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i had the best year ever so far had to turn work away as i could not get to it which is making me think that i am to cheap
I try to get my under under a set price charge, however im always asked for my hourly rate.
Saying this recently ive lost a few lawn jobs, as i've quoted what it should come to, ie 2 people x 2 hrs = (20ph) - £80 + 2 tonne bags of refuse x £10 each = £100 and ive lost them both, i'm thinking would i have got them by quoting £20 per hourly rate per person + refuse charge - Questionable. I really dont like the hourly rate thing.
Andrew
The Lawn Ranger
I'd not raise prices in the winter, it's too easy for people to spend the next three months looking at alternatives. I always do it at the end of the tax year: a convenient and understandable time as it shows I'm working it out on proper accounts. It also happens to be the time people are appreciating you most, and seeing you around every week working hard.
I automatically increase my "commercial" fixed price work by the inflation rate every year...... been doing this for years and the customer happily accepts it as its very fair. 3% doesn't sound much but it keeps things ticking over nicely.
I've been putting it off and putting it off...you know current climate everybody making savings etc but very soon I'm going to have to..I did let folk know in my last price increase that it would be two years before the next...it would equate to about 9%...so 4.5% per year (but actually thanks to my slackness longer than that !!!)..I rode the fuel price thing and didn't budge..and even saw one or two others less well equipped than I charging more...I charge by the hour and work hard so they get their pound of flesh...I know some charge [er job and different rates for hedge cutting etc mine get the whole monty for 15 quid an hour at the moment and really this has to go up as there ain't a lot of cash to maintain stuff or expand !!!!
Mark, that's the whole argument we keep having about charging by the hour. You can't survive on the hourly rate you charge, but your customers are getting an incredible amount from you: particularly if you don't charge more when you need specialist gear, for instance. And they're sitting at home tonight, drinking a nice glass of wine, glad that you don't put your prices up!
It's so difficult to justify any increase if the customer thinks they've got you over a barrel. Instead of increasing rates, why not start to convert them to monthly accounts, with a decent budget? Explain how it's cheaper for them, and they've got to be idiots not to understand.
Do them a few at a time, and if some refuse, you're next thing is to raise the hourly rate to a reasonable one. If they don't like that either, you have a few slots for new work, that can be on regular payments from the outset.
It's not rght to say that the economic climate means everyone's saving money. I have plenty of clients who need more work from me, as they are having to put more hours in at the office. There's always a positive side to a downturn. Some are struggling, and I've lost work from people who can't afford the "luxury" garden service, or are now unemployed and do it themselves, but that's more than offset by tenants who are now working silly hours and need me more than ever.
You're right there Paul.... Mark has to increase his prices. I always reckon "honesty" is the best policy here so explain the cost of equipment, fuel, inflation etc so that the customer understands the situation and realises your not putting your prices up to fund a Mediterranean cruise!!.
I must be an idiot here though..... I still don't see how the customer is going to save money over the total annual cost by going over to a monthly contract. If he's actually saving money on the new system, surely Mark must be having to cut corners somewhere?
To put it really simply, if you pay me £15 per hour I'll use the cheapest gear, and work as slowly as possible. I lose money if I travel to another job, so stringing your one out is in my interest, and why use expensive, efficient tools if you pay me the same as if I use a mower from B&Q that costs £100. If it won't start, you're paying by the hour whilst I pull the cord aimlessly!
Moving on, I actually "discount" monthly payers, as regular, guaranteed income is worth more to me. Plus, people on standing orders don't pay late, and tend to be more loyal in my experience. I certainly charge more if someone insists on an hourly rate so it's a real discount to them.
The way I sell it, they are my best clients: they give me a regular income, so I'll bend over backwards to help them. Standing orders means no invoices, no postage for me or them, no cost to pay cheques in. If the season is longer (like this year), they pay no more when I'm still clearing leaves in December. As clients with a long-term relationship, they tend to build trust: important with me having gate codes, knowing when the house is empty etc.
It's as simple as saying, for example, that it costs £20 to cut your lawn, and on average I cut it 30 times per year. That's £600, so setting up a standing order for £50 per month is better for both of us. In that example, I'd go so far as to say £45 per month, as the benefits are worth the discount. The cost of a posted invoice has to be a pound a month, for instance.
To put it really simply, if you pay me £15 per hour I'll use the cheapest gear, and work as slowly as possible. I lose money if I travel to another job, so stringing your one out is in my interest, and why use expensive, efficient tools if you pay me the same as if I use a mower from B&Q that costs £100. If it won't start, you're paying by the hour whilst I pull the cord aimlessly!
I see your point but in my case and I suspect Mark and most others, I take pride in getting jobs done as quickly, efficiently as possible without stringing them out to fit the time..... my customers are always amazed at the amount of work I can get through in the time... I wouldn't dream of dragging a job out and always use the best equipment to give the best value for money.
Agree, its nice to have regular payments through the year and I do that with "commercial" work. I have found that in my case, domestic customers do seem to prefer an hourly rate ..... I have tried charging a fixed rate per visit but really didn't work..... if anything, I was staying longer than usual!! I always find there's more than enough work to fill an hour at a garden and without a "cut-off" point of an hour, I could theoretically be there all day doing work to the minutest detail which the customer might not even appreciate ..... As it is, I know exactly what to do to make best use of the time available.
If the market can take it, Mark really does need to increase his prices...... unfortunately, if you're working in a poorer area of the country, this might not always be feasible and you might end up with no work at all.
Geoff Norfolk said:
Geoff, you're going to have to explain this to me!
Let's say I buy a Honda Pro for it's retail price of £1480. How on earth can I justify using it on your lawn, if you pay me the same rate per hour as if I brought my little e-bay Etesia that cost £100? One will do a large lawn in less time, so you pay me less, but it cost me 15 times as much to buy, and much more to run. You'd be laughing at me if I suggested you pay me less money, as I've increased my costs!
I genuinely don't understand how you can afford to buy the best equipment, which does the job faster, then the client pays you the same hourly rate but for LESS hours? Clients do understand the principle: I could use an electric hedge cutter, on their power supply, and cut a hedge in three hours for £15 per hour. That's £45. Or, I bring my proper hedgecutter, easily £400 plus MY fuel, running costs etc., cut it in one hour and charge £40. Who's the winner? I can do two jobs in the same time and get £80 instead of the £45, they pay less, it's a no-brainer for both of us.
I agree that some jobs need an hourly rate: domestic weeding or something, where you can't be sure of the amount of time it'll need. But for fixed-time, regular jobs like weekly lawns, or annual hedges, hourly rates are far less cost-effective for the client, let alone us.
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