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How much to raise prices...

Discussion in 'Commercial Snow Removal' started by Joel B., Sep 30, 2007.

  1. Joel B.

    Joel B. Senior Member
    from MN
    Messages: 233

    I've been plowing snow for about 5 years now. Some customers have been at the same rate for 5 years ($25/time for "average" driveways). I am raising prices this year but not sure how much. I had thought about going to $30/time but am wondering if that is too much of a jump. Then I thought about going to $28/time since it "sounds" better than $30.

    Also, some customers that signed up recently would get a price increase after only one year....I'm a little worried they might "jump ship" after a price increase so early even though it's actually been 5 years.

    Just not sure, any thoughts?


    Joel B.
  2. cet

    cet PlowSite Fanatic
    Messages: 7,257

    If they just signed up last year then it hasn't been 5 years. That would also be a 20% increase. I would have thought with the fuel increase the past 2 years you would have raised them already. I would raise the 5 year customer for sure. $28 sounds like you are asking for a little more to keep up with inflation. Regardless you are always going to get the few that *****.
  3. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 9,883


    What part of MN are you in?

    I have no problem getting $32 for a small drive here.
    Raising your price to $28 does not seam like enough $$.

    You can't make everyone happy, stop trying to.

    Sell your service.
    Charge what you are worth.
    You need to make money doing this, it's not charity or for the poor!
    It's a harsh reailety I know but thats how it is.
  4. oman1999

    oman1999 Senior Member
    Messages: 198

    I'll throw in my 2 cents. here. Charge what you are worth. Do you show up on time? are you insured? Do you have a back-up plan in case of emergency or break-downs?

    I just picked up a BP station. Not huge, has a McDonalds attached. Takes 90 minutes to plow and salt and another 20 minutes to clear the walks, touch up. So really I figured them at 2 hours. They were paying the last guy $165.00 a push plus the charge for salt. Problem was, he never showed up on time, or did a half-azzed job. And when he didn't show up, he would shut his phones off so as not to be bothered. I told them $225.00 a push including up to 250 lbs of salt (walks and approaches) with a 2" trigger. They said sold but now they want a quote for seasonal. Want to pay from November 1 to April 31. I'll have to figure some averages and come up with a seasonal price as I'm a per-push guy.

    So, the moral is that even if you have a good price it means nothing. Showing up on time is more important to 75% of the customers especially commercial accounts.

    Anyway. That's my $0.02
  5. Joel B.

    Joel B. Senior Member
    from MN
    Messages: 233

    I'm in Plymouth.
  6. Joel B.

    Joel B. Senior Member
    from MN
    Messages: 233

    Does each of your customers have a different price depending on when they signed up?

    I'm trying to avoid that but it doesn't seem fair to raise the price on someone who just signed up last year, but if that is the case they would have a different price than someone who signed up 5 years ago, who would be different than someone who signed up 3 years ago and so on.

    It would sure be easier if everyone was charged the same.

    Thanks again.
  7. Camden

    Camden PlowSite Fanatic
    Messages: 6,604

    You're in the cities and you're worried about getting $28 per drive?! That's crazy...I'm up here in Brainerd and I get $25 per small residential. Bottom line, you are way too low. Go to $30 and don't look back.
  8. Jay brown

    Jay brown PlowSite.com Addict
    Messages: 1,783

    if i'm the customer and been at $25 for a few years i'll pay you $30 no problem, if your doing a good job. probably should figure 5% increase aech year.
  9. NLS1

    NLS1 Senior Member
    Messages: 321

    In the cities I get at least $30, raise up prices and give good service. No one will complain that is worth keeping. Each driveway is different too, so maybe a blanket price is costing you profit. Make sure to charge extra for a bigger or more complicated drive. Just my .02.

    SNOWLORD Senior Member
    from MN
    Messages: 610

    I'm in mn also but dont do any residential but sounds cheap to me remember if you get them on price you'll lose them on price if you get them on quality keep the quality you promised and youll keep the account regardless of the $$$$$
  11. T-MAN

    T-MAN PlowSite.com Addict
    Messages: 1,363

    Thats not enough IMO, you can get more. 250#s of salt is low too. Who is your contract with Mickeys or BP ?
  12. Joel B.

