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Cosmic Hippo
03-14-2009, 01:18 AM
Defense of WHAT???

I bet you're mad already. lol

Ok, just a little thought experiment here...

Firstly, what lowballing is versus competitive pricing is sort of relative and subject to opinion. Don't know where the line is drawn. But, just as to the concept of significantly underbidding one's competitors, pricing below market, etc. (lowballing)...Here are a couple reasons it might not always be unwise:

1. Get the ball rolling. It is axiomatic here that the first and foremost thing anyone wishing to launch their business MUST do is, simply get out and get working. So if you price low enough to get a quick set of accounts, you are out there in the game. You got your lettered vehicles out, People see you out working, they see your work, you're meeting people, making connections. These benefits might offset the low profit margins in the beginning. It is a launch pad. Ok, bad metaphor, I can see all the crash and burn responses already. But it is a way to raise your chances of at least being out and working.

2. Overhead. No, I am not cruising the neighborhoods with a push mower in a 2 door hatchback trying to mow for beer money. Neither do I have near the equipment that you established guys have. And I don't believe I should. I think it is terribly unwise to go into massive debt to launch this business and equally unwise to sink many thousands in savings into it. A sensible balance must be struck early on, and it will differ from person to person. But we beginners' overhead is, or should be, much lower. For me, my little group here has a plenty of experience in maintaining all types of equipment. I believe we can keep running for less than buying premo stuff. Even considering all the extra maintenance, I like the math with this strategy. So overhead for us is lower. We will not need to recoup as much in profit. We can charge less.

3. Branding. I believe nearly every succesful business has built a solid brand, even if they don't think of it that way. Some of you guys have been in the business a long time and have built a brand far more valuable than Joe Blow's Lawns. Your brand should cost more because people associate it with the product/service that you have produced. If I am some ceo who is having business technology problems and I need a consultant, I can look in the phone book and call "A-1 Buziness Techno Guy" or IBM. If I choose IBM, I expect to pay more. And if my tail is on the line, I will pay the extra dough because chances are those guys can fix the problem. And of course, A-1 would be insane to charge IBM rates. A-1 those good-for-nothing-lowballing-sons-of-...um..guns.

4. Experience/Expertise (related to #3)The "Been there, done it" factor. Many of you have seen it all, done it all. Have all the gear. And your market knows it. You command a higher rate of pay based on your proven record of excellence. Lawyers that have succesfully tried many cases make lots more than new ones. Great surgeons same thing. Craftsman, artisans, tradesman, etc. If it is a stretch to compare lawncare with the preceding, I still think anyone with a history of excellence can and should be paid more than the apprentices and newbies.


The defense rests.






and....





.....the beatings will now begin.








Where am I wrong?

ambersLawnmowing
03-14-2009, 01:55 AM
Lowballing is ALWAYS unwise. Open your eyes, If you start taking work from someone getting $40 to mow and you charge $25, then the next year you charge $35 so you can afford some equipment to make your life easier. Do you think that customer will stay with you or move on to this years lowballer? More then likly move on. So now you have no work, and no money. As for Over head, I have done this 3 years now, debt free, You are just starting and are NOT debt free, who should charge less? Should i because i am debt free? Or you because your mower has no payments and 0% interest for the first 2 years? Most people just starting have more debt then people that have been in it for awhile.

White Gardens
03-14-2009, 02:05 AM
O.K.

So you keep your routes tight, overhead to a minimum, and you can low-ball.

As business grows, let me know how the lower prices affect your biz after you break the glass ceiling and you need to add.. More equipment, more crews, and so on.

So, why not charge more and keep the market value higher for everyone else who doesn't low-ball.

Cosmic Hippo
03-14-2009, 02:26 AM
My eyes are plenty open. And incidentally, I don't have debt. I am fanatically against it, as I must have not made clear in my original post. Still, fair enough. You make a good point. But I am not sure you have refuted any of my defenses specifically. Yours is certainly a valid point and I predict unanimously held on this.

I may loose that customer you mention...

by the way, my sort of disclaimer was probably not clear, I am not advocating (necessarily) lowballing. Rather I am trying more to be devil's advocate here. I have made the best case I can for lowballing it. I would in fact be happy to see each of my points soundly refuted.

