raising prices

[AB Lawncare]

I started full time 2 years ago. Now I am going into the third year and I really need to raise prices. Made the "lowballer" mistake when starting out because it was either that or starve (so I thought at that time) My question is this. Do I just state the new price in the renewal letter or do I offer any sort of explanation?

[Fantasylawns]

I'd wait till about June for lawn ..... when it's hot n everyone is busy .....send a letter the visit or month before

[Runner]

Yes, you do it in a nice confirmation letter. June is too late, you're already cutting at this time. Not a good time to "pop" it on them. Of course, you never want to do it too early, either. I've explained this in other threads. This gives them more time than you want them to have, to shop around, or have the neibor kid knock on the door. Early spring is ALWAYS the best time for this.
Anyway, when you make out your letter just make sure you put it in good context by saying something like.

Due to the economic state of fuel, oil, parts, and other operating costs, that have unavoidabally affected us all, there are certain slight changes that we have had to make in order to assure that we are able to continue to deliver to you the finest, top quality service that you have come to know and expect from our company. We hope that you understand that these price changes do not reflect on the profit of our company, but help ease the operation costs. For the program that you have selected, your price this upcoming season is only $XX.xx per visit (mowing/month/week/etc.) We look forward to seeing and serving you again this season. If you have any questions or if we can be of any assistance, please give us a call during our business hours of x:xxam. and x:xxp.m., Monday through Saturday. Thank you for your continued patronage.

[Mowerman90]

I agree with Runner whole heartedly, except for the part where he lists the reasons for the increase. That can come back and bite you in the ***. For example: When gas prices increased dramaticly this past year I, like many other companys raised my pricing. I sent a letter stating that my "costs of doing business" had risen and that the increase was justified. Other lawn services that I'm friendly with in my area raised their prices also, but stated that the reason was because of the increase in gas. Now that gas has come back down, these other companys are having a hard time justifying thier prices. I've had several customers ask me lately if I'm going to lower my prices because gas has gone down. I tell them "that wasn't the reason I raised prices to begin with, so why should I lower them now".
Do you understand my point? Never give them a chance to debate prices with you.

[Lawngodfather]

Just do it by 10%, write a letter with a little vegue explanation.

If you loose 10% then you make more money with less clients.

Like the on above said; don't be specific.

[MrNoSweat]

I raised all my customers when gas prices went up, it was my first increase in over 5yrs for some of my customers. Just make sure that you don't say anything about gas or fuel prices!. With the fast up and downs lately. They will want you to lower it when it goes down. Mostly I told then that my Insurance costs, ie (Health, Truck, Business, etc.) and other cost of running my equipment had gone up over the past year. Don't say anything that they can get you to agree to go down if the costs go down. I did'nt lose any customers over this increase, but I was woried alot before I did it. What I did was a 10% across the board increase. I figured even if I lost one or two customers I would be at the same monthly income with a few open slots for new aqccounts. Most of the time if you raise your lower priced yards you going to lose them. They will think that they will find a another lowballer, they will tell the new guy what they used to pay!! Just make sure that you can replace them with better paying yards when you do the increase.

[Runner]

Yes, I agree comPLETEly! Taking this into consideration, let's leave the gas out of the equation. For that matter, the oil too. I think the phrase "cost of doing business" works, however, let's change that to "operating costs".;)

[Lawngodfather]

Just to make it sound better for your end.

When I do loose some customers, I usaly loose the low dollar ones, eg $25-$30, then some how, I don't know why, it just happens, they get replaced with higher dollar ones, eg $50,$75,$100.

Runner; "operating costs" is the best term to discribe this, good thinking.

Like I said before keep it real vegue. The more info you give them, the more questioning will arise.

[strickdad]

Originally posted by Fantasylawns
I'd wait till about June for lawn ..... when it's hot n everyone is busy .....send a letter the visit or month before he may have something here. it will be harder for customer to find a replacement at this time of year.

[odin00]

We send a letter before season starts saying due to operations costs like fuel maintence costs and lawn waste costs we go up so much
We also calulate how much we need to go up but in the letter we tell them if they sign up early they will get rates at x amount
But if they wait past a certin date we will charge a higher amount
Makes them think they should sign up faster and are getting a better deal.

[Mowman]

I agree with you totally. I raised my price last year and only lost 1 customer. As far as new customer's this season I adjusted there price right from the start. Only 1 I bid too LOW. I will increase their price to get them up with everyone else. Unless the cost of gas SKYROCKETS in the spring I will keep the same price for next season.
Mowman

[Runner]

Now! Let's remember this thread, so we have this LETTER to come back to!LOL;)

[SolidAxleVette]

Don't offer an explination.

Our letters state: The price for XXX service will be $XX for the year 2002.

MrNoSweat- no increases in 5 years? Wow.

[Mowman]

I think that the cost of insurance should also be noted in your letter. I think everyone could relate to that as car,home, and other insurances are always going up. I myself will be adding it to my letters that I send out to customers that will be getting a price increase. Just another leg up. If they say the gas price has went down, can't you lower my price, well you know I might have been able to do that but since insurance rates have went up I see no way I can make a CUT at this time. Just a THOUGHT.

Mowman

[eslawns]

I decided for the 2000 season not to raise prices. I felt the economy was going to soften when gas prices started to go back up at the start of the season. Then came the election and all the uneasiness over that, so I decided not to again in 2001. I sent out a letter saying that we'd have no price increases until things in the economy settled down some. I haven't looked at all the man hour numbers yet, but I don't expect to need to raise more than a few for next season either. I'd give this some serious thought.

As far as giving them reasons why goes, I wouldn't. Your clients already know things are going up, and you'd just be one more thing costing more than it did. It may be the straw to break the camel's back. I know I've canceled several things recently because of increases, including cable TV, magazine subscriptions, cell phone, and memberships to different organizations. I wouldn't raise prices because the calendar changed anyway.

[cclllc]

I raised my prices last year and the year before when gas first started going up.Most people understood.I still kept some the same like those little old ladies who are barely making it.

[MIDSOUTH]

Originally posted by Lawngodfather
Just do it by 10%, write a letter with a little vegue explanation.

If you loose 10% then you make more money with less clients.

Like the on above said; don't be specific.

Makes sense, I could agree with that.

[Runner]

The only thing with 10%, (the same increment that I use) is that it should only be done every 3 years. The cpi, (Consumer Price Index) in accordance to The Wall Street Journal, is 3% increase per year. Obviously, if we increased by 10% evry year, we will have doubled the cost within 10 years. Not good. Now, of course, there ARE variations to this, such as jobs with lower profit margins, that need more of an increase, or on the other end of the scale, like cclllc said, the older seniors who are a little more limited on their incomes. I love taking care of these less fortunate ones, because then I just hit the doctors and the like harder to make up the difference. Is this stealing from the rich to give to the poor? No, not really. Because they are still getting good quality work, and it's even a SMALLER fraction of cost to them, as it is to the lesser incomed people.:cool:

[4 Saisons]

Originally posted by Lawngodfather


When I do loose some customers, I usaly loose the low dollar ones, eg $25-$30, then some how, I don't know why, it just happens, they get replaced with higher dollar ones, eg $50,$75,$100.



In the future you will propably drop the 50,75$ and get $100-$200

This is why i like to work for my own...;)