PDA

View Full Version : Would You Lower Your Price ?


Scott's Lawn Maintenance
03-15-2009, 11:24 AM
A customer called the other day and asked if I could do better with my price. I have been cutting the lawn for a few years , she said it was because of financial reasons. I don't really like the idea of lowering my price but don't want to lose a good customer. What would be a good solution ?

birtchetg
03-15-2009, 11:32 AM
If they are a loyal and valuable customer that you want to keep you could offer them a compromise. Say you understand the financial difficulties that they are under and that you value them as a customer. Figure about how much you are making net on the lawn after costs. If you are making 10 bucks a mow net, drop the price 5 bucks a mow and tell them you will just charge them your cost until they get back on thier feet, or for 3 months or whatever. Or actually just charge them your cost. (I wouldnt do that)They will be happy with you because you are dropping your price to what they think is your cost. You will be happy because you are still making a few dollars on the cut and keeping a customer. Win Win in my opinion.

mowerbrad
03-15-2009, 11:44 AM
If it is a customer that you want to keep I would probably lower it a little. But I would make sure that they understand that the price will be lowered only for the time that they need the financial assistance. After they aren't in a financial situation, then the price goes back up to the regular price.

CEASAR LANDSCAPING
03-15-2009, 12:09 PM
You never let a customer know your cost. I f you want to keep the customer offer them a discount if they pay their bill early after they receive it each month. Or see if they can drop some type of service to lower the cost for them only to save them from dropping you , hopefully they will add that service again in the future when things are good .

kaferhaus
03-15-2009, 12:21 PM
everyone's situation is different. Although we rarely get this request we've never lowered our prices. I tell them the truth, we've been absorbing our increases in operating costs and not raising their prices for at least the past couple of years.

We will not be anyone's "bank" (also why we don't bill residentials). The guy that owns the gas station won't lower his prices for me, the guy at the supermarket won't lower his either.

Why folks think it's fine to ask the guys dong their lawn work to lower theirs is beyond me.

Like many companies, we've had to increase productivity to maintain our margins. We've not done it by raising prices.

Tell them to call the grocer and raise hell about the 25-30% rise in food costs the past year.

Or call their congressman and raise hell about the subsidized "Ethanol" industry that's caused the cost of corn to go through the roof which has whats led the food prices across the board to skyrocket. It costs more to make a gallon of it than they can sell it for but the all knowing gubment is making sure they make a profit.... so much so that more plants are springing up for the guaranteed profits to make a product that not only sucks, but gets terrible fuel economy and wrecks engines.

capelawncare.com
03-15-2009, 12:23 PM
That really depends on the customer. I have a customer who is experiencing hard times, she makes payments to me on the Extra's like mulch and trimming. so far its working out. A few months ago she owed me close to a grand, now her bill is less then 300.

I thought, taking it a on the chin for a few months, was better then loosing a customer. So i told her to pay me my monthly rate for lawn care, and pay me the rest, as she can afford it.

I wouldnt do that for all of my customers though... just a select few.

lawnboy2068
03-15-2009, 12:37 PM
[QUOTE=kaferhaus;2854072]everyone's situation is different. Although we rarely get this request we've never lowered our prices. I tell them the truth, we've been absorbing our increases in operating costs and not raising their prices for at least the past couple of years.

We will not be anyone's "bank" (also why we don't bill residentials). The guy that owns the gas station won't lower his prices for me, the guy at the supermarket won't lower his either.

Why folks think it's fine to ask the guys dong their lawn work to lower theirs is beyond me.

Like many companies, we've had to increase productivity to maintain our margins. We've not done it by raising prices.

Excellent statement!

We had one customer ask us this same question this year and she gave us the same reason. Economic hardship. I told her that we have not raised her pricing within 2 years because she opted to pay us in full for each season and that her neighbors had been raised at least 6% plus fuel surcharges.
She went on and on about getting other pricing and I told her go right ahead but I would not lower our pricing.
She was shocked at my answer but she signed anyway.

Hold your ground. Emphasize about your great service and then tell her that you, not unlike her are in the same boat. Tell her that you will try to help her out in some other way as others here have mentioned. Hopefully she will understand and sign with you again.

James

Carolina Cuts
03-15-2009, 12:40 PM
Why folks think it's fine to ask the guys dong their lawn work to lower theirs is beyond me.

It's advertisement season.... someone else is most likely willing to maintain her lawn cheaper, so she figured she would give the option to him first to match the competitors price.


You are correct, the gas pump down the street won't lower the price for a customer, but the next station a mile away might be .05 cents cheaper.
Same for the grocery stores.... Food Lion might have meat @ 5.99lb.... Kroger @ 5.79lb.

