Should I raise my prices?

Discussion in 'Lawn Mowing' started by billc, May 20, 2004.

  1. billc

    billc LawnSite Member
    Posts: 119

    In a way, this is a dumb question. I mean, if I'm losing money, shouldn't I stop bleeding and raise my rates?

    This is our first year in biz, and after about 6 weeks I realize I have grossly underbid several of my accounts. As I get ready to send out May's bills, I'm thinking of including a letter to some of my accounts saying I need to raise their rates.

    What do you all do when you realize you're losing money? Do you make a change ASAP or bite the bullet until next year's contract?

    Thanks!!
     
  2. 1brilord

    1brilord LawnSite Member
    Posts: 17

    How much did you under bid them. If you raise your prices you can plan on losing a good amount of customers. You are not necassarily losing money you are just not making as much as you want. The amount of money you can lose from losing one customer is a lot more than the money you can gain from raising your prices a little bit. Thats just been my experience. Go with your instinct.

    Good Luck!
     
  3. Prot1

    Prot1 LawnSite Member
    Posts: 64

    First of all i wouldnt feel to bad. I think the majority of us made the same mistake our first year in business. I would suggest you bite the bullet and make the increase next spring.
     
  4. DennisF

    DennisF LawnSite Bronze Member
    from Florida
    Posts: 1,381

    Everyone in this business has underbid accounts at one time or another. Don't feel bad about it, but do learn from it. If you signed a contract with the customer you are probably stuck with the price you quoted. You might try talking face to face with the customer rather than using a letter to state your intentions. Sometimes you can convince people that you made a mistake on bidding and they will agree to alter the contract. Other times you don't get the needed response and are stuck unless you can get them to fire you (not a good thing to try) and let you out of the contract. If you can convince them that the price needs to be changed make sure you treat those customers in a special way and take very good care of their lawns. Those are the truly loyal customers that you need to build your business on.
     
  5. Mdirrigation

    Mdirrigation LawnSite Silver Member
    Posts: 2,754

    Reverse the situation ask yourself what would you do if someone quoted you a price to do work and then asked for more money? .
     
  6. specialtylc

    specialtylc LawnSite Bronze Member
    Posts: 1,656

    You cant raise them now. If you are losing money, just drop them.
     
  7. Coumbe

    Coumbe LawnSite Senior Member
    Posts: 270

    are you losing $$$ or not making as much as you would like to?
     
  8. PMLAWN

    PMLAWN LawnSite Gold Member
    Posts: 3,535

    With gas going up you might try the gas surcharge story to get a little more, but other than that count it up to learning.
     
  9. tiedeman

    tiedeman LawnSite Fanatic
    from earth
    Posts: 8,745

    I rasied my prices..I think customers understand with the recent gas increase
     
  10. CMerLand

    CMerLand LawnSite Senior Member
    Posts: 393

    Question for those of the bite the bullet persuasion and those who'll raise their prices next year. If they arent going to accept the higher price now, why would they everrrrrrr accept it next year????

    Heres a riddle for you.

    Lets say you have a five gallon bucket and have a 60 gallon tank to fill. But theres a problem. You see theres a hole in your bucket that leaks two gallons of water from the time you fill it, to the time you dump it in the tank. So for every trip you make, by the time you get back you only have 3 gallons left in your bucket.

    Now how many of you are just gonna look at that bucket and say, "Oh well, guess I gotta do what I gotta do" and walk back and forth the 20 times it takes to fill the tank, pissing and moaning about all the water running all over your pants and into your boots.

    Now how many of you are gonna say, " Well, hell, if I run fast enough, I'll only lose 1 gallon each trip and I'll get that tank filled in only 15 trips. Sure, I'll be more tired, but I get to make 5 less trips and got it filled all the same.

    As for me? Well, call me crazy but I think I'd fix the bucket as soon as I saw it leaking. Then I could fill that tank in just 12 trips, havent worn out my boots from all that running back and forth and go home high and dry with a smile on my face.

    The sad truth of this industry, is that there are far to many of the first and second persusions out there. The first ones are only in business a few years then get out, saying there was no money in the business, leaving behind a list of customers who are use to paying his too low price and look at me crosseyed when I give them my quote.

    The second guys, well, theyre damn hard workers. They may last a good long while cause they are always soooooo busy. The run and run and run thinking that profitability is just another job or two away. The only problem is when they get older and cant run as fast, its only then they realize that although they always had money in their pockets and paid there bills on time, there was never enough money to put away for retirement or health insurance or to buy new equipment on a regular basis. Even worse, they realize all those weekends they worked, dinners they missed, kids baseball games and school nights, they didnt see cause they had to work or the wife that left him because he was never home are gone forever.

    The last group, well hell, they're called businessmen and understand that the only reason to take all the risk and all the responsibility and aggravation this business offers, is to make a profit. And if you arent making a profit, then you might as well go get a job where at least you'll get paid for every hour that you work.

    CMerLand
     

Share This Page