Fuel Surcharges

Discussion in 'Business Operations' started by barefootlawnsandlandscape, May 9, 2008.

  1. barefootlawnsandlandscape

    barefootlawnsandlandscape LawnSite Senior Member
    Posts: 296

    Are you guys charging a fuel surcharge to your maintenance bills or are you just raising prices across the board. I have raised the prices on my contracts that have come up for renewal so far this year, but I cannot go any longer without raising the prices on ones that are less than a year old.
  2. JohnnyRoyale

    JohnnyRoyale LawnSite Senior Member
    Posts: 616

    Our clients are used to a 4-5% increase yearly-they expect it, and agree. I make up the difference on the extras.
  3. ProCutLawnCare10

    ProCutLawnCare10 LawnSite Member
    Posts: 26

    Exactly.. if you don't increase your prices by around five percent you're going to be out of business real quick!
  4. daveyo

    daveyo LawnSite Senior Member
    from N.J.
    Posts: 907

    I just picked up a full maintenance client because his landscaper of 25 years not only raised prices but added a fuel surcharge to his monthly billing. I know what I need to make and calculated fuel at $4.50 in the beginning of the season, all my prices went up. I'm not losing any money but obviously that could be more profit.
  5. MJS

    MJS LawnSite Bronze Member
    Posts: 1,316

    I don't add a surcharge - I just increased my minimum this year - so I have pretty much raised prices across the board. Nobody has complained though, they all agree that it's necessary.
  6. Brianslawn

    Brianslawn LawnSite Silver Member
    Posts: 2,004

    todd... if you need to raise prices or add a so called (surcharge) cause you dont know how to price jobs to begin with... then do so. we've had our prices same for past 3 years with no surcharges and will leave them same for next 3 years at least if not longer. even if gas is $10 a gallon. we look into the future and innovate. we may loose a few accounts to people who think they can offer cheaper intro prices like you.... but when they come back after their illegal mexican got deported, they get an even higher price than before.

    (todd... not saying youre an illegal mexican or taken any of our yards.... you just need to think like a real biz and not like a 12 year old.)
  7. JohnnyRoyale

    JohnnyRoyale LawnSite Senior Member
    Posts: 616

    Dumb question? How do you innovate enough to be cutting grass at prices from 6 years ago in three years?
  8. Brianslawn

    Brianslawn LawnSite Silver Member
    Posts: 2,004

    find ways to cut costs and increase productivity at the same time.

    plus our prices were already considered "high" when compared to the weekend warriors and illegal mexicans. when in fact our prices were just where they should be and where everyone elses shouldve been. thats money out of their pocket, though.
  9. barefootlawnsandlandscape

    barefootlawnsandlandscape LawnSite Senior Member
    Posts: 296


    I know how to price yards. Have you ever seen my prices? Have you ever lost a bid to my company because we didn't know how to price our lawns? I would have gone out of business my first year if I priced lawns like a twelve year old. We are not going to go out of business because of the gas prices. Unlike you, I have full service maintenance contracts that include fertilization and weed control, yearly mulch, annual flower change out, landscape maintenance, and irrigation maintenance. I don't mow lawns that are a per visit basis. With the increase in fertilizer prices and fuel prices I am getting double whacked. Fuel is not that much of a percentage of my cost, but with the forecast I have seen I see the percentage going up.

    All of my inputs have gone up at least 10% this year due mostly to fuel surcharges from my suppliers. These are increases that cannot be passed along without raising our contract prices. When I priced new contracts signed this year I did so with the knowledge that fuel prices are going to increase this year and priced accordingly. Gas is already at the point that I bid these contracts at, and in order to maintain the profit margin that I want something is going to have to change. Maybe you are right, I need to be more innovative, but from where I stand we are pretty efficient.
    We also have been innovative with the way we have approached this year. Making every step count. Tightening up our routes. Dropping customers that don't fit into our existing routes.

    With all due respect you haven't seen my books and don't know what is going on within my company. We have seen tremendous growth in this area going into our third year. Not only in maintenance, but in the landscaping sector also. There will be a lot of guys go out of business in this area because they don't know how to price their work, my company nor your company will not be one of them, so companies like yours and mine will be setting real pretty next year.

    I am just trying to nip this thing in the bud before gas prices hit five dollars and we see our profit margins drop due to something out of our control.
  10. DBL

    DBL LawnSite Silver Member
    Posts: 2,219

    we sent a letter out at the beginning of the season saying to expect a surcharge when fuel hit 3.75 and it did last week so we sent the letter out saying everyone went up 5%

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