What would you do?

mikeslawn

LawnSite Member
Location
florida
Lets say you have contracts and fuel costs continue to go up.What would you do to make up the cost.Would you break the contract and ask for more money or eat the cost?
 

HOMER

LawnSite Gold Member
You do what I'm doing. Charge more for your new business. We are having to pay more but at the same time your existing customers are faced with the same dillema, they are paying more for gas just like we are. Your new business that you pick up on the other hand will not know the difference. They either take your price or go with somebody else thats going to lose their butt because they didn't account for it. If you start giving up your existing accounts and try to renegociate I think you are opening a can of worms. As with all things this is a cycle and it will pass someday. I am not going to burn a bridge personally with old, faithful customers. I will pass the added expense on to my new ones and never bat an eye!<p>Homer
 

Stonehenge

LawnSite Bronze Member
Location
Midwest
I saw a great post in the Snowplowing forum a few weeks ago about gas prices - that guy puts something in the contract that stipulates that higher gas prices will be passed on to the customer. For the future, you might consider the same. Just leave it in the contract forever - then it'll be there if you need it again.
 

Charles

Moderator, Friend, Angel
Location
South East
I saw on the news the other night that in some part of the country the gas price could reach $$2.50 per gallon by JUly.
 

MJM Landscaping Inc

LawnSite Member
Location
Baltimore Md
Whats the normal price for gas? When it drops down to .99 cents are you going to give them money back? I think Homer hit it on the head. If you try to re-negotiate they will walk. Hang in there its just a part of buisness. Let me explain it this way (just because it is something that really iritates me) Pro athletes: They sign a multi year contract for good money, but take a little less for the security of a multi year term. After year 2 they have great year and hold out for more money. But lets say they have a bad year and Joe owner wanted to re-negotiate, do think THAT would ever happen. Just the same, we cant get away with it.<br>My 2 cents for what its worth :)<br>Mark A Musolf<br>
 

JimLewis

LawnSite Fanatic
Location
Beaverton, OR
I agree with Homer. I am slow to ever increase rates on my existing customers. But I am constantly increasing rates on new customers. As you get a better reputation, better at marketing, etc. you can charge more. But I try to keep my existing customers at the rate I originally quoted them for as long as I can. <p>Of course, like I've mentioned here before, I don't do contracts with any of my 100 customers. There are pros and cons and we've been thru all that before. But if I did do contracts, say a one-year contract, there is no way that I'd ever have the gall to increase the price on them until the contract was up. I'd eat the cost or whatever I had to do. But I wouldn't renig on my deal. At the end of the contract, maybe then I'd renegotiate. But I'd never increase the price in the middle of a contract. That's just bad form.<p>But one of the liberties of not having actual contracts is that I can increase the price whenever I want to. Still, I try not to increase rates for quite a while though. Typically I would never increase a price on a customer for at least 1 year. I aim for two if I can. But like last year, things went up quite a bit. Worker's comp insurance, gas, our state raised the minimum wage to above the federal minimum wage, etc... So I had to increase prices to some customers who had only been with me 6 months. I hated to have to do that. It killed me. And I've only done that once in my 5 years in business. But it was something I had to do and almost everyone took it very well. I lost only 2 oe 3 customers and I raised prices about 10-15%. But I was lucky. Plus, by that time, they knew me. They knew our service was well worth it. And they understood. <p>Anyway, I agree. My first option is to always raise prices to the newbies and keep the older, more loyal customers at the lower rates as long as possible.<p>Jim Lewis<p>----------<br>Jim Lewis - Lewis Landscape Services<br>http://www.lewislandscape.com
 

Nilsson Associates

LawnSite Member
Location
Connecticut
What do you people expect to pay (total increase in cost for the entire season) how much extra if gas goes to $2.00 a gallon?<p>How much of an increase per day, month, season?<p>Phil Nilsson
 

zimm4

LawnSite Member
Location
moline, IL
Opec is supposed to increase the output by 2 million barrels a day. This will drop the price of a barrel to about 24 dollars.<p>This would put gas at about 1.20 to 1.30 a gallon. I think we could all live with that.<p>Kyle
 

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