    Joel B. Senior Member
    from MN
    Messages: 233

    So, if you had signed up last year (for $25) and this year the price went up to $30, would you run away and find someone else?

    What do you think about raising the people who have been customers for only 1 year up to maybe $27 (instead of all the way up to $30)?

    Bottom line does everyone's price get raised the same or does it depend on how long they have been a customer?

  13. QuadPlower

    QuadPlower PlowSite.com Addict
    Messages: 1,056

    Bid the drive, not how long they have been with you. From what other MN are saying you are low.

    How much was gas last year? How much did your insurance go up? How much more this year than last is a gallon of milk?

    It sounds like you are worried that you are going to loose customers. I will bet you for everyone you loose, two are going to call when it starts getting colder.

    Write a nice letter, with the contract telling them of the price increase. Explain your situation, but don't sound too sad about raising your prices. When a new client calls, tell them the average is $35, but we would have to look at your drive. If they want you to come out, hit them for $35. You can always go lower, but you can't go higher. After 3 or 4 of those, it will be a lot easier to raise the price on the others.
  14. JD Dave

    JD Dave PlowSite Fanatic
    Messages: 11,194

    Go with your gut. It's usually right.
  15. ADK

    ADK Member
    Messages: 31

    Everyones going to be different, but I like to raise prices a % most years. This year I went with 5%. Hadn't done that in two years so the timing was right.
  16. YardMedic

    YardMedic PlowSite.com Addict
    Messages: 1,266

    So if you took 2 driveways of the same size & increased them by different amounts, aren't you in fact saying they're worth different amounts for plowing the same thing? Do you think the local grocery store considers new patrons in raising the price of orange juice? To me, the argument of "it's not fair that it was 4 yesterday and 5 today" doesn't fly with me. In a similar situation, I'm raising most of my residentials by about $5, though I don't have many "new" ones from last year. In terms of fairness, it's YOU that really matters. Anyone who doesn't sign because of you bringing your price up to what's fair deserves whatever service they get. Besides, say you lose a couple and still take in the same income.... aren't you working less for the same $$? I'm looking at it that way, plus the referral program I'm offering ($20 toward the bill for each referral we bring on). I'll lose dead wood/ deadbeats but probably gain a couple new ones and still increase the income this year.
  17. SnoFarmer

    SnoFarmer PlowSite Fanatic
    from N,E. MN
    Messages: 9,883

    :rolleyes: you hit the nail right on the head.:nod:
  18. NLS1

    NLS1 Senior Member
    Messages: 321

    Sounds about right.

    I agree with Medic. And I agree also about rewarding referrals. You incentivise good customers to refer other good customers and increase revenues. payup
  19. bribrius

    bribrius PlowSite.com Addict
    Messages: 1,609

    if your service is good go to the thirty. if not stay where you are. i wouldnt raise them separatley. its only fair if they are all getting the increase. last thing you need is one talking to the other and wondering why they pay more. not only that but your longest clients shouldnt be paying more than the newest clients if anything it even or the other way around so the new clients pay more.
    i hope you also charge extra for some of the drives that may be longer or have more backdragging etc.
    i wouldnt charge someone the same who had a driveway that was one straight push as someone with a driveway four cars wide with a garage on the side and a house in front that all had to be back dragged.
    as far as referrals i wouldnt pay for referrals. i figure if im doing quality work i will get a referral anyway. if im not then i wont buy it.
  20. Mark Oomkes

    Mark Oomkes PlowSite Fanatic
    Messages: 13,256

    How about this? How much are your costs increasing this year? How much have they increased over the last 5 years? $25 to $30 is a 17% increase. In one year. How many of your customers are going to tell you to shove it at that rate? I would shop it in a minute if any of my vendors tried to pass along that much of an increase in 1 year, unless they have some good reasoning. IMO, just because I haven't raised it in 5 years, is not good reasoning, that is your fault, not their's.

    Next, how long are these drives taking to service? Are they all exactly the same setup? Are some taking 5 minutes and others 10? IMO, you'd be a fool to raise all of them the same percentage across the board. Analyze how much TIME you are spending at each account and aim for an hourly rate that is the same across the board. You could very well be making a killing at one customer and losing your butt at another. The one you're making a killing at will go shopping because your increase is unreasonable, and you could still be losing your butt at the other because you should be charging them $40 instead of $30.