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at what what point do you change your buisness model

Discussion in 'General Industry Discussions' started by jeffex, Jun 18, 2008.

  1. jeffex

    jeffex LawnSite Bronze Member
    Messages: 1,933

    What will be the tip off point for your to change your current business pricing , equipment application , employees yes/no , diversification of services. I will first try and recover my fuel costs in a $1 incriments as gas hits $5 per gal $6 ... $7...$8 . At some point I may have to make a shift in my plan when customrs begin to drop off. The alternative for me is NOT to change but to service the ones whao can afford to pay and drop the rest. gas wil have to be $10 a gal before electric mowers will be the alternative IMO. At that time everything we knew about lawns per hour and productivity will be re set. some people have a long way to go in dropping or decreasong costs. Smaller vehicle and mowers that reduce fuel costs are next for some but my fuel costs are mimimal for each lawn still.
  2. Az Gardener

    Az Gardener LawnSite Gold Member
    Messages: 3,899

    I had hoped to possibly lower my hourly rate for my biggest clients when I was able to fill the 3rd route completely. I am anxious to attract some bigger residential accounts at my current rates I am usually out of the price range of what most homeowners are willing to pay. I really can't afford to charge less until I have the benefit of volume working for me, That wont happen until I have 3 full crews working 40 hrs a week.

    I am not sure if this will be possible with the increasing costs which are just beginning with fuel and fertilizer. I am curious what the low ballers and other competitors are going to do price wise.

    I will probably "stay the course" until the election then see how things are shaking out.
  3. jeffex

    jeffex LawnSite Bronze Member
    Messages: 1,933

    Math is your friend and enemy in any business. The numbers don't lie. I believe many business' are absorbing the increase in their costs hoping something will give with fuel and energy costs. Sooner or later the pressure to raise prices will push them to pass the increases on to the customer. Inflation! The biggest difference from now to the oil embargo of the 70's is that at $4 a gal. there are still no shortages or rationing. I can look at what it costs me to cut a lawn and see the math of price - costs = profit. There have been many threads about knowing your costs but no time like the present to take a closer look at them. The real question is where do our customers both residential and commercial place our services on their list of importance. I think my customers will welcome $1 increases because their perception from all the media hype is the sky is falling. They will gladly eat a few bucks since that will seem cheap in comparison to what they paid to fill their tank. How many will look at travel time in a new way to determine a price to a new prospect? I believe the tipping point will be $10 a gal and at that point our economy will be crippled and cutting the lawn will be the last thing people are worried about.

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