Surcharge Surcharge Surcharge

Discussion in 'Lawn Mowing' started by jpmako, Sep 2, 2005.

  1. jpmako

    jpmako LawnSite Senior Member
    Posts: 593

    I have been reading all of these posts about fuel prices and the ongoing debate of fuel surcharges. I have come to the conclusion that in my area It won't fly. I have recently picked up 4 clients because some other LCO has added a fuel surcharge in the form of a percentage on the bill.

    I have talked to many friends in the industry regarding the matter, Some are doing it and some not. For my company I think the best route to take is not adding a fuel surcharge that fluctuates with rising and falling costs such as that of fuel. I have read a few posts that contain letters to clients stating that there is going to be an increase due to fuel and if/ when fuel prices drop so will the bill? ;) What is that? Well here is the answer not good business practice. Why not instead raise prices across the board?

    Here is how I am dealing with it so far.
    1. Soon we will be performing aeration/ overseeding.
    my method for pricing aeration has been the same as monthly rate for grass cutting. so lets for argument sake say $150.00 then Overseed at $2.00 per pound.
    I have increased this service by adding another $37.50 to the aeration price and have increased the price per pound of seed to $3.50
    So the average price per yard has increased from roughly $170.00 to approx $257.50 that is based on 20 Lbs of seed.

    2. Fall Clean-up pricing
    Average Fall Clean-up $250.00
    Debris Removal $75.00

    New Prices
    Average Fall Clean-up $300.00
    Minimum Debris removal Price $125.00

    Average increase per client $187.50

    That for sure more than covers the fuel increase payup .

    Then there is the cost for cutting grass next season.
    I am going to raise most of my clients by roughly 7%

    Here is my clause for rate increases.

    A.) This agreement shall become effective beginning on the date of acceptance and shall continue for a period of twelve consecutive months until one year from the date of acceptance has been reached. Upon its completion, this agreement will automatically renew for an additional one-year commitment, and shall continue to automatically renew after each completion until it is terminated in writing. The rates for grounds maintenance services are seasonal and are subject to increase at anytime without notice.

    Just thought I would share,

  2. daveintoledo

    daveintoledo LawnSite Silver Member
    Posts: 2,587

    i have a contract with all my clients to cut for x amount, with no clause for changes..thats my fault, i went through the numbers agian last night and my profit margin is large enought to handle a gas crisis for now....

    but i will be charging more for fall cleanups, not from existing customers but from those i will receive from new batch of fall special flyers... just charge a bit more for leaf removal and gutter cleaning...

    but my next contract may be more open to unforseen circumstances...
  3. Remsen1

    Remsen1 LawnSite Bronze Member
    Posts: 1,020

    I too, think that "fuel surcharge" is a cop-out. I feel that a customer, or evenmyself would be pissed if we saw "we are raising your price $x because of fuel" when $x= more than the increased fuel price. I get pizzed when I see other similar increases when I know the increase exceeds the increased expense, especially knowing that if the expense decreases, my bill won't decrease. I would rather have somebody tell me, "this is a periodic price adjustment", or some other general reason than something specific that I can say "ah ha! you're full of crap!" It is also insulting to one's intelligence.

    "We have raised the price for your <<10 minute>> lawn by $5 because of the increased price of fuel. Sorry for the inconvenience, but our hand was forced."

    That kinda shtuff pizzes me off just as much as the gas prices going up $1 in one week. People are profiting from a disaster to humanity. Do you think the gas prices increased proportional the fact that the disaster happened right befor Labor day weekend? I DO!
  4. befnme

    befnme LawnSite Bronze Member
    Posts: 1,413

    check out this thread i think the same thing.
  5. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    To me a regular customer is GOLD and I brag off my mouth how they are so special so NOW is the time to SHOW them what exactly it means to be MY regular customer - I am NOT raising prices on the grass-cut and will carry them through the season at current prices BUT:

    Yes, my core aeration / fert / seed/ lime is going to be likely 10-15 dollars more for the smaller yards, 20-30 more for larger... I was reading your increase, you think 170-to-260 might be a bit rough? But I think most will handle a 170 to 200, just a thought but I am with you on this, lets be smart and do what we have to do instead of playing the cop-out game and making the customer PAY for us to be able to continue a gas-hog's standard of living while everyone suffers that is NOT fair!

    For leaves, there will likely be a MINOR increase on the TOTAL to cover for gas but it is a TOTAL increase and NOT by the hour because MOST of the gas is consumed by the truck, the blower burns very little in comparison so a one-time fee takes care of it. I've spoken to several of my customers and most are VERY happy the grass-cut fee stays the same and said they had no problem with leaves being a LITTLE bit extra this year.

    That's for regular customers...

    As far as new or one-time customers, well charlie I am sorry but new customers ALWAYS eat new prices FIRST and FOREMOST so as to help absorb the impact on my regulars. SHOULD they decide to become regulars AT the new price, their price settles at that point and stays this way for several years while OTHER new customers get it throughout this time.

    So you see, being a regular customer in my business PROTECTS you from sudden inflation but there is one more thing:

    Those customers at the Bottom of the barrel (those paying the LEAST) will see a 5-dollar increase next year but they will be ASKED to consider this before the season is over so they have time to think about it, and this comprises maybe 10 percent of my regulars, and that's 5 bucks each for them and between ALL of the above I can not see why it shouldn't absorb the fuel issue, unless we run out.
  6. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    Yes that's my attitude exactly, about a few other adjustments I am making include the fact (and I tell the customer) that I will likely play it MUCH more by ear than I used to, meaning I will no longer drive by sometimes just to SEE if it needs cutting (don't laugh, it doesn't ALWAYS grow the same) so I ask most of my customers to CALL me now if it gets out of hand and then that is a mutually beneficial relationship saves us BOTH money, see?

    Now THAT puts a bigger smile on THEIR face than any of this baloney cry-me-a-river over the price of fuel is when THEY see that I am taking steps to help them and yes, of course they want to help me in return, it is obvious to them I am not just trying to get extra cash out of them.

    I mean, neither one of my cars has MOVED since Monday, the ONLY time I go anywhere now is when I HAVE to do something and this saves fuel also, just remember every gallon saved = 4 dollars and suddenly it becomes easy especially if you enjoy running a semi-leaded 95.2 octane purple fuel in your equipment :)

    oh p.s.: yeah I think the whole thing was influenced not just lately but over the past 5-10 years, maybe longer.
  7. Green-Pro

    Green-Pro LawnSite Bronze Member
    Posts: 1,420

    Great point Jason, I also feel it to be a negative business practice to add a surcharge, like you I have incrementaly raised my prices on other services I provide including core aeration and fert/squirt.

    All you need to do to see the negative effect of surcharges/higher gas prices is be at a gas station, any gas station, and just listen.

    Thanks for the breath of fresh air post

  8. befnme

    befnme LawnSite Bronze Member
    Posts: 1,413

    5.00 Raise Across The Board.that Way I Can Keep My Hourly Billing Rate The Same.
  9. drmiller100

    drmiller100 LawnSite Senior Member
    Posts: 562

    i'm working on becoming more efficient. my labor is STILL a much bigger cost then fuel.
  10. ed2hess

    ed2hess LawnSite Fanatic
    Posts: 13,206

    Yes you correct on this point I don't understand people indicating fuel cost is a major expense. If fuel is the most significant expense then they better start looking at how to conserve or they won't be competitive next year when it is time to sign up customers.

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