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GSPHUNTER
03-18-2008, 05:29 PM
I've been thinking about all the lowballer talk on this site. I really bought into the mentality to charge higher prices than what I would normally have charged.

Here are some questions I'll throw out to people:

1.) Once you have bought mowers, they are considered fixed costs. Fixed costs will not change with cutting more, and even worse if you are not working your fixed costs aren't making as much as they could. The only thing changing is variable costs such as fuel, blade sharpening, etc.., which are nominal in terms of running a mower an extra 5-10 hours per week during the season. Is it better to have assets sitting on a trailer making no money or working at a smaller profit margin when starting out?

2.) If you are starting out, doesn't it make sense to charge less because you have less experience. Shouldn't it be the responisibility to the more senior companies to SELL their experience and not the new operation to try to BS people into believing they are experts.

I might have some more to add the more I think about this, but this came in response to some recent bids I submitted with a PM company. Total amount of work was $33,000 on my bids. This was for 6 properties varying in size from .25 - 2 acre total lot size and included mulch, mowing, bed edging, spring cleanups, and bed maintenance. I could be over anaylyzing this, but I haven't heard back from them yet and I'm a littled bummed out. To me, this 33k would have more than doubled my gross from last year, as I am part time trying to go full time. I, by no means, want to be looked at as the go to guy for cheap service, but I think higher prices can also be charged with proven services.

I guess basically the main question here is, for someone who is starting out without a full schedule, why would you choose to sit on the couch rather than making a slightly less than optimal profit margin?

These were just some thoughts I had. Not looking to start an argument or anything just kind of thinking out loud.

TomberLawn
03-18-2008, 06:54 PM
Good thoughts, GSP. Fixed costs keep accruing, no matter how much or how little the assets are used. I've been comparing my pricing to some other companies around and mine are always a good bit lower, but I have very low overhead and I need the experience. I've cut yards that were too cheap, but I learned how to do them quickly and efficiently so it didn't take so long. That's worth a lot to a beginner.

Sometimes I wonder if the guys giving help on bids are overinflating their prices. Like if somebody asks what to charge for an "average" 15k sq. ft. yard and somebody says $45, another guy might just want to look like a big shot and say he gets $60 for that size yard. It's hard to tell when somebody is telling the truth on the Internet.

I have charged more on some things than I first thought, but part of that is from experience. I know what my time is worth and I'm getting better at figuring out how long a job will take and what my costs will be. The better I get and the faster I work, the more money I'll make anyway just from productivity.

I'm just getting started with doing fertilizer. I bought a spreader this week. I'm not even going to ask what I should charge to put out fert because I really don't care what somebody else would charge. This will be my first fert job, so I'll learn if I charged enough or if I need to charge more next time. I know how much I have invested in tools and supplies, so I will definitely cover that. I don't want to overcharge and do a "bad" job, since this is my first.

Good thoughts, GSP.

Grubbworm
03-18-2008, 07:10 PM
A complicated issue. Certainly something that cannot be answered in a few paragraphs here.
I know it's pricey; but, I would suggest you purchase the book by James R. Huston entitled "How to Price Landscape & Irrigation Projects". It is well worth the $ and gives you the knowledge & confidence to really know your break-even points & when & what kind of business to turn down & for or what price to quote with confidence.
You soon learn what price you have to have and if you don't get it, you don't look back wondering if you should have....

IMAGE
03-18-2008, 07:36 PM
GPS- I know what your saying, basically you think you gave too high of a price and lost the job, and the price you gave was higher then you first thought it worth because you raised your price after everyone on here talked you into it. (or they made you not want to be a lowballer so bad that you overpriced yourself out of work.)

I did that last fall with a large sidewalk snow blowing job- raised what I wanted for it because everyone said it was worth XXX per foot or whatever. Anyways I priced myself right out of it. Looking back I sure would of done that job for the $450 per time that the guy that did it got, because I did not have a full schedule and it would not of raised my costs any (maybe $25 variable cost per time tops). Instead I bid it at $700 and lost out on about $2000 bucks this winter.

If you have the free time- fill your schedule if its gonna make you some money (even if its not 'what its worth to someone else'). If you dont have the time, bid higher.

Lawn-Sharks
03-18-2008, 09:20 PM
Its good to read threads like this...

cgaengineer
03-18-2008, 09:24 PM
Very good question, I am interested in seeing the replies.

ed2hess
03-18-2008, 09:26 PM
I, why would you choose to sit on the couch rather than making a slightly less than optimal profit margin?

.

