New Year Price Adjustments!


#1

You Bid a job in 2012, you still have said job? Did you raise the price after 2 yrs. You should at minimum raise your prices every 2 to 3 years to keep up with inflation.

You would be surprised how much difference it makes. This calculator in the link below can help figure out the new price.
Job I did in 2014 @ 650 should now be 663 for 2016.

http://data.bls.gov/cgi-bin/cpicalc.pl


#2

Yo Severen!

Welcome back.

That’s a great tool I just bookmarked that. thanks for sharing


#3

Thanks for sharing the link @severn.


#4

Nickel and diming your customers over inflation is awful in my opinion.


#5

You’re joking, right? :thinking:

I love my customers, but I love my family more. We all get “nickel and dimed” from inflation. It’s just inherent in modern economics.

If I don’t raise my prices to keep pace with inflation, I am in fact nickel and diming myself


#6

Thanks for the link!

Every single financial aspect of my personal life and business has increase in the last calendar year. My prices must go up. I increase every client at least 2%, as high as 10% for clients that I don’t mind losing. I’d say 9/10 completely understand because they are business people too.


#7

That may be assigning too much value on the act. I see some truth in what you are saying, in that if we price it correctly from the go, we may not need to raise as often, almost llke flying above the clouds. The weather doesn’t affect you as much.

However, the other truth is a quart of wheat for a denarius. There is no getting around it.


#8

I am not joking.

We grow through new customers. Some new customers are paying up to 2x more than old customers for the same work. But those old customers tell everyone around how they had the same price since we started cleaning for them. Then those new customers will become old and happy customers, bringing in more new customers.


#9

I understand that but increasing (even slightly) prices shows clients that your business is thriving. Thriving business = higher operation costs

I learned this from a very successful property manager years ago. I was so blown away that she was offering me all these properties to bid and on and clean that I felt like I was walking on glass the next year when resubmitting my proposals. She responded to each proposal with a higher price that I should be charging to reflect a thriving business. She said, “I don’t care how long it takes you young man… go back and edit these proposals with an increase over last year’s. My clients expect it!!”. She taught me that if I’m increasing my client list then I should be increasing my prices. If not, in the long run I won’t increase the overall value of my business.

I’ve made a chart that calculates the increase I should submit in each proposal, each Winter season. From experience I know that if a few clients take up arms against the increase (which there’s always a few), then I can say bye bye and not feel the hit financially.
If that’s the case you will literally make, at least, the same amount if not more and work substantially less. Timothy Ferriss would be proud :wink:


#10

You’ve found a model that works for you- that’s great :thumbsup: You’re essentially subsidizing your repeat customers with the “overpriced” new ones - nothing wrong with that. I just wouldn’t label the other model (regular price increases for existing customers) as ‘awful’.

For our business, we have too high a retention rate to rely on only new customers to increase our bottom line. We’re also no longer in growth mode, having no intentions of hiring help in the near future.


#11

Very good post. I think a lot of small to medium sized companies are afraid to do this out of some irrational fear that they’re going to anger their customers. Yeah a few WILL be truly angry and they WILL drop you. These are probably the real PITA customers who would still find something to complain about even if you serviced them for free, so no big loss on your end. They’re actually doing you a favor so look at it that way. You probably hate servicing them but now you don’t have to be the bad guy when the relationship ends.

Some will be angry but they’ll accept it and they’ll continue to use you. 95 percent won’t even notice a minimal price increase at all and if they do, they won’t say a word because they understand that’s just how the world works. A gradual 1% to 4% increase every year or two isn’t an issue for most customers. If you double or triple the price overnight, then you’re going to have some problems.

Arby’s doesn’t need to explain to you why their “5 for $5” deal from 15-20 years ago is now called the “5 for $9.95”. As an intelligent business owner, you can probably figure it out on your own. Their food costs went up, taxes went up, and minimum wage isn’t $4.50 an hour anymore. They’re not going to sell roast beef sandwiches at a loss, they’re going to pass their increased costs of doing business onto you, the hungry customer who willingly chose to walk into their store. As a customer, you can either cry about it and threaten to go eat somewhere else (Arby’s won’t care), or you can just accept reality and fork over $10.

If you’re doing $100,000 in gross sales and implement an across the board 3% price increase every year or two, you just gave yourself an instant $3,000 pay raise. How much blood, sweat, and tears would you have had to put into your business in order to obtain $3,000 worth of new accounts/customers? If a few cheap storefront owners drop you because of it, you’re still going to end up just fine so it’s nothing to lose sleep over.


#12

having to lose a customer because they are now so underpriced you no longer want to go and they cannot understand or afford the large increase is what i hate.
that was my experience with my employer the first year i did wc. my buddy who is still with them complains constantly about long term clients for that very reason.


#13

None of our customers are underpriced. If the price is too low we’ll raise it. I’ve raised jobs $500 and their happy. I’ve raise a job $18 and the lady freaked out and left a bad Angieslist review.

Maybe some people need every job to make the exact same amount of money for the effort put in. We find a more flexible pricing structure to work for us.


#14

Welcome back Severn! Hey it’s Chad in Louisiana. Hope all is well


#15

Very well said @BlackTieAustin. You will lose some customers but you will also have more PROFITABLE customers after the price increase.

Also remember that if you have employees, or are planning to in the future, you MUST increase your pricing every year or two. Having employees cost money and those costs go up every single year; if you are not raising your prices you are hurting yourself, your employees, and the economy in general.

We just got this email from a customer:

You had 2 men here for an hour. At $190 (or $95 an hour per man) that means I’m paying WAY TOO MUCH to have my windows cleaned!!! so I will not be using you again.

People like this are customers we do not need and no one on this forum needs them either.


#16

Don’t you love those kind of people? They’re always so sweet to your face, they complement the great job you’re doing every step of the way, and the minute you back out of the driveway they fire off an angry e-mail about something stupid instead of having the guts to say it to your face. Once the check clears, you should reply and say something like, “We’re actually hiring right now if you’re interested in a career change. I attached an application for your convenience”. Unless they’re literally a doctor or lawyer, I’m sure they’ll jump at the opportunity to “make” $95/hour.


#17

Not to get off topic but how did you respond to this email David.

That email from your client say a lot, but in only a few words.


#18

Those sort of customers stopped bothering me long ago. I probably won’t reply to it. Nothing good will come of it no matter how polite I am.

The reason I mentioned it here is that once you have employees your costs go up and yearly price increases become pretty necessary.


#19

I understand what your saying.


#20

CHAD!!! Been gone awhile, i missed everyone on here.[quote=“windowsrx, post:14, topic:40449, full:true”]
Welcome back Severn! Hey it’s Chad in Louisiana. Hope all is well
[/quote]