Slightly stumped on mulch pricing...

[fiveoboy01]

Well not really stumped, but let me explain.

I've been buying my mulch from a supplier about a mile out of town. I know the owner well, he also owns an LCO operaton.

Well out of coincidence, a co-worker at my full time job mentioned to me that his father-in-law manufactures mulch and supplies a lot of landscapers in the area, and he's about 8 or 9 miles further down the road from my current supplier.

So I call this guy, tell him I work with his son-in-law and that I'm a contractor, and would like pricing. For no reason, I mentioned where I currently get my mulch from.

Turns out, this guy supplies my current provider with his mulch.

If I buy directly from this guy I will save about 9 bucks a yard on mulch. And I know it's the exact same product.

Anyways that's not my dillemma. I'm in essence cutting out a middle man, and don't feel bad about it. It's a business decision and hopefully will not be taken personally. Here lies the slight dillemma...

I have 2 options:

A) Do NOT pass the savings onto the customer and profit more.

B) Slightly reduce my installed price by 3 or 4 dollars a yard in an attempt to close more installs. Hence still making more than I was per yard with the "old" price of material.

Now I know a lot of you will say I'm nuts for even asking this, and I think I might agree. But it's just something I thought of. I am really leaning towards option A, but just want to hear your input. There IS something to be said for possibly closing 15-20% more proposals, and at the same time making more profit than before(per install) even with the slightly reduced price.

Flame away guys:laugh:

[stephenslawncare]

go for it. i think the guy you work with would be more offended if you didnt buy from him than the guy you currently buy from who you have no connection to besides being you dealer??? and who dosent like more money in thier pocket. just my two cents

[topsites]

I usually split discounts with my customers 50/50, that's my incentive to find them, theirs to keep me around. Usually it results in the cost staying the same, one hates to drop a price when you fought long and hard to get it there, but if I'm above the competition by a fair to large margin then this helps and I can lower the price as well.

As for your mulch supplier, all I can tell you is I've been buying my mulch from the same guys for many years now, so I'd recommend finding a steady supplier more than the cheapest, thou a combination never hurts, consistency is crucial as well.

[lawnman_scott]

How big are these properties that you are doing? As far as redsidentials around here its maybe once per year that I will do more than 10 yards of mulch on one lawn. That would be $30-40 cheaper if you discounted the price. I dont think that will sway anyone to go with you. I would just pocket the extra profit.

I see your from southern WI. You probably have bigger properties there than we do here. I am from Waukesha, I just got sick of snow and cold and moved to FL.

[BigShelby]

If you aren't having a problem selling your services at the current prices why would you want to drop the price? This is simply reducing acquisition cost to increase profit margin.

[robtown]

I would not change your pricing. If something happens with this supplier you will have to jack your pricing up again. than there is a whole lot of complainig

[carcrz]

Don't forget you have to travel farther to get it & that will cost more in fuel & take longer to accomplish.

[fiveoboy01]

I should have clarified - both these guys deliver and their delivery prices to different regions of the county are the same.

Anyhow after thinking I'm sticking with A. But thanks for the input.

[carcrz]

Good call!

[HOOLIE]

Go with Option A...I agree with Lawnman Scott, unless it's a huge job, cutting the price a tad is not going to make or break the customer.

Don't forget you're in business to make money...this is what you look for, an opportunity to cut YOUR costs significantly. I see no reason to pass the savings along to the customer.