So, I loose that customer...But I have been out and I have been working. I have met people, honed my sales skills, gotten better, quicker, etc. I will hope to keep all of my customers. I will treat and serve them well. If they leave, then the next guy can take them and I will move on and price higher. Only now I am networked, practiced, etc. To say that when that happens I will have no work and no money seems a leap.

Not to get off on a tangen though, because I am most interested in my 4 specific defenses being refuted, with specificity.

I readily concede that you who are experienced are far better than I at evaluating the issue. Be that as it may, a great lawyer with a slam dunk case still has to make the actual argument. He can't just say, "you dont know what you're talking about. I know. I am experienced." If I am on the jury, I still want to hear the case, regardless of his credentials.

Cosmic Hippo
03-14-2009, 02:35 AM
O.K.

So you keep your routes tight, overhead to a minimum, and you can low-ball.

As business grows, let me know how the lower prices affect your biz after you break the glass ceiling and you need to add.. More equipment, more crews, and so on.

So, why not charge more and keep the market value higher for everyone else who doesn't low-ball.

Good point. So, as you see it, the risk is more long term than short term?

Is it not possible that some have failed in this venture because they were more concerned with high margin and propping up the market?

Sure, the lowballers are the villians because they cost you all money. Such is capitalism. I find nowhere near the same zeal or even modest caution in advising us not to price to high. Yet, that will sink us sure as underpricing. The difference is, well, who really cares about the poor sap that made that mistake, he's gone and there is more for the rest of us. And he didnt cost us any money.

Nashmowing
03-14-2009, 06:38 AM
This person is not a good business person at all!!! Any one who thinks that by having lower rates you can get more customers and keep your business afloat is on drugs. You can be competitive, but you cannot let yourself be foolish to cut into everyone else's profits.

If a customer is searching around and looking for service, yes they are looking for cost savings, but if they call around and compare prices, they most likely when they come to you and see your rates are the cheapest, are going to do one of two things, one is think to themselves why your rates are so cheap compared to others, or think that they stumbled onto a gold mine, changes are, people who can afford lawn care and landscaping and all the good stuff, are not worried about cost, they wan quality at a good price.

Did you know, that even some people feel the way we do about, "You get what you paid for" you pay for cheap service, you get cheap service, see my point? it doesn't always work, and in the long run you go out of business due to the lack of work.

White Gardens
03-14-2009, 09:38 AM
Really, what I feel it all comes down to is people not understanding what they are doing when charging lower for accounts.

It's not that they want to charge lower (sure they need the work) but more of not truly understanding the market and why they are out to get business in the first place, to make money.

I think it just stinks that we provide a biz that has nothing to set rates. In other businesses, most of the time the service is dictated by what supplies cost, minimum wage, ect.

When it comes to something like mowing, you just show up to do it and I feel the costs and overhead is overlooked be 50% of LCO's out there, thinking "I don't have overhead", which isn't the true case because you will always have something to spend money on in biz.

birtchetg
03-14-2009, 10:30 AM
I am getting up on my soapbox for this nonsense. I cant help it. In response to your post I would like to say these things.

1. (ball rolling) While I agree that lowering your asking price to obtain a base list of customers is a good thing, lowballing is quite different. Lowballing is defined as offering a price which hurts the local industry while not being able to cover your own cost of operation. Not being able to cover your cost of operation puts you by CHOICE in the red. It also conditions potential customers and everyone they talk to about you that the price you offer is the one they should pay henceforth. And as I stated before, when you offer lowball prices that do not cover your expenses, you cannot stay in operation. Nor can any other landscaper/LCO in your area, thanks to your stupidity.

2. (overhead). While I agree that going into massive debt is usually a poor idea, you still will have overhead as long as you have costs. Not charging enough to cover your own costs of operation will eventually catch up to you. Its like running a ponzi scheme on yourself. Eventually the deficit catches up to you. The biggest mistake I see mowers make is not factoring the cost of replacing equipment as it wears. That mower you are using today will not last forever. Neither will your truck, trimmers, trailer, blower, etc. You need to factor in the cost of replacing this equipment into your overhead. Otherwise when it wears out, you are paying for replacements instead of your customers. That is just poor business. And the reason you are paying? Because you did not ask a price that covered your cost to begin with. You were LOWBALLING.

