Raise prices?

Discussion in 'Business Operations' started by Toatlandscape, Jun 29, 2002.

  1. Toatlandscape

    Toatlandscape LawnSite Member
    Posts: 69

    I have only monthly accounts and have not raised prices for several years on some customers. I have been increasing some prices on new customers as they come up. Have you ever raised prices? How? What was the fallout if any? Did the increase outweigh the cancellations if any? Any input would be helpful.

    Thanks
     
  2. KenH

    KenH LawnSite Bronze Member
    from CT
    Posts: 1,622

    Im not sure what you mean by having only "monthly accounts", but I raise my prices yearly. If I dont raise on a customers cutting, I go up in another area (fert., hedges, etc.) IMO, you have to raise prices every year to keep up with the cost of living. Even if you raise minimally, every little bit helps. Gas goes up, insurance goes up, prices of maintenance go up, etc.

    I have never lost a customer from raising prices, unless I wanted to lose them.:D
     
  3. MOW ED

    MOW ED LawnSite Fanatic
    Posts: 5,028

    Never lost one for raising either but when I started I had no idea how to price so I was low on occasion. All of those errors were corrected after the people saw that I was doing good work, every week and I was honest.
    Now I must say that I do not get some jobs because I am higher than some other LCO's but there is enough work for them and me also.


    I think that if you have customers that are happy with your work then you will be able to raise the prices with little problem. Try and phase it in over a year if you are way low. 5% now and 5% next year. Explain to the customer that you have had high cost of business expenses or whatever reason it is that you are now low. Don't lie. The key to this is knowing your expenses and what you are making. Not just that but also what you are keeping. People don't understand that the PROFIT side of the business is why we do business. You don't have to explain that you are raising rates to make a profit but you can justify the raise on the side of your expenses.

    The letter or phone call could relate how your insurance went up 40%. (everyones went up so the homeowner has empathy) the cost of gasoline went up, maintenance costs up, equipment replacement costs, really look into your business numbers and find the areas that have increased over the years. You may surprise yourself. If they really squawk when you give em the news you are still in control, you can keep them by compromise or dump them and replace them with a customer that pays better.

    Good Luck and please keep us updated on what happens.
    I just don't want to cover my expenses, that doesn't put a dime in the pocket.
     
  4. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Posts: 7,547

    I have all monthly accounts as well. If you raise them 5 or $10 per month you shouldn't have a problem. May lose one or two, but with what you gain with the others will make it a good move anyway.
     
  5. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    i raised all my customers $3 per cut, thats $12 per month for each customer, it adds up nicely. no complaints or cancelations, matter of fact, no one even mentioned it.
     
  6. LawnLad

    LawnLad LawnSite Senior Member
    Posts: 738

    Raising prices is a natural course of business - if you don't do it, eventually you'll be giving away your serivce/product.

    Customers expect there to be some price increase over time. You may find it harder to raise prices 5% to 6% every second or third year than if you make a steady 2% increase each year.

    Ask yourself this as well - are you busy? Too busy to keep up with the demand? If you are (which I suspect is the case) than YOU'RE NOT CHARGING ENOUGH! Thin your customer list by raising prices a little bit more than you might feel comfortable with. Thin out those that are most price sensitive. They'll be the ones that occupy most of your time trying to talk you down $3 on some job. Become known for quality, not price, and you'll have all the work you want/need at the higher price. I'd rather work less and be paid more than be paid less and have to work more.
     
  7. Toatlandscape

    Toatlandscape LawnSite Member
    Posts: 69

    Thanks for all the input. I know that you are right that we all expect price increases but there is always the comfort factor. The check has always been there and I/we don't want to rock the boat. Again thanks I'll start to work on a letter. May need some help with that as well, but I'll let you know


    Lee
     
  8. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Posts: 7,547

    Just a thought, maybe only do 1/2 of them this month, and see what happens. then if it works good for you do the rest next month.
     

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