Long time customers and price increases

Discussion in 'Business Operations' started by dmk395, Mar 4, 2011.

  1. dmk395

    dmk395 LawnSite Bronze Member
    from Ma
    Messages: 1,006

    I have a 3 man operation, been in business for almost 15 yrs. I have quite a few clients who have been with me for 7+ years. Some lawn mowing jobs are still at 2003 numbers. Nonetheless I'm still doing well with these accounts. I usually don't raise prices until I absolutely have too, when looking at my margins, and here is why. I have a lot of $40 lawns. Takes 2 men 20 minutes each to complete. I can clear $800 with my 2 man mowing crew with lawns like these in 8-9 hrs no problem. Margin still seems good. However am I making a mistake by not going up a few bucks? I don't have so many accounts I need to hire more people, and figure I can really only lose by doing this. New accounts are priced more in line of course, and the ones that are a PITA are put at a premium. Just wondering what some of you others do in these situations?
  2. MLI

    MLI LawnSite Senior Member
    from Ma
    Messages: 464

    In a economy like this.....if your making money on the accounts, I dont see the point of losing any customers over a few dollar increase. People are shopping for better deals, and theres a ton of guys willing to work cheap. Different story if the accounts are breaking even or losing you money. As far as gas going up.....I might adjust prices when it goes over $4.00
  3. dmk395

    dmk395 LawnSite Bronze Member
    from Ma
    Messages: 1,006

    That's kinda my thinking at this point.
  4. 1MajorTom

    1MajorTom Former Moderator
    Messages: 6,073

    This is a question we think about every year. This is our 13th yr in business, and like you, we have a lot of long time customers, 7, 8, 9 and even 10 year customers. And I've read plenty of threads where people say, "you must raise prices every year."
    Well the way I look at it, AT SOME POINT, a customer is gonna be maxed out on price increases. A lawn that started at $40, if you have the customer for 10 years, and only raise his price 2 bucks a season, that same lawn is gonna now be 60 bucks. At some point, the customer is gonna balk, and say, "hit the road jack." SOOOOOOOO, we do not raise prices every year on every customer. We raise customers who have been with a couple of years... But on those special long time customers, you have to think outside of the box.
    Where else, can you maybe "hide" the increase"? Maybe on a spring or fall cleanup? An aeration. Mulch. Hedge trimming maybe??? It's easier to raise your price on an extra service, then it is on a weekly cutting.

    OOPS... I hit preview, then I went back and re-read your post (sorry), i missed the part where you said you haven't raised some since 2003.... Oh ya, for sure, you can get away with a price increase this year. Obviously the customer is gonna expect an increase sometime. And especially if they are happy with your service, I do not see a long time customer quitting over a couple of bucks. I wish we had your "problem". No doubt we would be raising prices after 7 years if those were our customers. Our problem is different, we have raised prices so much, that a lot of clientele seems to be maxed out. Now we need to find creative ways to hide the increase.
  5. HBLandscaping

    HBLandscaping LawnSite Senior Member
    Messages: 268

    I haven't raised my prices in 6 yrs. Last year I did do to gas, I did add a fuel surcharge when gas went over $4.00 which I have in my contracts for this year because you can see that $4 gas here by fri (around here). I don't raise my price every year because just like me, my customers are hard up for money also, I'd rather keep my prices the same which keeps that customer then to raise te price and lose that customer. I do add a few dollars on here and there on extra services to make up for the lower mowing price. You can't add $$ every year for mowing, if everyone did them a 1/2 acre lawn would go for $100 a mow within a few years and you'd have no clients.
  6. kilgoja

    kilgoja LawnSite Senior Member
    Messages: 944

    i'm just kindof starting out...this is my first full season giving it a go...i'm pricing things pretty much at the max of what people are willing to pay...$40 for a 1/3 acre yard and $50 for 1/2 acre......i really don't see giving a price increase anytime soon...some people think i'm too high now.....there is a limit on what people are willing to pay...people know the $25 a yard guys aren't as good so they don't want to hire them...but if you get up to like $65 people are gonna look elsewhere
  7. ncknaklawns

    ncknaklawns LawnSite Senior Member
    from NY
    Messages: 379

    I do pretty close to a perfect job on my properties. It takes about 25 minutes to do 1/3 acre as a solo. If I charged $40 for that I'd easily be in the $80 /hr range and be bringin in $80K for 9 months . I must not be charging enough.

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