3. (Branding). IBM, landscapers are not. And most property owners look at landscapers as unskilled work, no matter how long you have been in the business. While some people are loyal to a specific company or person, in this day and age most are not any longer. So while you are coming in and lowballing the prices to get business, you are putting both yourself and the established company under. And you are right, a squared away LCO with an established reputation can usually charge a few dollars more. But again, lowballing is not about a few dollars. Its about charging so low as to not cover costs. As I have stated time and time again, I think most guys get into this business without knowing how to actually price. I have a buddy that started a landscaping business without even building a budget. Then when I finally convinced him to do so, his budget was missing huge amounts of dollars that never even occured to him to factor. Which is one of the reasons he thought he could operate so cheaply. I tried to convince him but he thought he was right. He currently works at wal-mart.

4. (Experience/Expertise) Not really going to respond to this one as much. When I got into the business I didnt make the mistake of letting everyone know I was the noob with less experience than the established companies. I presented myself as a consummate professional that was every bit as good as the companies they had seen before. And you know what? People thought I was an established company with a loyal customer base just based off of my professionalism. Only lowballers would cost themselves money because they felt they were not worth as much.

Conclusion: I think maybe there is some confusion between competitive pricing and lowballing. I defined lowballing in my opinion in my rant. Competitive pricing is charging the customer less while still covering the costs that your organization accumulates while operating, with a little left over for profit. If that makes you lower than the next guy then that means you are running your business more efficient. Thats good. But like I stated before, most owners that do not have a back ground in business dont actually know what their costs are until they have dug themselves a hole. By the time they realize their mistake, thier company, and the local industry pricing has been permanently crippled. That my friend is why lowballing is stupid. That is why lowballers are hated by everyone who is established. That is why you are either stupid, a joke, or do not know how to run a business. I have so much more I would love to rant about but my fingers are tired of typing. Oh, and just because you look up big words to type in your diatribe does not mean people will take you to be an intelligent person if what you are saying is foolish.

4.3mudder
03-14-2009, 12:06 PM
Hmm, I 'm glad that I started younger and bought all my equipment. Now, I did not buy best of the best, but I did buy Stihl. I knew better than to buy some weedeater brand from walmart or ryobi from home depot. I have grown, so I needed a couple other big pieces of equipment. I did not go out and buy a 10000 dollar mower. Why, SHoot, I woulr have to work for x maount of months just to pay it off, who wants to do that? I look around for deals on used equipment, and I mean used.

I bought a exmark lazer z parts mower for around 440 a piece. I put, oh, 800 dollars into one and 600 in the other, now, that may seem like a lot, but, that is 1240 for one and 1400 for the other. I sold one for 2100, so after all expenses and crap, it was like I almost got a mower for free. Finding a good used mower would be way more that I can say, but, I would rather buy somehting used, fix it up, and run it. If you have knowledge and skill to work on these machines, it helps out a whole lot in the long run. What is labor rate at shops now, 55 or 60 an hour? There is no way in hell I would spend that much, no way, I work on my own stuff, save the money, and use it for something for constructive like buying savings bonds or put it into a savings for a rainy day. Thats all.

ambersLawnmowing
03-14-2009, 12:26 PM
My eyes are plenty open. And incidentally, I don't have debt. I am fanatically against it, as I must have not made clear in my original post. Still, fair enough. You make a good point. But I am not sure you have refuted any of my defenses specifically. Yours is certainly a valid point and I predict unanimously held on this.

I may loose that customer you mention...

by the way, my sort of disclaimer was probably not clear, I am not advocating (necessarily) lowballing. Rather I am trying more to be devil's advocate here. I have made the best case I can for lowballing it. I would in fact be happy to see each of my points soundly refuted.

So, I loose that customer...But I have been out and I have been working. I have met people, honed my sales skills, gotten better, quicker, etc. I will hope to keep all of my customers. I will treat and serve them well. If they leave, then the next guy can take them and I will move on and price higher. Only now I am networked, practiced, etc. To say that when that happens I will have no work and no money seems a leap.

Not to get off on a tangen though, because I am most interested in my 4 specific defenses being refuted, with specificity.

I readily concede that you who are experienced are far better than I at evaluating the issue. Be that as it may, a great lawyer with a slam dunk case still has to make the actual argument. He can't just say, "you dont know what you're talking about. I know. I am experienced." If I am on the jury, I still want to hear the case, regardless of his credentials.

