Raising Lawn Care Prices

The cost of fuel, the cost of insurance, the cost of fertilizer and materials – every business expense for lawn care operators (LCOs) seems to be on the rise these days, and LCOs are challenged to find new ways to off-set those costs. In most instances, contractors pass on the expense to their customers through increased service fees, and some LCOs already make this an annual practice.

“We’ve been very consistent in raising our prices annually,” says Daryl Zellmer, president, Lawn Systems, West Bend, Wis. “From last year to this year we didn’t raise them much, but small increases every year are what keep us running as a profitable business, especially when our costs are continually rising.”

But rather than issuing across-the-board increases, Zellmer and other contractors have developed new fee adjustments that compensate for business costs without squeezing clients’ wallets.

“We recently restructured our weed and feed program and adjusted our rates depending on square footage,” notes Zellmer. “But we balanced out the scale so that everyone is charged fairly. We used a spreadsheet to figure out the values, but basically everyone under a certain size lawn is being charged $3 per 1,000 square feet. As the square footage gets higher, they’re charged less – maybe only $2.75 per 1,000 square feet.”

Zellmer still reviews accounts annually to determine potential price increases, but the graduated pricing scale keeps clients happy.

In a different approach, Brad Culver, president, Nitro Green/Helena, Helena, Mont., increases fees for only a portion of his customer base at a time.

“We usually raise our prices annually, but we don’t always increase everybody’s prices – only a part of our customer base every year,” Culver says. “One year we might increase the smaller lawn sizes and the next year the bigger lawns.” This approach allows Culver to gain the income necessary to run his business, but also maintains clients satisfaction. Whereas annual increases can take their toll on customers as they watch their own costs go up and up, clients who only see increases every other year are more understanding of the extra expense, rationalizing that they didn’t have to pay more the year before as well.

Zellmer and Culver agree that fair price increases are usually between 2 and 5 percent before customers start to complain, thought the exact amount depends on the company’s costs.

“We look at things like increased insurance costs, fuel costs, workers’ compensation rates, and also historical increases for our customers,” Culver says. “We have the ability to raise prices either a precetnage of the actual job or just by a certain dollar amount for the stop charge, btu you have to look and see in which areas your costs are increasing and decide which method would be the best for your company.”

The author is Assistant Editor of Lawn & Landscape magazine and can be reached at lspiers@lawnandlandscape.com.