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Question about Raising Rates

Discussion in 'Lawn Mowing' started by verant, Feb 22, 2008.

  1. verant

    verant LawnSite Senior Member
    Posts: 484

    I am thinking I need to raise my charge on some of my accounts this coming season. When you do this, do many of you let the customer know before hand or do you just send them the bill regardless? I bill every month. It would be just a $5 raise per mowing.
  2. grasswhacker

    grasswhacker LawnSite Gold Member
    Posts: 3,873

    I let them know when I send out my service agreements.
  3. landscaper22

    landscaper22 LawnSite Senior Member
    Posts: 829

    Yeah, you want to give them notice. People don't like surprises. Not that kind anyway!
  4. Jason Rose

    Jason Rose LawnSite Fanatic
    Posts: 5,858

    "just a $5 raise per mowing" is a lot, IMO. Not saying that you aren't ready for a $5 per week, per customer raise, but are your customers? Yes, some pre-notification is a MUST, and you need to sort-of "justify" the increase in words. $5 to cover gas being higher this year is hardly a good excuse, becaues it may be costing you an extra 50 cents to do their lawn, including getting there.

    Maybe I'm doing it all wrong, but I try to raise prices based on what they are paying now, and base it on a sliding scale or percentage of the original price. A $25 customer may get a $2 raise, where a $100 customer may see $8 to $10.

    From a customer retention standpoint, it may be best to split your price increase in half, or even thirds, and raise them over time, 2 to 3 years. The sticker shock of a $20 to $25 a month increase WILL send some calling the competition. Of course there's another way of looking at that too. So, if you loose 10 customers out of 100, and you are charging the remaining 90 $5 more per cut, you basically are making the same net, while actually working less.

    I've always been on the 'scared to loose people' side of the fence, and I try to do a small increase every 2 years. But I know of others that have done the $5 jump and never had a complaint...

    Just things to chew on.
  5. KS_Grasscutter

    KS_Grasscutter LawnSite Gold Member
    Posts: 3,332

    $5 is a BUNCH to raise at once like that. I raised about half mine last year, like $2 each. This year the ones that didn't get raised will be raised by $2.50 or maybe $3, and the ones that did get raised last year will be raised another dollar.
  6. Jay Ray

    Jay Ray LawnSite Fanatic
    Posts: 6,510

    Up $5 once a week can take away half of their social security raise they just got. It is a 14% raise on a $35 lawn going to $40. This is the perennail businessman's dilemma and a lot of thought should go into it before acting.
    But is is true everything we buy to be in business is going up.
  7. grasswhacker

    grasswhacker LawnSite Gold Member
    Posts: 3,873

    What I did is to raise rates and eliminate all double mowing, bagging and fuel surcharges, and stated that in my cover letter.
    so in that way they feel as though the raise would be offset in some way. However in the long run I will make out much better, especially after the spring growth..
  8. verant

    verant LawnSite Senior Member
    Posts: 484

    thanks for the replies

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