Going up on prices

Discussion in 'Business Operations' started by Davis Lawncare, Jan 14, 2006.

  1. Davis Lawncare

    Davis Lawncare LawnSite Member
    Posts: 5

    Guys, I have about 20 yards as of right now. 10 or 12 have been the same price since I got them 3 or 4 years ago. I need to go up on prices but have a bunch of tightwads in my group who may not concur.

    1. Whats the best way to break it to them? Letter or face to face?
    2. Anyone have a "going up on prices" letter from the past I could read?
    3. Also how much should I go up and how often?

    (Oh and just for the record, I have been reading on this site for a little while now and I don't think Mississippi clients care about their yards as much as your customers)

    For instance, I have 20 yards and I bring in roughly $2,100 a month. Most of them are cut twice a month, only about 5 of them once a week. So my last question is:

    4. If you guys were to have 20 yards, with just general lawncare maintenance, (no landscape work) whats a rough guestimate of what you would make where you live? (Include where you live)

    Thanks ahead of time. Todd
     
  2. lawnspecialties

    lawnspecialties LawnSite Silver Member
    Posts: 2,513

    My residential accounts range from $120.00/month to $200.00/month.

    As for the price increases, most people realize with fuel prices as they've been, services with machinery are inevitable to go up on price. From what I've learned, be confident on your increases. Don't be timid at all when talking to them or even in a letter. If you wait until March or April, it's even better because they know if they fire you, they either have to get a mower or another lawn maintenance man quick 'cause the grass is growing. Just be courteous, confident, and not afraid to lose the customer if it comes down to that. That's one of the toughest things to learn as a business owner but if you're being fair and providing a good service, it's not your fault if they leave.
     
  3. out4now

    out4now LawnSite Bronze Member
    from AZ
    Posts: 1,796

    I should have read through the whole thing probably but here goes, raise the price either way they will most likely not balk because expenses are increasing. If its a small amount and they drop, so what. They are price shoppers anyway and not what you need. If you need the money to stay profitable and they won't pay it, good riddance. you have to do what is right for you. Too many times people will hang onto a loser account to keep the schedule full. Start advertising and continue advertising all the time. Turning away work is better than scraping for it. Just my .02
     
  4. RonB

    RonB LawnSite Senior Member
    Posts: 429

    hey neighbor - about 50 miles north of ya.

    I plan on raising prices on several this year and informing them on first contact this spring, either by phone or in person when it's time to start cutting.

    Somewhere along with the chit-chat I'm going to mention like everything else - I'm going to have to raise their price this year, pointing out some expenses that they can relate with, like gas, electric, even stamps!

    good luck
     
  5. NickN

    NickN LawnSite Bronze Member
    from Alabama
    Posts: 1,010

    One thing that stands out it that you need to raise your prices,but you don't know how much.If you don't know how much to raise them,how do you know that you need to raise them?
    Also,looking at your demographics,you really need to expand to cover at least the entire county.Laurel only has about 19,000 people total.Median household income is $24,988 while the county median income is $28,764.With household incomes that low,that doesn't leave much room for lawn maintenace.I'd say you're doing pretty well considering that and the number of lawns you're servicing.
    What I would do,if you're in this full time,is expand into other counties.With 20 customers,you have time to travel(plus it's deductible).I would look into upselling new services as well,since you said they won't take kindly to a price increase.
    Offer maintenance packages instead of just mowing.Give them a choice,but make those choices work for you.Basic package could include mowing and fert.Upscale packages could include,mowing,fert,shrub trimming,etc.,,Look closely at the numbers and you'll find that that those services,broken down into payments,don't raise your rates very much,but do raise your profit.
    Also,offer a 12 month payment plan so your monthly billing rate will be lower.With this option,you'll get more business from those who can't afford $200 per month,but can afford say $125 per month for 12 months.
     
  6. nobagger

    nobagger LawnSite Gold Member
    from Pa
    Posts: 3,065

    I raised last year when gas went to $3.00/gallon and no one complained, infact they all agreed with me. I only had to raise by $2-$3 a lawn but it all adds up. We had a minimum charge last year of $21.00 (lower end of normal rates around here) and this year It's going to go up to $23or $25. If they don't like it too bad. Like someone said before I'm tired of filling up my schedule with dead beat customers just to try and fill up a schedule.
     
  7. DLS1

    DLS1 LawnSite Bronze Member
    Posts: 1,619

    Why would they complain when even with raising their rates last year you only charged $21. :dizzy: :dizzy:

    I haven't seen anyone less than $30 around here last year.
     
  8. nobagger

    nobagger LawnSite Gold Member
    from Pa
    Posts: 3,065

    It's amazing how the rates vary ins't it. Believe me average prices for the lawns I am talking about are around $25.00
     
  9. mtdman

    mtdman LawnSite Gold Member
    Posts: 3,137

    Don't tell them anything, other than rates are increasing due to my increasing costs. Your new rate will be $XXX. Leave it at that. If they ask, then explain it to them. When people raise rates you pay, do they explain? Credit card companies, your rent, food prices, etc? Nope. Because people understand why rates go up, and most people won't challenge you, even expect it.

    You need to figure your costs, set down what you want to make profit wise, and then figure your rates. Some guy on the other side of the country can't give you your rates based on his costs.
     
  10. Jpocket

    Jpocket LawnSite Silver Member
    Posts: 2,278

    Not to be rude or anything, but if 90% of your customers don't want weekly service shouldn't you reconsider this business. I know myself the minuet i can't cut weekly I'll be looking for a way out
     

Share This Page