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rixtag
12-04-2001, 10:56 AM
I would like to hear the what you all think the differences are between a lowballer and someone who has extremely low overhead and can price very competitively.

Thanks

Rick

David Haggerty
12-04-2001, 11:44 AM
lowballer?
That's probably the nicest thing my competitors call me! lol

Dave

MATTHEW
12-04-2001, 01:28 PM
A lot of guys will say anyone who underbids them by more than10-15% is a lowballer. Most of us price according to the market and our overhead. So why don't wee just all charge the same, they ask? It's up to the customer. They see a nice shiny new truck and professional equip. and guys with uniforms and say " I'll pay more for that" Then there's the guy with a '82 chevy and a 4x8 tilt with a 20 year old walk behind that needs a bath, and they'll say "oh they must be cheaper" I would rather have nice looking equipment and charge as high as the next guy.
The real problem with lowballing is that you tend to get stuck in a rut. You start out low to get customers. Then you get referrals and you need to have similar pricing. Then you try to raise the price and lose business.

Twotoros
12-04-2001, 02:06 PM
Exactly Matthew. Once you set a price that is the basis for future rates. If you realize you are too cheap and adjust prices you could loose 25-50% of your customer base. I know this from personal experience. The only way that a lco can have low overhead is to not pay taxes. I am at a bare bones now but half my expenses are for tax and insurances. The only cutbacks I can make are in repairs and new purchases. To stay in biz you have to repair and upgrade equiptment. Hence, keep thy prices as high as possible. Lowballing hurts everyone including yourself.

bobbygedd
12-04-2001, 02:09 PM
charge what u r worth

Equipguy
12-04-2001, 02:28 PM
Why give your time away? After all its the most valuable asset your lawn business has. Frequently, price is low on the list of what the customer really wants but many feel the need to ask. Our job is to provide a service that makes the customer feel the're getting a "steal" regardless of what you may charge. Sell the sizzle, not the steak.

rixtag
12-04-2001, 03:15 PM
I'm thinkin' I didn't make my question clear enough.

In your eyes what is the difference? I am not talkin' about your attitude towards somebody who can underbid you because they have less overhead or a lost bid because of a lower price.

What I want to know is what you consider a lowballer to be.

Nobody likes a lowballer, I agree, but if I have considerably lower overhead and that allows me to do a job for less, will I be labeled a lowballer or not? and WHY?

Rick

casey
12-04-2001, 04:37 PM
I price based on proximity to other contracts not solely on the individual job. If drive time is minimal to none my price will reflect that. I also bid low on a contract on a new street on the usually guaranteed assumption it will lead to further contracts on that street & with that customers friends & relatives. This is not lowballing but smart business. Eliminating drive time means more mowing production.

smburgess
12-04-2001, 07:16 PM
How could you have such a much lower overhead than the next LCO?
Insurance, repairs and maintenance, operating supplies, etc. is not going to vary to that extreme. The usual differences in prices are from equipment configuration.

LoneStarLawn
12-04-2001, 10:39 PM
The difference in my eyes is this....

A <b>lowballer</b> is someone who intentionally lowers his price for a certain property knowing what the <b>current service is charging</b> just to get the account.

Just because their price is lower than someone else's doesn't make them a lowballer. Everyone's numbers are not the same.
Profit margin is the key.

Chopper Lover
12-04-2001, 11:23 PM
I want to agree with Lone Star and add this example:

You are established in a neighborhood that averages $30-35 per mowing. Some "lowballer" sticks flyers in all the news paper boxes advertising "$18 per yard".

That is low balling....

Mark

AVRECON
12-04-2001, 11:32 PM
theres a lco here that has all the new trucks and equpment. Ok they maintain 2 banking locations. They charge $225 per month yr. round, for both branches. They have to go over every week and at least blow off the parking lots, when grass doesn't need mowing, also trim bushes 2 or 3 times a yr. Now please tell me how anybody can do that and make a profit? Thats less $30 per visit not including overhead, labor, ( usually 2 or 3 guys) equip and fuel. Thats what I have to compete agains't here. Geeezus!!!

CSRA Landscaping
12-05-2001, 12:15 AM
Here we go again. Guys, some of these examples could be reflective of someone that's just starting a business and need cash NOW to feed their family. Granted, there are exceptions. Lowballing, in my opinion, can be seen in this example:

Guy A goes to look at the job and all he wants is to be paid, doesn't really care about doing the best job. He tells them $40 to get up all the pine needles in their 1/2 acre yard. Bagging. And hauling it off.

Guy B goes to look at the job and wants to have a good image reflected in his work so he charges whatever his time is worth to him, maybe $120 for the same job, whatever he feels it's worth. He does a good job.

Guy A lowballed. How did Guy B learn not to lowball? By doing the same thing Guy A did before and (this is key) learning from it.

