Price increase due to inflation

I had a boss who would raise prices every now and then due to inflation. Basically every few years he may raise prices on existing customers by like 3% or so. Is that something that people normally take into account in their business? If no, why not?

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Yes it’s a must otherwise whilst inflation goes up and the cost of living goes up your wages stay the same which means you are essentially taking a pay cut each time inflation goes up,

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I figured I’d bump this instead of starting a new thread.

Inflation (consumer price index) is somewhere around 4.5% for the last 12 months. That’s a pretty significant amount. Prior to COVID, inflation had been fairly tepid. If you’re not increasing your prices in response, you’re losing money.

All of my larger commercial accounts have gotten a 5% bump from last year’s prices. Realistically, I could probably justify an even larger increase, due to the many commodities that are not factored into the CPI.

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Nice bump. It’s been on my mind lately.

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We bumped up our prices by 10% this spring and our close rate actually went up.

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Same, not a drastic rise in close rate… but an extra job or two even though service minimums went up and I’ve been pushing more packages for exterior cleanings (windows, house, gutters)

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I finally raised my min form $75 to $125 and it’s been much easier to weed out the value price hunters and folks that want only 5 windows they can’t reach.
I will likely move it to $140 for all new accounts and raise all current clients 5-10% in the spring. My realtor clients have told me “it’s crazy” and “where is this money coming from?!” and “you’d (referring to me) stupid to buy right now.”
such is life in a capitalist country that has a good percentage of folks that want socialism. Those that will work want more money for their time (don’t we all?!) and those that will pay for stuff must now pay more for the goods.

Window cleaning minimum is now $300, power washing is $400, roof cleaning is $600, gutter cleaning is $200

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Most likely raising my window price by $4 next Spring.

At least for the busy Spring season.

In the last 6 months rental increase has been huge, with covid many people who were city based have moved out into regional areas. Since many jobs these days can be done from home, there is less need to live close to where you work for many people and the regional areas have pretty much been untouched by covid.

6 months ago $300 would have got you a 3 bed 1 bath home, now those same houses are over $400 and the houses that were $400 are now $500-$600 per week.
For me this was my number one driving reason for increasing my prices which is only logical for my particular market

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Nice! I’ve bumped my minimums, as well. $250 WC, $350 PW, and only offer gutter cleaning as an add-on now for if I’m already there power washing.

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I like that! I might have to steal that gutter cleaning approach

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Dave Ramsey said to raise your price every year so your customers are used to it. It’s a lot easier to take 2% a year for 5 years than 5 years of nothing and then a 10% jump.

We raised things 3-5% this year (with just a few jobs more than that) and bumped our service minimum from $150-175

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Not to mention you’d be shorting yourself on quite a bit of income doing it that way. On a $100 job:

Year 0: $100
Year 1: $102
Year 2: $104.04
Year 3: $106.12
Year 4: $108.24
Year 5: $110.41

That’s $20.40 in missed income years 1-4 if you waited 5 years to raise rates. And you short yourself 41¢ in the end price by not accounting for the compounding effect of inflation.

That could really add up. If you expanded that out to $100k worth of income in year zero, you would’ve missed out on somewhere around $20,810 in income over the course of 5 years.

The losses get even bigger when you consider that the average rate of inflation has been closer to 3%/year historically.

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good to see the math on that. I have averaged ~1,000 jobs a year the last 3 years! That’s serious money. Definitely going to raise prices, may need to do it with the fall postcard, things got real expensive the last 8 months…

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Raising prices is always a difficult decision. I have accounts I’ve done for 20 plus years, and never raised them. Usually accounts over 3 years old should be evaluated. Incriminate of $5 or more.
It’s hard to just do 3 or 4%. Uneven numbers?
I added some dusting to a few commercial accounts, then raised them $5. Look for a simple add on, like using your pole to do some high dusting above a door. I used to say nothing, but that’s not a good business practice. Let them know your supplies, fuel, and insurance has gone up. Most of the time it’s not a big deal. Reassure them you plan to keep this new price for a long while, and appreciate their loyalty, and business.

Yeah, I usually take the 3% or 5% or whatever the CPI and job calls for, and then round up to the nearest $5. I’m not a fan of weird numbers.

I read someone say on here a long time ago, suggesting that you give people the price like you’re telling them the time. You don’t “justify” or explain your answer when someone asks you what time it is. It simply is what it is.

That was a mind-blowing revelation for me, and improved my approach to customers dramatically, resulting in higher close rates and a better quality customer.

I feel the same way about price increases. If someone demands that I justify my price, or a price increase, they aren’t the kind of customer I’m looking for. Do they demand an explanation from their grocer when the cost of bread goes up?

I do try and give a heads up if there’s going to be a larger price correction for a job. But I still feel that no explanation beyond, “it was underpriced to begin with”, is really necessary.

Can’t seem to edit posts right now, but wanted to add:

Also, I want to condition my customers to expect small price increases (keeping with inflation and my costs of doing business) on a yearly basis. It becomes routine, and something they are less likely to resist.

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We increase a big majority of our clients from $20-$40 per service , none really cared. You just have to let them know ahead of time

Genaro and others:
how do you ley them know?
email them, postcard, over the phone when scheduling?
I’m considering doing it with my fall postcard.