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Explaining your Price Increases

Discussion in 'Business Operations' started by Mack77, Mar 16, 2011.

  1. Mack77

    Mack77 LawnSite Member
    from NJ
    Posts: 208

    Hi Guys,

    I send out a letter each spring to welcome back the customer and explain how services will be conducted. Included in this letter is the weekly price for lawn mowing services. I have not had a price increase in years, what would you recommend, explicitly WRITING "Due to increased costs of doing business, we have raised prices $5 this year", or just say "This year's rates are $xx.xx"? (without an explanation and let them draw their own conclusion)

    What would you recommend?

    Thanks
     
  2. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Posts: 4,259

    We do not feel the need to explain increases we write the price and they either agree or go elsewhere. Most are smart enough to figure out on their own why prices have to go up. A few dim ones always complain but its easier to deal with 2 of them then to get into a debate over your business expenses with the other 200.
     
  3. Mack77

    Mack77 LawnSite Member
    from NJ
    Posts: 208

    Thanks,

    I appreciate your insight.
     
  4. tradeyouraccounts

    tradeyouraccounts Banned
    Posts: 344

    If you want to explain the rise maybe something like this works.

    We hope you understand that since “Date” we have been absorbing the rising cost of equipment, Supplies, liability insurance, licenses, and gasoline which have gone up over 50%, we are forced to increase service rates to $amount per month from “Date”. Even with all the increases we have had to endure, we are dedicated to keeping your service rate as low as possible.

    And then maybe say you can earn from us if your refer us and pay them an incentive for their referrals this way they may think if i refer it takes care of the raise.

    Just a thought.
     
  5. Brodie

    Brodie LawnSite Member
    Posts: 122

    That is not a bad idea.
     
  6. Green Feet Lawn

    Green Feet Lawn LawnSite Member
    Posts: 226

    I just sent out my annual spring letter. In it I put... "efffective this year, we're forced to increase the cost of our mowing service from $XX.00 to $XX.00 per mowing. In the past several years we have had to pay increasingly higher prices for gasoline, insurance and maintenance. Regretfully, we are no longer able to absorb the increase ourselves. Since our goal is to continue to provide high quality services for all of our clients, we believe that this is our best course of action."
     
  7. bustutah

    bustutah LawnSite Member
    Posts: 52

    This is the first year I'm doing a welcome letter. I have called my past customers directly. I'm also raising many of their prices. I was hoping a letter would soften the blow to them and a less likely chance of me hearing, "well, I'll have to get back to you if we need our grass cut". I'd hate to mow all of april to find out they're not paying "they didn't agree for me to come out at the new prices. How have you dealt with these issues in the past?
     
  8. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    dont get in to a long drawned out explantion....

    just simple and stright to the point,

    Due to the current changes, we are forced to increase our prices ?? %

    We appolige for the increase, and hope to continue providing you with the best possable service available.

    the new prices will be reflected on next months invoice

    thank you for your understanding.
     
  9. Darryl G

    Darryl G LawnSite Fanatic
    Posts: 8,033

    I don't explain my increases really. What I do say is that some of you may see a small increase and that we try to keep any increases to a minimum. I go on to explain that the price is based on the equipment and labor required to provide the high level of service bla bla bla. I don't have my language in front of me, but it's along those lines, and I avoid giving any specific reasons.

    The ones that don't get increased feel lucky and the ones that I do raise a bit go along with it.
     
  10. T.E.

    T.E. LawnSite Senior Member
    Posts: 799

    This is good advice, and also as stated above simple and too the point. If you tell them specifics such as the price of gas. If gas ever drops they'll expect the price to go back down.
     

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