Debt isnt just something in the credit world. It took some sort of money to get your equipment. That money that was spent was either from Your personal account, or from the business account. If from you personal account the business needs to repay you, If it is from the business account you Just cut into the profit, I dont see how you have a profit before you went and bought the equipment. So i am guessing you choose A. personally finance you equipment for your business. Great Now your business maybe be debt free but You arent.

Also you cant move on and price higher because you already killed the market.

Also 4.3 Mudder. You say that the shop make $40-50 an hour to fix mowers. What is your labor worth? I know i pay myself hourly but For me to work on a machine is going to cost my business the same amount. When you worked for someone else did you work for free sometime? Answer is no, so why do it for your own business? I am not trying to get into a fight with anyone just point out some business points that may have been over looked.

Cosmic Hippo
03-14-2009, 01:26 PM
Thank you all of the thoughtful responses so far.

Birtchetg,

By far the best comments against lowballing I've seen. Thanks for taking the time to answer all of the questions.

I would like to remind you and everyone else, that I merely wanted to see specific responses to some specific motivations that might lead to lowballing. But apparently that makes me stupid, or a joke, etc. for even asking questions.

You may disagree with all of my points. In fact, I think you pretty much settled the matter in your favor and I really hope all of the newbies read your response. That said, simply challenging assupmtions and conventions is NOT stupid for anyone.

Aside from the personal attacks, posts like yours will do far more to help people make the mistake of lowballing for their own sakes and for yours.

Hey...kinda what I started the thread for in the first place!

So, thanks again to you and the rest of the responders.

Sincerely,

the "joke"

melanieb3
03-14-2009, 01:49 PM
Yeah, those kind of responses are what I don't understand. Don't call someone stupid or tell them they're a joke or even should NOT be in the business just because they asked a question.

These forums are supposed to help...not to demean the poster.

Whitey4
03-14-2009, 01:57 PM
As soon as the word low balling is used, flares go off. It hits hot buttons.

Competitive prices and creative selling are musts. Last year was first year as a real business. I took a group of three houses away from one guy. My area consists of small properties, lots of obstacles and 3 to 4k of turf. They are vitrually all irrigated. This guy found out that I undercut him on weekly maintenance by about 25%. So, he says I am a lowballer. Not true. My total billings came in at the same prices he was charging, I just billed things out differently. Sure, the weekly maintenance number was low, but for my ferts, squirts and mulchings I charged higher prices than he did. People looked at the weekly cost of just maintenance, and that was a hook that they liked.

I didn't low ball these 3 houses, I out sold the guy. I also got plantings and things like aeration and over seeding that he wasn't getting.

Now, here is an account that I did drop my shorts on. It is a church with two houses on the property. I came in at 18% lower than my competition. 10% might have done it, as the customer is not happy with this guy's service, but I had to be SURE I got this one. The reasons:

1. I have capacity. I have room on my schedule to do this large property.

2. Last year was my first, and I operated on a shoestring budget. My 1998 Chevy S10 long bed and crappy little open trailer were not going to get it done this year. I had to upgrade, HAD to. I just ordered a 2009 F150, and put some $ on a 10X6 enclosed trailer. This one account will pay for both.

3. Once my quality of work is proven, I will increase my prices by 10% at least.

Am I lowballing? Am I hurting the market with this one account? Or am I doing what I have to do to sustain my business? I know, it is the later. I am dong what I have to do to upgrade equipment that MUST be replaced just to stay in business. The new rig with signage will also help me grow. I have no signage now.

Being that it is a church, after the parrishioners see my work, other doors to new accounts may open up. This isn't low balling, it is investing in my business. The guy who had the account last year won't see it that way I am sure. He also did some cute things to make his prices appear to be more reasonable. Creative selling, creative proposals. I am willing to bet that after the year is out, I will have gotten more billing from this account than he did, and I'll be at least as profitable as he was.

It's called capitalism. Competition in a free market. This guy sent the church a very amatuerish half hand written quote. Mine was slick, with a cover letter. This economy is tough. The guys that know how to creatively operate will come out on top. This guy will swear I low balled him. But, at the end of the year, when it's all said and done... I am confident I will have made more money and done more work on this account than he ever thought possible. It won't be because I was dishonest, either. It will be because I got the mulching, I got the annual plantings, I got all the work he missed.

