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account renewal question

Discussion in 'Business Operations' started by jsf343, Mar 1, 2007.

  1. jsf343

    jsf343 LawnSite Bronze Member
    Messages: 1,786

    those of you with a lot of commercial experience I have a question for you. I am relatively new to the commercial side of things, I bought out another lco last year and he had about 5 big commercial accounts. Most are getting close to the renewal stage and I want to be quick and proactive and get them signed back up with us again. My question is this... Generally how much do you feel comfortable raising the price when it comes to renewals? I have a car dealership that we do that pays about $700.00 a month, do you just go for a standard 10%, 15%, 20% increase? I do NOT want to loose these guys and want to be reasonable. Keep in mind I am talking only big commercial accounts not residential.


  2. ACEMowing

    ACEMowing LawnSite Member
    Messages: 93

    Personally, I'd be nervous on anything over 10%... if it was one of my bread-and-butter / base accounts and I was keeping a decent margin, I probably wouldn't raise them at all.
  3. jsf343

    jsf343 LawnSite Bronze Member
    Messages: 1,786

    I was thinking the same.
  4. nlminc

    nlminc LawnSite Bronze Member
    from GA
    Messages: 1,671

    I've been taking care of a high end auto dealership for 3 years and charge them $700/month. I make extras on annuals/ pine straw and irrigation work not included in the monthly fee. I was thinking about raising my fee this year. In January, I received a call from the "new" GM of the dealership. He wanted a bid from me to see where my pricing was at. I found out thru the service manager who is my main contact that the new GM was bidding out all of the venders looking to save money. He had a company from one of their other lots bid and their price was $300.00 a month less than mine!! I was in shock. There's no way! I came down about 30-40 /month when I took on the job 3 years ago! They always told me I've been the best company they've ever had. Employees want me to work on their properties!

    Before I knew what this other company had bid....I asked the GM if I could bid on the other lot also........he said sure. I came in at $425/month and the other company was $400.00 on that one also! I'm $25.00 off on that lot and on the lot that is almost 2x the size(the one I care for) he's the same price..$400.00. Goes to show you this other guy has no clue.

    So far I'm still there! I've pointed out how I go out of my way to take care of them.....the service manager has spoken up for me also. They call, I'm there.. same day! They drove cars on the lawn to show.....busting irrigation valves and flooding the lot! Who's there within an hour of their call for the repair! ;-) Go in on Sundays to do the leaves not to disturb their customers and employees with the mess and noise.

    Sorry I've hyjacked this thread.....just made me think of my situation. I think auto dealerships are feeling the pinch so if you don't have to raise your rate then don't do it.

    Seems like our industry makes one step forward every 5 years the other years we are going backwards! Prices haven't kept up with inflation.....you have to really run a tight ship nowadays.
  5. jsf343

    jsf343 LawnSite Bronze Member
    Messages: 1,786

    I agree, and its sad isn't it? prices keep going up on everything but when you try to pass that on you get Joe lowballer who will do it for x amount cheaper. Then you ask yourself how the heck he does it because you are already running as cheap as possible. Frustrating.
  6. jsf343

    jsf343 LawnSite Bronze Member
    Messages: 1,786

    any other opinions?
  7. salandscape

    salandscape LawnSite Member
    Messages: 168

    Run your 2007 numbers and see if the pricing from last year will cover these and these profit margin you are looking to acheive. Without knowing your numbers you are just taking stabs in the dark, and hoping to make money. Being relatively new this is the best time to get a handle on the finacial side of the business, don't let this go any longer! Winter is the time to work on your business! Although you should spend all year working on it as opposed to in it, which is easier said then done!
  8. Bigwhop

    Bigwhop LawnSite Member
    Messages: 3

    I would determine how efficient you are on the job, I usally raise between 3 and 9 percent depending on the account. Think of the following:

    Fuel Costs
    Future Enhancements ( how many will you get )
    Wear and Tear of your machines

    Relationship, this is one of your most important. You need to let your client know that by putting you in a bid war with another company and driving the price down he's only hurting himself, because when he drives the price down he dosent understand he's also driving the service down.You need to be able to have these conversations with your clients and dont be afraid to be honest and ask for the business. I deal with alot a HOA's, but with my dealerships and banks I always try to get them to understand curb appeal and that the landscape is a reflection of the business.

    Hope this helps

    HOOLIE LawnSite Gold Member
    Messages: 3,981

    One way to look at it, from the customer's perspective, is a residential customer hires you because they 'want' to, whereas a commercial account hires you because they 'need' to....whenever it becomes a 'need' price becomes a big factor. If you really feel you need to raise your prices then you need to do so, but if you are already making a nice profit on it then maybe you might want to keep it the same, even though a small increase would be justifiable. Because you know someone will underbid you, if you give the customer a reason to seek other bids.

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