Customer sez no more $increases

[twotoros]

Has any body run into this problem. At years end I was informed by at least 7 customers that they could not take increases and would have to shop for cheaper if I did raise. I was planning no increases next year as this area is over-populated w/ lco's. I have been at a 20$ minimum since 99 and last year I average about 42$ an hour. All accounts range between 2500-1500sq ft and max out in price at 50$. One lady who sais no raise is 26$ and takes me 35-40 min average. Am I charging too much? I think not. Besides no raises I am thinking of dropping my min to 18 when I bid new accounts. This would be for lawns that takes 25min or less including the drive. It is pretty bad here and need at least 20 new accounts next year.

Who else lives in a buyers market? And when do you think it will stop?
signed -going mad in the desert.


ROTFLMAO

[Crabgrassman]

I guess this could be a problem if you increase rates every year. I like to increase mine every 3 years or so. I usually go up 5 bucks each time I do this and I've never had a serious complaint about it. This way the customer doesn't look at it as if you are nickel and dimeing them to death every year.

My minimum charge is $25.00 and you would have to have a 10 minute job to get me to come down off of that.

[BigJim]

Life is hard then you ........go bankrupt and starve to death if you start dropping your prices to compete with all the lowballers,if you start bidding $18 what you gonna do when others start bidding $16?.Hold your prices if times are tough,just put the least profitable accounts on the bottom of your list and then replace them as you pick up new accounts.If your offering top service theres people out there willing to pay you for it.If you pick up 20 new lawns @$18 instead of $20 over 6 months you would be giving approx. 52 free mowings!!!!Work smarter not harder,are you using a good ztr?Since I bought mine I found its made a lot of the unprofitable lawns good earners.At the lawns that wont increase there prices you checking to see if they got extra jobs you can do,rubbish hauling,gutter cleaning,pruning etc,often you might not get more for the lawn but these people can be happy to pay more for extras, that are more profitable than grass cutting.Then other folk see you doing the work,word gets around,you get more jobs,you are a valuable man,and you can charge more for that!.We all live in a buyers market but notice how the companies that survive and prosper only put there prices one way,and it aint down,things that go down only end up in the plug hole!
Life is hard then you ...amaze your customers with excellent service and don't be afraid to charge them for it!;)

[Esby]

I know exactly what you mean. Currently I run a $25 minumum, and it has worked out pretty well. I was kidna wanting to raise it to $30 this past spring, but then I realized how many $25 jobs I was landing that dont take that long! For instance, why not drop the gate, work for 20 minutes and get paid $25. Doing 3 of these jobs in a row sure beats trying to bid on "some" of the commercials in which the most you could get paid is $35-$40/hour. The low rates for commercials is due to the high competition, which in many cases is realativly low for residentials. Dont get me wrong, the commercial properties that I do maintain profit very well, but sometimes you need to just look at the dollars and if one can make more doing residentials compared to commercials, why not target them!

[Lawn Dog]

I have this problem too. I work generaly in two aeras. One area has about 5,000 landscapers. My minimum in this area is $20. To most people in this area that is high. The two largest companys in the area have $15 minimums. It is very hard to charge a decent price there. The majority of my business is in this area. A lot of my customers in that area have been with me for years, and wont switch as long as my prices are competitive. Last year I raised almost all of my $20s to $22. I didnt get too many complaints. Most of the properties are under 10000 sqft. There is no way you could possibly get a $25 to $30 min in this area.

The other area that I service is totally different. There are only two companies in town, and Im one of them. My minimum in this area is $25, and that is for 5000sqft or less. People think that price is fantastic because either they havent been able to find someone, or the other guy was more expensive. I now focus all my advertising in this area. There are a lot of big properties in this locality as well. I have been pulling in about $55 an acre on them. Most of my yards in this area are in the $30 to $40 range.

If I were you I would not lower my min from $20. When you service a very competitive area, its rough. But $20 is bad enough let alone $18. Instead of raising your current customers prices, you could always just push a price increase on to new customers. Start out alittle high. If they bite, Great! If they dont then let them haggle with you a little bit. You could also try finding a less competitive area to service. Also If I have a customer who is making out on the lawn price, I make sure anything else I do for them is a little more expensive to make up for it.

[AustinJ]

When you guys say a $20 minimum, I assume you're talking about $20 per cut?

[G&S LANDSCAPING]

Our minimun for 2001 was $28.00 plus tax. Our minimunfor 2002 will be $30.00 plus tax.Per cut.

