Originally Posted by Steve
What's the best way to go about increasing the prices? Should it be mentioned that it is because of gas or no?
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.