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Company is bigger and I'm a little wiser- can we change prices mid season?

Discussion in 'Business Operations' started by Right Touch, May 25, 2009.

  1. Right Touch

    Right Touch LawnSite Senior Member
    Messages: 382

    Ok, so anyone who has read my threads knows my company has gone from just me to a couple crews in the past two years. Along with that has come ALOT of trial and error. I took on a handful of mowing contracts two years ago for the sake of building accounts. Soon after I stopped mowing the lawns every day because I had a crew doing it. This spring I have been putting in extra hours myself to help the lawn crew stay caught up with their lawns due to spring growth and alot of rain. There are some lawns that we mow that now I am sitting on my rider thinking to myself, "wow, Im really not making anything on this lawn for the time its taking". Now I know there are a million threads about mowing not being profitable, but there is a margin on it, though I think we've all taken a lawn or two in our day because the person was a friend of the family or the wife was just really hot... so is there any morally and legally correct way to say, "hey listen, I know we've cut your lawn for $35 for the past two years, but recent review of the time and fuel it takes to mow your lawn shows that your price does not work with our margins." there is a clause in my agreements (which are signed by every customer every year) that says prices and terms can change at any time, but it just doesnt seem right to do it. Do I just suck it up one more year, chalk it up to experience, and make the necessary adjustments next year? Currently I have to turn down new customers because we have so many, but weeding out the lower profit ones is something I wanna do because its killing me to mow a lawn for like $2 a week profit! And I know it takes longer to cut in the spring and it kinda evens out in the summer, but then thats another thing- people complain when you cut if they think it "doesnt need it" and think you should charge them less when it takes you less time, but then I always say, "i dont charge you more in the spring when its a foot long!" sorry that was just a rant and vent... this site seems to be a good place for that.

    DLAWNS LawnSite Fanatic
    Messages: 5,780

    I would say let it ride until next season. Do you get upsells from any of these lawns that you're not making much on? If not then maybe you should give them increase because you aren't making anything on them. Either way I would probably ride out the year and then reevaluate. Hope that helped a little bit.
  3. Woody82986

    Woody82986 LawnSite Silver Member
    from DFW, TX
    Messages: 2,128

    If you are full up and still getting new calls... Put estimates in on the new calls at your newly adjusted and higher rate. If they go for it, then call up the absolute bottom of the barrel client you have and let them know you will have to raise their price as well. If they bite, then find a way to get both the old client and the new client taken care of. If they don't bite, then you replaced a lawn you made next to nothing on with a lawn that you are turning a decent profit on...
  4. whoopassonthebluegrass

    whoopassonthebluegrass LawnSite Platinum Member
    Messages: 4,305

    This is dead on. Get the better account #1. THEN raise your price on someone you could do without. You're protected with your contract, and there's nothing immoral about NOT doing work at cost. You're a business, not a charity.
  5. Right Touch

    Right Touch LawnSite Senior Member
    Messages: 382

    thats kinda what my mind set is. Im getting all these calls now because people see the quality of work we do and im thinkin i could bump it up a couple bucks cause i dont really need the accounts. I dont want to start putting the idea out there that we are the expensive company. It's just such a strange business- i can get $35-$40 a cut for a small 5,000 square foot detailed lawn, but only $40-$45 for some of our lawns that are almost an acre. I know its a time thing, but it seems as the lawns get larger, the less money people wanna pay. So its really the larger lawns that are the problem. As i was growing, I took them for that "wow i have big lawns" feeling that somehow you feel will give you the look of a big company, but really the margins are lower. Alot of guys in my area ARE cutting those large lawns for that price so to me it seems like they either arent good business men and not watching their margins, or im doing something wrong. But then I was in the mower shop the other day and some older lady came in to buy a push mower to do detail on her acre property and she asked the guy behind the counter what the going rate was for an acre if she were to hire someone and he said around $65. So it makes me feel like im getting hosed on these larger accounts but if I told someone $65 for an acre, they'd find someone else for $40- and I live in an area with some wealthy people... but you do have a point about selling other services to these larger accounts- there is just no direct corrolation to that though. We have a few 2,000 square foot $30 lawns that have spent over $20,000 a year in upgrades- so i guess its just a matter of looking at each lawn individually. I think a polite phone call to discuss it with the customer may be the best way to go- after all, we are all human. Though there are a couple customers I wouldnt mind just sending a letter bumping their price and telling them to go screw themselves if they dont wanna pay :laugh:

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