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Too late 2 RAISE the prices???

Discussion in 'Commercial Snow Removal' started by X-LOWBALLER, Oct 27, 2007.

  1. X-LOWBALLER

    X-LOWBALLER Senior Member
    from Toronto
    Messages: 102

    Knowing it is late in the season, our bookkeeper comes over to our office late Thursday night for a drink. She pulls out our plow records from last year and shows us which accounts we made very little money on. BOOKKEEPER WAS OUR BEST INVESTMENT!

    We recently were awarded the largest contract of our lives for the winter so my butt dragging partner and I decided it was time to raise the rates on the accounts that are barely profitable (as any smart business person would).

    I call 3 companies Friday morning and explain to them our dilemma. We are providing great service but in the end our bottom line does not reflect the level of service......2 companies call back the same day and agree to the increases. The highest increase was $440 per month and I was amazed at how they didn't even fuss over it.

    Anyhow (this one is the *** chapper). The 3rd company called was to increase their fee (which remained the same for 2 years) a measly $325 per month. The secretary asked me to meet her half way.....I said no. She asked me to include the first salting at no charge....I said no.

    I explained to her that we are plowing 3 of their buildings and the increase was ONLY $108 per building. She stated that the management would not go for it and that it was late in the season to "Pull this sort of thing". I agreed with her but regardless we have to look out for ourselves first.

    I asked her if she would go to work and hand her boss $5 and work for free...ofcourse she said no. I then asked her how she expected us to do the same. I then ask if she is looking for service or price..."I can provide a list of 10 companies that will do it for half of what we charge....if they show up." Monday we find out whether or not they will remain a client.

    LONG POST SORRY


    I guess my question is this: If a LEGIT business owner is plowing a company and realizes halfway thru that he/she has underbid, is it wrong to cancel the contract? I know a lot of people will bite the bullet for moral reasons but if you are actually losing money, wouldn't one be better off to just cut it loose?

    I know people will say "Know your prices" and yada yada yada but we have been doing this for a long long time and to this day I can honestly say that I have underbid on ocassion (now with less frequency) but I have always just canceled the contract with the time specified in the contract just so I don't lose more money.

    end of rambling transmission
     
    Last edited by a moderator: Oct 27, 2007
  2. YardMedic

    YardMedic PlowSite.com Addict
    Messages: 1,266

    Why are you finding out in the middle of contracts that the finances aren't working? And if you've found this out other times with other accounts, why haven't you adjusted your rates properly prior to renewing a contract? Don't you think it's a shady way of doing business, to sign them on & then come back after you've been awarded the contract saying you can't fulfill what you promised? It's effectively a bait & switch tactic you may or may not have known about (and if you didn't, you said it... "'Know your prices' and yada yada yada").

    If the client changes the terms of the agreement (wants service different than what has been already agreed on for price in a contract), then you have grounds for adjusting & amending the contract at their discretion (you're not going to simply impose a higher fee without their agreement). Contracts should include every provision to cover you up front, and you're not very professional to be crawling back asking for more money.

    Suck it up for the life of the contract, re-bid it correctly allowing for increased costs & projected costs, and employ this ethical approach with all existing & new customers so you're not having to solve the same dilemma again.

    Best of luck


    ~Kevin
     
  3. Italiano67

    Italiano67 Senior Member
    Messages: 639

    I agree. Its pretty bad business to call them back and ask for a raise when you should have done it at the time of submitting the bid. You need a bookkeeper to tell you what jobs are profitable? How did you get to the original numbers? The approach you took is exactly why most people are taking the lowest bid and hoping for the best.
     
  4. plowzilla

    plowzilla Senior Member
    Messages: 289

    She counter offered on YOUR mistake. I would at least give her what she is asking for. This way they still feel that they got an upperhand. Otherwise thats bad business and 'word of mouth' will make you or break you. Salt is cheap anyway!
     