New LCO's can't survive unless they have an edge. Too many of them just charge less. That is a bad strategy. Get legal for pesticides. Offer one stop shopping for services. Be creative when you make proposals. Know what potential each account may offer in premium elective services. Be sure to mention improvements and plantings to your customers without being pushy. I still carry a few mow and blow only el-cheapo accounts into this year, but I have capacity. As I reach capacity, those accounts get dropped. The next new guy can take them as my business grows and I concentrate on accounts with more potential for higher profit income.

The bottom line is that there will always be low ballers, guys with no vision, no business plan, and they will come and go. Let them. Do what you need to do, but have a plan, a vision and an idea of where you want you and your company to go. The truth is, for that church account... if they were happy with his work, I never would have even been asked to bid on it. He left the door cracked, and has himself to blame.

Cosmic Hippo
03-14-2009, 02:14 PM
Great points. Thank you.

George Mason
03-14-2009, 03:01 PM
It's called capitalism. Competition in a free market.

AND

The bottom line is that there will always be low ballers, guys with no vision, no business plan, and they will come and go. Let them. Do what you need to do, but have a plan, a vision and an idea of where you want you and your company to go. The truth is, for that church account... if they were happy with his work, I never would have even been asked to bid on it. He left the door cracked, and has himself to blame.

Someone hit the nail on the head, no matter how much we don't like it. There is no other way to put, it's crying over spilled milk if this drum keeps beating. In addition, if you leave that door open cracked, be it by poor service, raising your bid 10% next year, etc., someone will likely do the same to you and you move on or try something to get it back.

Choices people! I hate some of it too, but in the end it's the US way and nobody has ever had a more successful way that I am aware of. Maybe the best part of this "way" is that it keeps everyone on their toes - if you want to be average, you had better not buy too much or become too pricey with average equipment and average help or you'll slip and pay the price, you'll need to keep your prices and product/service just that, average. If you want top-shelf, you had better keep advertising, reputation, product/service, and the equipment, help, and rates all top-shelf, and if your content with the bottom, it's not a bit of difference. You see, as service providers we'll figure out where we need to be and adjust accordingly and those that can't or don't... see you later. Customers are the same, they'll find what they are looking for and adjust as needed, it all works out in the wash. It was never meant for everyone to succeed and get the top price, nothing works that way, I wish it did though.

High-end, average Joe, or lowballer... do your thing, if there isn't a niche out there for you, good luck with something else, and I assure you, that whatever that is, it will be the exact same way as this industry.

4.3mudder
03-14-2009, 05:18 PM
Also 4.3 Mudder. You say that the shop make $40-50 an hour to fix mowers. What is your labor worth? I know i pay myself hourly but For me to work on a machine is going to cost my business the same amount. When you worked for someone else did you work for free sometime? Answer is no, so why do it for your own business? I am not trying to get into a fight with anyone just point out some business points that may have been over looked.

I see where you are going, but yes, I have worked for free. In my younger years I used to volunteer a lot of time at some local baseball fields. Now, I would get paid, but it was minimal. I would do a lot, because I liked what I was doing, I mean, this was when I was like 12 years old, and really didn't know what making money was. Plus, the tractor that I used was not mine, it was my dads at the time, but he did not mind at all. I paid for the fuel, and maybe got a little bit of side money, again, I did not know about making money at 12. I could have been playing video games and not learning anything at all except where every button on the controller was.

I do little things on the side for people while doing a job for them, because I like doing what I do. Now, I don't mean mowing a half acre for free, but if a tree needs a couple small limbs trimmed or what not, just small stuff. That is what the customers really appreciate, the little things, at least mine do.

SO getting to the labor rate. I work on stuff in my own time. This is because, I am a one person crew and I do not go out every single day of the week so I have time on my hands. I also go to school full time, so that is partly why.

Everyone likes to save money, so why not cut out 300 400 500 bucks on mantainence bills at a mower shop if you can? I mean, that is money left in the bank. NOW, yes, I can see if you were running multiple crews that you would need someone to do that and I have no problem with, but if you are just one person, and have some knowledge, time, and skill, why not put it to use.

I can see why shops can be paid 40 50 bucks an hour, because they know what they are doing and they have the knowledge. I will never be like Restrorob and all the others on here that know almost about everything. But when you get familiar with your equipment, it is useful in the field if something happend to go wrong. I'm not disputing that taking your stuff to shop is better for the business, but if you can save money by all means do it. That can be money invested to other things, rainy days, ect.

