# Irate Customer Due to Rate increase - How do I handle?



## dmjr77 (Nov 6, 2004)

Hello,
I just got off the phone with one of my plow customers. He is mad at me since I had to increase the rate (plow & shovel walk) on his driveway by $4.00. I tried to explain to him that the cost fuel and insurance is more this year than last year, but all he could say is "I feel that is asking a bit much" Do you think $4.00 is to much? Any ideas on how I should handle it or should I tell him to find someone else?
Thank You


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## Young Pup (Aug 13, 2004)

Is this a residential customer? I just looked at my prices from last year. I raised my residentials anywhere from 3 to 5 dollars last year. I got not one complaint. Now this year I don't think I am going to raise them. I am milling over that before I send the letters out at the end of the month. Me personally I don't think you need to give in to him. He can take it or leave it. Tell him everyone is getting the increase because of your overhead is well over you head. Sorry had to say that.


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## All_Clear (Jan 28, 2005)

Well lets see... If you need to make $4 more because of costs and a customer does not understand then sorry they should find a new plower.

Assuming you know your cost to run your business and thats what you need, then never lower a rate just for a single customer. You'll end up out of business fast. If however you value this customer and have to keep them then i'd say try to find a new customer in the area to off set the cost. Not much else you can do, ya win some ya lose some.


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## dmjr77 (Nov 6, 2004)

This is a residental customer. I feel that I justified since at the start of winter last year fuel was $1.49 a gallon and now it is 2.79 a gallon. Am I out of line at all?


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## Mick (May 19, 2001)

dmjr77 said:


> is "I feel that is asking a bit much"


Tell him "Thank you for your business in the past. I'll take you off my list for this winter. Again, thank you very much."

If he calls back - "I'm sorry, Sir, my route has been filled".

But that's just me - I won't plow for someone who thinks I'm gouging. Apparently, he was upset and now I'd be upset. There are other customers. Would you take on a new customer who wanted to argue with you?


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## Young Pup (Aug 13, 2004)

dmjr77 said:


> This is a residental customer. I feel that I justified since at the start of winter last year fuel was $1.49 a gallon and now it is 2.79 a gallon. Am I out of line at all?


To me it should not just be the fuel costs making you raise your rates. You have Insurance,salt prices are going up due to fuel, You need to go get the salt as well. It just a business move.


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## Young Pup (Aug 13, 2004)

Mick said:


> Tell him "Thank you for your business in the past. I'll take you off my list for this winter. Again, thank you very much."
> 
> If he calls back - "I'm sorry, Sir, my route has been filled".
> 
> But that's just me - I won't plow for someone who thinks I'm gouging. Apparently, he was upset and now I'd be upset. There are other customers. Would you take on a new customer who wanted to argue with you?


Well put Mick.


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## dmjr77 (Nov 6, 2004)

I do not do sanding or salting, I sub contract it out. As for my insurance, I just checked with my insurance agent today and my rates are staying the same as last year. I feel by traveling 12 miles to get to his driveway, I feel that I am in line.
Thank You


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## All_Clear (Jan 28, 2005)

dmjr77 said:


> I feel by traveling 12 miles to get to his driveway, I feel that I am in line.
> Thank You


Well you pretty well answered your own question then, if you feel your in the right and its 12 miles to the job and he wont pay then, find a new customer in a tighter route. If your route includes homes right around it, like i said try to pick up a new customer and charge them your going rate to off set some cost of the other guy. However sounds like he wants a certain price and would bail on you if someone else comes along cheaper anyhow....


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## cet (Oct 2, 2004)

If you find an educated customer or one that is good with numbers he will know that $4 increase will cover more then fuel and insurance. If you do 25 houses per snowfall then the increase is $100/night. I bet you don't spend $100/night total not just the extra. If you need the $4 then stick to your guns but don't blame everything on fuel. I raised one of my contracts last year from $12,000/year to $13,000. They phoned pissed off but I said that is what I need, no other explanation. They said they would look around and get back to me. I told them that was fine, we talked for a little more and before I hung up they agreed to the increase. Sometimes we price things wrong and they need to be adjusted. That is for the customer to understand. What percentage is the increase?


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## dmjr77 (Nov 6, 2004)

cet,
it figures to a little more than 12%, $33 to $37 for a plow and shovel.
Thank You


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## cet (Oct 2, 2004)

If the house is 12 miles away and then 12 more to the next job it might be hard to make money at that price. Drive time alone in the snow must be almost 30 minutes return.
Our town isn't 12 miles wide and we don't leave town.