If you can do a good job cheaper than someone else and still make money, why not? That's business. :blob4:

parkwest
12-05-2001, 12:21 AM
A lowballer is someone who thinks he has lower overhead than everyone else and then, after a couple of years, tries to sell his accounts because he can't afford a new mower.

65hoss
12-05-2001, 12:35 AM
Someone competitive knows his expenses and what he needs to make a profit. A lowballer is someone that has no clue as to expenses or cares even less about profit. He works for getting by until something better comes along.

Craig Turf Management
12-05-2001, 09:27 AM
I'm just guessing, but I bet more than half of the members here don't know why they charge what they charge for their services. I mean I don't believe that many of us know how to determine our true overhead and cost of doing business. I think it's like the kid in school who is afraid to raise his hand to ask a question out of fear of being ridiculed by the class. Then on test day, he blows the test, flunks out of school, can't get into college, so he buys a lawnmower and gets into the business only to fail at that because he is afraid to ask his buddies on a lawncare forum how to figure out his cost of doing business because he is afraid of being ridiculed. I see things changing around this place, and maybe now is the time to get back to basics, ask the hard questions, and be honest with yourself and everyone else on this site. Do you need help figuring out the business side of doing business. Matbe some of the successful operators on this forum can help us or send us someplace for this information. Be honest, should you be on this list? I think I need help, so I'm raising my hand. Be gentle, I'm your lawnsite buddy.
Bill Craig!

TGCummings
12-05-2001, 11:03 AM
Lonestar probably hit this one on the head, but my answer was closer to parkwest's. ;)


I'll try and clear up some definitions:

A cad is a person who charges less than another in order to steal an account.

An unfortunate is a person who charges less than they are worth because they don't understand their total overhead.

Both are lowballers. I can be angry at the cad and feel sorry for the unfortunate. Regardless, they don't affect my bottom line because I understand my costs after years of being an unfortunate.

Bill Craig: I'm all for it. Let's talk Cost of Doing Business! After countless months (and yes, years) of hearing what I need to do to understand my bottom line I finally have a clear understanding of what I need to charge on every job. Truth is, it's remarkably simple! However, just hearing about it doesn't do it. You must apply it day in and day out. And you must not cheat yourself!

I'm looking forward to a fresh, new thread on this topic. ;)

lawrence stone
12-05-2001, 11:32 AM
People who buy lawn care don't give a ratís azz about what equipment you operate or what truck you pull up to the curb.

They buy on price, reliability and results.

If you can meet the above standards you will have great and unlimited success.

There is NO way a contractor that buys $10k GHS walker can compete on paper vs. one who buys nearly new $1200 52" Toro gear drive off ebay.

When you add in the financing and sales taxes the walker becomes $14k.

By operating the old Toro vs. the new Walker YOU pocket vs. Bob Walker $8-12 more dollars per hour.

TGCummings
12-05-2001, 11:35 AM
In that case, my goal would be to buy the used Toro and charge new Walker prices. ;)

LoneStarLawn
12-05-2001, 11:40 AM
Originally posted by AVRECON
theres a lco here that has all the new trucks and equpment. Ok they maintain 2 banking locations. They charge $225 per month yr. round, for both branches. They have to go over every week and at least blow off the parking lots, when grass doesn't need mowing, also trim bushes 2 or 3 times a yr. Now please tell me how anybody can do that and make a profit? Thats less $30 per visit not including overhead, labor, ( usually 2 or 3 guys) equip and fuel. Thats what I have to compete agains't here. Geeezus!!!

What is the size of the property? Hard to agree with you without knowing that....

AVRECON
12-05-2001, 12:20 PM
Not very large, more parking lot than anything. My question is how can you buy all this new eqpuipment and trucks and charge these prices? Also they have to put out pine straw and sesonal flowers for the same fee per month, they only charge more for materials. To me stopping for anything less than $35.00 per visit just doesn't make sense espcially(sp) when you have the other things to do yr. round. Hell, by the time you pay taxes and employee's and upkeep, wheres your profit? I just don't understand, unless its getting all the work you can for less than anybody else is going to charge. And their work looks very good, also they wear co. shirts and drive new trucks and new equipment. I don't have new equipment and new trucks and there is no way I could make it charging those rates and I'm a solo operator.

Samurai WeedWacker
12-05-2001, 02:38 PM
$225 divided by 4 is $56 and change. I'd go for that deal at any bank in this town. My minimum is $20 per man-hour. I'd probably be getting close to $30 per man-hour at banks here in Laramie WY.

AVRECON
12-05-2001, 02:43 PM
Divide that $56 by 2 and you get $28 per bank branch per visit.
2 banks one price $225 per month for both. Not $225 for each branch, but for both branches.

rixtag
12-05-2001, 03:37 PM
Ok,
I am starting to see what this means to everyone.

