Would you give a 5% price reduction to renew a contract?

Discussion in 'Business Operations' started by Toro 455, Jan 21, 2013.

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  1. Oxmow

    Oxmow LawnSite Senior Member
    Messages: 488

    This is exactly what I did several years ago when natural gas went out of sight. I was maintaining a heat treating company and went in with a new yearly contract with a 5% increase. The manager handed me a letter from their parent company asking all vendors to cut their prices by 10%. He said if I would keep my prices where they were he would sign it now...I signed for another year.
  2. Tanum

    Tanum LawnSite Member
    Messages: 169

    We get this request a lot here in Ireland, but its usually 20-40%! We just cut out additional services and give a basic rate. All the things that were included in the original contract are extras now. Another thing we did was invest in an amazone profihopper, this enables us to cut grass every three weeks in the growing season, thus reducing costs for us and the client.
  3. Toro 455

    Toro 455 LawnSite Member
    Messages: 238

    It's going to be a little over a thousand bucks. They're my second biggest client so I need to keep them.
    I'm just going to keep my head down for now. You know, "to get along you go along." Plus they did give me a pile of construction materials I was wantnig last year, worth a whole lot more than that.
  4. Darryl G

    Darryl G Inactive
    Messages: 9,500

    Yes, I'd reduce the price and find a place to reduce my time on the property by at least that much.
  5. jrs.landscaping

    jrs.landscaping LawnSite Silver Member
    from Maine
    Messages: 2,764

    I'd take the 5% hit to keep a $20k account.
  6. Tanum

    Tanum LawnSite Member
    Messages: 169

    Yes give the 5% and thank them for their continued support, also look at ways to reduce their costs further. What you don't want is them going out to tender. Its best to be under the radar, keep your head and do a good job. At the end of the day is only $19.23 per week less. Regards
  7. GreenGuysLC

    GreenGuysLC LawnSite Senior Member
    Messages: 366

    If you know what it takes to run it...and feel u have 5% to give... fine. I just rebid a 20k job....i wasnt the low bid but was the contracto for last 3 years. My work has been top notch and they said so. They asked if i could.."sharpen my pencil". I said no....and went into detail about whag all insurance i carry....about my uniforms my crew wears..and the lettering on the truck. Not to mention...
    I know the property and what it takes...and my numbers represent what it takes for me to leave them wirh a professional job each week. I got the bid back based on my quality. I will take quality over quantity any day. Big box store called and wanted me to take two stores in my area...sent me pricing...i called back and said not for these prices. She said what will it take...i told her. She said she would have to keep looking as we were really far off. Two weeks later she called back and met my numbers. Bottom line....i didnt get into business to be a public service....i did it to make a living. Covering expenses doesnt make a living. Guys....letting others dictate our prices only hurts us.
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  8. weaver

    weaver LawnSite Bronze Member
    Messages: 1,393

    I don't blame you. I think you're doing the right thing and it sounds like a big job and would do the same thing...
  9. GaryBK

    GaryBK LawnSite Senior Member
    from Canada
    Messages: 274

    Not a chance! My prices go up 10% every year. NONE of my costs go down. Why should I eat increased costs and reduced revenue? I'm running a business not a charity. But I'm in Canada and the economy is booming here.
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    GARRETTWOOD LawnSite Senior Member
    Messages: 347

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