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## Makndust (Feb 6, 2004)

Your well justified. I raised my rates 25% (yes you read right). From 60.00 / hour to 75.00 / hour. I was feeling a little bad until tonight. My 12 year old son was helping me put on a new set of boss v plow blades. He asked how much they cost (180.00 per set). I started explaining the 150.00 here and 200 there thing and he couldn't believe it. He asked me how I could stay in business with such expenses. With my rise in fuel and insurance costs it kinda puts things into perspective.


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## hickslawns (Dec 18, 2004)

I don't know who said it, but someone on this site said "If you feel guilty about sending out your bills, then you are probably priced where you need to be. If you feel like you are giving your customers a break then you are underselling yourself." Maybe not the exact quote, but that basically covered what they were saying. I don't feel guilty when I send my bills, but I am not doing charity work. Who paid the tranny rebuild last year (although it should have been my driver, I fired him instead because he knew better)? Who pays the insurance? WHo pays the fuel? Who leaves their wife and kids for sometimes days at a time? Who takes off on Christmas eve when necessary? We are in this to make a living. If a customer can't understand the need to occasionally raise prices to offset rising costs, then they are not concerned about whether you will be there next year and years to come. They are concerned about the bottom dollar. I can respect that. If I can't afford something, I don't buy it. I don't go into Walmart and try to beat them down on a price either though. It is priced there to make them a profit so they can stay in business. 

My opinion: Tell them take it or leave it! Just do it tactfully like Mick said.


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## Mark Oomkes (Dec 10, 2000)

The 12% increase is fine assuming you needed to raise your rates 12%. What percent of your costs is fuel? Did your fuel costs increase 12% as a percentage of your gross profit? Or were you low in the first place as someone else said?

I raised a customer 75% one year. I screwed up on how much had to be mowed, was way off. After the first year, explained the increase to him, he stated he had to get other bids, I told him I understood, we still have that customer today. 

Just a personal opinion. I don't 'feel' a price increase is ever justified. I justify it with facts. Feeling is an emotion and emotions are not objective or quantifiable, facts are.


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## Up North (May 4, 2004)

dmjr77,
Stick to your guns man. I'll bet you anything that most "professional plowers" in your area have raised their rates more then 12%. I'd say if he's not happy and won't pay the increase...sayanora! 

Buck


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## DBL (Aug 27, 2005)

$4 is nothing...i dont know anything about this customer but if hes gonna get all rilled up over $4 then hes probably gonna ***** all year long


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## Mark Oomkes (Dec 10, 2000)

DBL said:


> $4 is nothing...i dont know anything about this customer but if hes gonna get all rilled up over $4 then hes probably gonna ***** all year long


Did you happen to notice the part where he said it came out to 12%? What about the comment if the guy plows 100 driveways in a night, that's $100 total. Does anybody go through that much fuel in one night in one truck? $4 is nothing if you are talking about $100 (4%), $4 is a lot when you are talking about $4 (100%).

What if he get's serviced 30 times a year, is that still nothing? We still don't have an answer whether he is raising his price because he underpriced it initially or if his costs have actually gone up 12%. If either one of these is true and the customer won't accept the increase, then yes, he is better off without him. But if he just went up 12% because he felt that would cover his costs--but not knowing the facts--then maybe his increase is out of line. We don't know and shouldn't give him an answer one way or another until he answers us.

What I am trying to point out is that any of us would be a tad upset with a 12% increase in anything we purchase if there wasn't a good reason behind the increase--salt, plows, fuel, trucks, health insurance (I wish it was only 12%), etc--but when we are educated about why something costs 12% more, we either pay it or find something cheaper. Why do we get upset at our customers for doing the same things we do? It is possible to price yourself out of the market, even if you provide the best service in the world, not everybody can afford that, therefore you will not be able to provide yourself with a living at that pricing level. It's called remaining competitive and capitalism, someone will always be looking for a more efficient way cheaper so that they can get the work you have. So don't go condemning the customer without knowing all the facts, he's doing the same thing you would do if you were in his shoes.


