Price increase

Discussion in 'Lawn Mowing' started by Keegan, Feb 2, 2007.

  1. Keegan

    Keegan LawnSite Senior Member
    from CT
    Posts: 606

    How do you go about handling a price increase? DO you let the customer know and do you do a % or a flat amount?
     
  2. lawnpro724

    lawnpro724 LawnSite Silver Member
    Posts: 2,201

    As a general rule I increase my rate for lawn care on commercial accounts 5% every two years, residential is another story.
     
  3. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,842

    Definitely, you have to let the customer know.

    We increase prices every year or two. I think we'll skip this year because we did a pretty hefty price increase this year.

    You can't just do the same percentage increase for everyone. You have to evaluate each account individually, and here's why; When you first go to give a bid, you take a look around a property and bid it according to how long you think it will take you - basically you're making an educated guess. But after you've worked that property for a while (say, a year) you then have EXACT knowledge of how long it takes you for that property. You also know more about the client. Are they kind of a PITA, always nit-picking about little things? Or are they totally cool, never bothering you about a thing? Do they pay quickly? Or are they a slow payer? Does it take you longer than you estimated originally? Or perhaps it takes you less time than you figured. These are all factors that need to be considered when you go to raise prices.

    So I evaluate each account according to these things. If we have an account where the client is just totally cool, always pays on time, never bugs us about anything, and we are actually working there for less time than I expected, I am probably not going to raise prices for that person. They are already a gem, even at the current rate. So I just leave them alone.

    Then there's the average client, who pays fairly well, complains only on occasion, and we seem to take about as much time as I expected we would. So that guy I'll give a small increase to (maybe 5%.)

    Then there's the customer who has been a little bit of a PITA, complains enough to be mildly annoying and cause us to work in their yard for longer than we probably need to, etc. But isn't quite enough of a PITA to let them go. Well, that person I am going to raise up about 10%.

    Finally, there's the customer who is fine in all other respects except that I just have come to realize that I really underbid it at first. We're routinely taking longer at his property than I thought we would. Not because of anything he's done. I just underestimated. So that guy will get a 10% increase as well.

    That's how you go about determining who to raise and how much to raise their prices.

    As for how to let them know, just a polite letter. If you want a copy of my price increase letter just PM me with your email address and I'll send it to you. You're welcome to use it for yourself. It's very well written.
     

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