Fuel cost increases...pass them on?

Discussion in 'Lawn Mowing' started by GarPA, Mar 25, 2002.

  1. GarPA

    GarPA LawnSite Silver Member
    from PA
    Posts: 2,585

    No secret that fuel cost is rising fast..... again. For all of us who preach "know your costs" b4 you do an estimate, do we surcharge our customers at some point?? I'll bet most of us don't yet there has to be a point at which we must, else we are "lowballing" in a way....granted for small lawns the client might say, whats the big deal he can't be using that much fuel..but...over a week plus the truck fuel...it could add up to a moderate increase in our costs...lets say by June, fuel is 50 cents more than when you built your cost structure back in January....do you just eat it? thanks
     
  2. Golfgar4

    Golfgar4 LawnSite Member
    Posts: 4

    If you increase your costs in mid-year after telling your clients what the costs will be, do you think they're going to stay with you very long? They're going to think that you'll increase your prices anytime you want. This is part of doing business. If you know what your operating costs are and provided for possible unexpected increases, you should be alright until you can legitmately increase your prices the next time. I think once a year is the max you can increase your prices, UNLESS the customer wants to renegotiate the contract in mid year.
     
  3. TOSLC

    TOSLC LawnSite Member
    Posts: 175

    Last year I told all my customers that the price of fuel was rising, not only for the equipment, but for the vehicles. If the price of fuel got above "X" amount, I would have to increase the price of the serives. . . until the price of fuel returned to "normal". They were all very understanding. Of course I still had some that whined and complained, but I didn't lose any of them.
     
  4. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,842

    Last year we used the rising cost of fuel as the main reason for raising prices. We usually raise prices about every 2 years anyway.

    When we raise prices for any reason, it's never across-the-board for all of our clients. Some of our clients are worth gold to us and I'm not about to risk losing them for anything. Everyone has a few of these. Still other clients are fairly new to our company and I hate to raise prices on someone who we just signed up at one price and then tell them, "Oh, sorry. Now it's more." So we usually don't raise the prices for them either.

    What's left are existing customers we've had for a year or two or more. We raise their prices.

    We always try to raise prices as little as possible, just to lessen the impact. I'd rather raise prices a little every year or two than I would raise them a lot just one year.

    BTW, we've raised prices several times over the years and I rarely lose a customer because of it.
     
  5. roscioli

    roscioli LawnSite Senior Member
    Posts: 749

    Just my .02, but I feel that no increase should be unexpected. I always price a job with a buffer for things like gas going up. Now, I will be raising my prices this year for almost all existing customers by a couple bucks, but keep in mind that inflation is about 2-3%, and gas prices haven't risen with inflation for the past 20 years. While I hate to see it, gas prices really should be higher compared to how they were 10-20 years ago, and how they are in the rest of the world. Perhaps you could say like TOSLC says- "If it goes up to $X.XX/gallon, we will have to raise prices by X" or something like that. Just be prepared
     
  6. GarPA

    GarPA LawnSite Silver Member
    from PA
    Posts: 2,585

    those are reasonable approaches...I didn't mean to imply I would raise prices everytime it jumped 20 cents a gallon...rather as some of you suggest, if it goes above 'x' then I will be making an increase..thanks for your good points of view
     
  7. LAWNS AND MOWER

    LAWNS AND MOWER LawnSite Bronze Member
    Posts: 1,129

    I would never tell a customer I'm raising their price because price of gas has gone up. What if gas falls to 80 cents/gallon? Are you going to go down on their prices? I only increase rates at the beginning of the season. If they ask, tell them that the cost of doing business has increased. Never use gas prices as the main reason for raising prices. I can mow $600's worth in one day using 10 gallons of gas. ( Mower and Van ). If gas is $1.50/gallon, my fuel cost for the day is $15. If gas is $1.00/gallon, my fuel cost is $10 for the day. I hope you get the point. $5/day extra for gas is not going to break me up. Granted, others have larger outfits than myself and use more gas, but the %%%% of fuel cost to gross revenue should still be pretty consistent.

    LAWNS AND MOWER
     
  8. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    I agree with LAWNS AND MOWER. We roughly figured it out here the last time the prices went up and we came up with a figure of around 50 cents maximum additional fuel cost even if the price went up by 50 cents a gallon on a 1/4 acre lot. And that includes the increased fuel cost for the towing vehicle assuming you don't drive for miles between each job.
     
  9. thelawnguy

    thelawnguy LawnSite Silver Member
    Posts: 2,412

    You really need to be up on current events and trends. Any price increase, be it fuel, repair costs, insurance, whatever, needs to be somehow passed along to the customer, otherwise what are you working for, gas and groceries? Not for me...
     
  10. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    I never had in the past...but I might this year as a "fuel surcharge". I know others in the NE do, just not sure yet if we will.
     

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