THC
03-14-2009, 06:50 PM
.....the beatings will now begin.








Where am I wrong?
When you run around with cheap prices you really do attract an unusual amount of cheap PITA customers and just because your overhead is lower doesn't mean your prices HAVE to be lower.

Tyler7692
03-14-2009, 08:25 PM
The bottom line is that a "lawn mowing business" is typically an easy market to enter (relative to most others) and thus has low margins. Actually, I'll come right out and say it, unless you go big like Brickman, its almost a scum business (NO OFFENSE). There are many, many, (& I repeat MANY) businesses that offer much better margins, but it is hard for most people to enter business models like that due to limited capital, credit, and other factors. Free market, baby. Believe me, if I can build my business to the point I will be able to escalate to a higher playing field, I will. And I work as if that is my only goal. So I plan on being there.... and outta here.

birtchetg
03-15-2009, 11:42 AM
Cosmic Hippo,

I shouldnt have thrown the snide comments in and I apologize for it. If it was possible I would ammend my post accordingly. My apologies.

Cosmic Hippo
03-15-2009, 01:40 PM
Thanks man. No worries. Thanks again for the good points.

George Mason
03-15-2009, 09:28 PM
There you go Birtch, I like that. You don't see that too often on this board, or any other for that matter (I'm on the sports boards too). That's what it's all about, accountability! :)

mdlwn1
03-15-2009, 10:00 PM
Defense of WHAT???

I bet you're mad already. lol

Ok, just a little thought experiment here...

Firstly, what lowballing is versus competitive pricing is sort of relative and subject to opinion. Don't know where the line is drawn. But, just as to the concept of significantly underbidding one's competitors, pricing below market, etc. (lowballing)...Here are a couple reasons it might not always be unwise:

1. Get the ball rolling. It is axiomatic here that the first and foremost thing anyone wishing to launch their business MUST do is, simply get out and get working. So if you price low enough to get a quick set of accounts, you are out there in the game. You got your lettered vehicles out, People see you out working, they see your work, you're meeting people, making connections. These benefits might offset the low profit margins in the beginning. It is a launch pad. Ok, bad metaphor, I can see all the crash and burn responses already. But it is a way to raise your chances of at least being out and working.

2. Overhead. No, I am not cruising the neighborhoods with a push mower in a 2 door hatchback trying to mow for beer money. Neither do I have near the equipment that you established guys have. And I don't believe I should. I think it is terribly unwise to go into massive debt to launch this business and equally unwise to sink many thousands in savings into it. A sensible balance must be struck early on, and it will differ from person to person. But we beginners' overhead is, or should be, much lower. For me, my little group here has a plenty of experience in maintaining all types of equipment. I believe we can keep running for less than buying premo stuff. Even considering all the extra maintenance, I like the math with this strategy. So overhead for us is lower. We will not need to recoup as much in profit. We can charge less.

3. Branding. I believe nearly every succesful business has built a solid brand, even if they don't think of it that way. Some of you guys have been in the business a long time and have built a brand far more valuable than Joe Blow's Lawns. Your brand should cost more because people associate it with the product/service that you have produced. If I am some ceo who is having business technology problems and I need a consultant, I can look in the phone book and call "A-1 Buziness Techno Guy" or IBM. If I choose IBM, I expect to pay more. And if my tail is on the line, I will pay the extra dough because chances are those guys can fix the problem. And of course, A-1 would be insane to charge IBM rates. A-1 those good-for-nothing-lowballing-sons-of-...um..guns.

4. Experience/Expertise (related to #3)The "Been there, done it" factor. Many of you have seen it all, done it all. Have all the gear. And your market knows it. You command a higher rate of pay based on your proven record of excellence. Lawyers that have succesfully tried many cases make lots more than new ones. Great surgeons same thing. Craftsman, artisans, tradesman, etc. If it is a stretch to compare lawncare with the preceding, I still think anyone with a history of excellence can and should be paid more than the apprentices and newbies.


The defense rests.






and....





.....the beatings will now begin.








