Raising Rates: Need Guidance

Discussion in 'Lawn Mowing' started by Oh Yard Boy, Jul 11, 2005.

  1. Oh Yard Boy

    Oh Yard Boy LawnSite Member
    Posts: 11

    Need some professional guidance here people. Short story ... I started part time doing plant and tree installation for my girlfriends father who has been in the business for over twenty years working with Landscape architects and Real estate companies preping homes for resale. Since I have a former background in art design and business opertations I started doing CAD and Landscape Pro designs for his customers, they loved the work and soon we had a hard time keeping up with demand. He has since retired so I have spun off my own company. Here's the problem, most of the install clients asked if I could take over their property maintenance so I did hoping to capture some reoccurring revenue and start a separate crew. New to this end of the business I often matched the service rates of the previous LCO's and in some cases lower. Most of the LCO's were Mow,Blow,& Goers so they did poor work. I provide a niche in the market and provide a total service including lawn, hedges, sprinklers, fert, trimming,etc. The work speaks for itself. Now I have more clients than I can handle and pick up 2-5 more through referrals weekly. Most of my clients are well to do and live in gated communities with small to zero lot lawns, a few are larger. The area is saturated with Mow, Blow, & Goers so the local rates are low $ 20-30 lawn cuts are the norm, so I have had to match these rates to keep the clients happy- also charging market rates for hedgework etc. I need to raise my rates at least 10% to beat the economics, how do you do it without a mass exodus of clients ?
     
  2. Precision

    Precision LawnSite Silver Member
    Posts: 2,995

    first if you are getting more clients then you can handle it shouldn't be an issue unless they are coming because of your low rate.

    My suggestion: At anniversary time send each client a letter stating that prices are being raised from x to x +10% effective on the next bill. Then you mitigate the number who are being affected at one time and can make up for any cancelations with the 2-5 you pick up per week.

    Now raising someone from $20 to 22 shouldn't create mass exodus. Unless of course your quality isn't nearly as good as you think.

    I have said it before and will undoubtedly say it again. People pay for reliability and quality. Those who don't want to pay for that should be thrown back to the scrubs they deserve and have their prices raised (double the intended raise) when they crawl back.

    Rates schmates. Charge what you are worth and let the scrub CLIENTS go.
     
  3. qps

    qps LawnSite Bronze Member
    from Indy
    Posts: 1,484

    Amen....what is it with these $20 lawns???
     
  4. KINGjosh

    KINGjosh LawnSite Senior Member
    Posts: 531


    Thats south Florida for ya!
     
  5. Mancinioldhorse

    Mancinioldhorse LawnSite Member
    Posts: 69

    how do you survive with 20 dollar cuts? Geeze..that reminds me of the little boys walking around with a gas can and a mower asking neighbors to mow their lawn for em.

    If I'm there for anywhere close to 1/2 hour its $30-35 bucks easy. anything over 10k sq feet is 140 to 200 per month. Bill your worth, if you do a great job.....they will pay it....if not they won't.
     
  6. qps

    qps LawnSite Bronze Member
    from Indy
    Posts: 1,484

    Yeah...I forget how competitive it is done there....
     
  7. kevinsky

    kevinsky LawnSite Member
    from Nevada
    Posts: 75

    Perhaps you could raise rates neighborhood by neighborhood starting now.
    On the first wave, raise the rates as you had planned. On the next wave raise rates higher if you didn't lose many and keep going up. What you might think is a large increase may not be significant to your clientele.

    If you really provide top service and the people you service can afford it, you won't lose many, and you will have weeded out the bad ones. Remember the economics here. If the demand for your service is high, then charge for it. Forget competitive rates. Charge as much as you can. Be at the top of the market! Go for it!
     
  8. Precision

    Precision LawnSite Silver Member
    Posts: 2,995

    I am also in Florida. Central Florida but Florida none the less. My minimum to do a yard with monthly service and a contract is $85 Monthly (40 one time). So just under $25 per cut. This is if it's .13 acres up to .24 acres. If you are .25 acres or larger then you pay more. You also pay more if you have any landscape I have to avoid, If I have to use a smaller mower or change mowers, lots of wacking and the like. I have one yard .25 acre yard that pays $110 monthly just for the basics (cut, wack, edge and blow) That is $31.50 per cut. I have another that gets full service and pays $240 monthly or $69 per cut and they paid the entire year in advance(no discount offered or asked for).

    The question becomes do you want a fair number of good (good paying) clients or do you want tons that pay at or BELOW market (or below PROFIT). I know which ones I take.

    So I price accordingly
     
  9. Precision

    Precision LawnSite Silver Member
    Posts: 2,995

    so did we answer your troll well enough for you Oh yard boy?
     
  10. Evergreenpros

    Evergreenpros LawnSite Bronze Member
    Posts: 1,155

    Raise rates on new customers first, those that have yet to sign up for service. See how price sensitive the market is. You may find that raising 20% won't turn anyone off, you might find you can't even pick up a new customer at all. It's best to lose a potential customer than a happy existing customer.

    Be aware of your profit, that's what it's all about. You might find raising prices 30% and losing 25% of your customers will boost your profit, it's hard to say but not uncommon.
     

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