  5. midwestsnowguy

    midwestsnowguy Member
    from midwest
    Messages: 36

    should of had that info from your book keeper way back when you bid the job, you lucked out with the first two, but now instead of making something, your looking at making nothing. not to mention your driver being out those couple hours to do three places.

    i would have sucked up to them all season hit them at the end of the season with a new contract while there were very happy and wouldnt mind paying a little extra.



    and now that i think about it, you uped them 108/lot per month. tha doesnt cover alot when think about how you just had to up their price....not picking a fight, seems slightly trivial??...imo
     
  6. JD Dave

    JD Dave PlowSite Fanatic
    Messages: 11,045

    Suck it up, you can't cancel half way through from your own mistake. If you already sent the bid in, then that should be the price. If someone sent me a bid then called me later to want more, I'd probably say no too.
     
  7. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    If you had a contract, then I'd say you are obligated to live with it. You said it was "only $108 a building". Well, they could say the same to you "You're only losing $108 a building". If you go to store and buy something, what would you do if they wanted to change the price at the cash register? Or at delivery, they want another $50 for the chair you bought?

    YardMedic had it right - basically it was a bait & switch tactic.
     
  8. LoneCowboy

    LoneCowboy PlowSite.com Addict
    Messages: 1,760

    I agree
    I would have dumped you on the spot.
    You made the bid to everyone's agreement and now you come back and change it?
    No, sorry, tha'ts not how it works.
    We all have bid something wrong (sometimes completely and totally wrong) and you know what, you sit there and do it because that's what agreements are for.
    I think you treated your 3 customer's poorly and the one for sure will now tell all their friends about how poorly they were treated and I would guess that the other two are looking right now. Sure, they accepted your offer for now, so they are covered, but since you reopened it, obviously the bid/contract/agreement means nothing so I'm sure they are looking.
     
  9. cet

    cet PlowSite Fanatic
    Messages: 7,202

    Do you keep logs? If so, you should have known how long something took to plow and how much salt went down. If there are sidewalks then you should have known this cost as well. I can see pricing something the first time and not getting it right but sending in a contract on a property you all ready do and then adjust your price is something that would be embarrassing to admit too. In the eyes of an owner I would wonder who I hired. You are lucky your work is so good but last year was an easy year. You better give them FIRST CLASS SERVICE.

    I wouldn't need anyone to tell me my cost on a property I all ready do.

    Good Luck!
     
    Last edited: Oct 27, 2007
  10. Camden

    Camden PlowSite Fanatic
    Messages: 6,598

    Do your contracts cover the topic of rate increases? If not then I think you're out of line asking for more money this late in the year. Your request for an increase should've been discussed at the end of last season or at least before Labor Day.

    $.02
     
  11. basher

    basher PlowSite Fanatic
    from 19707
    Messages: 8,992

    Con*tract; noun : binding agreement, verb; 1; establish or undertake by contract 2; become ill with 3; make shorter

    Simplest definition of contract I could find. Unless your contract includes a codicil providing release for no cause the best i can say is good luck. the other party in the contract has the right to apply to have the courts up hold the contract. Contracts are by definition legally binding agreements. They can hire someone else to provide the service and expect you to pay any difference between your contracted price and the price they charged to do the work.


    if the customer is fulfilling their side of the contract, you have a legal obligation to provide snow/ice control services for the life of the contract. If you do have grounds to nullify the contract most contracts (and state laws) require 60 day notice of discontinuance. During that time you are still liable for injury suits, and could be sued by the businesses for loss of income, failure to provide, etc...

    The fact that they offered to renegotiate at all is remarkable.

    Shame your bookkeeper didn't tell you before you signed the contracts.

    all comments above JMO
     
  12. X-LOWBALLER

    X-LOWBALLER Senior Member
    from Toronto
    Messages: 102


    Oddly enough, this came up one day after they asked me to come in to change the terms from 5cm to 3cm (which is fine cuz we salt them at 3cm) and they also asked for a 8am guarantee...........which I told them if they could guarantee a 6am snowfall, we could guarantee a 8am clearing.
     
  13. X-LOWBALLER

    X-LOWBALLER Senior Member
    from Toronto
    Messages: 102

    My whole point is realizing what CET mentioned. Last year was an easy year. The reason (as stated above) came about when they called me to have 2 changes made to the contract.