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## TRUE TURF LAWN (Sep 12, 2005)

i went up $10.00 on residential and $50.00 on commercial i Had no complaints. :waving:


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## Up North (May 4, 2004)

Mark Oomkes said:


> Did you happen to notice the part where he said it came out to 12%? What about the comment if the guy plows 100 driveways in a night, that's $100 total. Does anybody go through that much fuel in one night in one truck? $4 is nothing if you are talking about $100 (4%), $4 is a lot when you are talking about $4 (100%).
> 
> What if he get's serviced 30 times a year, is that still nothing? We still don't have an answer whether he is raising his price because he underpriced it initially or if his costs have actually gone up 12%. If either one of these is true and the customer won't accept the increase, then yes, he is better off without him. But if he just went up 12% because he felt that would cover his costs--but not knowing the facts--then maybe his increase is out of line. We don't know and shouldn't give him an answer one way or another until he answers us.
> 
> What I am trying to point out is that any of us would be a tad upset with a 12% increase in anything we purchase if there wasn't a good reason behind the increase--salt, plows, fuel, trucks, health insurance (I wish it was only 12%), etc--but when we are educated about why something costs 12% more, we either pay it or find something cheaper. Why do we get upset at our customers for doing the same things we do? It is possible to price yourself out of the market, even if you provide the best service in the world, not everybody can afford that, therefore you will not be able to provide yourself with a living at that pricing level. It's called remaining competitive and capitalism, someone will always be looking for a more efficient way cheaper so that they can get the work you have. So don't go condemning the customer without knowing all the facts, he's doing the same thing you would do if you were in his shoes.


Fuel alone has gone up what...75% higher then at this time last year? I think a 12% increase is well within line. All my accounts are getting hit with an increase as well, $5 will be the minimum increase, in most cases it's going to be $10 more then what they paid per push last season.

Buck


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## The Boss (Oct 22, 2003)

Simple. If he's going to get his panties in a bunch over $4.00, tell him to find someone else. I wouldn't even think twice about it.


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## stumper1620 (Dec 19, 2004)

dmjr77 said:


> cet,
> it figures to a little more than 12%, $33 to $37 for a plow and shovel.
> Thank You


OK, 12 miles to get there, up from 33 to 37 bucks.
How long is the drive? how long does it take to push an average snowfall? how difficult is it? How much shoveling?
I don't Know your cost. but i would say that is a fair price for a medium length country driveway. ( I would probably increased to 35, but, thats me.)
looking at fuel only, if you get 12 mpg thats 1 gal to get there & 1 gal back, I cannot imagine more than .5 gal to plow his drive so we have a total of 2.5 gals. using my current diesel fuel cost of 2.89 that gives us 7.23 per trip on fuel,(this is being a high est. to you for fuel) comparing this to last November's fuel price of 2.19 that comes out to 5.48 a diff. of 1.75 now fuel fluctuated all over the board last season so you could add a few cents per gal. but would still not cover the increase without doubling the per gal. cost. take the 7.23 pad that by another .77 for fuel fluctuations that gives a total of 8.00 in fuel and determine if you are being fair.add your maint. labor, windshield time, ins. permits ect. to the current padded fuel cost to determine if you are being fair.
taking the current padded cost of 8.00 and subtracting last years cost of 5.48 the difference is still only 2.52, fuel alone does not cover your increase.


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## Mark Oomkes (Dec 10, 2000)

I had a long response for this thread but the freakin' server\software froze on me, again. :angry: :angry: 

I guess I'll start typing ALL my responses in Word or something so I stop wasting my time. What a pain in the ***


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## stumper1620 (Dec 19, 2004)

Mark Oomkes said:


> I had a long response for this thread but the freakin' server\software froze on me, again. :angry: :angry:
> 
> I guess I'll start typing ALL my responses in Word or something so I stop wasting my time. What a pain in the ***


that has been happening a lot lately, PM is really screwing up.


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## Mark Oomkes (Dec 10, 2000)

Yeah, what really pissed me off is that I spent 20 minutes going through some real life numbers without saving it anyplace and then I lose it all. Posted a bunch of times yesterday after my first time it locked up, so I wasn't prepared for it to happen again. 

Pierre, IP address and screen shot are on the way.


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## stumper1620 (Dec 19, 2004)

Mark Oomkes said:


> Yeah, what really pissed me off is that I spent 20 minutes going through some real life numbers without saving it anyplace and then I lose it all. Posted a bunch of times yesterday after my first time it locked up, so I wasn't prepared for it to happen again.
> 
> Pierre, IP address and screen shot are on the way.


I found on lawnsite that if you don't touch anything quite often after a miniute or so it goes thru, I think if someone else is replying to the same thread at the same time one has to wait for the other.
Thats just what i've been thinking it acts like, but I'm not an expert at this either.
I think me and you were replying at the same time.


