View Full Version : getting to know the competition
02-23-2001, 12:00 AM
This is the best way I can come up with for figuring my market conditions.
Pricing is largely determined by "the going rate".
The "goin' rate is largely determined by the competition.
Qualify them as "competition" (no scrubs)(full service)
Their going rate for the avg yard in each of the communities they service.
What are the big $ communities?
What communities do they serve?
(I'm wide open for suggestions for questions!!!)
I will try to get as large as a sample as possible. The larger the sample, the more accurately determine the results of this study.
I will be expanding the range of my search beyond my current market, into neighboring markets that have similar economic characteristics. This extra effort should increase the sample size respectably.
The idea behind a large sample size is that if I get a few that are way off base in their pricing/honesty, they will be easy to pick out from the crowd
No real completion date set yet...just something off the top of my head...
02-23-2001, 12:37 AM
will be hard to compile these figures over a short time and in a direct manner....over a few years in-directly no problem!
02-23-2001, 12:51 AM
Island Lawn, Are you out of your mind? The competition is not going to give you information that is reliable. Even if they did, what does this have to do with your prices? Your price should be based on your costs, plus profit. If everyone in your community decided to charge $3/hr would you follow? Of course not! Set your own prices based on your own particular circumstances,with a healthy profit. I try to get an idea from my competitions bids as to what they charge but I'm usually amazed at how low the competition bids. I am the most expensive and proud to be! SELL YOUR PRICE!! Tell the prospective customer why you charge what you do.
02-23-2001, 01:09 AM
Ya never know if you don't ask.Some people love to tell you about how "big" they are and brag about what they are doing.
I see your point about setting your own prices,but you must know what the other guy is doing it for.What happens if you are leaving money on the table? That isn't good either.
Always keep an eye out on your competition,cause he's watching you. :eek:
02-23-2001, 03:30 AM
At the risk of offending someone..... pricing your services "at the going rate" will (in the long run) probably put you out of business. While this is an opinion on my part, the large contractors associated with ALCA and SIMA will tell you that they price their work based upon calculations done to include all expenses (direct costs, G&A, and general overhead recovery) plus the viable profit that they have determined they need to survive. Then they go sell THAT as the rate they need.
We find, and I tell our people, that for us to maintain a 5000 sq. ft. property for less than $xxxxx will keep it from being profitable - even though the local trunk slammers can, and will, cut that lawn for $20 a pop. I am also of the opinion that if you are making more than 6 stops a day with any one crew (maintenance) you are in the trucking business. It costs more to load and unload and travel than it does to perform the actual service. I would venture to guess that the vast majority of your "competition" doesn't realize this. Smaller contractors have no overhead recovery program in place and don't really know what it costs them to do business.
I seriously doubt that you'll be comparing 'apples to apples' if you try to guage your own business finanicals based upon "competitive pricing".....
02-23-2001, 08:21 AM
Well, my post won't be quite as chock-full of hard-earned info as JAA.
I stopped answering questions about price on the phone a few years ago. I found that it was either a price shopper calling or it was my competition. Either way I didn't want them to have a number they could hang me from.
That being said, if I get someone on the line who would continue to ask me probing questions about my business, I would happily feed them all kinds of bogus information about my business. It's to my disadvantage to give you any real information.
About the only way you could gather all that info is to pretend to be a potential customer and call out every local company to come out for a bid. And this would tie up so much of your time that you'd be better off spending the time pouring over your own numbers to see what you need to charge to make the money you want.
I guess I'm lucky we get to see everybodys bid (public works jobs) This is comparing apples to apples. Are we the lowest no, but I sure like seeing the guys that make big miskates in bidding :)
I agree with John on the trucking part, I want my crews to be on the job site working not moving from place to place, It's even better on the larger jobs where we can leave equipment and material on site and have the crews start there every morining. Moving crews around from job to job is a waste of there time and mine, I know that there will be times when it will have to be done but I try to limit this. Tring to get people to understand this is hard but if you hit them behind the head with a 2" X 4" enough they will learn:)
02-23-2001, 10:48 AM
OBRYANMAINT, Good point. My thought was that this was to be an ongoing project. But it might be too much of a diversion/commitment.
I'm just brainstorming. I was thinking of face to face, informal, professional conversation.
I hear ya' on being the most expensive AND proud to say it!
How can I be sure that I AM the most expensive when I don't know their prices?
Very good info! I agree w/ya'.
As far as comparing apples to apples, I was considering only the profesionals.