[mgardner]

Most of the time we are freindly to the competition out there during the season. In fact we know a lot of them and pull off and have a chat in a big parking lot.We are frustrated because we see these people running around in S10`s with a trailer big enough to fit a 21 and a small non-commercial rider. They always have the flat lawns so it doesn`t require good hydo action . These are people that usally are retired or do it in their spare time.Last summer I had one walk over to where I had parked and couldn`t get over my trimmer traps.When he asked what I`d paid for them I thought we were going to have to give him CPR. Afellow commercial cutter told me later that they had the bid for 7 or8 years for all these drive-up ATM`s and the same guy (who told me he`d put in 38 yrs at some big shop in town)had low balled the ATM`s so bad that they couldn`t touch it.I had another instance where a part-time on the side guy was on the lot next to the one I was cutting and asked if I thought I could go over and blow off the drive and walks where he was finishing up,because he said he had forgotten his blower.I promise you one thing, if I was raking in 3400.00 a month with full medical benifits , you wouldn`t see me out there , but I guess I can understand if its next door to the guy, or down the block within riding distance. I almost would like to see,I said ALMOST, a commercial operators license that would require proof of insurance and a fee. But there just hasn`t been enough liability action ,I don`t think to warrant such a measure. I guess cuttin is so enjoyable to them you know, they just can`t get enough of it. Its something a lot of them do in their leasure.But youll have that. I am sill having a hard time accepting those 6" trailer tires they use to haul the plywood decked 4`x6` trailer. with the two 2"x 10"x6` loading ramps. I really didn`t want to go there.... Another thing they had at a public elementary school was when all the leaves were comin down the local news covered it, this lady from the elementary school took all the kids down the streets near the school and went door to door , and for free the kids raked all the leaves to the curb at these residents . You know when I was a kid I still got a little jingle for raking the nieghbors leaves. Maybe only enough for a pack of smokes but.So in other words the teacher at the school "voluntered the kids to all go rake . The news really made it look cute so one would dare not criticise or you would be tarred and feathered. The point being,who`s liable if the kid steps in a mole hole and sprains his or her ankle ; the property owner I presume. They were bragging on the news the kids had raked like 17 lawns that day. It just stuck me a little strange , because how many of those same property owners would ball the same kids out if they were cutting across the back yard? Point being,and don`t please don`t get me wrong , a lot of those residents had probrably paid next to nothin all year for the mowing and then they were all open arms to get free clean-up. And if you had seen the neighborhood ,it was not, lets say, a needy part of town at all. Its just one of those quirky things,ya know, I`m crashed on the couch watching the news after blowing and loading and unloading leaves all day. I thought;thats interesting.

[65hoss]

If you've been making good with $20 min. then why would you consider dropping? Keep the customers you have happy, ask them if they can give you referrals. Word of mouth will be better, you will almost have the job before you ever show up. Start targeting areas now. Get your name out there.

This is the very reason I am an advocate of keeping your expenses low. You can still compete without hurting yourself.

[cos]

These people don't appreciate good work and service. Let them go there own ways and find that you are better and they will call back.

[twotoros]

Well for starers I have been in biz 16 years. I lost three yards last year to lowballers in mid-season. One was 20 and they found a chump for 12 bucks.
That is what is going on here. 50% of the guys here are happy to gross 20-30 bucks an hour as a solo and 30-40 as a two to three-man op. I know they are not paying legit wages or tax. So I figure I will drop my min. Last year out of about 25 bids I got maybe two. No advertising only a phone listing. When I said my prices start at 20 that was it they said too much. A lot of lawns here are 6k and under so when I bid 20 it is for 4k and under.

What my original ? was "has any boby told you they won't accept increases?"

I am at the point of cave in or quit. No other choice. And only low pay jobs in the area . I would move but for my aging mom is here and I feel I should hang. After all she was there in my young age. I truely hate mt neck of the country. I have already pulled my state license because they would not attemp to crack down on scammers. So I now screw them out of sales tax for revenge for the time being. That's how ****** I was last summer. I do pay the feds however which is more than most do.

[tpirobert]

The best thing I did was go to a $35 Min. per cut. I still have a few old customers under that amount, but they take 20 min to mow or less. With a higher min. I know I will make money. If I am too busy, then I need to raise my rates. Along with raising rates I concentrate on wealthy areas of town. I no longer "discount" properties because they are next door. Don't toss in the towell. Re-group and go after the high dollar accounts. I am doing more lawn applications now, which is really helping with referralls. I've lost quite a few customers over the years to lower bids, but a better door has always opened. Good luck.

[Mowman]

I raised my price this year as the gas price was KILLING me. It was my first increase in 3 years. Everyone understood and had no problem. One said they could not afford it, so I told them I'd cut for the same as last year. After 2 cuts they started paying the increased price cause they didn't want to LOSE me. I was surprised by this. They always have EXTRA work for me that's why I was going to cut for the same price. But I'm glad they started paying just like everybody else. I know they had TONS of medcial bills from her husband.
I only had one customer ASK for a PRICE CUT after the increase, because the gas price went back down. She will not be a customer next season, as she is a PAIN in my @ss. Always want the garage sweep out trash burnt or the mail brought in. All for no more pay. I will not MISS her at all next season.
As far as raising prices again next year I'm not going to. I'm just going to ADD to my customer base. Hope I didn't get too far off subject. NO PRICE INCREASE EVERY YEAR!!!!!!! If I were a customer and someone raised my PRICE every year I would start looking for someone else. Think about it.
JMHO,

Mowman

[twotoros]

There is not any thing in my personal or business life that does not increase each year. When I raise each year it is between 2-3% so it is small but resented by my customers. By the responses this seems to be a problem only in my area. My best bet would be to move.