I understand your comparison.... but it's not a good one. Price shopping was, is and will always be around....

when money is tight.... loyalty could go both ways....

topsites
03-15-2009, 12:48 PM
I would ask her, if the price of fuel goes past $3 a gallon, would she be willing to increase
the price no questions asked, and if so then you would lower the price until such time.

And I hate to suggest it too just because gas is cheap right now...
But I probably would, just this one time, keep the peace and be done.

Oh yeah, I almost forgot...
Then, start speculating in petrol heavily hahaha

Proc's Lawncare
03-15-2009, 01:18 PM
Consider a new customer cost 10x more then keeping an existing customer... I might be willing to move a little on the price. The person is obviously price shopping, and why wouldn't she be? Look at Insurance company commercials on tv... Shouldn't you shop around? It's all over the media telling people to get the most bang for their buck, so consumers will think your just taking advantage of them if they don't try and get a few bucks off their bill... I would lower it VERY slightly, like maybe a dollar or two less, and explain you have operating cost and what not being a licensed business, but since you like having them and they are such wonderful people, you'll give them a $1 or $2 dollar discount, a buck shouldn't break your bank and it makes them feel like they won something... Just a thought...

Fox Lawn & Garden
03-15-2009, 01:30 PM
I'm facing the same problem....
A commercial customer of mine for 4 years steady. No bids, no contracts. Weekly cuts on large property ( a whole days work). We had a drought last year.... they had me skip a week about 12 times. This year, they called me and said they're taking bids for grass cutting. They want me to lower the price. I feel like raising the price $1 or tell them where to put the job. They're becoming a PITA.
What would you do? I need the work (solo operator), but not the grief.

kaferhaus
03-15-2009, 01:31 PM
Do you seriously believe a buck or two is going to "save" an account?


The insurance analagy is a good one, but here's the catch... yest company one may give you a price that "looks" better than company two... but you'd better read the fine print very carfully because chances are the coverage is different... and you can't just look at the "big" items, like the deductible or amount of liability etc.

These cut rate companies (even the big ones that are advetising) are using slight of hand to make you believe you're getting a better deal and unless you're smart enough to make them send you a copy of the policy they're selling so you can READ it to make a fair comparison you're likely getting less coverage for that smaller premium. The little things like towing, glass repair, roadside assistance, loaner/rent a cars, forced to use their "authorized" body shops, forced to accept chinese replacement parts etc.

I tell customers the same thing. If someone comes in here and offers you a price low enough that you'd consider giving up a known quality service I guarantee you the only way they can do that is to cut corners, you will not get the same service and attention to detail that we've been giving you and that you've become accustomed too.

I also tell them "truthfully" that we haven't raised their rates in 2 years even tough my costs for fuel, labor and materials have all gone up. If they leave and then come back they'll be treated as a new customer and their price WILL go up to the rates we're now charging for the premium services we provide.

kaferhaus
03-15-2009, 01:35 PM
I'm facing the same problem....
A commercial customer of mine for 4 years steady. No bids, no contracts. Weekly cuts on large property ( a whole days work). We had a drought last year.... they had me skip a week about 12 times. This year, they called me and said they're taking bids for grass cutting. They want me to lower the price. I feel like raising the price $1 or tell them where to put the job. They're becoming a PITA.
What would you do? I need the work (solo operator), but not the grief.


Man that's tough as a solo. But I've been there and I'd tell them "well I'd planned a subtantial increase this year but I'll let it slide, that's all I can do.

If they balk, or put it out and you don't get it, go to your current customers and ask for referrals. I've always done that, still do it evey chance I get and it's where we get our best customers.

Never be shy of askiing for a referral.

EDEN77
03-15-2009, 02:18 PM
I'm setting my sights lower in pricing NEW properties. But, dropping the price of an existing customer ? NO WAY. Those of us who are 100% legit cannot drop our prices and still make a profit with all the overhead, expenses, taxes, insurance, fuel, etc. An existing customer who could afford the price before but now can't probably will not be a customer much longer anyway.

Fox Lawn & Garden
03-15-2009, 02:56 PM
My problem is keeping work. I have 2 commercial properties that account for 50-60% of my entire business, and they're both up for bidding. We're talking 2 days worth of work solo for a little over 700 per week. My expenses aren't bad. I have all the right equipment ( could use a truckloader) and it's all paid for.
Do I run the risk of losing these bids by submitting the same bid as last year? Being these are large properties.... 1 is a church - 9 acres total size, LOTS of trimming, and MANY different sections to service, the other is a community park.. 15 or so acres with a lake, swimming pool, and some wooded areas, and oh, yea, a creek. It's an all day job, sometimes for 2 (my son would help). In the heat of summer, I might only be there solo for a few hours....still pays the same..
What do I do? The park bids due tomorrow. The church is waiting, too.

