Raising prices.

[knoppdude]

I am having to raise my hourly labor rate this year to cover the rising cost of everything required to operate. I have one very good customer that has provided a great deal of work for me to date. Does anyone have advice on approaching the company with this in a tactful and honest manner? Thanks for any and all responses.

 

[LarryFine]

Does anyone have advice on approaching the company with this in a tactful and honest manner?

I think you've answered your own question.

 

[ptonsparky]

Just tell indicate it on your next billing as to when new pricing will take affect. Hopefully you are not having to take a huge jump.

 

[dbuckley]

I got some advice on this subject in a different context recently - raise your prices every year (or even more frequently); don't absorb increases to the point where you have to impose a massive increase. Customers may whine at 10% raise, but they will be angry at a 50% rise.

 

[jumper]

I got some advice on this subject in a different context recently - raise your prices every year (or even more frequently); don't absorb increases to the point where you have to impose a massive increase. Customers may whine at 10% raise, but they will be angry at a 50% rise.

True, I can live with small increases in my own personsol expenses a bit at a time, better than a large one at once.

The amount probably is the same, but the way it effects me is different. Good psychological reasoning into customer mentality.

 

[knoppdude]

Thanks for the advice all, the increase I was planning for was less than 10%. Rising costs have to be passed on, and costs are rising.

 

[jmellc]

I need to raise rates but I don't think I can. Work is still hard to get around here. Better than it has been, but still not good. If I raise rates, I'll get even less work.

I'm thinking of adding a small surcharge for scrap disposal. I usually include that unless a customer has his own disposal services. I may start pricing job 1 price if he handles it, higher price if I do it.

A former boss used to add a $25 trip charge to most jobs, especially out of town. We got a lot of flak over it but gas is even higher now, so maybe I should do it now too.

 

[electricmanscott]

Funny that just about every bill we get goes up without warning. But when we want an increase to cover costs outrage ensues.

 

[laketime]

You need to raise rates as costs increase to keep your gross profit percentage where you need it to be. If the project goes for a lower price than you can take it for then it was not a project you should have taken. You don't want to be the guy saying "I may not be making any money but I am working everyday." :roll:

 

[jmellc]

Hard thing is, I can't afford to just break even but if I'm not out there being seen, I might lose more work. I have gotten a few decent jobs just by a neighbor coming over & asking me to check out their issues when I finish this job.

I've also thought of increasing my material markup instead of my labor rate. Some people don't argue as much with materials as labor. They buy things every day & know they go up.

Still thinking on it all.

 

[Buck Parrish]

That's what we did. $5 every now and again and hardly any body noticed, hahah.

An old but wise bussiness man told me "If nobody complains about your prices, Your not charging enough"
Hmmm ,
I think I'll use that in my signature area.

 

[dbuckley]

An old but wise bussiness man told me "If nobody complains about your prices, Your not charging enough"

My late father in law was a tax inspector on the Liverpool docks, and no-one kept books worth a damn, so he used this method to determine the appropriate tax take. If they just wrote a cheque and handed it over, he knew that next time he needed to demand more tax...

 

[readydave8]

I need to raise rates but I don't think I can. Work is still hard to get around here. Better than it has been, but still not good. If I raise rates, I'll get even less work.

unless you doubled your price and only lost half your work. then you'd have time for a second job.

seriously, the amount of work you would lose needs to be balanced against the increased profit on the work you keep. fixed overhead changes the equation.

 

[boboelectric]

the Boys Are getting good and deserve an increase.

 

[renosteinke]

Some of the best 'business classes' I've had were given by prostitutes. No kidding. Remember, I'm from Nevada, where such is a legal profession.

Dolores French wrote about her career in "Working." She made one very important point .... regular customers are the heart of any business's success- and it's nearly impossible to raise your rates. In her case, she had customers who still expected 1970 prices in 1995. Oddly enough, during the 'slow season,' she had no problem calling them up and soliciting 'cut rate' business ... but during busy times, it was most annoying.

There's the deal: you need to cover expenses, but you wind up repaying their loyalty when you got started with cheap work later on. Your only 'way out' is to develop enough new business that it doesn't hurt too much.

 

[knoppdude]

Some of the best 'business classes' I've had were given by prostitutes. No kidding. Remember, I'm from Nevada, where such is a legal profession.

Dolores French wrote about her career in "Working." She made one very important point .... regular customers are the heart of any business's success- and it's nearly impossible to raise your rates. In her case, she had customers who still expected 1970 prices in 1995. Oddly enough, during the 'slow season,' she had no problem calling them up and soliciting 'cut rate' business ... but during busy times, it was most annoying.

There's the deal: you need to cover expenses, but you wind up repaying their loyalty when you got started with cheap work later on. Your only 'way out' is to develop enough new business that it doesn't hurt too much.

That is the problem for me, the customers are good, and the work is T&M, and they often pay for the material. In addition, they trust me enough to give me the keys to the plant. This is the smaller, and ironically, more profitable plants. The people are almost like family, so it would be very hard to raise rates, as they are a bread and butter job. On the companies bigger, Taj Mahal operations, they are dumping money on all kinds of processes, to the tune of millions. I still have to treat them both the same, which complicates things. I think I will follow Larry's advice and at least be honest, as I have no tact.

 

[laketime]

That is the problem for me, the customers are good, and the work is T&M, and they often pay for the material. In addition, they trust me enough to give me the keys to the plant. This is the smaller, and ironically, more profitable plants. The people are almost like family, so it would be very hard to raise rates, as they are a bread and butter job. On the companies bigger, Taj Mahal operations, they are dumping money on all kinds of processes, to the tune of millions. I still have to treat them both the same, which complicates things. I think I will follow Larry's advice and at least be honest, as I have no tact.

They are supplying your material?

 

[LarryFine]

I think I will follow Larry's advice and at least be honest . . .

Funny how it often comes back 'round to that, isn't it?

 

[jmellc]

I've seen a lot of crooks out there & seen some of them reap what they sow. I'm sure the rest will fall sooner or later.

I've done jobs that I would do differently & maybe better if doing again but I've never charged anyone dishonestly & had to lose sleep over it. I can look any customer in the eye & justify every penny of the bill. I can often point out something I "threw in" or forgot to charge for.

Honesty does pay off in the long run, even if I have to shut down my business & work again for someone else.