I think the simple answer is...they make enough money at their full time job.

bill8379
03-18-2008, 09:28 PM
Make whatever you want when you're on your own but if you grow and have employees you'll have to adjust prices. I guess it's best to do it the right way from the start even though I never did that.

If you work for cash, a lot of people will view you as a scrub right away and will never pay a decent amount of money. So if you build up a large, underground customer base, you might lose them all if you go legit and priced for profit after expenses incl. employees.

Grits
03-18-2008, 10:18 PM
I fully agree with you GSP. Starting out, you should get out there and pretty much take what you can get. You will pick up other jobs just by being out there working. Over time, you can begin to pick and choose and demand a higher price. But until then, 5% profit is better than 0% profit.

luckydooley
03-19-2008, 12:00 AM
I also agree GPS. I have priced several jobs stressing that you pay for quality, and with the mentality of not wanting to be the "lowballer". Well I I didnt get many. I have lowered my price and am now picking up jobs. I am still covering expenses and making a few bucks, but more importantly I am getting exposure, word of mouth, and at least covering costs. This is my full-time position I dont have another job or second income. I have four children and a stay-at-home wife to support. I cannot afford to sit on my @ss and wait to get a job for a premium price. The way I am looking at it is after my schedule is full, I will then begin dropping less profitable jobs for the more lucrative jobs that present themselves.

tennesseelawnguy
03-19-2008, 12:17 AM
OK here's some honest advice. 1st of all, it's your business and if you're comfortable with what you are making, that's all that matters period. 2nd, yes it is better to be working than not. any income is better than no income no matter how you slice it. I've heard the same crap for years from people saying " if i don't make XXXX i don't even unload." funny thing is, i'm still here mowing full time and they all have jobs now.the only cuts i advise staying away from are the overgrown and one time cleanup mowings because the risk of equipment damage is too high. take all the other jobs you can find and you'll be amazed at how fast you'll grow. you have to mow grass in order to be seen mowing grass .once you get a full schedule then you can start naming your price and that's when the real fun begins. I hope that helps a little

hackitdown
03-19-2008, 08:00 AM
Another way to look at it...supply and demand.

If you have plenty of supply (time), you can afford to be aggressive on price, since you have nothing to lose. It is better to bill$35/hr instead of $0/hr. When your supply is low (you are working all the time) you have the ability to raise prices to $60/hr.

In my case, I have much higher prices on new customers, but I don't have enough demand to justify bumping up my old customers.

LushGreenLawn
03-19-2008, 08:18 AM
Keep in mind that a mower is not a fixed cost! That mower will eventually wear out and need to be replaced. The more you use it, the faster it will need to be replaced.

Also, what happens when you get to the point when the low prices you are charging is not enough? Will you give all of your clients a large increase in price, and hope they stay?

The BIGGEST mistake people in this industry make is charging too little. You may not see it starting out, but a few years down the road, when you are staring at a spreadsheet with all of the costs you didn't think about you'll get it.

I'm not saying to charge to much, but be careful charging to little...

Ravenwood Landscaping
03-19-2008, 08:47 AM
You bring up some great points. I think what makes people angry the most is when they spend the time to get the right licenses, insurances, equipment, etc. because it's the right thing to do, and then they turn around and see some guy, who just decided to start mowing lawns without all of that, mowing the lawn for half of their price. The thought that goes through my head, is why did I spend all of that money when nobody is going to enforce me having my licenses, insurance, etc?

In all honesty though, just in my short time running my own company, service and quality will beat out a slightly lower price almost 95% of the time. I'm gaining clients left and right based on referrals, the fact that I return phone calls right away and I show when I'm suppossed to. My prices are not the cheapest by far and I know that and even the clients know, but they aren't becoming a major deterrent to most of the people I talk to. When I'm showing up everytime and actually providing them with good customer service, they don't feel cheated.

It's like Target and Wal-Mart. Many people go to Target even though they know it's slightly more expensive because they feel like they get better service and better quality products. Any shmoe can sell something or cut grass, but how many shmoes can be reliable and provide a good experience for the customer?

Roger
03-19-2008, 08:49 AM
Some of these ideas were posted in another thread a few months ago. Rather than repeat my comments here, the links:

http://www.lawnsite.com/showthread.php?p=2144115&highlight=home#post2144115

http://www.lawnsite.com/showthread.php?p=2143302&highlight=home#post2143302

There are many other posts in that thread that focus on the topic of working for a bit less than desired, rather than sit home for $0.00.

