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Tip Of The Day - 12/6/05 - Raising Prices

Discussion in 'Industry Surveys & Polls' started by Sean Adams, Dec 6, 2005.

  1. Sean Adams

    Sean Adams LawnSite Gold Member
    Messages: 3,597

    Another year has passed...assuming you have sat down and looked over your numbers this past month as well as for the whole season, you should be able to tell whether or not a price increase is required. A new year often times means growth, more equipment, more travel time (gas), maybe more employees or giving employees raises, etc.... when your costs go up you should be able to justify to your clients the need for a price increase. Now how you go about doing that is the trick....simply invoicing them a new amount won't cut it, a voice mail isn't going to win you any fans.... a phone call speaking directly to them, or even better, a nice form letter, explaining the need for a price increase is the way to go. But realize that your price increase should not be too significant unless part of your objective is to weed out clients you do not want. If you made the mistake of mowing for Mr. Jones in 2005 for $25, don't think he will be thrilled if you send him a letter saying his price is going to change to $45 per mowing. A slight increase for all clients across the board (if there is room for it - handle each client individually) will probably give you the extra added and needed revenue heading into the new season.
  2. 1MajorTom

    1MajorTom Former Moderator
    Messages: 6,073

    I have read on here where some members do not inform their customers of any price increases, they just sent the bill at the end of the month, and that's how the customer finds out. We however, do send them a letter in March. It's professional looking, short and to the point.
    I would be interested in hearing if anyone does go the route of telephone calls, as I'm not too keen on that idea at all. Seems like it would be real easy to open up a can of worms by having them on the phone where they could immediately complain about the increase.
  3. olderthandirt

    olderthandirt LawnSite Platinum Member
    from here
    Messages: 4,899

    If it not on paper its might as well not be there
  4. SodKing

    SodKing LawnSite Bronze Member
    Messages: 1,641

    I am so expensive I haven't rasied prices i years...

    Though I did just come from a meeting at a condo where I told them they shold expect a 4-6% increase in pricing next year.
  5. DLS1

    DLS1 LawnSite Bronze Member
    Messages: 1,619

    I send letters beginning of February to everyone even if they don't have a price increase. I ask everyone to let me know by last week of February if they want the service again this year. Gives them time to mull it over vs asking them over the phone. So as of March 1 I know how many old customers I still have before I start advertising to fill up open spots.

    Will be more increasing prices next year 10 - 30%.
  6. 1MajorTom

    1MajorTom Former Moderator
    Messages: 6,073

    Very good, we do exactly the same thing, we give them till March 15th which gives them roughly 2 weeks to decide.
  7. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Messages: 10,178

    what services do you use, that advise you of a price increase, in advance? god, i could see it now, you guys, approaching a client, looking down at the floor, stuttering, like u just committed a crime, "umm, mrs smith, ummm, if it would not be too much trouble, ummm, i was thinking...." i increased everyone this year, and caught crap from only ONE CUSTOMER, who then cancelled, and came whimpering back in mid season. i had another one, who i increased from $28 to $30. she goes, "no, i won't allow it." i quickly jumped back at her, " I WASN'T ASKIN YOU, I WAS TELLING YOU!." she goes, "oh, ok"
  8. DLS1

    DLS1 LawnSite Bronze Member
    Messages: 1,619

    Called looking at last years overhead,etc. using Quickbooks and deciding if I need to increase prices.

    Is your method you need two increase your beer intake by two beers each time you mow a customer next year so you determine how much two beers cost and increase it by that amount. :D
  9. 1MajorTom

    1MajorTom Former Moderator
    Messages: 6,073

    Get off your high horse and quit with the act, no one buys it anyhow.
    Cable, gas, and water, all notify in advance of any rate increase. Credit card companies always notify in advance when they will be changing their interest rate.

  10. captaingreen

    captaingreen LawnSite Senior Member
    Messages: 471

    I send out a letter in February that reviews services for the year and rates. I don't like the idea of calling everyone either.

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