increasing prices

Discussion in 'Business Operations' started by Bingham Brothers, Dec 15, 2006.

  1. Bingham Brothers

    Bingham Brothers LawnSite Member
    Posts: 66

    I took over an existing service with 50 properties a year ago and built up to 110 by the end of the season. Quite a few of the original 50 and some of the first I picked up are priced on the low end. What is the best way to increase prices for existing clients? I am a little apprehensive since I only have 1 year of history with my clients, should I wait another year? My goal for next year is 200 properties and I plan on staying in this business long-term.
    thanks,
    Jason
     
  2. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    If you're apprehensive, I've found the best way, especially with customers whom you would not mind servicing another year at the same price, is plain ask them if they would mind paying an extra $5.

    While some will go for it, some won't.
    But it helps.

    It's one way, anyway.
     
  3. Wells

    Wells LawnSite Member
    from SLC UT
    Posts: 0

    My experience has been that if the client is satisfied with the work you perform of their property then they generally have no problem paying a few extra dollars to keep your service.

    I had a client drop up over the increase in costs one season, he then spent the next year tyring out three other companies. The following season he called and asked to be put back on our schedule, at the higher rate of course.

    I generally raise all of my clients rates each year but rarely do I jump them up by $5 per cut. It's usually more like $3 per cut and rarely is a client going to drop a good service over an extra $12 per month. An incease of $20 or more per month and the client might start looking for another service.

    Now take that increase of $12 per month / per client and add it to your 200 clients and you've just increase your bottom line by $2400 per month without doing any additional work. So the answer to your question is YES....if you feel comfortable with the service level you're currently providing then increase your prices
     
  4. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    If you a little ....tense.... on the issue ..... raise like 1/3 the 1st month of notice .....June 1st than 1/3 in July n the last in August
     
  5. Matt k

    Matt k LawnSite Member
    Posts: 60

    If there not making the numbers you need, why worry about keeping them. If you know what you need to get for each account, I say charge it. You may loose some, but you will be profitable with the ones you do get. This also opens up the door to gaining new customers at the rates you need. The key is when you raise the rates, sit down and tell them and explain why. You would be surprised how many will understand. If they elect not to go with you, give them references of companies that would be in your price range and let them see what the market dictates.
     
  6. IN2MOWN

    IN2MOWN LawnSite Platinum Member
    Posts: 4,993

    When I did my price increases I sent out a letter at the beginning of the year stating what the increase would be and why. I asked all my customers to call me if there was a problem with it. I had one call and after explaining again why I was raising prices the customer kept me on. Most people understand why prices go up. If they dont then they can find someone else.
     
  7. Team-Green L&L

    Team-Green L&L LawnSite Bronze Member
    Posts: 1,776

    The minimum wage increase is such a good cop-out, but the fact is that EVERYTHING inflates.
     
  8. HOOLIE

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    I had quite a few customers from 2002 (my first year) that were underpriced. I had raised them slightly the last few years...this summer (in August) I just raised them all $4-10. Only 2 of them cancelled, and those were both on $7+ increases. Surprisingly no other customers even called to discuss the increase.

    I will say, better to bite the bullet and jack them up to acceptable levels now, versus bumping them up slightly over the years.

    Fantasy has a good idea, raise just some of them at first to see what the reaction is, then hit the rest of them up.
     
  9. carcrz

    carcrz LawnSite Silver Member
    Posts: 2,085

    I went up 10% at the beginning of the year on all of my residential customers. No questions asked.
     
  10. AintNoFun

    AintNoFun LawnSite Bronze Member
    Posts: 1,807

    very well said, im amazed so many people are nervous about raising rates. are you in business to make money or to see how many non profitable customers you accumulate? we raise prices every year, this year we went up5 to 7% we lost maybe about 15 customers out of close to 300...


     

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