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## Mick (May 19, 2001)

I had similar situation in driving about 10-15 miles to get to some accounts in an area I tried moving into last year. This year I calculated my fuel, time and related costs and increased rates average of 33% (ie: $30 to $40). But, I was not concerned with keeping or losing them. Each had to stand on it's own - in other words, it had to be worth it if I lost all but one account. I even provided each one with referrals to closer contractors and I called those contractors to brief them (most were real good customers, only one was a beadbeat). Each customer emailed me to thank me for the referrals and two even said they'd go back to me if I could go back last year's rate or even with a slight increase. But I figure with the current fuel volatility, I can't take the chance.


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## Mark Oomkes (Dec 10, 2000)

I tried letting it go for a couple minutes, nothing happened.

Quick summary of my post. These are my actual numbers for '03 and '04
Fuel & Oil (as a percentage of sales)
'03---2.9%
'04---3.4%

This is what my percentages would look like if I use a 75% increase cost in fuel.
'03---5%
'04---5.9%

So based on these figures, my rate increase on fuel alone should be at 75% increase in fuel:
'03---2.1%
'04---2.5%

If I raised my prices by 12% because of fuel alone, that would mean gas would have to be approximately $11.75 a gallon. That is figuring gas at $2.25 per gallon, average increase of 2.3% [(2.1+2.5/2)/12*2.25=11.75].

JMO and my math with real life numbers.


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## stumper1620 (Dec 19, 2004)

stumper1620 said:


> OK, 12 miles to get there, up from 33 to 37 bucks.
> How long is the drive? how long does it take to push an average snowfall? how difficult is it? How much shoveling?
> I don't Know your cost. but i would say that is a fair price for a medium length country driveway. ( I would probably increased to 35, but, thats me.)
> looking at fuel only, if you get 12 mpg thats 1 gal to get there & 1 gal back, I cannot imagine more than .5 gal to plow his drive so we have a total of 2.5 gals. using my current diesel fuel cost of 2.89 that gives us 7.23 per trip on fuel,(this is being a high est. to you for fuel) comparing this to last November's fuel price of 2.19 that comes out to 5.48 a diff. of 1.75 now fuel fluctuated all over the board last season so you could add a few cents per gal. but would still not cover the increase without doubling the per gal. cost. take the 7.23 pad that by another .77 for fuel fluctuations that gives a total of 8.00 in fuel and determine if you are being fair.add your maint. labor, windshield time, ins. permits ect. to the current padded fuel cost to determine if you are being fair.
> taking the current padded cost of 8.00 and subtracting last years cost of 5.48 the difference is still only 2.52, fuel alone does not cover your increase.


oop's after filling my tank today, current fuel cost is now 3.19 so using 2.5 gallons at 3.19 per gal. your current fuel expense is 7.98, still inside the padded fuel expense though.


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## SnowGuy73 (Apr 7, 2003)

Stick with the price you quoited him, if he drops you, you can always pick up another account.


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## WMHLC (Jul 31, 2005)

Mark Oomkes said:


> I tried letting it go for a couple minutes, nothing happened.
> 
> Quick summary of my post. These are my actual numbers for '03 and '04
> Fuel & Oil (as a percentage of sales)
> ...


I agree with mark, if you price right, then you don't need to increase your prices. So far this year, I still have not raised my prices yet. My gas expenses have only increased by 1.5%, why would I increase my customer prices by 12% if my own expenses have not increase by 12%.


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## Oshkosh (Sep 11, 2005)

*Nothing like a good Yankee.lol*



dmjr77 said:


> Hello,
> I just got off the phone with one of my plow customers. He is mad at me since I had to increase the rate (plow & shovel walk) on his driveway by $4.00. I tried to explain to him that the cost fuel and insurance is more this year than last year, but all he could say is "I feel that is asking a bit much" Do you think $4.00 is to much? Any ideas on how I should handle it or should I tell him to find someone else?
> Thank You


 I was a service manager for several years, some people(Just arnt happy) will say thats to much no matter what you do or how much you charge.All you can do is provide a good service and it should take care of itself.You are in the heart of good ole Yankee country afterall...


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## Mark Oomkes (Dec 10, 2000)

WHMLC, better watch out. It seems that you should raise your price whether you can justify it or not. We seem to be in the minority.