I definately didn't want to misrepresent myself in this!
I didn't want to push myself on anybody either. One of my "Competitors" that I talk with regularly also runs a retail nursery and is my pine straw supplier. He gives me a good price and good info too. Also 85% of my business last year (my first year) was this guy's leftovers.
In my limited experience, I have found it beneficial to approach humans honestly.
Anything I can't be honest about, I take the 5th!
I'll respect a man if he wants to do the same. I don't have much respect/use for liars/cheats though.
No public works jobs for me yet.
Currently, I'm 100% residential.
Definately good info on the trucking issue!
02-23-2001, 11:38 AM
I apologize if I misunderstood the original post.
The first post sounded like you were going to get on the phone and call each competitor and fire these questions at them. If you have competitors that are friends, they'll likely be honest. If you don't know them, I don't think you could expect much information.
And this may be greedy on my part, but I'm going to protect what I have. I've had acquaintance competitors suggest that they could work with my guys for a week to learn how we install pavers. I've asked them 'why do you think I would want to teach you how I install pavers?'
(this of course calls into question why I give this information freely on this site. I haven't figured that one out yet. Not too bright, I guess. :)) I did joke with one that for $10K he could spend a day with me on a project. He didn't bite.
I think it would be reasonable to expect that other business owners will not give you information that you could use to steal away some of their market share. I think O'BM was right - you can probably get it indirectly over time. I don't know you personally, and I couldn't tell from the first post if you were planning on trying to corner them to get info. My comment about 'bogus info' assumed that was the plan. I had a guy do that to me. Wouldn't stop asking questions. So, I did what I needed to in order to protect my interests.
[Edited by Stonehenge on 02-23-2001 at 12:02 PM]
02-23-2001, 12:13 PM
I think approaching it like the posts you got here:
will garner as much good info as you'll get. That you are making it a formal research project will probably make it more valuable. Mine's in my head. That and a quarter will get me a cup of coffee.
Sometimes knowledge is the only thing that separates the haves from the have-nots. So some will guard that knowledge as they would guard gold and diamonds.
02-23-2001, 03:20 PM
I just want to throw .03 on the table here.
I have always been concerned about trying to price our services fairly. I dont want to pilage and plunder the market. Yet, I dont want to give away services either.
The one thing that I have failed to overlook was profit margin when comparing my bids to the competiton. If I have a lower overhead than most, and my equipment is paid for, and I dont have outstanding leases for vehicles, then Im actually only calculating replacement and operating costs plus storage as overhead vs. payments, storage, leases, operating costs, replacement costs etc. Therefore its not necessary to charge what the competiton is to make the same money.
Hence this season I have recinded my price increase.
My best source for pricing info has been the landscape architects we work with. I'm not worried about being too high on price, I'm worried about being too low. Once I've figured out what it costs me to do a job plus profit I can generate a good price and make money. If my carefully considered price is consistently the low price I want to know. I'm not out to gouge anybody, but I am in business to make as much money as possible. I provide a deluxe service and should be priced accordingly. The thing that really frustrates me is trying to get customers to tell me what other contractors were charging after the bid has been awarded and having the customers not want to tell.
02-27-2001, 09:06 PM
I believe it is a good plan to meet the competition and exchange ideas. I did this in my small local area, everyone I talked to was very helpful!
I would start a conversation with an owner and introduce myself as being new to the business. Everyone stated there was plenty of work to go around and would usually volunteer info about their pricing and other aspects of their business, however if they didn't volunteer it, I would not ask.
In one particular conversation, I found out that a BIG commercial acct was taking bids this year. About a week later an aqaintance urged me to bid on it, I decided not to.
One reason I'm new and want to stick with residentials, but mainly because I knew how excited the guy was telling me about bidding on it. I don't believe in burning bridges or cut-throat competition.
I strongly believe in fair competition and professionalism, especially evident at this site.
02-28-2001, 10:53 AM
I dont know about the six jobs a day,I have one route where we do 16 yards that day and it is the most profitable route we do.I have a minimum in which I charge no matter how small.I have some where you just use a weedeater and its still the same minimum price (takes 5-7 min.).I have found sometimes new landscapers are so anxious to get a premier housing plan or condo unit they actually bid half as much as I did just so they can say "well we are doing so and so" who cares its all about profit.Some of the best accounts are the small ones who you charge a healthy price and they dont shop you every year.Once they get used to doing business with you ,you can usually raise that amount annualy with no problems.
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