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Yearly price increases.

Discussion in 'Bidding, Estimating and Pricing' started by MowDaddy, Apr 28, 2019.

  1. MowDaddy

    MowDaddy LawnSite Fanatic
    Messages: 6,714

    Curious how everyone handles yearly price increases.
    We have always rotated increases on about 50% of customers each year. So every 2 yrs each customer gets around 1.5% increase per yr.
    Lot of our commercial contracts have a built-in price increase of 1.5% annually on multi year contracts.
    I've never had push back.
    The only time we've had any grumbling is on a second yr property that was underbid in the first place, and we jumped maybe 5-10% the following year.

    How do you all handle it.
    hort101 and Cam15 like this.
  2. weeze

    weeze LawnSite Fanatic
    Messages: 17,376

    honestly i've never raised prices on anyone. granted most people don't stick around but for maybe 2-3 years before they move, pass away, start mowing it themselves, or something like that.

    some of my customers just start paying more each year without me even asking them to do so. only a handful have done that. most of the time when people ask i just say same price as last year.

    i try to price properties right from the start though. i know some offer cheap prices and then slowly raise them over the years. i never mess around with that. i just price it right from the beginning.

    the only way i would ask for more money is if gas prices go up to like $4-$5 a gallon or something in which case the customer would understand the reason for the raise in price.

    really there's so much turnover in this business it sort of takes care of itself. you just charge a higher price to the new customers you get each year. the old ones drop off sooner or later on their own....it just takes care of itself in some weird way.
    Jeff@diyokc, JLSLLC and Cam15 like this.
  3. OP

    MowDaddy LawnSite Fanatic
    Messages: 6,714

    It's called getting a raise. Cost of living increases, workers need pay raises,
    Insurance goes up etc. A $1 per hr pay raise for my 3 workers cost $162 extra per week. That money has to come from somewhere. And not my pocket.
  4. Smith Lawn & Landscaping

    Smith Lawn & Landscaping LawnSite Senior Member
    Messages: 854

    We send out an email before season that prices will slightly be increasing due to xyz. If they balk or question it either cut ties with them or explain your situation.
    hort101 likes this.
  5. weeze

    weeze LawnSite Fanatic
    Messages: 17,376

    yeah i get it. i'm solo though. i don't have to deal with such things. i only pay myself.
  6. OP

    MowDaddy LawnSite Fanatic
    Messages: 6,714

    You don't like a raise, or your insurance never goes up, or your cost of living doesn't go up ?
    We should all move to bama.
    Cam15, Mark Stark and UpNorthMowing like this.
  7. weeze

    weeze LawnSite Fanatic
    Messages: 17,376

    yes it does but that doesn't mean raise prices $5 every year. you'll just lose customers if you do that. raising prices $1 doesn't really make any sense. if i'm gonna raise prices it will be at least $5 more.

    speaking of that i did do that on 1 customer this year. they usually sprayed themselves but i offered to take care of it for them at $5 more per cut and they said yes.

    i try to save money in other ways. getting mowers paid off. getting the truck paid off. things like that. then you make more money without actually having to make more money. :laugh:

    anyways like i said earlier. sometimes people give you a raise without even asking for it. i have a customer that i started mowing for $60 a cut about 3-4 years ago. they now pay me $75 a cut. i never once asked for a raise. they've just been giving me a $5 raise every year on their own.

    that kinda worries me though because eventually the price will become too much for them and i may end up losing them even though i've never asked them to pay any more than $60 a cut.

    i've ran into that before. people that i asked for $75 a cut ended up paying me $100 a cut. they then asked me to mow an extra part of the yard and i said ok $100 is fine just keep paying that amount and i'll add it in....so then they end up paying me $125 a cut....then before you know it they are no longer your customer. sometimes the people that are the most "giving" are the ones that can't really afford it. i would have rather had them just pay the lower amount and kept them as a customer but instead i ended up losing them so i get nothing now.

    people have too much pride to admit they can't afford a certain amount of money. all they had to do was ask if i could keep doing it for $100 instead of $125 and i would have said sure that's fine. i mean i'm human. i understand what it's like to run into financial struggles. we all face them sometimes. it's just the way life is.

    i've always been the type that i don't want to lose a customer over $5-$10 in price. i'd rather keep them and at least have a customer than to lose them and be a customer down. that doesn't mean i go around lowballing but say i want $40 for a yard and all they can afford is $35? i'll still do it for $35. i mean i'm not gonna go do it for $25. you have to draw the line somewhere but i will work with people a little bit.
    Last edited: May 1, 2019
  8. OP

    MowDaddy LawnSite Fanatic
    Messages: 6,714

    Ok ?
    Apparently Weeze blocked me.
    Because I can't see any of his responses anymore.
    Was I being mean to him??
  9. weeze

    weeze LawnSite Fanatic
    Messages: 17,376

  10. River

    River LawnSite Silver Member
    Male, from Wisconsin
    Messages: 2,502

    Inflation is usually around 3% and in order to make sure that every dollar you are getting is worth the same amount year after year 3% increase.

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