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View Full Version : Is your company more expensive than the competition


JimLewis
03-23-2007, 04:30 AM
If a customer in your area were to get 10 bids on a design/build or landscape construction project; 9 from a random selection of your competitors in your area, and 1 one from your company - and set them in order from 1 to 10..... 10 being the most expensive bid they received, and 1 being the cheapest bid they received... How many of you would expect your company to be a 8, 9 or 10?

ooo
03-23-2007, 07:07 AM
I'd say about 5 or 6. There are customers who tell me I am this much lower than this one and this much higher than this one. They than proceed to try and get me to lower my prices and say they will call the others to get lower, and that they have more people coming. I tell them the price is fixed. There is no way I am going to get in a bid war. They are just looking for the lowest price and must be willing to sacrifice quality over a few dollars.

Lawnworks
03-23-2007, 07:47 AM
I would expect to be one of the highest bidder. Even though I am the highest bidder, I have pretty good success at landing the jobs. I think my proposals are much more detailed than the competition.

I also think that the more reputable your company name becomes, the higher up that bidder scale you will be. Simply supply and demand.

I went and looked at a job for a lady the other day and spent an hour going over some landscaping ideas w/ her... then when I was leaving she said mentioned something about good luck on the lowest bid!! I just thought to myself I just wasted an hour of my life.

YardPro
03-23-2007, 08:02 AM
lawnworks.

we are the same way, we will be one of the higher. but we still are booked.

cgland
03-23-2007, 08:30 AM
7 or 8 for us. There are a couple of companies around us that are outrageously priced, plus their work isn't that great.

Chris

AGLA
03-23-2007, 08:48 AM
Do you think that anyone is going to post saying they are in the lower end of pricing?

Does your competition tell you what they charge? Then how do you know?

I would also not consider a random sampling as your competition unless they are truly competitive with you. By that I mean that you are more or less equally likely to win a job over them as to lose a job to them. If your prospect is looking for a lowballer and you are a 7,8,9 then you are not in the race at all. If you are a company built to compete for work based on price (it is a viable business model if the management is good) and someone wants all the bells and whistles in their maintenance, you are not competitive with a slower detailed oriented company.

Now who is going to claim 1,2, or 3 on this thread. Step up because 30% have to be.

PORTER 05
03-23-2007, 10:48 AM
i am on the low side of pricing, proubly in the 4-6 range its tough cause theres tons of low-ballers here, (not really there fault ), but there are, andthere are some pritty big companies here too, i dont really know wat the low ballers charge bit i do know wat the larger companys charge and where maybe $10-$15 dollers per HR per man off there price. i would place us right in the middle, and we are booked about 3-4 weeks from april to jan.

PaperCutter
03-23-2007, 10:54 AM
30%? I doubt it... my guess is that if you were to do a statistical analysis and graph of where people are in the industry, you'd see a normal distribution- that is, the majority would fall in the 4-7 range, with 1-4 and 8-10 being the outliers. I'd go a step further and think that the distribution is skewed a little higher, with the biggest groups being 5-7.5 or so. That's because you won't have a lot of 8s and even fewer 9s, maybe 1 or 2 10s- because the market isn't there in most places to support many of these. There's probably a huge amount of fluctuation in the 3s and below, and the 4s and 5s will be pretty variable as well- people may move up through the 4s and 5s as they get more comfortable selling, and maybe settle back into a 5 if they're really efficient. I would think (based on what I've seen doing this in New England, Ohio, Cali, AZ, and now Virginia) that most of the operators are in that 6-7 range.

To answer your question, Jim, I'm personally a 6 pushing to become an 8.

Dave

AbsoluteH&L
03-23-2007, 11:20 AM
I would put myself as a 5. The thing is that lowballing guys are'nt competion for the bigger company's that can charge top $. I'm not a business with a fleet of trucks and 5 crews, or I'm not side show BOB pulling a jet ski trailer with a piece of plywood pulled by a Kcar. Middle of the road pricing seems to work best for me.

Ric3077
03-23-2007, 11:47 AM
We are around 9, I get flyers all the time for aeartion for 15ksqft $38!!!!! My price is $225 for that. I got a mowing flyer $25! My lawn would be $55.

Uranus
03-23-2007, 12:03 PM
I really have no Idea. I ask once in a while once I get to know the customer, but how would someone really know unless you had a customer who is willing to show you the estimates?

