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Raising my prices

Discussion in 'Commercial Snow Removal' started by DJ Contracting, Nov 10, 2005.

  1. DJ Contracting

    DJ Contracting PlowSite.com Addict
    Messages: 1,392

    Well i'm raising my prices, the funny thing is i had several accounts call and ask me how much thier snow removal was going up. So far it's made it easy for me. I just told them that i was not going to absorb the fuel cost. I figure by raising the account $10 - $15 dollars across the different increments of snow fall will cover the cost of fuel and still make good money
     
  2. glenspot

    glenspot Senior Member
    Messages: 255

    I'll get blasted for this, I'm sure.... But I'm not raising my prices at all this year.

    For me, a gallon of 87 octane is only about 30-cents more expensive this year than last. That means, that I SHOULD have raised my prices a dollar or so across the board to cover the increased cost of fuel. My other expenses have not gone up significantly, so I don't really NEED to increase my price significantly. Most of my competitors raised their prices several dollars per push. The competitors who do seasonal pricing raised their prices by about the same increment per push, but it works out to around $100 per season. (And customers notice that kind of money on one invoice)

    This year I am getting a lot of calls from people who's former plower is raising his rates, and they are just "checking" to see whats out there. (All residential). I give them their quote, and they sign on the bottom line. I have only lost one customer and have gained another 6 new ones so far.

    So far its working pretty well.

    Glen
     
  3. Stan

    Stan Senior Member
    Messages: 579

    I feel that its not just the "fuel" that determines the price. Its everything around you that revolves around "fuel" as well. I happen to work in the trucking biz & the rates have never been so high for the 25 years I've been doing this. Eventually, everything goes up.
    Here's an example;

    Produce load from Ca-NY Nov '04- $3800.00...Nov '05 $5000.00
     
  4. Pete7

    Pete7 Member
    Messages: 55

    I understand everyone raising their rates and in my construction business I am actually surprised at some of the things that have not gone up very much when looked at over the long term--10 years or more.
    I recently attended and interesting seminar by another builder (he closes 175 houses a year), he has someone that tracks commodity prices and when subs or suppliers try to renegotiate prices he points out the dips in prices over the life of the contract and how the supplier never offered him a discount. This worked well with the example of lumber, it is a commodity so it has wide price swings and suppliers do not call to lower the price on orders that are already placed. This got me thinking and I think if you have long term customers raise your prices since fuel isup and we are all paying for it at the pump and everywhere else. BUT when gas/fuel prices drop a little send out a letter dropping prices just a bit take $2 off per push or send rebate check on seasonals. Bill it to your marketing account, it will be the best money you ever spent. And then next year if fuel is up at contract time you can raise your price because your customers will trust you.
    Keep in mind that this will only work if you know the true cost of your service and already have a profit margin.
    Pete
     
  5. justme-

    justme- 2000 Club Member
    Messages: 2,138

    I raised my rates this season for the first time- ever. 8 years in business. I price my accounts by what I feel is fair for the job, but with diesel at $2.75 a gallon, up basically $1.00 from last season (up almost $2.00 from 8 years ago) I need to offset the costs. ALL of my customers have been very understanding and all of them expected it. They didn't expect I only raised by $2.00 per push across the board. If Fuel goes under $2.00 a gallon I'll drop it off, if it goes over $3.00 I'll have to raise it again. Fuel costs are a fact of life and they all know gas and diesel have gone up- don't feel you have to eat the fuel as long as you can justify the fee increase and it's reasonable. Adding $5.00 per push would have been reasonable since I have plowed all of these customers at least 3 years and most of them going on 7 years or longer with no price increases, but I don't feel that's necessary personally.
     
  6. drmiller100

    drmiller100 Senior Member
    from idaho
    Messages: 119

    average here is 22 pushes a year.

    last year a grand total of 3 times. lots of the old timers are scaling back.

    so far htsi year I have pushed 3 times. way early season, no one ready.

    I'd be driving from job to the next, see a commercial account of a friend, and stop and clear the lot. sometimes it is a competitor struggling, no worries, just helping out.

    sometiems it is someoen who gets to work, didn't have anyone, adn SURPRISE!!!!!!!!! lot is clear, and i got a new account from someone that doesn't care what it costs.

    I raised everyone 5 bucks. most don't care, the few that call around get a rude awakening. no one else is accepting new clients.
     
  7. karl klein

    karl klein Senior Member
    Messages: 557

    i have raised my hourly rates for skidsteer's and dump trucks five dollars over last year and front end loader up 10 dollars. my salting i went up 5 dollars per ton applied but thats just becuase my salt price has gone up 5.00 per ton.
     
  8. lawn king

    lawn king PlowSite.com Addict
    Messages: 1,070

    price increase

    We raised prices 10% across the board, no complaints. Diesel fuel alone has increased 100% in three years!
     
  9. justme-

    justme- 2000 Club Member
    Messages: 2,138

    Not exactly 100% in three years- three years ago it was $2.25-$2.50 per gallon if I remember correctly- was either 3 or 4 years ago then came down a bit to a reasonable ish price.
    But close enough fuel has increased in cost and the world knows it so cost of business increases then prices must increase. I was thinking 10% flat increase myself originally, but I got soft- my flat increase works to between 5% and 8% depending on the specific customer.
     
    Last edited: Nov 14, 2005
  10. Woodland

    Woodland Senior Member
    Messages: 269

    I raised most of my prices a little this year to offset gas increases as well as to bring some of them up to where they should be. I think most people expected it. One of my commercial accounts, a waste mgmt facility, called me back in August to find out how much I was going up so he could put it in his budget for the board of directors meeting that month. Didn't want to know if my price was the same, but how much the increase was!
     
  11. twintreeslawn

    twintreeslawn Junior Member
    Messages: 10

    Fuel prices

    I too raised prices this year. I never to customers why. What happens if and when Diesel goes down are you going to lower $$$. Just woundering.
     
  12. DJ Contracting

    DJ Contracting PlowSite.com Addict
    Messages: 1,392

    I'm with you twin trees lawn the way i figure it, it's my business and it's happen to me, with serveral vendors raising their prices. Hope you all do good this season.
     
  13. justme-

    justme- 2000 Club Member
    Messages: 2,138

    actually, yes. Personally if diesel drops below the $200/gal mark I'll drop the increase I just did. I feel the per pass rate I get is fair for the work I do and I realize my services are not a necessity for any of my customers, especially compaired to heating oil or food, so the increase is simply to cover the fuel cost increase in my operations. This is the first time in 8 years I have raised prices....this is also the first time in 4 years I have had openings on my route. I have not need to advertise, getting all my new customers from word of mouth. Too many people moved out of the area this off-season and the houses have not sold yet. I usually pick up new owners on the old owner's recomendation.

    Considering I get $35 per pass ($70 for a 6 inch storm is not unusual) for a drive many competitors only get $45-50, or less for in the same 2 passes and my customers are happy to pay it, I have no reason to quibble with them over $2.00. If they feel I'm cheating them or overcharging them they will be upset, and rightly so. But little things like that make them feel special and keep them happy. I won't nickel and dime customers, reather I know how many customers I need on my route to make the amount per storm profit I want to see and I do everything I can to maintain that amount of customers.