Cost of business increases everywhere

Jeff@diyokc

LawnSite Senior Member
Location
Owasso, Oklahoma
For me, the hardest hit came in the labor column. Not only has the availability of labor decreased, but so has the cost of attracting that labor. I operate in one of the most economically depressed areas of the country. Consequently, it is very difficult to increase my pricing schedule. This in turn undermines my ability to attract competent employees.

In response, I have decided to simply do what I can on my own. Most operators don't have that option available to them, but for many small ones that's the only choice, as being small has its own set of limitations relative to staff size.

I have shed my less profitable contracts and raised prices by fifty percent or more. It has been painful and it has left me unpopular with quite a few people, but it was my only recourse under the circumstances.

Our work is going to be ever more expensive to accomplish and ever less available to the public in the future as a result of forces beyond our control. The only recourse we have is to adapt and overcome. My own approach is toward exclusivity, either you can afford me or you can't. If you can't then so sorry, not my fault. If you can then you should because blah, blah, blah (enumeration of my credentials and experience). Now, more than ever it it is imperative that operators grasp the truth that all money isn't good money. If it doesn't pay the bills then let it float into someone else's nightmare. There are only twenty-four hours in a day. Hence we are all functionally living on a "fixed" income. If your only attractant is the low cost of your work then you are doomed. When your equipment wears out and your employees decide they want to go fishing instead of coming to work you'll be broke and unable to fulfill your commitments. The clients that you ate biscuits for so they could eat steaks will shed you instantly and move on to the next sucker. And you will be known as "good riddance."

I am always amused by those who brag about how many lawns they mow in a day. As if such information had any bearing upon their bottom line. They work themselves to death wearing out there equipment while sinking deeper and deeper into the morass of debt and mediocrity. Their employees are wore out and their bottom line keeps them one step a at from disaster.
I just had a similar conversation with one of my 5 year commercial contracts, one of the few I had ever kept when thumbtack was worthwhile.

we had agreed on a fall clean up of the office atrium and warehouse perimeter. The perimeter would entail a wood chipper as part of the process, and a good amount of sterilants to kill off the weeds/small trees. in the bid, I had left it open as to the chem pricing, with the verbage we would address the price increases which I anticipated would happen.

the “ this is a difficult call for me to make” call came, with me being let go for not performing the work and the exorbitant price. Normally, I would get into my polite, former field grade officer mode and thank them for the business.

instead, I opted for a “ did you read the contract?, your job is slated to begin on 11 oct, your supposed to provide me access keys to the property, and the pricing is as you signed and agreed to”.

it turns out the office manager has a son that is starting his own lawn biz, he’s cheaper. End of story and end of contract with them. In following @landscaper22 and @Greg Valentine, it’s the old let me get someone cheaper than you.
 

phasthound

LawnSite Fanatic
Location
Mt. Laurel, NJ
For me, the hardest hit came in the labor column. Not only has the availability of labor decreased, but so has the cost of attracting that labor. I operate in one of the most economically depressed areas of the country. Consequently, it is very difficult to increase my pricing schedule. This in turn undermines my ability to attract competent employees.

In response, I have decided to simply do what I can on my own. Most operators don't have that option available to them, but for many small ones that's the only choice, as being small has its own set of limitations relative to staff size.

I have shed my less profitable contracts and raised prices by fifty percent or more. It has been painful and it has left me unpopular with quite a few people, but it was my only recourse under the circumstances.

Our work is going to be ever more expensive to accomplish and ever less available to the public in the future as a result of forces beyond our control. The only recourse we have is to adapt and overcome. My own approach is toward exclusivity, either you can afford me or you can't. If you can't then so sorry, not my fault. If you can then you should because blah, blah, blah (enumeration of my credentials and experience). Now, more than ever it it is imperative that operators grasp the truth that all money isn't good money. If it doesn't pay the bills then let it float into someone else's nightmare. There are only twenty-four hours in a day. Hence we are all functionally living on a "fixed" income. If your only attractant is the low cost of your work then you are doomed. When your equipment wears out and your employees decide they want to go fishing instead of coming to work you'll be broke and unable to fulfill your commitments. The clients that you ate biscuits for so they could eat steaks will shed you instantly and move on to the next sucker. And you will be known as "good riddance."

I am always amused by those who brag about how many lawns they mow in a day. As if such information had any bearing upon their bottom line. They work themselves to death wearing out there equipment while sinking deeper and deeper into the morass of debt and mediocrity. Their employees are wore out and their bottom line keeps them one step a at from disaster.
Very well said!!
 

oqueoque

LawnSite Fanatic
Location
Jersey
Look on the bright side of higher cost. If you are already in business and have your equipment, it will be more expensive for new guys to start up businesses and the low ball prices will be higher than before.
 

oqueoque

LawnSite Fanatic
Location
Jersey
Get this- I was looking at a ferris isx 800 in May 2021 and it was listed for $6800.
2 months later I checked and it was listed for $8000!

I brought this up to the dealer and he mentioned it has nothing to do with him but price changes coming from Ferris
We hear on here, that we can't raise prices for one reason or another and we will lose business. But here is an example of a manufacturer who might lose some business, but raised prices anyway, because his cost went up.

Ferris might lose some business, but might make more money, if their profit on each mower they sell goes up.

The same thing can work for lawn care businesses who raise prices, and lose some accounts.

If there was ever a time to raise prices, it is now, because customers are having a difficult time finding businesses like ours, that are willing to take on more work, mostly due to the lack of labor.

Try raising the price on a few. Tell them your cost of doing business has increased, and see what happens. If it works raise some others.

Or raise your quotes on new business a lot, and see if customers say Ok.
 

oqueoque

LawnSite Fanatic
Location
Jersey
This is horrendous logic
I have to guess why, because you gave no explanation why. So you're saying if someone's cost to start a business increases, due to higher cost, they should continue to charge low prices, that were being charged over the last 10 years.

That might work for Mother Teresa's Lawn care, but most other people can't afford to operate a charity.
 

Crazy 4 grass

LawnSite Fanatic
Location
Minnesota
I have to guess why, because you gave no explanation why. So you're saying if someone's cost to start a business increases, due to higher cost, they should continue to charge low prices, that were being charged over the last 10 years.

That might work for Mother Teresa's Lawn care, but most other people can't afford to operate a charity.
I said nothing of the sort.

It is horrendous logic 2 be pleased that prices are higher across the board because it creates a higher barrier of entry for new people.

I could care less about the barrier to entry for new people all I care about is how much stuff costs to my company
 

Top Forums



Top