[*Chris Browne]

Im looking to increase my prices, im wondering , do you increase your prices every year by the rate of inflation? or as and when. I know that some do it as a matter of course, but im just wondering how to impliment it and how to word it basicly, if there is some sort of template someone has drawn up , that would help, up untill now ive just put increases onto certain contracts and blamed the goverment, any help would be gratefull.

chris

www.scsf.co.uk

[Art]

Chris,

 I've sent you an email 

Arthur

[CMS]

Hi Chris

Price increases are OK but I think the method of increasing your charges should have been written in at the start. Probably too late now.

But....................how about this for a concept. I'm going to run something by you that will on the face of it sound totally at odds with everything we have ever thought before.

Wait for it.................how about decreasing your prices?!!!

Yes I know it sounds madness but hear me out.

I have used this as a sales aid before now with a certain degree of success. I use it to get a Client to sign up to a three year contract instead of a one year contract.

I explain that throughout the first year we will learn more about their building and the way they operate thus enabling us to improve our service for less cost in the second year and even further in the third.

If they agree to a 3 year contract we offer to reduce their charge by 5% each year. Therefore a charge of £10,000 per annum in the first year would become £9,500 in year 2 and £9,000 in year three.

It wins business and gets you longer contracts.

[*Chris Browne]

Thats a cracking idea, not thought of that one

many thanks

chris

www.scsf.co.uk

[Paul Forster]

This would only work if the starting price was set very carfully so as to afford the reduction in 3 years and still maintain a good margin of profit.  (not a crtisism mearly an observation )

Paul

[Tim Downer]

I would have thought that CMS would have taken that into consideration, he seems to have been in the business long enough!! However, wether you have or not, you have increased your potential customer earnings from a £10,000 job which could end in one year, to £28,500 for the three years. In effect, secured work for three years!! Sounds good to me

Regards

Tim

P.S - CMS - Where has your web site gone? Was showing another cleaning friend of mind a couple of cleaning web sites......yours seems to have gone??

[CMS]

The domain name expired on the 20th January. I was sent a reminder email but it was filtered out as spam so I didn't get it......................

I've renewed it but it will take another couple of days to be up and running.........................

[Tim Downer]

Cheers, will check it out in a few days then. Cheers for that.

Tim

[blacksheep]

hi cms, if wages rise in the next 3 years and there is a variant as a result of legislation,would the contract stand as is and would  a person need to go back to client to change the contract a wee bit regards blacksheep

[Fox]

Blacksheep

There is usually a standard clause in contracts that deal with government changes, minimum wages etc which allows for that flexibility.

CMS

The terms you mention are commonly used for hygiene contracts, for example we provide sanitisers, mats and bins etc, if the client signs a three year contract rather than one we offer them a more attractive price.

However this is much more difficult to get right on the cleaning side.  Every contract has a clause and it doesn't normally matter how the contract is worded if the cleaning isn't up to speck and the manager of the cleaning company hasn't protected themselves with signatures of satisfaction on qc's etc then the contract is only worth 3 months.  I commonly tell the client that they usually only need give 3months notice no matter how long they think the contract is for when I am selling and have not been wrong yet, (I'm not saying there aren't contracts out there which are much harder to break, just that I haven't come across them!).

Personally I use a rolling yearly contract, so basically if I don't get three months notice before the end of the year it automatically renews for another year. 

Anyway back to the question.  I increase my prices once per year, I do not increase those that have been with me for less for 6 months.  I usually tell them that it is due to the increasing costs in materials and travel plus an increase in wages.  I always say in the communication that we will meet a certain of the % increase and that the % we are asking of them will be xxxxx. 

Fox

[*Chris Browne]

Many thanks for everyone's replies and advice, it is much appreciated.


chris

[CMS]

hi cms, if wages rise in the next 3 years and there is a variant as a result of legislation,would the contract stand as is and would  a person need to go back to client to change the contract a wee bit regards blacksheep

Every quote or contract should have that written into it............that 'we have the right to vary our charges subject to changes in legislation'.

Then any change to minimum wage etc. can be accomodated.

[CMS]

Blacksheep

There is usually a standard clause in contracts that deal with government changes, minimum wages etc which allows for that flexibility.

CMS

The terms you mention are commonly used for hygiene contracts, for example we provide sanitisers, mats and bins etc, if the client signs a three year contract rather than one we offer them a more attractive price.

However this is much more difficult to get right on the cleaning side.  Every contract has a clause and it doesn't normally matter how the contract is worded if the cleaning isn't up to speck and the manager of the cleaning company hasn't protected themselves with signatures of satisfaction on qc's etc then the contract is only worth 3 months.  I commonly tell the client that they usually only need give 3months notice no matter how long they think the contract is for when I am selling and have not been wrong yet, (I'm not saying there aren't contracts out there which are much harder to break, just that I haven't come across them!).

Personally I use a rolling yearly contract, so basically if I don't get three months notice before the end of the year it automatically renews for another year. 

Anyway back to the question.  I increase my prices once per year, I do not increase those that have been with me for less for 6 months.  I usually tell them that it is due to the increasing costs in materials and travel plus an increase in wages.  I always say in the communication that we will meet a certain of the % increase and that the % we are asking of them will be xxxxx. 

Fox

Hi Fox

I agree that most contracts can be broken if the cleaning is not up to scratch.

However there is a very important reason for securing a three year contract if possible.

I think I've touched on this before. We are not just in this to earn an income. If that was the case we should be employed elsewhere.

Surely we are trying to build something that has a value in its own right..something to sell or pass on to kids etc.

Contractual business adds 'value' to a company and a three year contract adds more value than a one year contract.

Its worth more if you want to sell it and carries more weight if the company wants to borrow money for whatever reason. Lots of comapnies borrow to grow by 'aquisition'. Go to the bank with a handful of three year contracts and they will be falling over themselves to help you!

[shelton]

It's interesting to see the different points of view, between the 'big boys' and the smaller, 1/2 man band enterprises.

I found the comment from CMS about not in the game to earn a wage completely at odds from my own position.

I started my company to take on a limited number of customers to allow me to contribute to the household income, only working when it suited me and the kids schedules.

Subsequently, I've gone from earning £0 per month to nearly £900 in just over 3 months.  Maybe I'm missing the point, but I'm not looking to expand, sell or anything else.

Obviously, expanding and taking on staff is always an option, but I'm not interested in going down that path - reasons being;

1.  I wouldn't know where to start
2.  Could really do without the hassle of having staff, holiday pay, etc, etc ...

There's obviously nothing wrong in building large enterprises, but please bear in mind some of us are small-fry and only in it for a wage.

I assume I'm not in a minority?