Price increases

Discussion in 'Business Operations' started by newbomb, Feb 2, 2006.

  1. newbomb

    newbomb LawnSite Senior Member
    Posts: 391

    I have been off the site for awhile but Im back. I was wondering what the general feeling is about price increases for 06'. My rates have been on the low side for the last 2 seasons so I have bumped them about 20%. The new rates are in line with what other "professional" mowers are charging but Im getting resistance from my customers. I dropped most of the "cheapskates" already and hope to hold on to most of the better work. What are others here doing and what is the response?

  2. POPO4995

    POPO4995 LawnSite Bronze Member
    Posts: 1,206

    This year I raised my prices 15% from last year. When fuel jumped last year I didnt adjust my prices on my lawn maintenance contracts but everything else got a fuel surcharge. I'm satisfied with the 15% increase.payup
  3. JohnsonLawn

    JohnsonLawn LawnSite Senior Member
    Posts: 400

    I world't feel comfortably raising prices by 15-20%. That is a pretty big jump in one season. I think some of your clients will put up a stink. I think you would be better off raising your rates by 5% this year, then another 5% next and adjust year to year as needed. I have done this in the past and nobody complained. Raise rates in small , but consistent increments. Good Luck
  4. tcls83

    tcls83 LawnSite Member
    Posts: 241

    Make up a good excuse. Use something like "This year my services are going to be $45 per cut instead of $35 because of the rising cost of fuel and materials." Some agree, some don't. If you've done quality work for a low price at these places, just go up in price, if they dump you because of it fine. It'll be hard to find someone to the jobs for the same price with the same quality so they probably could call you back down the road, and accept your price if they liked your work before.
  5. ArkansasLawns

    ArkansasLawns LawnSite Member
    Posts: 93

    I raised my prices on about half my regular customers last year. If I was getting 30 then it went to 35. 40 to 45. This year the rest of the customers that did not get an increase will be getting it this year. Any new customers I took on last year had the higher price included when I took them on and will not be getting an increase. Yes it is more than 10-15% but I try to keep the checkbook easy to keep.

    I have this one "pita" commercial customer which I have added into the contract a line about Gasoline prices going up to $4.00 a gallon. Currently reg is about $2.30 a gallon.If gas reaches $4 or over then the contract will automatically be up for renegotiation. The client griped about it but signed it anyway. Anybody else have a clause like this in their contracts?
  6. drsogr

    drsogr LawnSite Bronze Member
    Posts: 1,275

    I have raised my landscaping prices about 20 percent this year as well. But if I was a regular lawn care company and my guy decided to raise my price from $30 to $36 I would get pissed too. I would be think why the heck is he raising his prices 20%! Luckily with landscaping I have very few regular customers.
  7. TurfProSTL

    TurfProSTL LawnSite Senior Member
    Posts: 693

    Good luck bumping all your customers 20% at once. Were your prices so low you were losing money? If so, it may need to be done. Just be prepared for cancellations.

    The best way I know to raise prices is multi-facteted.

    1st, you should be job costing on a continuing basis and raise prices on any you are losing money on. Immediately.

    Secondly, raise prices on your new customers to increase revenues. Let your established accounts be as long as possible. Constant increases will have them price shopping.

    As a last resort, a moderate across the board increase may be necessary to cover increased operating costs. And to keep your margin in line.

    Hopefully, your prices weren't so low that you can't weed out the losers and replace them with higher priced new accounts. Otherwise, an increase may be necessary on everybody.

    Make sure you NEED a 20% increase before you do it, because thats a big chunk all at once.....
  8. Az Gardener

    Az Gardener LawnSite Gold Member
    Posts: 3,899

    Last year all my old clients got increases they varied from 20% to 50% mostly because if the maturity of the landscape and time needed to keep them up. All these had the same rate for at least 3-years. I had documentation to illustrate the hours spent and I only lost one of 20 clients. But like Lucy I had a lot of splainen to do. New clients have been getting new hourly rates and I review them yearly, now. Increases will occur in April. For the clients with consistent hours or mature landscapes they will get a 3% cost of living increase. One thing that is unique to here and a few other spots is A new L/s goes in this year and you avg 4 hrs a visit, next year its 5.5, and the third year you are at 7-8 hours per visit because stuff grows so fast. I'm talking full service shrubs, trees, pond plants etc.

    HOOLIE LawnSite Gold Member
    Posts: 3,981

    I had great success last year with a mid-season price hike. If your contract allows it, it is a nice option. People are MUCH less likely to drop you in mid-season than they are in the spring, when they are getting a million flyers from other LCOs on their door each day.

    Also consider a price hike for selected customers only. I'm sure you have some lawns you make pretty good money on. I'd leave those ones alone, try raising everyone else up to whatever dollar per hour mark you're looking to make.
  10. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Posts: 7,547

    I try to raise about 1/2 of my customers each year. This way they are only dealing with a price increase every 2 years. But if they are low thats not out of line for an increase. Once you get them to a reasonable rate the increases wont have to be as much.

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