Rate increase?

Discussion in 'Pesticide & Herbicide Application' started by Landgreen, Jan 8, 2013.

  1. rcreech

    rcreech Sponsor
    Male, from OHIO
    Messages: 6,163

    Totally agree!
    Just like someone said...we r not the only game in town.
    I consider our program and quality the best around.
    But guess what if my competitors use the same products at the same time and do detailed work I am no better.
    It comes down to density or customers, volume discounts and being effecient.
    Take care of who pays the bills...and never take advantage of them.
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  2. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Messages: 4,988

    I might raise existing companies every 3-4 years a little depending on cost.

    If I need new prices I implement them on new customers.

    If you are raising prices every year you aren't charging enough to start with. We hear about lowball era in mowing all the time!
  3. ringahding

    ringahding LawnSite Senior Member
    Messages: 611

    The question I would/do ask myself every year is: If I keep the same rate as last year, will I make a profit with that same rate this year?

    Whatever your answer is will help with your decision.
  4. rcreech

    rcreech Sponsor
    Male, from OHIO
    Messages: 6,163

    I understand that thinking.

    But honestly ur margins may get smaller per customer.

    It isn't can I make what I made last year...but can I be happy with what I make on this customer and grow my business enough to make up for the lower margin.

    Just using that as an example

    Case n point

    There are very few buisness's today with the same profit margins they had say n the last 2-10 years.

    Margins are realistically getting smaller in every business you just have to manage it.

    Luckily our margins have been very stable.
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  5. ringahding

    ringahding LawnSite Senior Member
    Messages: 611

    It is tricky for various markets. And yes margins get smaller as the years go by. If you are continuously growing every year, passing the buck to new customers is not out of the question.

    Example: Let's say you have maxed out rate increases with current clients. What would you think an increase for a current client would look like if you could do increase it?
    If you are charging them $35 per week for lawn mowing, would their rate increase look like this $37.50. That is what you would charge new clients.
  6. jc1

    jc1 LawnSite Silver Member
    Messages: 2,157

    Again fertilization and lawn cutting are two different animals trying to compare pricing strategy is difficult.
    How many lawn mowing company's are pricing against national or regional mowing company's that have thousands of customers?
    It is better to increase the number of services provided to a customer than to keep inching the price on the single service you are providing to them.
  7. rcreech

    rcreech Sponsor
    Male, from OHIO
    Messages: 6,163

    If I was mowing I would have a $100 minimum just so I wouldn't get any work.

    I agree this Is a pesticide forum.

    I don't even mow my own lawn.
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  8. ringahding

    ringahding LawnSite Senior Member
    Messages: 611

    I agree and can see this is not a Lawn Mowing Discussion, hence that was an "Example".

    But I suppose if i were charging applications @ a Per Square Foot Dollar Amount Rate, I would use my previous post "Example" when retaining new clients.


    If I am charging $45 per application up to 10k sq. ft for "Example", I would consider making it $46 per app for new clients and keep current customers @ the same rate, since I am assuming(according to the poster, rates have been maxed out for current clients)you are still able to make a profit.

    Adding $1 per sq ft or more could possibly cover any new over-head(Fertilizer Prices included)you may need recoup.
  9. Landgreen

    Landgreen LawnSite Senior Member
    Messages: 254

    Thank you for all the replies

    Yep. I never wanted to raise prices based on fuel since price per gallon was so volatile. A surcharge allowed us to adjust for that volatility but now it is always on an invoice. Fuel has stayed high for so long that it should be incorporated in the the ap price.

    I agree that a price increase needs to be sold. The customer expects some sort of justification. That will be explained in our spring newsletter. Probably include a mention of business expenses and cost of living but also our changes we have made to better our program. With the wild weather, crabgrass seems to be an added expense and our customers expect it to be controlled no matter what.

    I'm impressed you have found a source for fert that has not raised their prices. Our price of granular has gone up 25%.

    You may also want to look at expenses outside of your business expenses. Cost of living is skyrocketing. I don't mind paying myself more to cover that and certainly never considered greed to be a factor.

    Customer loyalty at its finest. :rolleyes:
  10. jc1

    jc1 LawnSite Silver Member
    Messages: 2,157

    If you are saying your cost for fertilizer went up 25% this year you need to find a new supplier.

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