Next Season Increase's

Discussion in 'Lawn Mowing' started by qps, Jul 10, 2005.

  1. qps

    qps LawnSite Bronze Member
    from Indy
    Posts: 1,484

    Again another question for some of the larger LCO's but it applies to all...what are going to be fair increases in large accounts on mowing due to fuel increases???? with the cost of labor, Insurance and fuel something has to give....if you take last years cost per gallon (I seen somewhere it was around 1.80) compared to 2.09-2.29....(seems to change hour to hour here in Ind.) that breaks down to a increase of around 14-22 %...diesel is even higher.....some food for thought.
     
  2. Green-Pro

    Green-Pro LawnSite Bronze Member
    Posts: 1,420

    I'm not a large operation, first year in business as well but got a few thoughts on the subject.

    I took over several accounts at the start of season, raised a good deal of them right off the bat no problems. I gained more accounts later into the season, so it seems to me the best thing for me to do is raise one groups prices every other year. I feel this will give the customer a break insofar as they will be raised only every other year and benefit me in that I will still increase revenue on the mowing portion of my business.
    That said I tend to make more money on the peripheral projects, the kind of projects, plant beds, bed renovations, mulch, walls, etc. that can be a bit more fluid in price through out the season.

    Just my .02

    -Geoff
     
  3. qps

    qps LawnSite Bronze Member
    from Indy
    Posts: 1,484

    Yes...your off to a good start....mowing is not a big money maker, don't get me wrong it's the basis of my business but it is mainly keeps the cash flow coming in to pay the bills...most profit will be made on other services (mulching, plant replacment, a so on.) good luck with your new business.
     
  4. Roger

    Roger LawnSite Fanatic
    Posts: 5,927

    gps: Look at a previous thread a couple of months ago regarding fuel costs as part of the total expenses for the business. I think the number was 7-9%. Your post does not say directly, but implies that the percent increase in fuel price will be the direct increase in charges to the customer (e.g. 20% increase in fuel price === 20% increase in customer charge).

    Maybe I've missed something in both threads. Are you intending to up the cost 20% to the customer, based upon a 20% increase in fuel prices? (I'm using 20% as an example -- I think the actual is more than 20% in my area)

    adding on:

    Here is the thread:

    http://www.lawnsite.com/showthread.php?t=106847&highlight=fuel
     
  5. ed2hess

    ed2hess LawnSite Fanatic
    Posts: 13,314

    Our approach was to be very aggressive on cutting fuel usage. We switched out trucks so we use the best gas mileage engines on the longest runs. We started cutting back on use of the big banger blowers on parking lots...we simply are doing less. In our market on commericial when you inform them you are going to raise the price you might as well get ready to take a cut because they ALWAYS find three lower bids. And it is gettng about the same way on residential.
     
  6. qps

    qps LawnSite Bronze Member
    from Indy
    Posts: 1,484


    My thoughts exactly......and no not a 20% increase over the board...you would lose customers left and right...like you said 7-9% to cover the fuel and other overhead expense's.
     
  7. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Posts: 4,372

    Last year I raised my prices 10-50% for monthly contracts. Some contracts went from $9,000 to $12,000 for the year, some went from $250 to $400 / month, some went from $900 to $1,000 / month.

    Anyways, my point is, over the years, figure out which customers like you. Ones that realize that business is business and that your expenses increase.

    If they don't, you'll have to look for a different group of customers that do.

    It's taken me 17 years to get to this point, but now I know I can go to my customers and get my rates increased.

    Last year on a gross of $130k, my total fuel cost $11k, or about 8.5%.

    My insurance was $8,500 or 6.5%.

    I have no labor costs since I'm solo, which also helps out on the fuel costs.

    So you figure that diesel has jumped about $.70 / gallon now, so I figure this year my fuel costs will probably jump up to about $13-14k, around 11%.

    Since I raised all my prices at least 10% across the board, I can cover the 3% increase in my expenses.
     
  8. rodfather

    rodfather LawnSite Fanatic
    Posts: 9,501

    Wow, 11K in fuel on just 130K of total revenue? You covering the entire state of Minnesota or what? That is high IMO. Should be no more than 1/2 of that even with the price of diesel and gasoline these days.
     
  9. qps

    qps LawnSite Bronze Member
    from Indy
    Posts: 1,484


    That's what I was thinking...must have a hole in his gas tank....I spend about 1200.00-1500.00 a month in the spring, but on twice the gross. fuel cost this year est. 7-9k.... :)
     
  10. LwnmwrMan22

    LwnmwrMan22 LawnSite Platinum Member
    Posts: 4,372

    That's about 40k of miles / year.

    Includes the mowers, chainsaws, tractor when we're hauling wood, the firewood processor which burns about 10 gallons / day, wife's vehicle when she has to run parts for me.
     

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