Where am I wrong?
Your not wrong. The problem is that 98% of all guys out there lowballing do not understand what you seem to. They just take up space and depress market pricing...with no plan...no agenda. Then they give up. If you need a certain amount of market share right away...by all means your spot on. As long as you understand that your plan must figure in a way to make money at some point.

capetan
03-16-2009, 11:04 PM
okay,
low balling is a lifestyle
low price
low service
low reliability
low quality
low duration in business
equals
low baller

Staffordnurseries
03-17-2009, 11:14 PM
These posts always interest me. One of the earlier posts hit it right on the head, low barriers to entry on this side of the business. If you are running at a good margin, it attracts others into the business. Same thing that is happening to large and small businesses since we are in a global economy. Guy loses his job to a factory in China, he goes after your margin just to earn money. Ford lowballed the automotive market for volume at the start of the century. Japanese, Koreans and sooner or later the Chinese will displace Ford unless they find ways to compete. Just a curiosity how many LCO's that post on here about low balling are unionized? Maybe your lowballers are just your ex emplyees entering the business. Perhaps your solution to low balling is prevailing wage, pension, healthcare, jobs for life so its easier just to work for you.....like I said I just love these posts

mowzilla
03-18-2009, 12:17 AM
i acutally called around and checked my competition's prices.. and i have a real good friend with and establsihed business that sat down and showed me where to be on pricing. the way i have my pricing set up, it seems low but its based on lawn size and menu pricing.. i would say that i am not the bottom of the price echelon, but rather i chose to offer a wide array of plans to fit any budget. my lowest per trip price is for a 1/4 acre yard to mow/blow it only..same with my montly rates. 3 trips mow/blow only!.. if someone wants everything, then i will fall well in line with my competition somewhere in the middle of my competiors' price range. my niche?? service and quality..period. give the customers, no matter what plan they pay for, the best i have to offer, while constanly looking for a upsale or premium service i can sell (but not be too pushy) and show them i care about their lawn and its look. i prefer the 'full menu' mow/blow/prune/edge/weeds/leaves, and i have set up 'deals' to carry my wintertime business load if need be, but as a last resort. i try to cover the details ( weeds/crackweeds), leave it clean,even,properly cut,prunned, no scalps, edged, trimmed, no weeds, and nice.i do mean nice and sharp as i grow, i will offer fert/areation/etc..my selling point, as i have planned, is to have the best quality and service humanly possible within their budget of my clients' particular plan . i was a pro musician 15yrs here in the atlanta market and lowballing will do nothing but hurt everyone. in fact, i never really saw a big increase in what i made as a musician, and due to lowballing had to play more gigs to make the same $$ i did early on in my career as a musician. lawn care does not deserve this, as it goes on everywhere, unfortunately. like i said i am selling service and quality. i'd rather have a few quality accounts than a bunch of $30 accounts. can't grow and mow like that.

nylawnman75
03-18-2009, 11:33 AM
Low balling is dangerous. While it might increase your business temporarily, I think my business started taking off when I STOPPED being the low bidder. I think being a low bidder inspires DISTRUST. They think they aren't getting something from you that they are getting from someone else.

Raider
03-18-2009, 09:11 PM
okay,
low balling is a lifestyle
low price
low service
low reliability
low quality
low duration in business
equals
low baller

okay,
low intelligence is a lifestyle
low class, judging other people
low ambition to make your own business better
low chance you understand how the free market works

mowzilla
03-18-2009, 10:43 PM
i agree with nwlawnman75, distrust is already a problem in our industry, and feeding the 'dragon of distrust' only means more fires for the legit guys to put out.

hsieh
03-24-2009, 06:39 PM
i don't understand the concept of working more for less. by doing so you are wasting precious time that you could be spending with your family and friends.

time goes by - once it's gone it's gone.

bohiaa
03-25-2009, 10:04 AM
Funny how someone will go to a used car dealer, Get a GREAT DEAL, then brag like mad.
but when the tbls are turned they will ***** like hell

Brett's Cutting Edge
03-25-2009, 12:29 PM
I look at it as why would i go out and work when i can sit at home watching tv in air conditioning and watch all the people cutting lawns for dirt cheep thinking your gettin the same income as i am working alot less time. Competitive is in a whole different field then low balling to get a job. I bid a homeowners association this year that i have a very good relationship with over the past few years and a company lowballed at 120.00 under me a week and the president called and asked if i would like the job for the other companies price. i explained that i would loose money on it. The went with the other company but still want me to do all the other maintenance around the grounds.

grasschopperofchicago
03-25-2009, 03:38 PM
I am getting up on my soapbox for this nonsense. I cant help it. In response to your post I would like to say these things.

