We used CLIP to figure out who was paying us the lowest per-hour rate, and we increased prices for those customers only. To make up for it, we raised our rates-for specific customers. We had to go out and pay for local labor, which is much more expensive. One year, my own lawn care company didn’t get any H-2B workers. So what’s the bottom line on surcharges?Īfter all that talk about surcharges, I may surprise you with my advice: Don’t add surcharges. But we never charge for set-up, Quickbooks syncing, reports, routing, or customer portals. If you need more bandwidth and server space for more customers, we’ll add a fee. Everyone pays the same base subscription fee. Wondering whether I practice what I preach? This mindset is exactly why we don’t charge CLIP customers for add-on items. That’s how you build loyalty with your lawn care customers. Whether it’s spring, summer, or fall, they pay you an agreed-upon rate, and you get the lawn done. It’s about agreements between you and the customer. Personally, it makes me feel as if they’re trying to nickel and dime me.Įverything isn’t about dollars and cents. If you’re spending hundreds or even thousands of dollars a month with a company, a surcharge can be a tough pill to swallow. What if your insurance company added an extra $50 to your monthly premiums? What if UPS started charging 10% more to ship your mom’s birthday gift? Do you like paying an extra $30 to check your bag when your plane ticket already cost you hundreds? If you’re adding surcharges all the time, the unpredictability can be irksome-or drive them away entirely. A lot of your lawn care customers have built your price into their budgets. And it might be more beneficial to your lawn maintenance business’s bottom line. You’re unlikely to shock anyone with a labor surcharge. Minimum wage won’t cut it anymore, and just about everyone knows it. In fact, 20% of folks are planning to quit their jobs this year. Everyone knows what’s going on with the labor market and the Great Resignation these days. If your labor costs are through the roof, you might consider a labor surcharge instead. A lot of lawn care companies are struggling to find good labor-and they’re paying a premium for what they can find. Wage demand has grown dramatically since the COVID-19 pandemic, especially for low-wage roles-such as lawn care. We’ve seen a number of changes to the employment market over the past few years. Are rising gas prices truly the biggest threat to your bottom line? I’m guessing not. You should also look carefully to see if fuel is your most significant cost. If you’re successful, you’ll continue to enjoy those savings when gas prices drop again! Take a look at your other expenses and see if you can save a few bucks elsewhere. You may be able to cut costs elsewhere to make up for the loss. No one wants to see their bottom line shrink-but 6% isn’t a massive number. That means that extra 6% is coming out of your profits. Let’s say you discover that gas usually accounts for about 9% of your total costs. Take a look at your profit and loss (P&L) statements. Your customers won’t be surprised to see a fuel surcharge.īut you may want to do some calculations before making a snap decision. Who wouldn’t be tempted to add a surcharge? After all, everyone knows gas prices are up, and everyone knows why. The cost of gas goes from $3 a gallon to $5. To continue with the fuel example, let’s say something happens in the Middle East. Surcharges are driven by variables in the market. Once gas prices drop, you can drop the surcharge and return to regular rates on your lawn care pricing chart. But that extra payment can keep your revenues looking strong. Without that fuel surcharge, rising costs can put a dent in your profits. It’s designed to address a short-term change in costs or demand, so you can protect your bottom line.įor example, if gas prices are sky-high, you might add a fuel surcharge to cover those costs. A surcharge, on the other hand, is temporary. When you raise your rates, it’s generally considered a permanent move. If you bought flowers on May 25th, on the other hand, you’d probably pay a more predictable price. That’s because flowers are in very high demand during that time of year. For example, if you order flowers on Mother’s Day, you may pay a surcharge. Unlike price changes, surcharges are a temporary rate increase.Ī surcharge is just an extra payment for a standard service. Specifically, we’re going to talk about whether you should use surcharges in your lawn care pricing chart. Hey Clippers! Dave Tucker here to talk about surcharges for your lawn care services.
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