Small dilema

Discussion in 'Starting a Lawn Care Business' started by rustyb265, May 22, 2006.

  1. rustyb265

    rustyb265 LawnSite Member
    Messages: 67

    Just need some advice. I just got 5 lawn accounts from a co-worker. They were givin to me for free. They are about 8 miles from my house, but once I get there all five are within 1/4 mile of each other. The problem I have is that he has been drastically undercharging them. All five of them I would say are at least $30 underpriced. My question is, should I try to raise the prices now or do a season at his price and then talk about rasing them next year? That is what I am leaning towards so I can make sure I can keep the accounts. What do you guys think?

    HOOLIE LawnSite Gold Member
    Messages: 3,981

    I would address the pricing issue now. If they are that badly underpriced why waste your time on them???
  3. grasswhacker

    grasswhacker LawnSite Gold Member
    Messages: 3,873

    IMO I'd keep the price the same and prove myself. Then next year raise the price.

    HOOLIE LawnSite Gold Member
    Messages: 3,981

    Yeah but he can prove himself at reasonable prices...

    Just because he's looking to take over, doesn't mean he has to assume the other guy's bonehead prices.
  5. All_Clear

    All_Clear LawnSite Senior Member
    Messages: 443

    Since they were free accounts.... Raise prices now.... Prove yourself over time... keep the one's that sign today and really want their yard taken care of, not just "mowed"

    The ones that say no thanks now just want something for nothing and would probably be PITA's later... so your better off.

    Also you never know they may not have been happy with the quality of service... basically they got what they paid for... Provide service to justify your price and like i said those that want the property taken care of, wont have a problem paying.

    1 out of 5 is still 1 more then you had... Just remember the customer doesn't care that your business costs are different then the other guy's... They know what they paid and what they recieved... Might want to sell them on quality, you will be spending that little extra time that the other guy was in to much of a hurry to do...

    Just my 2 cents
    All Clear
  6. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    This is a tough one because it involves 5 customers so I suggest taking them each as an individual and do not bunch the 5 into the same group. Since they are close together, even losing 1 or 2 wouldn't be such a big deal but even I would be hard pressed to just drop 5 customers, please don't push me to it, but I also don't go out asking for it heh...

    As a general rule I tend to look at the percentage of how much too low it is...
    I find 10 percent tolerable, 15 percent is pushing it, while 20% (or worse) is unacceptable.

    So, for example:
    A 50 dollar yard that is priced $45, 10% off so it is no problem.
    A 50 dollar yard that is priced at $40 is 20% and unacceptable, it needs to be raised to $45 to bring it to tolerable levels. I find these are the easiest to raise, since they're so low that even bringing them up 5 dollars is still cheap, if they drop me at this point in time, I'm not losing any sleep (or money).

    For those yards it was easy because the percents worked out and I used prices that would. Lets take a $35 yard at $30, that's 15 percent and now what I would do is either time it or see how big it is: If it's in between 30-35 then leave it alone, if it's a definite 35 then keep it for now and raise next year, but if it's one of those could be 40 because it's 35-40, I might see about raising the prices now.

    If you approach each of the 5 with the above math, you'll likely lose 1, maybe 2...
    You'll probably get 1 or 2 raised, and you keep 1 or 2 at the same price for later raise.

    So then worst case is you only keep 3, only one went for the raise and you're keeping the other two, it should be ok now because you're out of the worst of it and what you have left is still close together... Better-case, you lose 1, 2 raise and 2 stay.

    Hope that helps.
  7. eyes&earsopen

    eyes&earsopen LawnSite Member
    Messages: 66

    All of the above are good tips. Once you talk with them and develop your business relationship maybe you can get a feel for which ones you can definitely increase their price. Also, determine what the quality of the service was and if you are clearly better you might be able to raise the prices. I would also consider how troubl-free are the yards and is the route tight.

    With all that said I think anytime you talk raising prices you're going to lose some, or at least ruffle some feathers. At the end of the day make sure you are fair to yourself.
  8. howardsells2000

    howardsells2000 LawnSite Senior Member
    Messages: 355

    I have been in this same situation. Some I raised the price and some I kept the price the same. I can tell you that you will be sorry that you didn't raise the price. Everytime you go to one of those houses it will be in your head. I keep it to myself but I don't care as much about the accounts that are under priced. I usually try my best to give quality work but when I feel like I'm getting ripped off it makes it hard to have that positive feeling. It's not that the customers have done anything. I did it to myself. Even with some that I raised I still feel I didn't raise them enough. I say raise them now. You will be glad you did.

    PMLAWN LawnSite Gold Member
    Messages: 3,534

  10. StBalor

    StBalor LawnSite Senior Member
    Messages: 798

    This is most likely why he gave them to you. He bidded the yards to cheap and relized he was not making any money from them. You could try to raise the price, but i doubt they would go for it, but they might. This is why the guy passed on these clients.

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