help me out with 2003 price raise!

[FeartheDeere]

Hey guys,

I remember admin making a good post a couple of months ago about raising prices and how to go about it. I'm taking his advice and composing a letter to inform some of my least profitable clients of the raise and asking them to let me know if they agree to the terms.

Here it is:

Dear Mr. And/or Mrs. _________,

We regret to inform you that due to the rising costs of doing business that we will have to slightly raise your lawn maintenance fee for the 2003 mowing season. This extra expense is unavoidable, but is guaranteed not to change for another two seasons. Your total price increase per service will amount to $____. I will also have to submit a contract to you agreeing on a set amount of mowing services per year.

In return for the fees The Mean Green Cut will always try it’s hardest to make your lawn look the best it possibly can. For example, edging along walks and drives is included in your per service price for 2003. We have some separate services this year that will better this effort such as fertilization and aeration, shrub and foliage care, and landscape design and installation. We also have a better production method (lawn vacuum) for spring and fall cleanups. We are licensed and insured so that you can rest assured that you are getting a professional job. At The Mean Green Cut, we value our customers very much and strive for their satisfaction.

Please reply back on this matter by either agreeing or not agreeing to the terms listed above on the post card included that is ready to be sent back to me.

Thank you very much for your cooperation in this matter. If you have any questions at all, call Kevin Rumsey at (___)-___-____ or e-mail me at the_mean_green_cut@yahoo.com. If you would like to check out and see what’s new to The Mean Green Cut for 2003 or what services are available then go to:
(my website isn't up yet, but hopefully will by the time these letters are sent)

(END)[]

Note: None of my accounts were on a contract last year so I'm informing them about that too. One guy pulled a fast one on me by sayin half way through september, "well I wont need ya anymore for the rest of the season! come back next year though!" I didn't have a lawn vac and he wanted it vacced. You can't budget with out contracts! (he was my highest paying account)

Anyway, I'm open to you suggestions and comments and would like an approval from some of the pros before it is approved to be sent! Tell me if any errors are in there or if you have any ideas how I could present or lay it out better. Thanx a million![][:p]

[BergLawnCare]

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Sounds pretty good to me just as you have it. The only thing that i would ad or i should say i do differently is i have a date put in there that i want them returned by and i have had very good responses by that due date. I put a due date in there to prevent people from putting it on the back burner and forgetting about it then calling after i have been mowing for a couple of weeks and wanting me to give them that first cut at the regular rate. Believe me if the customer sees a chance at saving a buck or to at your expense they will do it in a heart beat.i give them a 2 week due date from the time the letter is sent out any longer and they will set it aside and forget about it. Also by putting a due date on there lets you have a better idea if you will lose any accounts and lets you get a feel for how many new accounts you need to pick up or that you can handle if you are a small lco, which i am assuming you are. Good Luck!!!

[masterlandscaping]

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Good idea and professionally worded. but 2 suggestions:

1-<b>lose the 2 yr. guarantee completely </b>- or you could possibly be underwriting your customers in the second year.
2- <b>The easiest way to justify price increases is fuel cost</b>. next to wages, it's probably the largest operating cost line item. Customers know from their own experience that gas is much more expensive. Fuel prices increased 30% just in the 4th quarter. Do an analysis on fuel costs and include it in your letter. Also, if you feel strongly about a 2 yr. guarantee, make sure you reserve the right to add a fuel surcharge due to uncertanties in the middle east and the instability of the oil markets. I'm doing this and will base the surcharge, if needed, on the %age each customer represents of total billing. I think this will prove you are concerned about the customers, keeping cost manageable and fair.

there is an additional thing to consider - those high maintenance customers should be analyzed to see if they are worth it: <i>do they pay on time; are they perpetually unsatisfied no matter how hard you try? </i>Financing your customers - which you do if they don't pay - is costly. Raise their rates and/or insist on payment in advance. If they quit, you can focus on the quality customers!

Happy New Year and good luck - let me know how you make out!

[GrassMaster]

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Hello Everybody:

I would not give a reason why you are Raising Prices.

OK, Say you tell everybody that you are Raising Your Fees due to Gas Prices? Are you going to Lower it if the Prices go back Down?

Trust me if you raise Prices due to the Rising Price of Gas, You will then be Contacted to Lower Your Prices when Gas Goes Down?

I've never had anybody raise my fees on anything & Give me a Specific Reason, You should do the Same.

Consider if Absolutely Neccessary saying "Due to the Rising Cost of doing business I must raise my Fees!" Me Personally I would just ask for a Raise Plain & Simple.

You will also have a Hard Time with Contracts with Residential, If I did it, I would at least have in there that they give 30 days Notice. About 85% of them will Shuck you Loose that moment, when they are Ready to Change Services. Then Prorate Your Services to that day if you give a Monthly Fee. That's How I did it!

If You do good Work, in most cases they will Keep You & Why in this World would you want to Work for or Force somebody to use you if they are Unhappy with you or Your Services!

If a Lawn Service Guy was doing My Lawn & I wanted him to Stop, It would be very easy for me to do this. You can't Force People to Keep you when they do not want you there!

You would be Paying to Paint My Cars, Fix My Broken Windows & The List Could be a Mile Long if I did not want you on my Property!

Yes, I could Probably Tell you how to Write a Legally Binding Contract, Where they would have to pay you in full for the Entire Length of the Contract, But How Many Would Sign it? But is this Neccessary with Residental Customers, Your Living Depends on Happy & Satisfied Customers that will refer you to Many others.

