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Question about gas price increases:


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Old 03-01-2011, 09:33 PM
clegger11 clegger11 is offline
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Default 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?
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Old 03-01-2011, 09:42 PM
950thomas 950thomas is offline
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I will go up but I will assess each property to see how much to increase
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Old 03-01-2011, 09:53 PM
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Would it be weird to increase by like 2 or 3 dolllars
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Old 03-01-2011, 10:14 PM
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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.
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Old 03-02-2011, 08:02 AM
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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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Old 03-02-2011, 06:57 PM
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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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Old 03-03-2011, 07:23 AM
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Quote:
Originally Posted by Steve View Post
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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Old 03-03-2011, 08:49 AM
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I was planing on raising prices this year anyways , but I'm going up 5 to 10 buck a yard.
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Old 03-03-2011, 06:02 PM
hounddog hounddog is offline
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Quote:
Originally Posted by shadrach View Post
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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Old 03-03-2011, 11:31 PM
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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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