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## WMHLC (Jul 31, 2005)

Mark Oomkes said:


> WHMLC, better watch out. It seems that you should raise your price whether you can justify it or not. We seem to be in the minority.


I don't care if we are minority's, at least we are right in my opinion, it doesn't make sense to me. Bid right, and provide great service.


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## Oshkosh (Sep 11, 2005)

*You are right for you...*



WMHLC said:


> I don't care if we are minority's, at least we are right in my opinion, it doesn't make sense to me. Bid right, and provide great service.


 Whos to say what his expenses are.How can anybody say how much he should charge and when the last time he went up on his rate?Need a little more background before anyone can make an educated guess. ...Did you guys know the cost of living increase/consumer price increase per year NOT including food or fuel is 3% alone?
Just something to think about when you are crunching numbers.


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## RYDER (Sep 19, 2005)

I would tell him(very nicely) that is what I am charging all my customers this year and if you still feel that its too high feel free to find someone else.


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## gino (Jul 30, 2005)

Regarding this rediculous $4.00 complaint. There are way too many other fish to fry. I would not give in on this guy. Let him shovel to save his $4.00. Personally, I would just be very cordial and tell him that you appreciate his business but you have to go up. And I would hope he goes somewhere else. Life is too short for chisselers like him. Be honest, be good, and make as much profit as you can.


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## Dwan (Mar 24, 2004)

My prices have always been high enough to make a good profit. even with the increse in fuel, insurance, truck license, new truck pricing, blade price increase, food on the table, cloths on my and my familys back. and increase taxs I could still make a profit at my old price and a good one at that.
I did raise my prices by about 15% this year just because I wanted to. I don't need a reason. I just decided I wanted to make more money. No one has a right to tell me what I am alowed to charge because it is still a free country. 
Now if one of my customers don't like my price I say thank you for your business for the past XX years and if you should change your mind call me back. 

if a customer should quick then it gives me a chance to raise my price for his replacment or even him when he calls back.


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## Mark Oomkes (Dec 10, 2000)

Yes, I am aware of that OshKosh. Great points made by Dwan as well.

I'm not sure if it is in one of my posts or if it was the one that didn't work, but I also said the same thing as you OshKosh, not enough info. But, if he was raising his prices 12% based on price *alone* and the customer called him on it, the customer is right. His fuel costs did not go up 12%. Maybe he was low on his first year, fine tell the customer that and if he doesn't like it, move on. Maybe he figured out his labor, overhead and profit requirements and had to raise it 12%, if so explain it to the customer and if he doesn't like it, move on. Or if he did like Dwan did and just wanted to raise his price that much just because, fine no problem here.

Nowhere and no how am I ever, ever going to tell someone to lose money on anything. I am just saying (once again) that if the only reason he raised his price 12% was because of increased fuel costs, the customer has a right and obligation to his own family to question the increase. If you bought a less fuel efficient truck, then yes you need to raise it and explain it.

However much you increase your price, no matter what for, have a good reason for it. An intelligent customer will understand your reasons and either be able to afford you and the service you can provide or he will accept a lower price with the accompanying lower level of service.


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## M-Pact Snow (Feb 2, 2005)

Very Well Put Mark,

But As For The Fuel Alone It Is Not Just The Fuel You Put In Your Truck, Its The Fuel It Took To Get Fuel, The Fuel Increase On All The Other Overhead That Suppliers Put On Us, Fuel Is A Very General Term And There Are Alot Of Ways You Can Justify A Fuel Only Cost Increase Jmo - Fred


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## itsgottobegreen (Mar 31, 2004)

I raised every residenial by $15, I told them I have to make it worth my time, because my truck makes more doing commerical. All have returned that I have talked too, because they love the service. Even better is I changed the number of inches of snow per price. Used to be 1 to 4". Now its 1 to 3". And no one even noticed. So its even more that $15, its more like $20. HAHAHAHA


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## Mark Oomkes (Dec 10, 2000)

There is another example of having a valid reason to raise your prices. Congratulations on having the guts to do it and stick to it.


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## SnoFarmer (Oct 15, 2004)

I increased my rates 2yr ago A couple of customers called to ask why?
I explained where the money goes, ie, ins, truck maint, wages, service, fuel,
etc, then I gave them the #'s of other contractors ( I know to have very high rates) and they call back and say your rates are fine, will you plow our lot , thank you.
So, if your rates were to low to stay in business and make a buck then increase them and don't worry about the people who are looking for a 
low-baller, after they receive poor service they will call you back.


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