Word of Mouth is our Main Stay in this Business, When dealing with Customers! A Fact!
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BTW: Times are Very hard right now, if it's not in your area you are Lucky & it will probably be coming to you Soon!

I would have Higher Fees on all my Newer Customers.

Then on My Existing Customers, I would Make a List of the Highest Priced (Best Accounts) ones to My Lowest Priced ones (Crappiset Accounts or Problem Customers) then Start at the Bottom of the List & Slowly raise maybe 10 to 25% of them a Month. Until I was Satisfied.

About 3 Years into Business, I needed to Borrow $20,000 form the Bank for Equipment. The Bank wanted me to Provide Contracts. I had no Contracts, I used GrassMasters Simple Contract that is here on the Web Site.

I Lost 2 Customers & Many Others were Upset & I didn't even Raise My Fees. I just Had to Show Sometyhing to the Bank? You will have some problems just getting them on Contract, Much Less Raising your Fees!

Again I would save the Raises for the New Customers & do the List I mentioned above! Better Safe than Sorry. The Economy is Getting Worse by the Day!

[qualitylandscaping]

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Fear,

I agree with everyone else. If you are just adding a few dollars, there is no reason to explain why you are doing it. If you raise it over $5 per cut, they will definiently want an explination because I can run my 48" Lesco WB all day on one 5 gallon tank and it only costs me $6.50-$7.50.. So, my advice to you would just be not say anything unless your raising the rate by more than $5, and you better be able to justify it or your toast!

Your letter looks real good! There are a few grammatical errors but no big deal. Look at the second paragraph in the letter. When you listed your services, you used "and" four times. Break that down and only use it once (I'm starting to sound like my english teacher, lol!)

Good Luck![]

[TerraCare]

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yep, besides the grammatical errors, the letter looks and sounds very good. Actually, I really wouldn't worry too much about those. I had to read it a few times to catch anything anyways. I wouldnt expect any more than a 5 dollar raise on them, but if you plan on going over that I would want an explanation as a customer.

todd

[CCLS]

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I agree with grassmaster. If they want an explanation, then tell them that you are raising prices do to incease in overhead and operating costs. I'm in the same boat with a couple of my customers. I will raise their prices next year, and if they don't like it, they can find someone else. The time that I am using on their yard is the time I could be using on a more profitable account.

[BergLawnCare]

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I have never had a single problem getting customers..residentials or commercials, to sign a contract. the year that i started using contracts i sent out a letter explaining that due to needing to acquire loans from the banks in order to expand my business i needed to show proof of customers and that the banks required a signed and dated contract that explained the charges and the time frame of the services. Everyone of my customers signed and returned them.

[FeartheDeere]

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Good idea Berglawncare! It's just that, I don't think I'm going to get a loan...in fact, I probably couldn't get a loan of substance! Either that or my dad wouldn't let me. I don't necessarily need a contract, I just need a document that clearly specifies the services agreed on and all other services will be separately charged.

Anyway, I've gotta do some chewing on these price raises. I'm getting underpaid by amounts of up to $42.50 per mow on some accounts and that's just based on a $35.00/hr basis! How much is too much to raise my prices? Should I just tell some I'm simply not getting paid enough?

[FeartheDeere]

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Hello? I got more questions here!

[dancom]

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i think raising an account 42.50 per mow will cost you a customer. i guess that depends on what they are paying you now. i am not sure what the cost of living went up this year but i would imagine if you raised your prices much more than that you could have trouble. if you have an account you are losing 42.50 per mow how much are you going to raise the price to. if you are going from 400.00 to 442.50 you might be ok but if you are going from 100.00 to 142.50 you could have trouble.

[dancom]

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i agree with grassmaster do not tell them it is because of fuel cost that will be a nightmare for you. just say the rising cost of doing business if you feel you must say something.

[FeartheDeere]

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Alright...thanx dancom. I guess slow and steady is the way to go. Unless I'm just really fed up with that particular customer and say pay up or I'll do someone else's lawn. O'course I can't afford to do that on most accounts of mine.

[qualitylandscaping]

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Fear,

$42.50 increase, like dancom said, will make you lose the customer. From what I'm guessing, when you first gave your prices, you didn't have a clue how to price them and most likely just threw a number at them. I know, I used to do the same thing. But when you go to a customer and tell them you need to raise the rate by $42.50 because you way underpriced yourself, you can tell them almost anything you want about cost of running a biz and they will probably shut the door in your face. Now, if you raise it $10 a year for the next 4 years, I wouldn't see any problem in getting them to say yes. But $42.50 increase is way to much for an account thats not more than $100 already.

[Jack]

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Fear,
there is some great advice here. As Grassmaster said times are tight for a number of people. I have found myself studying and learning more about the local and state economy. If you have some retired people that only get a cost of living raise once every three or five years, and they see their utilities and the cost of groceries going up, they need your service, but it will be hard for them to justify an increase when they do not have the raise. Without appearing too nosey learn some about your clients. On the other hand if you have some younger people that are working hard and doing better than average, and have some business sense, they can understand the increase. I have one lady that is a widow and retired, she has a limited income, and sometimes, I think I am not making money on her account. She is very involved in her church and bible studies and it seems like each week someone will call and say Mrs M.. told me you do her yard and she is so pleased and I would like for you to start doing mine. I kid guys like Phil and Grassmaster in the off topic forum, but when it comes to being serious and learning, these guys are the pros and I am just beginning to learn from their years of experience. Take to heart what they tell you.