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Rate Increase for a Customer


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  #1  
Old 09-29-2010, 02:14 PM
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Default Rate Increase for a Customer

As many of you know or may have guessed. I've been doing this full time for the last 7 months or so. When I first started I was optimistic about getting all my grass clients on weekly service. We some you just cant convince other wise and I charged more than the normal rate but not enough.

Now please understand I dont have to many clients in this situation and I still make money on some of them. But this one Im telling you about I probably break even on.

Her agreement is to have us out every 2 weeks and take care of the grass and weeds. She asked us 2 months ago to trim a bush for her and we obligied but took the opportunity to discuss a rate increase for the month of October. The rate would go from 32.50 to 40 a visit. Witch is our minimum for bi-weekly clients now. To get her better value for her money we were going to add the bushes to the agreement. Was more than fair I thought. Shes not going for it and looking for another landscaper. Witch is fine Ive been prepared to lose her for a while with the rate hike looming for the last 2 months anyways.

My question to you guys is how successful are you guys at retaining a client after a rate hike?
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  #2  
Old 09-29-2010, 06:14 PM
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Generally, customers are okay with rate increases as long as the service still represents a good value to them. I have always had good luck giving rate increased at the beginning of the year. That way, customers don't feel they are being confronted with a rate increase in the middle of the season.

If a customer balks, you can always offer to give them an add-on for free. Something small like the bush trimming or blowing out a bed that gathers lots of leaves and debris during the mowing season. An extra small job here and there will help them accept the increase.

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Old 09-30-2010, 12:02 AM
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Ouch almost a full day and no one but keith has experience in this or at least one to share. That cant be right....

Has anyone else had success in retaining clients after a rate increase?
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Old 09-30-2010, 04:01 AM
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I think this is simply part of the growth process in your business.

When you initially get started, you are not going to have a good grasp on your expenses and what you should charge. The consequence of that is, properties will be underbid.

Now when properties are underbid, customers get used to those prices. They aren't going to want to pay more just because you need more for your business to survive. Even if you add on something extra, there will be plenty of customers that look at the bottom line, which is how much I am paying per month.

When you land underbid jobs, there is also a good chance you are picking up customers that are going to place a premium on cost. This means, their ultimate deciding factor is based on the price.

Furthermore, when you are servicing bi-weekly customers, you can pretty much assume they don't give a hoot about quality. They want price, price, price.

With all that being said, as you gain more experience and find the price you need to charge in order to cover your expenses and make a profit, you will need to correct the prices you charge customers who are underbid. There is a good chance these customers are not going to agree with a price hike and ultimately will need to be replaced with customers willing to pay a higher price and those wanting better quality.

No one likes losing customers, but if you can get rid of an underpaying customer and replace them with one who will pay you what you need, you are growing and should feel good that you are.

You can't make everyone happy and you can't work for free. So continue forwards and keep moving up the customer ladder. Forever looking for better customers who want the skill and quality you can perform at the price you need to survive.

Does this help?
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Old 09-30-2010, 11:09 AM
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Ya it does I has hoping more or less that people on here had some experience to share on the matter.
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Old 09-30-2010, 11:01 PM
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As Keith said, I think timing can be a big issue as well. You will probably find more success if you increase your prices at the beginning of the new season versus at some point during the season.

I have a couple of articles on the topic of raising prices, in my blog. They should help you further.
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Old 10-01-2010, 07:50 PM
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I know it may be hard if you dont have a really good client base, but in my personal opinion quality customers, is way better than a quantity of customers. Then the best is a quantity of quality customers, that comes with time and hard work.

in other words, just like Steve mentioned, you cant make everybody happy, if the customer cant except a small increase, they may not be that quality customer your striving for.

Every time i have raised prices, one or two will move on to another company. Thats business, and thats it.

Good luck and dont stress it to much.
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Old 10-01-2010, 10:42 PM
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Quote:
Every time i have raised prices, one or two will move on to another company. Thats business, and thats it.
Do you find that they open a spot in your route that allows you to fill it with customers who are willing to pay a higher price? Ultimately in the end, do you find it worth it?
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Old 10-01-2010, 11:00 PM
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Quote:
Originally Posted by FloridaBoy View Post
in other words, just like Steve mentioned, you cant make everybody happy, if the customer cant except a small increase, they may not be that quality customer your striving for.
Ya that kinda my problem. Im a people pleaser. Im not stressed I just hate losing customers. I stive to be the guy customers use for years and years on end. I just hate seeing them go but like you said its business and life goes on. I just wonder what the success rate was out there.
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Old 10-01-2010, 11:56 PM
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well ill give my insight on this as only kieth and steve has

i had rates increase for 3 of my customers
2 of them were completely fine with it as they loved my service provided they also added when they agreed that if anyone ever needed a customer reccomendation or a job asked for refferances to put there number down.

however the third was not pleased. he even threatened to leave as a customer. He was a grouchy old picky man from the start. the kind that sits on his porch with his dog and drinks 36 cans of beer per day so he has nothing to do but nit pick


Although i was only raising it 10 dollars he was upset and until i explained that..all the other local companies would give you a bid on it for 5-10 more than that he was outraged.

He did get estimates from other companies though.. a couple buddies of mine who work in the area told me that they got estimates from him and we confirmed it was the same guy haha

but..theres always going to be different people.

if you do a good job and you know there happy..its almost guaranteed they wont have an issue as long as its not a ridiculous increase
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