On gas surcharges

Discussion in 'Lawn Mowing' started by Twotoros, Sep 21, 2000.

  1. Twotoros

    Twotoros LawnSite Senior Member
    Posts: 494

    Some of you are talking surcharges. Well if gas keeps going up and hits 2 bucks average on the national level
    I'm afraid a surcharge won't cut it . At some point all business will have to raise prices and that will hit us harder . I'm not going into the poorhouse so I can get my daily exercise mowing for peanuts. This will be higher inflation than the last few years and if that is the case I will raise prices a lot more than I had planned. Usually I average 3% across the board yearly with some accounts 0% and some 10% .
    At 3% over the last few years that has been ok.
    What I'm afraid of is if I adjust for higher inflation I will lose half my customers .

    My question I guess is this : If you raise your prices double or triple or whatever your usual yearly increase ,
    how much business do you think you will lose and is it worth it . Or should we stick to our game plan and eat the loss ?

    My prices are bare bones now but my compitition is 20-40% cheaper !!
     
  2. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    TwoToros wrote:

    <<My question I guess is this : If you raise your prices double or triple or whatever your usual yearly increase ,
    how much business do you think you will lose and is it worth it . Or should we stick to our game plan and eat the loss ?>>

    We don't have a yearly increase. All accounts are reviewed annually. It just so happens that about 50% of our accounts are getting price increses next year of $5.00 each. Most of our accounts get price increases every 3 years or so. I would think that a customer would get tired of their lawn care company raising the price <i><b>every</i></b> year. You speak of losses associated with gas price increases. Have you broke it down and looked at it what is it costing you in additional gas cost to cut each 1/4 or 1/2 acre lawn? If you pay $1.50 for a gallon of gas this vs. $1.00 last year and you burn a quart of gas cutting that lawn then it will cost you 12.5 cents more to cut that lawn at this year's gas prices. Of course there is always the increased gasoline costs associated with getting the equiptment to the job. For a truck getting 10 MPG and a distance of 2 miles between jobs that would be about 10 cents per job additional. So tell your customers that you are enacting a 22.5 cent (or whatever it works out to in your particular situation) surcharge on each lawn cut and see what they say. I bet you get a lot of laughs.
     
  3. jaclawn

    jaclawn LawnSite Senior Member
    Posts: 490

    Richard hit the nail on the head. Gas is a small expense in the grand scheme of things. I did some very quick math, usine some very round numbers, and figured that gas costs are about $.50 per hour more than last year.

    Many guys on here are boasting of hourly rates of $60, and that $.50 comes out to about 30 seconds of work. I am sure that you could find a way of saving 30 seconds on a job.
     
  4. klc

    klc LawnSite Member
    from iowa
    Posts: 27

    Try being careful while whiping or dont whip all the yard each week by not needing to go to the truck and get the blower to blow off the driveways

    get a patteren for whiping each yard it saves time
     
  5. Chuck Sinclair

    Chuck Sinclair LawnSite Senior Member
    Posts: 336

    After talking to you guys on my last thread i decided to add a $2.50 surcharge per trip. Here why:

    Average yard in Sacramento is about 1000 sf sod (Front & Rear)and then the flower beds and shrubs. Now if i try to charge more then $60.00 a MONTH (FULL SERVICE)they think i'm trying to rip them off and hire the unlicensed guy for $45.00 a month so if i get the bid at $60.00 that = 2 hours amonth 30 min a week i time myself and make sure not to spend any more time then that on that job.
    Chuck
     
  6. bob

    bob LawnSite Platinum Member
    from DE
    Posts: 4,254

    Chemlawn is adding a $1 surcharge for every application.
     

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