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  • Question about gas price increases:

    Just wondering if you all were going to raise your prices this year due to the ever increasing gas prices? I am seriously considering an 18% increase across the board to protect myself. Any thoughts?

  • #2
    I will go up but I will assess each property to see how much to increase

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    • #3
      Would it be weird to increase by like 2 or 3 dolllars

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      • #4
        If gas was 20% of my expenses and the price of gas averaged $1 more this year than last year, then my expenses would be 7% more this year. I can't see raising price 18% and not losing customers. We are going up 5%. Also have a $1.25/trip charge if gas is $4.00/gallon that week. If you tell people you are raising price because of gas they may expect price to go back down if gas goes down.
        Evansville Lawn Mowing
        Newburgh Lawn Care

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        • #5
          I dont see raising my rates at this time. Fuel is a pretty small expense for my company. I will keep an eye on prices, and may add some additional money on to bids later in the season, but for now I am fine. I would probably tighten up my route and try to realize other efficiencies before raising prices.

          jay

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          • #6
            What's the best way to go about increasing the prices? Should it be mentioned that it is because of gas or no?
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            • #7
              What's the best way to go about increasing the prices? Should it be mentioned that it is because of gas or no?
              Steve,

              Good question. Here is my take. If you have to raise prices because of the gas price increases I would first look at my pricing structure. Why is a 30cent increase in fuel prices causing such a issue with profitablity? Did I not figure fuel costs correctly when I set up my pricing structure? When you figured out your hourly rate did you take your monthly fuel costs to be based on fuel at 2 bucks a gallon or did you plan and use a cushion number like $4-5.00

              Second why are fuel prices such a big part of my overhead? There may be efficiencies to be found by tightening your route. Maybe consider a different vehicle. Do you really need a F350 dually to pull your 10ft trailer with one 36inch mower on it. Are you using oversized or undersized mowers for your client base.

              If you need to increase pricing I would not use fuel costs as a reason. When/If costs on fuel come down the first words out of your clients mouth will be to lower your price back down. I would just site nomal increases in the cost of doing business, inflation etc.

              My issue is you are going to have a hard sell in a depressed economy, with a saturated market of contractors trying to raise prices by more then a dollar or two depending on the size of the account. If gas continues to rise I may start to bid new accounts 50cents to a dollar higher, but I may just increase costs on my less competative services where a dollar of two wont matter much to end number.

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              • #8
                I was planing on raising prices this year anyways , but I'm going up 5 to 10 buck a yard.

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                • #9
                  If gas was 20% of my expenses and the price of gas averaged $1 more this year than last year, then my expenses would be 7% more this year. I can't see raising price 18% and not losing customers. We are going up 5%. Also have a $1.25/trip charge if gas is $4.00/gallon that week. If you tell people you are raising price because of gas they may expect price to go back down if gas goes down.
                  I'm adding a $1 per cut at $4.45 and a $1.75 at $5 per cut trip charge in to my agreements this year

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                  • #10
                    it's not just fuel prices going up. all the things we buy are delivered by trucks, that use fuel. the factories that make the things use fuel. the extra cost is passed to the customer.

                    so the price of everything is going up, why not lawn care prices???

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                    • #11
                      Second why are fuel prices such a big part of my overhead?
                      Do you think there is some kind of range fuel prices should fall into as compared with the total overhead costs?
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                      • #12
                        Do you think there is some kind of range fuel prices should fall into as compared with the total overhead costs?
                        Steve,

                        I think that there are just to many variables to contend with to pick a one size fits all number.

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                        • #13
                          Gas and passing the cost along

                          You are right I never thought of it that way if gas goes up everything goes up that is a very good point. What do you think is the answer to this problem in a nut shell?

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                          • #14
                            John you are correct. If the price for everything else is going up, so should the price of lawn care. Steve brings up a good question. What pecent of your over all cost is fuel related? Let me ask this. Do you know how many gallons of fuel your bussiness uses in a year? Ours is a small company. We used about 1000 gallons last year. Mowers, trucks, snow blowers, trimmers, ect. If gas goes from $3.00 per gallon, to $4.00 per gallon that would cost us about a grand, right? Not even. Because it would need to be at $4.00 for the entirer year. Fuel is not as big as an expence as some would think. If you raise your prices more than a percent or two and say it was because of fuel. You are useing fuel price as a excuse, not a reason to raise your rates.

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                            • #15
                              Raise prices gradually EVERY year. (.5% to 4% is what we have done). On residentials its usually not more than a dollar or so a week. Much better than 5 or 10 at once. Fuel surcharge ($X per trip if gas is $X per gallon) that goes away when/if price comes back down. If gas stays up for whole year then trip charge becomes part of your percentage increase for next season and you have a new $X per gallon for fuel surcharge. Two complaints in 3 years doing it this way and only lost one of those people as customers.
                              Last edited by shadrach; 03-05-2011, 09:27 AM. Reason: cant spell
                              Evansville Lawn Mowing
                              Newburgh Lawn Care

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