Lost the 2nd, 3rd and 4th biggest accounts yesterday

Discussion in 'Lawn Mowing' started by LwnmwrMan22, Mar 20, 2008.

  1. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Posts: 4,372

    I'm a solo op.

    This will be my 20th year.

    I had a large national retailer based out of Arkansas that I'd been doing the location since the store opened, about 12 years ago.

    This year I raised the price from $60 per hour to $75 per hour.

    I'd been doing it at $60 per hour for about 5 years now.

    I have 2 fairly large strip malls that I've been doing for 15 years. I raised them from $900 per month to $1100 and $1200 per month. The last price increase was 5 years ago.

    I have another large non-profit place that I did. I did not raise their price this year, since it was the first year in business last year.

    All of these I've lost to people charging $50 per hour or less.

    I don't understand.

    For me, it's about $30,000 / year in business, about 25% of my gross.

    I understand I have a larger overhead than most solo ops, but I tried to break down the numbers, and do not see how these people can make an amount of money that keeps them wanting to do this business.

    If company A is only going to gross $20 per hour, GROSS, not NET, on top of employee wages, I would immediately sell out and go to work for someone else.

    I thought I had a decent market. Apparently not so.
     
  2. stbentoak

    stbentoak LawnSite Member
    Posts: 38

    I own a buisness with over 2 MM dollars of hi tech computerized machinery and if I charge over 50.00 a man hr I can't win any jobs and my people get laid off...Too much competition for good jobs, including China.
    And I have to pay their ins and 401K and the list goes on and on, so I can't see how someone solo can't make it at 60.00 hr......
     
  3. grass-scapes

    grass-scapes LawnSite Bronze Member
    Posts: 1,552

    Ive been having trouble bidding jobs this year. Im just a bit higher for the fert and things other than mowing than last year, but my mowing is staying around the same. I haven't picked up too many this year at all, and lost more than Ive gained due to lower pricing. Ive got a batch of 3 Fast food rest. that I haven't increased pricing since 2004. I HAVE to increase this year, and Im afraid that I may lose it too. Im going to meet with the owner by the end of the month to have a discussion on the new contract.
     
  4. shovelracer

    shovelracer LawnSite Silver Member
    Posts: 2,009

    Apparently you where going to lose them even if you didnt raise your prices. there are a lot of companies out there that dont do everything right and therefor can operate for less money. It isnt right or legal, but no one stops them. Instead they take the market an then leave it hanging when they go under. I dont understand why a 12 year customer would just go somewhere else , without involving you in there decision first. Or is there more to the story that we dont know. do you maintain regular contact with the owners/managers of your properties or do you just wait for the phone call?
     
  5. IMAGE

    IMAGE LawnSite Bronze Member
    from midwest
    Posts: 1,134

    Sorry to hear that LwnmwrMan22. I hope you pick up some good jobs to take thier place!
     
  6. Toad

    Toad LawnSite Senior Member
    Posts: 443

    I think you need a reality check my friend. 75 per hr is way high. You had it good at 60hr, then for some reason you got greedy. If you cant make it at 50, your working to slow, or you are living beyond your means.
     
  7. JNyz

    JNyz LawnSite Bronze Member
    Posts: 1,086

    I've been in business for 21 years and learned a few lessons. Clients do not understand 25% increases. That is why small increases every year make more sense then one 25% increase every five years. I raise my prices anywhere from 2 to 6% every year, people learn to expect it. If I were to increase my price 25% this year I think I would lose half my biz. Someone told me a long time ago to never send out renewal letters or price increase letters unless you have a specific contract. Do not give your clients a chance to think about getting someone else. Just show up do your thing and bill them at the end of the month. Most will not notice a small increase every year. Twenty five percent increase is a big increase even though it was the first one in five years. Good luck I hope you find enough work to replace it.
     
  8. JNyz

    JNyz LawnSite Bronze Member
    Posts: 1,086

    50 an hour as a solo op is low. If you work 2000 billable hours that would be only 100k. Working and billing for 2000 hrs is not easy. Take 100k subtract your expenses and see what is left over, not much. Remember your solo your expenses also are retirement, healthcare, disability not just fuel, equipment and stamps.
     
  9. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Posts: 4,372

    In 2004, I had a fuel bill for the season at $9,000.

    Last year, I had a fuel bill for $16,000.

    In 2005, I was paying $10 per 50 lb bag of fertilizer. This year, I was quoted out at $21 per 50 lb bag.

    I've already sat on these increases for the last 3 years.

    Why should I keep digging into my own profit margins for costs that I cannot control?

    Rather than run surcharges and look like I'm nickle and diming my customer, I decided to run a 6-15% increase, depending on the account and how long it's been since I raised the price.

    These properties, I bend over backwards for my service. It's why I charge what I charge. The strip malls the property manager (not the one making the call on the contract) calls me if there's an issue, and I'd swing by the property and take pics with the cell phone and email them to him, so he didn't have to drive 60 miles one way to check it out.

    One of the strip malls is 30 miles from me. It's going to cost me $100 per month just in fuel to drive there and back. Normally I wouldn't do it, but it was tied in with the other one, and they didn't have someone doing it.

    As far as $60 per hour, sure, I could make it, but why?? If I'm not going to gross $30 per hour over the fixed costs (payments, etc.) to cover the fuel, insurance, property taxes, cell phone, internet, garbage, fertilizer, chemicals, lubricants, again etc., then why wouldn't I just sell out and go work as a foreman or sales for a company for $20 per hour???
     
  10. pinto n mwr

    pinto n mwr LawnSite Senior Member
    from gr8, mn
    Posts: 422

    Like the market here?
    We just lost an account over price, we haven't raised the price for this property in 5 years also.

    We also got word this week that we did not get an account for 150 sites, we did about 70 or so last year. That was due to a lowballer also.
     

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