Price Increases

Discussion in 'Business Operations' started by SprinklerGuy, Nov 25, 2001.

  1. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    Today the repairman billed 7.75 units (svc calls + labor hours) and he worked 9 hours. That's pretty good considering 175 minutes of drive time. Our valley is very spread out.

    You lost 1.25 hr of billable time or $68.75. Do that every day x 5 days and that's $343.75/wk.

    Maybe you need to restructure pricing, not raise it, or route your stuff more efficiently.

    How do you schedule those calls. You seem kinda like a go getter, gotta service them now 'cause if I don't somebody else will.

    I don't have the foggiest idea what it is like to do irrigation in your climate or geographic area, but, I have lots of pushy people wanting things now. I try to build a schedule around a large time frame to make a route. I'll give people #1 am which means we're there between 8-9 am. I give them last job, which is 3-5 pm. Other than that I tell them 8-1 or 12-5. SSHHH, sometimes 9-1 or 1-5 if I know what I'm doing and where.

    So when a call comes in I try to schedule it within the next few days on a route where I want to put it and the time of day (am/pm) where I want it. I try for an in/out or circular kinda of travel day with back and forth across multiple towns or a county a no, no.

    So if your scheduling correct, maybe a service call needs to be worth 1.25 hr including the 30 minutes of job time. So 5 stops today with an extra 15 minutes each would have billed 9 hr work for 9 hr paid.

    Still think your probably ok @$55/hr but the business process needs refinement.

    Also think you need to see

    Chuck Vander Kooi or
    Jim Huston to tune up your bidding, pricing, money controls etc.
  2. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    Paul, like I said I usually come in even or above on my daily needs therefore if I am above my daily needs by 25 per day average, that is a profit to my business of approx. 500 for that month. I have been averaging approx 100 per day over and above my needs which is a profit of around 25k per year. I would say that isn't so bad. Now, nobody knows what my salary and disbursements are either.......I get paid pretty well as I have a wife that likes to spend money. And I do too.

    I like the idea of the 8-1 and the 12-5 but here is my problem, maybe you can help. Our first is at 7am this time of year and usually from there I will tell them 9-11, 11-1, 1-3. I plan for 4 and leave room for more. I usually fill the 5th and 6th spot with stuff that is urgent from my LCO clients or whatever.

    I like to think that people appreciate our smaller gaps. How do you convince people to stick around for a 5 hour gap for something that doesn't involve their TV, power, or phone? I always get resistance for that. Perhaps you are right though, if they want it bad enough they will wait???? I used to think that I would say "am or pm", but people around here seem to balk at that.

    Foxx, are you saying that you are consistently billing as many hours as you pay? I would say good for you. Something to consider is that I may not have sold the 9 hours that my guy worked but he is a salaried employee so technically he only got paid for 8 hours!!! I generally do like you said a few responses above this and make up the gravy with parts. Are you selling parts cheaper than me? I generally sell a 1inch valve for 30 bucks and 1 inch fittings for 1.50. What about you?

    I think with 175 minutes of drive time, my scheduling could be a little better right? My problem is I am always trying to make people feel that they are being accomodated. Maybe I shouldn't. There is so much competition around here they just might find someone else. Everyone has an emergency you know?

    As for the business process needing refinement, I guess we would have to use real numbers to really tell that wouldn't we? Me just telling you that I sell a certain amount of hours doesn't really help when you don't have any idea what my O/H is and such. I would be happy to do that if this is the right place? Maybe it's not.

    As for the reason for this thread to begin with: It wasn't so much that I thought I should be making more, or I'm not making enough as it was am I leaving money on the table due to the market conditions I spelled out in the beginning. And do I try to keep myself competitive or do I go with the market and do whatever it will bear?

    What I have been leaning towards is raising the service rate by roughly 10 bucks and leaving the labor the same. If I had done that today I would have done that extra 1.25 units.

    You guys are great, this site is great, this thread is great. Thanks so much. Keep it coming if you can stand it. Thanks paul, foxx.
  3. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    A young bull & an old bull were standing on a hill over looking a pasture filled with cows. The young bull said lets run down there and screw a cow. The old bull said let's walk down and screw them all.

    Your running way too much with the 2 hr window.

    I like the idea of the 8-1 and the 12-5 but here is my problem, maybe you can help. Our first is at 7am this time of year and usually from there I will tell them 9-11, 11-1, 1-3. I plan for 4 and leave room for more. I usually fill the 5th and 6th spot with stuff that is urgent from my LCO clients or whatever.