Frue
03-19-2008, 09:06 AM
Some of these ideas were posted in another thread a few months ago. Rather than repeat my comments here, the links:

http://www.lawnsite.com/showthread.php?p=2144115&highlight=home#post2144115

http://www.lawnsite.com/showthread.php?p=2143302&highlight=home#post2143302

There are many other posts in that thread that focus on the topic of working for a bit less than desired, rather than sit home for $0.00.

Roger very well put and I am glad you are in PA. If I am in your area I would love to buy you lunch. Great help guy...

Lawn-Sharks
03-19-2008, 09:08 AM
Everybody has been a "Lowballer" at some point because someone else is alway going to charge more.. And i agree i would rather make 5% profit then 0% This is full time for me has been from the start and from time to time i aint to proud to turn my nose up to a lower profit. Anything is better than sitting around talking to my equipment

PattersonL&L
03-19-2008, 09:17 AM
You have to also take into account that the charge is different for different states.In Michigan we charge between 20 and 25 for medium yards. In Florida I have read they charge 30 to 35.

Frue
03-19-2008, 09:21 AM
I've been thinking about all the lowballer talk on this site. I really bought into the mentality to charge higher prices than what I would normally have charged.

Here are some questions I'll throw out to people:

1.) Once you have bought mowers, they are considered fixed costs. Fixed costs will not change with cutting more, and even worse if you are not working your fixed costs aren't making as much as they could. The only thing changing is variable costs such as fuel, blade sharpening, etc.., which are nominal in terms of running a mower an extra 5-10 hours per week during the season. Is it better to have assets sitting on a trailer making no money or working at a smaller profit margin when starting out?

2.) If you are starting out, doesn't it make sense to charge less because you have less experience. Shouldn't it be the responisibility to the more senior companies to SELL their experience and not the new operation to try to BS people into believing they are experts.

I might have some more to add the more I think about this, but this came in response to some recent bids I submitted with a PM company. Total amount of work was $33,000 on my bids. This was for 6 properties varying in size from .25 - 2 acre total lot size and included mulch, mowing, bed edging, spring cleanups, and bed maintenance. I could be over anaylyzing this, but I haven't heard back from them yet and I'm a littled bummed out. To me, this 33k would have more than doubled my gross from last year, as I am part time trying to go full time. I, by no means, want to be looked at as the go to guy for cheap service, but I think higher prices can also be charged with proven services.

I guess basically the main question here is, for someone who is starting out without a full schedule, why would you choose to sit on the couch rather than making a slightly less than optimal profit margin?

These were just some thoughts I had. Not looking to start an argument or anything just kind of thinking out loud.


I can understand your points. When I first started out I cut lawns for 12 dollars now my minium is 25.00 2 swipes with the 60 inch z or not. Knowing your cost is what matters if you only need 20 an hour to survive than thats how you bid.

Now lets get into the numbers of your big account. Lets say you only need 20 an hour to survive and you got this account. You would have possibly bought more equipment for the account uh oh there goes your cost going up but yet you bid it at 20 an hour persay.

Now they were probably looking for the cheapest price this year trying to save at least 20% from last years lawncare prices. So do not beat yourself up I have done 4 commercial bids this year and landed 0. I was even told my bid was most impressive but it only matters whats on that last line, PRICE. Understand how the markets are going people are looking for deals.

Finally I want to discuss the gas price. Now with gas prices maybe going over a dollar more per gallon you must take this into consideration. Lets say you use 50 gallons a week that is 50 more dollars a week. That is 1500 more a year. You must figure this into your prices for this year or you will wonder come november what happend to my profit.

GSPHUNTER
03-19-2008, 10:20 AM
You bring up some great points. I think what makes people angry the most is when they spend the time to get the right licenses, insurances, equipment, etc. because it's the right thing to do, and then they turn around and see some guy, who just decided to start mowing lawns without all of that, mowing the lawn for half of their price. The thought that goes through my head, is why did I spend all of that money when nobody is going to enforce me having my licenses, insurance, etc?

In all honesty though, just in my short time running my own company, service and quality will beat out a slightly lower price almost 95% of the time. I'm gaining clients left and right based on referrals, the fact that I return phone calls right away and I show when I'm suppossed to. My prices are not the cheapest by far and I know that and even the clients know, but they aren't becoming a major deterrent to most of the people I talk to. When I'm showing up everytime and actually providing them with good customer service, they don't feel cheated.

It's like Target and Wal-Mart. Many people go to Target even though they know it's slightly more expensive because they feel like they get better service and better quality products. Any shmoe can sell something or cut grass, but how many shmoes can be reliable and provide a good experience for the customer?