[cclllc]

I have a 35.00 min. per cut.I usually keep the same price for atleast a couple of years unless gas goes up again. Moist people understand.Ask them how much they pay for plumbers and electricans?

[Crazygator]

Originally posted by cclllc
I have a 35.00 min. per cut.I usually keep the same price for atleast a couple of years unless gas goes up again. Moist people understand.Ask them how much they pay for plumbers and electricans?

This made me think. Other service's charge a minimum of $50.00 just to stop and see what your problem is. Then they get their hourly wage or charge for the job, plus all materials used. The reason they can do this? They have set the standard, you need a little more training than just mowing grass, but they have helped others in their field to see the need to maintain the minimum.

So what do we do? As stated in many other places, educate all the lawn care/landscapers that we come into contact with. Im not saying give away your little secrets of how to's, just help them see the need to keep the prices at a certain level. Of course many may really need just a few bucks to survive and continue to lowball. But if we as a group can get the word out and be nice about it then it most certainly will not only help others but in the long haul help us too! Just think, no more selling someone into your minimum. Nice thought huh?

[strickdad]

around here we have just a handfull of "pros" and quite a few at the less than pro status. most of the pros are within a few bucks of each other on pricing bids.. the other ones (working for beer money) will do work dirt cheap ... this problem has gotten worse due to all the textile layoffs etc. local news reports that NC. is having trouble paying unemployment benefits due to the vast amount of people signed up.

[Scraper]

What I don't understand is how people can say they continue to raise prices every year or every three years. Doesn't there come a point where you can't really charge any more for a lawn? I always bid on the high end so I don't have much higher I can go. At least that is the way I see it. For instance...1.5 acre lot...wide open...I get $65/cut and it takes a whopping 45 minutes. How much higher can I take it? See what I mean? I do believe there comes a point where you really can't raise the price any more.

[cpmayhewinc]

Scraper, your right, the market will only bear what it can. If your market is small 2-4K lawns then those customers are only going to pay so much. And I don't blame them.

Twotoros, you have several choices: Increase volume, add on services, upscale your market, etc.

I think your on track with the $65 price and I run very close to that. I don't like any jobs that take less than an hour to complete and most of my jobs take 2 hours. So I shoot more for the larger tracts and do full service year round.

[Crabgrassman]

Scraper wrote:
.......................
What I don't understand is how people can say they continue to raise prices every year or every three years.
.......................

I guess it has a lot to do with where you work. Where I am inflation runs at a higher rate then say Greenville, North Carolina. For example the cheapest houses here are around $130k and are barely habitable. You can buy liveable houses in Greenville for under $40k. My house is around 1500 sq ft. and the property taxes ran me $1548 this year. It will go up every year. The same style and size house in Greenville has a property tax around $500.

The same market forces that drove the value of my house up $15k last year also drives up the value of services. It simply costs me more money every year in order to maintain my present lifestyle and I pass those costs along to my customers.

There is no cap that can be put on the price of anything indefinately. At some point you must raise the price of doing a job or else you will find yourself making the same amount of money but you find that you can't buy as many things as you used to.

In other words a farmer pays you 3 chickens to clean out the barn. You take those 3 chickens to the grocer and trade them for 10 pounds of potatos. Next year the grocer says he needs 4 chickens for those potatos. What are you going to do?

[SlimShady]

[i]
Who else lives in a buyers market? And when do you think it will stop?

[/B]

We now bid each contract with 3 prices, the lowest is a basic mow & go with no frills, the highest price being a cut, trim & all surfaces blown. Having 3 prices & service levels on the table will help you get & keep contracts & reduce time spent on those not willing to pay higher prices.

[Scraper]

Sorry Richard...While I agree with you to a point...there is a point where the market will not bear any more increases. Would you pay $10 for a box of 20 bandaids? No. I don't care where you are from...as a matter of fact my area is much like yours in that it is a metroplitan suburb. Sure the people have money, but they aren't stupid.

[twotoros]

SLIM - what is your midlevel deal. I take there is no trim on the low deal.

I have thought of doing such a thing and might offer that to new customers.
What scares me is that not onlt does the compitition work cheap they do it for all the bells and whistles. Mow,edge,trim,BAG and blow. The bagging is what scares me. I tend to recycle 90% of the time. If I want to charge more for the full deal I am afraid in my market it won't fly. Bagging and dumping add up to 50% more time that is not charged for here. :crazy:

[SlimShady]

Mid level service varies depending on the prop. Will usually include cut, trim (front only), blow drive (no back decks) & a double mulch or discharge cut during spring growth if necessary. Basic includes minimal to no trim, (some turf mods may be required, such as bedding & mulch around a tree in the front), drive, front walk & step blowing only, No double cuts or bagging ever regardless of clippings density.
Presenting three quotes in a professional manner will not stop some from hiring a lowballer doing all the frills but it will demand attention & consideration from many customers looking for a reliable contractor that is upfront about their service.