    I like to think that people appreciate our smaller gaps. How do you convince people to stick around for a 5 hour gap for something that doesn't involve their TV, power, or phone? I always get resistance for that. Perhaps you are right though, if they want it bad enough they will wait???? I used to think that I would say "am or pm", but people around here seem to balk at that.

    My compromise to the 5 hr window is #1 am or 3-5pm. That will satisfy the most chronic ones. Once I have #1 nailed down wether or not it was officially scheduled that way, I can tell the other am's 9-1 which is 4 hr and reasonable. Same with the afternoon. You can say 12-4, if you have a 3-5 scheduled.

    If they are really tight for time and want the #1 or last job, they will wait. You gotta strap a set on and ask them to wait. Remember one of my favorite (maybe origonal) sayings, "you don't get what you don't ask for". Thats true in life, business or anything.

    Look at it this way, which would people swallow easier a 4 hr window or a price hike??? You know the answer. If you make more money and never change a thing other than a method or attitude your way ahead.

    Stop leaving spots for emergencies and refering LCOs. Fill thye day in advance. It's running you ragged and killing profits. These people can wait 24-72 hrs for a repair. You just don't ask them to. They can't and you can't afford the instant service.

    You "try to make people feel accomodated" with the 2 hr window. Hey, you answered the phone and scheduled them on the spot. That light years ahead of much of the competition right there. Anything beyond that is bad for you.

    Sounds like you maybe doing some flat rate work which bundles the repair labor and parts. If so, make your acctg stuff handle this so you know how much labor and parts were sold individually so it can be properly tracked. Then pay that whiney service guy on the "book hr" like an auto mechanic. Route yopur stuff better and maybe $$$ will sky rocket.

    You haven't promised me to do a 2 day bidding and estimating seminar with Vander Kooi or Huston .
  4. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    I like the young bull/old bull analogy...that's true in this case.

    I have always prided myself on getting there quick, perhaps it wouldn't hurt to make em wait a little.

    Just now a phone call from the other side of town,,she needs us today, I have a gap but she is far away. I will probably go. Maybe a trip charge?

    I promise to contact those guys. Also, I am going to Charlotte to see Tom Grandy. He sold me a service agreement packet and I liked it, haven't done it yet, but I liked it. He is speaking about pricing structure.

    What if I continued to pursue these people the same way that I do now, but I charged a little more, say 10 bucks for the service charge to make up the difference. I would think that would work, and then I could gradually start doing larger gaps. I just scheduled for Friday and did the day with larger gaps, my guy can route himself and less drive time.

    I guess the idea is to squeeze at least one more service call in per day with less drive time and then not have to or want to raise rates?

    What about the people who say "call me when you are on the way?" Then you call and they can't get there right away, that screws your whole route up!!

    Thanks again foxx, this is great.
  5. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    I'm a pr...k. I tell them we can't do that, but sometimes I do with certain people for certain reasons. You have to remember who's business this is and who's in charge. It ain't the customer! You push them softly, don't let them push you. Customers need to be lead, just like employees to get the right results. Like I said, you don't get what you don't ask for.

    Other thing is, you gotta lie a little and tell them what they want to hear but in a way that doesn't hurt you. If you have to call them, because a few you will, you call them early from the previous stop, not when your finished, and still make them wait.

    People need to be told, so that they understand, that to be fairly priced and give prompt , effective service you must be organized.

    I'm not against needed price increases, but your not as efficient as you could be.

    So what was the emergency that needed attention now?
  6. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    I'm afraid you might be right about the efficiency.

    The emergencies are all the same, somebody thinks its a big deal because of a leak or whatever, never as bad as they think.

    You are right about making them wait. I think I will try to institute this 4 hour gap thing and see what happens. Now is the time to do it as it is slower than the whole rest of the year. Maybe I can learn to be a pr...k too.

    If i can squeeze one more stop in per day, not only will I not need to raise prices, which I hate to do, but I won't need to add a guy like I thought.

    I am in a tweener zone where 2 or 3 days per week I could use another guy but not the others. I need to make a serious push to expand to that other guy or get off the pot a little.

    What hurts the most is that brand new van, fully equipped and stocked, sitting in my front yard where I have to see it every morning every evening and all weekend, just sitting........

    thanks foxx, I hope there is something I can help you with swing maybe? Are you going to charlotte?
  7. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    management conference or a basketball game?