^^^^^^^^^^^Target and Wal-Mart are huge corporations and they did not start out that way. Wal-Mart started out as some podunk little store in Arkansas, and I'm sure Target had similar beginings. Point being, they both had to start somewhere to get there name out there. If I'm not out working, my quality cannot win over price, because no one will know my quality. Other companies have two things going over me. They have a familiar name and years of experience, which are both worth something. Since I don't have these, it's hard to sell them. All I can sell is the work that will be done, which is basically my time. In the future, when my years of experience and familiar name start landing me more and more jobs, I can raise prices even on current clients.

Roger, your other posts were excellent and this is EXACTLY what I'm talking about. I don't understand the mentality of sitting at home getting no exposure as opposed to working getting your name out there.

Hey guys, thanks for all the responses.

Ravenwood Landscaping
03-19-2008, 10:56 AM
^^^^^^^^^^^Target and Wal-Mart are huge corporations and they did not start out that way. Wal-Mart started out as some podunk little store in Arkansas, and I'm sure Target had similar beginings. Point being, they both had to start somewhere to get there name out there. If I'm not out working, my quality cannot win over price, because no one will know my quality. Other companies have two things going over me. They have a familiar name and years of experience, which are both worth something. Since I don't have these, it's hard to sell them. All I can sell is the work that will be done, which is basically my time. In the future, when my years of experience and familiar name start landing me more and more jobs, I can raise prices even on current clients.

I think I was just looking at it from a different point of view on why people hate "lowballers" but I certainly agree with all of that. My first job netted me a little over $7. It was a 15 bag mulch job that I charged $100 for. I spent $93 on mulch. Now that was a problem with my pricing, but I kept the price for the customer without raising it because I didn't want to get a bad name and I needed the work to kick the business off and get word about my company out. Now, I told my customer that it was a "first customer discount", so that word didn't get spread that we do work for nearly free. I'll certainly work for a little money over none.

That's why it's competition. I have always disagreed that all LCO's should band together to raise prices. That's just rediculous as far as I'm concerned. Yes, I want more money for less work, but I have enough moral values to not consciously screw people. Now if I unconsciously screw people, that's a different story.:laugh:

Lawn-Sharks
03-19-2008, 01:15 PM
You have to also take into account that the charge is different for different states.In Michigan we charge between 20 and 25 for medium yards. In Florida I have read they charge 30 to 35.

What you are saying is true....

daveintoledo
03-19-2008, 01:50 PM
Keep in mind that a mower is not a fixed cost! That mower will eventually wear out and need to be replaced. The more you use it, the faster it will need to be replaced.

Also, what happens when you get to the point when the low prices you are charging is not enough? Will you give all of your clients a large increase in price, and hope they stay?

The BIGGEST mistake people in this industry make is charging too little. You may not see it starting out, but a few years down the road, when you are staring at a spreadsheet with all of the costs you didn't think about you'll get it.

I'm not saying to charge to much, but be careful charging to little...

you need to do a business plan, you need to learn about the cost of depreciation, and all the true cost of doing business, this is the only way to know if you are charging correctly or not....

IMAGE
03-19-2008, 09:06 PM
Keep in mind that a mower is not a fixed cost! That mower will eventually wear out and need to be replaced. The more you use it, the faster it will need to be replaced.
Also, what happens when you get to the point when the low prices you are charging is not enough? Will you give all of your clients a large increase in price, and hope they stay?

The BIGGEST mistake people in this industry make is charging too little. You may not see it starting out, but a few years down the road, when you are staring at a spreadsheet with all of the costs you didn't think about you'll get it.

I'm not saying to charge to much, but be careful charging to little...


It depends on how you look at it, if it is a variable cost or a fixed cost. You can figure it out by the hour and say it depreciates $4 per hour (or what ever # you chose.) Or you can look at it as a repeating fixed cost. I look at it as I want to add 1 new mower each year, around 8-10k, so for me I figured it as a repeating fixed cost. I plan it this way because I want to expand, and run crews, so after 5 yrs I will have 5 zero turns, and at that point I will start replacing the oldest or least efficient one each year. Heck hopefully around the 5th year I will be buying 2 a year :).

Anyways- its a long term piece of equipment, but it doesnt last forever: no matter what, your replacing it sometime- just gotta plan for it.

JohnnyCuts
03-20-2008, 08:51 AM
Roger, your post on the first link is one of the best I've read on this site.