If I understand right, generally speaking, a lowballer is someone who intentionally tries to cut the price sooo low to get the job without, and here's the key word: RESPECT.

Is that right? I have a pretty good idea that this is the core of the problem. If I can maintain the margin to which I am accustomed and assuming I run a legitimate business( insurance, taxes etc) then if my overhead is lower and I get the job for 20% less and do a great job then I am not a lowballer. Right? I am not trying to offend anyone, just trying to understand.

Lawrence, what happened to the "X"? LOL I agree with you on your points. Impression is important but not paramount to getting the job.

Bill Craig, TGC, I am all over it. New thread in the business forum. I am getting close to having mine all in line but it is frustrating when asking these questions and being told to search. I will not search. I want a live discussion.

Thanks everyone for your participation on this topic.

Rick

Michael Fronczak
12-05-2001, 04:59 PM
Around here the biggest problem I've had (in commercial bidding situtations) is one of the top three national co's. I know my overhead is lower than theirs (I used to work there), going to run numbers this winter to be more competive for next year, still had an exceptional year even without that work I didn't get. As for lowballers yes there out there, but as a professional you shouldn't have to worry about them, people know they get what they pay for. Saw an add today for snowplowing "most drives $ 10.00 includes shoveling walks & salting" wonder if he has insurance? There will always be people that buy on price only, they aren't the customers I want.

casey
12-05-2001, 06:52 PM
Originally posted by lawrence stone
.

There is NO way a contractor that buys $10k GHS walker can compete on paper vs. one who buys nearly new $1200 52" Toro gear drive off ebay.

.

On our small props their is no way an LCO running belt drives can complete a job as fast as an LCO running hydros. Production of unit must also be taken into consideration. Initial unit cost should not reflect higher prices if mowing production is vastly increased.

LoneStarLawn
12-05-2001, 07:21 PM
Originally posted by AVRECON
I just don't understand, unless its getting all the work you can for less than anybody else is going to charge. And their work looks very good, also they wear co. shirts and drive new trucks and new equipment. I don't have new equipment and new trucks and there is no way I could make it charging those rates and I'm a solo operator.

Looks like they might be doing something right.

How do you know the figures for that service that they are performing? If they are only staying at each prop. for 10 min (with 3 guys) then the price comes out pretty good. This also depends on the locations of the properties before and after each of the banks (drive time).

10 min at $28 is $56 per man hour (does not include drive time).
I would think getting $35 per man hr is pretty good in your area and there is plenty of room for drive time. 15 min will be ok as well (depending on route).

AVRECON
12-05-2001, 08:29 PM
I know how much because a friend used to do it and has inside info as to how much this lco bid on it.

lawrence stone
12-05-2001, 09:45 PM
Originally posted by TGCummings
In that case, my goal would be to buy the used Toro and charge new Walker prices. ;)

No you want to charge 80-90% of the guy with the new Walker so you price is more "attractive".

dj'slawnservice
12-05-2001, 11:24 PM
LonestarLawn nailed it......lowballers knowlingly underbid you to take your accounts !
I second the motion that Craig Turf Management made !!

thelawnguy
12-06-2001, 06:56 AM
"transitive verb
Inflected Forms lowballed, lowballing, lowballs
Definition 1. to give (someone) a deliberately understated price without intending to honor it. "

awm
12-06-2001, 08:26 AM
this is just from memory but i believe that about 4 out of 5
new buisinesses will fail within 6yrs of start up.this is why their will always be underpriced services. they find out whats realistic priceing. but its usually to late when that is finally realised . when young i
ran a parking lot sweep truck for a senators aid ,who wanted
to stay incognito. his idea was to under price and do volume work.
works fine for discount stores but parking lot cleaning aint sellin taiwan products. when the truck wore out ,we were done.
guess he may have gotten a tax rite off or something.
but i was lookin again.

AVRECON
12-06-2001, 09:21 AM
I also know what I have to charge to make a profit too. Anything less than fity an hour, then I end up in the hole.
Originally posted by Craig Turf Management
I'm just guessing, but I bet more than half of the members here don't know why they charge what they charge for their services. I mean I don't believe that many of us know how to determine our true overhead and cost of doing business. I think it's like the kid in school who is afraid to raise his hand to ask a question out of fear of being ridiculed by the class. Then on test day, he blows the test, flunks out of school, can't get into college, so he buys a lawnmower and gets into the business only to fail at that because he is afraid to ask his buddies on a lawncare forum how to figure out his cost of doing business because he is afraid of being ridiculed. I see things changing around this place, and maybe now is the time to get back to basics, ask the hard questions, and be honest with yourself and everyone else on this site. Do you need help figuring out the business side of doing business. Matbe some of the successful operators on this forum can help us or send us someplace for this information. Be honest, should you be on this list? I think I need help, so I'm raising my hand. Be gentle, I'm your lawnsite buddy.
Bill Craig!