    Is the new truck sitting all the time or just some days?

    How about using a swing man between installs and service for now? Either a man you have or hire a new.

    You need to more critically define an emergency. For me it's when water won't shut off and the customer doesn't know how. Or maybe it's when new turf is being put down and the system won't work or the contractor broke the main.

    So are you doing many/any repairs flat rate for labor and materials? The idea has fascinated me for years and I've done a little prelim work but not executed yet.

    And what has happened to the service agreement/contract thing. I need to get more dollars out of existing customers. Too many ignore, use the lawn guy, do themselves (ineptly) or whatever. As the systems get older I feel they need at lest one annual visit other than for us to winterize them.

    I guess I need to follow my own advice and ask them for more and explain the importance of why they need a pro more than once per year.
  8. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    Charlotte NC for the lawn and landscape management seminar, email me for info.

    The van sits EVERY DAY

    I have been kicking the idea of a swing type man for quite a while. What I really need is a guy who doesnt' mind throwin' the pick and shovel, can work alone on simple repairs, and can help the large crew when necessary. Wish that cloning idea would hurry up....

    My only hispanic employee would be perfect for this if he would get a driver's license. Maybe he can't, I dont know, I have told him 2 bucks an hour raise if he did. Then he could run the big crew by himself if necessary and the crew leader/foreman white guy could drive the other van and do repairs when necessary and become more help to me.

    Or, I could hire a guy and inch him up the ladder while he learns.. That's why the van is sitting, the last guy like that decided it was too much hard work......

    We don't do many repairs in lump sum, but when we go to a house and reallize they need a timer we tell them it will be.....this much money parts and labor included and then that's what we charge. Also, if the manifold needs to be replaced we tell them the same thing with a window....say 400-500 and then just charge them a lump. My reasons for this are many:

    1: If I say 400-500 and it ends up being 325 on an hourly basis I usually charge 400. I feel that if they agree to the gap, I should at least get paid the lower of the two. If I go over, I only charge the higher of the two. It's only fair

    1. Sales tax, if I lump it together I technically do not have to charge sales tax. I started doing it this way back when I used to do the sales tax forms myself. Now someone else does them and old habits die hard. Makes life easier when writing those TPT checks though.

    As for the service agreements, I hope to finalize my offering by January 31st in time to catch the snowbird/winter visitors before they go and get one visit in under my belt.

    My plan is to offer the agreement and tell them it will cost roughly 150-225 per year for 3 guaranteed "tuneup" visits. They will have to let me tuneup their property at full price first. When I make this first visit I will tell them this. Then when finished with the initial visit I will give them the bill and offer to knock half of it off if they sign the agreement for service. Then they will receive 2 more visits for free. anything in between they will save the service fee, a great savings, and only pay labor and parts. How does that sound?
  9. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    The agreement doesn't sound good but I'm sure it's not coming across right.

    Sounds like you gonna bill them T&M 1st trip (and make everything right they might need) and if they sign up, cut this bill in half. I addition to cutting the bill in 1/2, you'll come out 2 more times and just charge of OJT and parts. 1/2 min of OJT???

    I kinda want to do a regular spring start up and winterization then a July/Aug visit when it is slower as a check up ( charge about 1/2 time-$28), repair labor & parts additional. This would be a $28 savings over our min. $56 to come out and check out the system.
  10. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    No....sorry this damn keyboard

    Let's say the initial visit would normally cost them 110.00

    Let's say that their property for the normal service agreement would be 185 for 3 visits. (basically getting them to prepay for 3 service calls right?)

    Now what we would do is tell them if they want the service agreement for 185 we will apply 1/2 of the initial tuneup visit that would have cost them 110 to the annual agreement.

    This would result in: Instead of paying me 110 and letting me leave they would pay me 55 + 185 for a total of 240. Then I would come 2 more times for the life of the agreement.

    This would save them money on the initial tuneup and provide them with two more visits hence peace of mind.

    make sense?

    This way I clean up the system, get paid in advance for the next two visits and they should be easy. Every year should stay easy if we do the job right

    Also, if a valve fails or they get a leak anytime during the agreement, they will pay me for my parts and labor but save the trip charge or service charge and I will fix it as I can fit it in to my schedule with a guarantee that I will do it within 48 hours.

    My loss is only the service call fee on any of those "extra visits" but I will have their money up front which should improve cash flow.

    I think this will work best if I have ALOT of them.

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