I like to think that I'm some where in the middle, 5-7 range. If I break it down by lot size, this is how I "think" I would rate may bids.

under 1/4 acre:.....7 ..... I know I'm making money on these
1/4-3/4 acre .. .... 5 ..... I really hope I'm giving a fair price with good work
3/4-1 1/2 acre .... 7 ..... I bid these as 100% spring cut. I'm not getting burned by the size
over 1 1/2 acre ... 9 ..... A lot of work for one guy. Might as well get paid well for it. quality better be good

But if you stop and think about it wouldn't it be better to be the 1. 80% or more go with the cheapest guy/company.

JimLewis
03-23-2007, 12:12 PM
Does your competition tell you what they charge? Then how do you know?

If you are an 8 or above, chances are your company has an excellent reputation in your area and you've been around for a while. And probably one of the more experienced companies in your area. If this isn't the case, and you're still a 8 or above, I'd say you're probably just arrogant, then. But that's off topic.

I know very well were we sit in our market, as any good business person should. I know just from the feedback I get from my customers alone. But I also know because I do a decent amount of "research" on my competition each year where I compare my prices on a job with 10 or so of theirs for the same job.

I would also not consider a random sampling as your competition unless they are truly competitive with you. By that I mean that you are more or less equally likely to win a job over them as to lose a job to them. If your prospect is looking for a lowballer and you are a 7,8,9 then you are not in the race at all. If you are a company built to compete for work based on price (it is a viable business model if the management is good) and someone wants all the bells and whistles in their maintenance, you are not competitive with a slower detailed oriented company.

I think it's very important to compare yourself with a random sampling - including low ballers. Because a lot of customers are ignorant. They have no idea why they should chose you - at a higher price - over one of your competition, who is at a lower price. So first you need to know all about your competition. What brands they use, what kind of short cuts they would take, etc. and then when you meet with your customer, you educate them on the differences between you and the "other guys" they might be getting bids from. You give them reasons why they should chose you, even though you are at a higher price. You point out flaws to look for in the other bids and point out strengths in your company. Things that the other companies won't be able to say.

Case in point, when I give a bid for an irrigation system (and I know we're usually a 7 or above in that area) I always take a half hour or so to explain why they should chose us, how our warranty is stronger, what brand we use and why that's important, how most other contractors will try to take short cuts and water both turf and shrub zones at the same time and many other short cuts they take, I point out a good 10 differences where I am fairly sure what we're doing and offering is going to be much more appealing than the other bids. I tell the customer to ask certain questions of the other contractors.

And it works. Today I am signing a contract with a guy. He called yesterday and said this, "Jim. Hi this is John Doe. You came over the other day to give me a bid for a new irrigation system. Remember me? Well, man! You were so right! The other bids we got were a little less than yours. But they wouldn't tell me what brand they were going to use, they wouldn't tell me about the components when I asked, almost all of them were going to try to cut down the zones and stretch them out to water different areas (sunny vs. shade) at the same time and lawn and shrubs all at the same time. And their warranties weren't as strong. And none of them offered us a list of references like you did. I am glad we talked with you first. I'd like to get started. When can you come over and sign a contract?"

Drew Gemma
03-23-2007, 04:30 PM
over all we are an 8 only thing we are cheap on is service just kidding we are almost at the point where we are only going to take referals. B!^ch about price and lowballers all you want we are expensive and we are always busy sometimes I think we need to double prices just to slow down.

ooo
03-23-2007, 04:49 PM
I get guys like this half my calls (mine was at $440):

"I am still waiting for 4 other people to give me estimates but I will be honest, that the best price I have gotten thus far was $400 for the package ($180 for cleaning up and removing leaves, and $220 for mulching and edging the mulch beds). I am not too sure if you can match that or not but I will confirm once I hear from the other people as well."

AGLA
03-24-2007, 12:52 AM
Dave, If there ten individuls are lined up in order from 1 to 10, as Jim described, there is no average or statistical mean. There is one 1, one 2, one 3,.... and one 10. 1-3 out of ten makes 30%.

I would agree that 4-7 might only be a dollar apart, while 1-3 might be $20 less and 7-10 $20 more.

PaperCutter
03-24-2007, 09:34 PM
Andrew, I'll grant you you're correct with an N of 10. However, if we had a sample size of, say, all full-service landscape co's in Boston metro, and you grouped them by price range, you'd have many more in range #6 than you would in range #1. At least, that's what I think.

Dave