1. (ball rolling) While I agree that lowering your asking price to obtain a base list of customers is a good thing, lowballing is quite different. Lowballing is defined as offering a price which hurts the local industry while not being able to cover your own cost of operation. Not being able to cover your cost of operation puts you by CHOICE in the red. It also conditions potential customers and everyone they talk to about you that the price you offer is the one they should pay henceforth. And as I stated before, when you offer lowball prices that do not cover your expenses, you cannot stay in operation. Nor can any other landscaper/LCO in your area, thanks to your stupidity.

2. (overhead). While I agree that going into massive debt is usually a poor idea, you still will have overhead as long as you have costs. Not charging enough to cover your own costs of operation will eventually catch up to you. Its like running a ponzi scheme on yourself. Eventually the deficit catches up to you. The biggest mistake I see mowers make is not factoring the cost of replacing equipment as it wears. That mower you are using today will not last forever. Neither will your truck, trimmers, trailer, blower, etc. You need to factor in the cost of replacing this equipment into your overhead. Otherwise when it wears out, you are paying for replacements instead of your customers. That is just poor business. And the reason you are paying? Because you did not ask a price that covered your cost to begin with. You were LOWBALLING.

3. (Branding). IBM, landscapers are not. And most property owners look at landscapers as unskilled work, no matter how long you have been in the business. While some people are loyal to a specific company or person, in this day and age most are not any longer. So while you are coming in and lowballing the prices to get business, you are putting both yourself and the established company under. And you are right, a squared away LCO with an established reputation can usually charge a few dollars more. But again, lowballing is not about a few dollars. Its about charging so low as to not cover costs. As I have stated time and time again, I think most guys get into this business without knowing how to actually price. I have a buddy that started a landscaping business without even building a budget. Then when I finally convinced him to do so, his budget was missing huge amounts of dollars that never even occured to him to factor. Which is one of the reasons he thought he could operate so cheaply. I tried to convince him but he thought he was right. He currently works at wal-mart.

4. (Experience/Expertise) Not really going to respond to this one as much. When I got into the business I didnt make the mistake of letting everyone know I was the noob with less experience than the established companies. I presented myself as a consummate professional that was every bit as good as the companies they had seen before. And you know what? People thought I was an established company with a loyal customer base just based off of my professionalism. Only lowballers would cost themselves money because they felt they were not worth as much.

Conclusion: I think maybe there is some confusion between competitive pricing and lowballing. I defined lowballing in my opinion in my rant. Competitive pricing is charging the customer less while still covering the costs that your organization accumulates while operating, with a little left over for profit. If that makes you lower than the next guy then that means you are running your business more efficient. Thats good. But like I stated before, most owners that do not have a back ground in business dont actually know what their costs are until they have dug themselves a hole. By the time they realize their mistake, thier company, and the local industry pricing has been permanently crippled. That my friend is why lowballing is stupid. That is why lowballers are hated by everyone who is established. That is why you are either stupid, a joke, or do not know how to run a business. I have so much more I would love to rant about but my fingers are tired of typing. Oh, and just because you look up big words to type in your diatribe does not mean people will take you to be an intelligent person if what you are saying is foolish.


There is a fine line between lowballing and efficient/tight routes and proper equipment!--If I can lowball (underbid) a commercial account and get it from another LCO I will--provided it's profitable for me...if I see another LCO cutting with a 36WB and he takes 1 hour to cut a particular business, that I know I can cut for less and 30-40 minutes, I will bid it...even if they aren't accepting...efficient equipment is there for a reason!...When Tucker built the Automobile, he hand built it, while the Big Three were running assembly!--he was ahead of his time, however he got killed by the more efficient powers that be!---is that lowballing or taking advantage of a tight route and better equipment?
Example being...LCO #1 takes 1 hour to cut a 1 acre account...he is sold on making $65 per hour...so his charge is $65 for that lot
I bid it for $55.00 and can finish it in 30-40...I am at $110@hour...
Lowballing or no?

hsieh
03-25-2009, 04:41 PM
ya but wouldn't your expenses be higher so you're profit margin is not as great?

you can do it faster for less but you hire more people and have more expensive equipment to pay for.