    The first being: A 8am guarantee -they expect to have the lot cleared for entry by 8am..easy enough....I control the weather, therefore I can grant them that.

    The second was to change from 5cm to 3cm. I failed to include this in my original comment but the the first 2 commercial properties didn't ask for any changes. I just refuse to service properties and not make money (again). I know the other properties have more than enough contractors who issued estimates at HALF of what we quoted. They could have switched, jumped ship, gave us the heave hoe but I am glad they did not.

    I didn't just say "Hey, pay more or we are gone". I have a relationship with these people and simply explained our situation. The last property has a NEW customer service receptionist who I am sure wants to get rid of us anyway for her guys used at her last job and will do the right thing.

    $108 per building is a lot to leave on the table IMO. I wouldn't bat an eye losing this account. In fact, they gave us the BS empty promises of more business in the future if we just "Do this, and do that but don't charge us for it, it's in your businesses best interest" speech.

    Their contracts start Nov. 15. After reading some of the replies, I had a split second moment of a change of heart then I realized that I for one believe that our profession is already viewed as something one does if they don't graduate high school (don't laugh, that one came from my old school teacher). I preach to the new guys on raising prices and I REFUSE to work for free and/or lose money. If that means canceling 20 days prior to the start of a season...oh well.

    I can guarantee they wouldn't offer more money in January if we got hit with 2 feet of snow every day for 30 days, nor would I ask for more at that point either. I expressed my position and offered to find a reputable replacement. Problem is, they don't exist...as far as I know.
     
  14. YardMedic

    YardMedic PlowSite.com Addict
    Messages: 1,266

    So the rise in price is based on an increase in plowable events (based on prior years) because of lower triggers now?
     
  15. northernsweeper

    northernsweeper Senior Member
    Messages: 397

    Kind of sounds like you got one really nice contract, that pays quite a bit more than the contracts you had. Congratulations, but raising prices mid contract is a choice only you can make, and you'll have to live with the results. I find it hard to believe you would have a contract where your making NO money.. think mabey your getting a little greedy??:nono:
     
  16. X-LOWBALLER

    X-LOWBALLER Senior Member
    from Toronto
    Messages: 102

    I would like to say yes but I would be lying. Actually, they were on the list of 3 and when she called and requested the changes, I pretty much lost it. They tried to chew me down in price on their summer maintenance this season and I would not budge. They wouldn't cancel me because they knew and I knew they got the best winter service. I kept that place BLACK at all times. They pay well but when this new lady came in, she tried to change they way things gelled. I messed with my chi and I had to bring the price up. The lower trigger was just icing on the cake but they would have been raised regardless.

    They switched to our company after the last TWO companies didn't show for hours and hours and several calls after a storm We went in, signed the contract and for two years gave them what they wanted. We wrote our own checks for the summer but once again, this new lady wants to rock the winter boat. LOL.

    This account really isn't worth the time it takes to type this. If we lose em, it was meant to be.
     
  17. X-LOWBALLER

    X-LOWBALLER Senior Member
    from Toronto
    Messages: 102


    Would you call a $25,000 wrist surgery greedy? How about $182 for 10 minutes to unplug a clogged drain? Or, some of Bill Gates software CD's for over $3500 or more? None of these things would be possible without their friendly neighborhood plow guy. So maybe I am wanting a little more. If I were wanting a little less I would be a LOWBALLER, not a X-Lowballer.
     
  18. cet

    cet PlowSite Fanatic
    Messages: 7,202

    Had you already submitted a contract that you both agreed on?
    Were you in the middle of a multi year contract?
    Is salting included or billed per application?
    $108/month is a lot on a $500/month contract. On 10,000/month it is not worth mentioning.
    My concern would be plowing something and not knowing you are not making money until your accountant tells you so. If you don't mind, how many trucks are you running? Both subs and your own.
     
  19. YardMedic

    YardMedic PlowSite.com Addict
    Messages: 1,266

    Maybe the subs are running HIM! :dizzy:
     
  20. cet

    cet PlowSite Fanatic
    Messages: 7,202

    He was on here when I asked the questions. There are always 2 sides to every story but this one seems fishy.