Jay Ray
03-20-2008, 09:43 AM
1.) Once you have bought mowers, they are considered fixed costs. Fixed costs will not change with cutting more, and even worse if you are not working your fixed costs aren't making as much as they could. The only thing changing is variable costs such as fuel, blade sharpening, etc.., which are nominal in terms of running a mower an extra 5-10 hours per week during the season. Is it better to have assets sitting on a trailer making no money or working at a smaller profit margin when starting out?

Mowers are a depreciable asset, something that gets used up and has to be replaced. The IRS lets you take a nice write-off over several years, or write it all off the first year on section 179. I've read several posts to the effect that a commercial mower loses $5 in value for every hour it is run. Like a car or truck loses value.

The first year I worked too cheap way too often, and too much in the second year also. But I consider it a learning experience of learning what not to do. I'm still making the mistake of bidding too low sometimes, but not intentionally wanting to put my business to work for cheap.

I filed a tax return from the start and had to have the discipline to do the paperwork and tracking to know what my net loss/net profit really was. If you are not filing a return it is pretty unlikely you will hassle with the paperwork to know what your profit actually is.

But the money in your equipment is wasting away. The IRS recognizes that fact as depreciation expense and lets you write it off.

larryinalabama
03-20-2008, 10:58 AM
Im surprised about the responses I see in here. Their ar hogh ballers and low ballers, I have alaways priced my services slightly higher that the middle.

I like to be known as the "goto guy" for a beautiful yard. I never ever want to be the "goto guy" for the lowest price.

If I charge 35$ for a yard its one I can do in less than 45 minutes. Ok so heres where I lowball... if I have a slow day I will sometimes spend an 90 minutes, that is what I do insted of advertising , and it also allows my to spend 30 minutes on a really busy day.

Really fellers try to sell your business and equiptment and most of all yourself... If price is all you have to sell a service business in not for you ,,,,,,switch to something retail.

I have never sat at home because of my pricing, and I have never priced my stuff low.

creatived
03-20-2008, 11:05 AM
THIS IS THE BUSINESS WITHOUT IT WE WOULD ALL BE OUT OF WORK. :weightlifter::weightlifter::weightlifter:

kleankutslawn
03-20-2008, 11:20 AM
sell,sell,sell

Military Lawns
03-20-2008, 04:12 PM
This is one of the best post and responses that I have read since I have been a member. It has most certainly motivated me to be more attentive to certain methods for pricing.

DJ-

lawnkingforever
03-20-2008, 06:32 PM
This was one of the best threads in a while. It gets old reading all these posts about charging 100$ an hour or you are a lowballer. I have accounts that I am a little high, a little low and some priced just right. I know my bottom line and what I need to make to be profitable. When I cease to make a profit at the end of a summer, I will no longer be in business, period. If you have to price yourself a little lower starting out, then that is what you have to do.
Bid a yard yesterday where the other LCO demanded the yard gets cut every week, even during a drought. I told the lady I would cut weekly through June and every other week July-Aug. My bid was 5$ more a week than the other guy, she took my bid. After figuring in the extra 5$ a week she will not save that much money during the season, over the other guys weekly service during these 2 months. Good customer service usually wins out in the long run.

GSPHUNTER
03-20-2008, 09:35 PM
Wow, I never really thought that this post would get this kind of response. I really expected to get burned with it. I'm glad to see that other guys feel the same way I do.

With everything said though, I still can't wait until I can be a bit more picky about what I take on.

Good Luck to everyone this season.

paul vroom
03-21-2008, 12:20 AM
I agree with a lot of these thoughts but I really think I would rather be on lawnsite rather than working for just a few dollars profit. I could be home learning rather than putting hours on a machine which in turn saves money.

larryinalabama
03-21-2008, 06:57 AM
My point is to sell your service, if all you have to sell is price I doubt you will be in this business long. Walmart can sell low because all they do is buy crap and put it on a shelf, they have nothing invested but money. We have blood sweat and sometimes tears in peoples homes. Put the extra effort in what you do, if you truck sits in front of the nicest house on the block for an extra 15 minutes, thats 15 minutes of advertising, leave som flyers at all the neighbors. Eventually they will see your truck and flyer and know who you are.

Honestly I feel as if low ballers are doing me a favor. I work a fulls time job and do this part time. I can generally feel people out on the phone and if there looking for estamates I generally dont waste time with them. If someone calls me for an aeratiating estmate I give them a price without looking and tell them what day I will come. The last thing I want to do is run all over town trying to beat everyones price.