Whitey4
03-15-2009, 03:26 PM
For a small residential, an existing customer that is not a pita, tough call. For me, I think i would have to refuse, even though I am a small solo. My prices are already probably a bit too low. I am generally a few % points under the market rate going into my second year as a legit LCO. Because of that, I would just have to tell her I don't have the room for any price cut that would make a meaningful difference to them.

The risk is losing them to a low baller who seriously undercuts the market rate. I wonder how many out of work people think they can go out and start mowing lawns for cash. I just put a deposit on a new enclosed trailer. The guy told me that he's had a lot of LCO's coming in to sell their trailers... out of business. this year it looks like I will almost double in billings and be at about 90% capacity. Everyone's situation is different.

I got my first commercial account this year, and it makes me nervous. It is a property that will be an entire day's work on average. I hate to be in a position of needing it as badly as I do. This sort of economy is uncharted territory for most of us. People will always go after the lawn guy first when things get tough, becasue they know they might be able to negotiate a lower price. People might switch insurance companies now based on cost... I just did. I was with State Farm for 25 years for auto. I will save a lot of money with that switch.

This industry like auto insurance gets much more competitive in a down economy. That is because people have options. One might save a little money going to the cheapest gasoline station, but the difference is minimal. Same thing for supermarkets. Those businesses all have fixed costs they have no control over, they just set margins. There is a floor.

There is no real floor in lawn care, and people know it. People who are struggling may live with much lower quality if it cuts their bill in half. Tough times....

ambersLawnmowing
03-15-2009, 06:29 PM
I am offer this year to customers that i have done in the past a payment program. Figure i mow 6 months ish out of the year for these people, Well i am going to split up there bill for 12 months to lower the price. They get the same great work, at a lower monthly rate.. Plus i have income coming in 12 months of the year. Just be sure to cover your operating cost with the split. And i didnt lower my price, or give any "free" work away.

4.3mudder
03-15-2009, 06:38 PM
Good way to get your foot in the door.

Lux Lawn
03-15-2009, 06:40 PM
If your landscaping season is 8 months long try and put her on a 10 month payment plan keeping her at the same price.
What I do with dome of my customers is take the year total of all their services...mowing, fertilizer, bush trimming snowplowing clean-ups anything they order and divide it by 12 give them that as a payment. That way it lowers their payment on months were they get more services...it also gives you more income in the winter when things are slower.

mdlwn1
03-15-2009, 09:35 PM
Guys...based on his other posts, he's a newbie. If you had enough work, you would absolutly say NO. You currently arent in that situation, so you might want to think about keeping the customer untill you can replace the revenue with something better.

Florida Gardener
03-15-2009, 10:02 PM
I would try to cut something out(not quality) if possible such as anything you kind of do as part of your service. Do not drop your price. I have 2 customers that are per cut every 2 weeks. I am working it out to where one will be increased for the summer and go back to the original price in the winter. i can do that b/c the type of grass doesn't even grow in the winter and i don't have to spend extra time on the property b/c the grass is so overgrown. The other is getting raised year round but i told her she only has to let me cut it at least once in the winter months. Try to work something out where you can help them out without really lowering their cost. If you are a legit biz and do quality work, you simply can't lower your price. Good luck.

RGM
03-15-2009, 10:07 PM
If customer was having some money problems I would try the every
2 week cut before lowering the price.

Florida Gardener
03-15-2009, 10:14 PM
But then he is spending more time cause the grass is overgrown.......unless it is a time of the year where every 2 weeks wont have a big effect.

RGM
03-15-2009, 10:20 PM
Its not that much more time and I am not lowering my price and the customer is happy I can deal

cantoo
03-15-2009, 10:35 PM
Lots of options when they ask for this. Tell them you have a referral deal where you will discount their lawn for every new job they get you in the neighbourhood. If they get enough new customers they can receive up to half off their price or whatever.
Reduce level of service, trim every other week, no shrub trimming or something else that you do for the lawn price.
Offer to do "extras" that they pay someone else to do such as garbage removal, moving appliances, pressure washing. Something that you can do while you are there so you still make money and they receive value ( save money)
Barter with them for something that you want or need and they have. What do they do for a living, maybe you can make a deal?

Fox Lawn & Garden
03-16-2009, 09:33 AM
bumping this once for other opinions if possible. Thanx

whoopassonthebluegrass
03-16-2009, 09:50 AM
Didn't read the any responses, but here's my take:

You lower your price and you're committing business suicide. You've gotta stand up for your principles or you have none.

If they want to spend less, then offer them less (frequency of mowing... or trimming, whatever). But don't shortchange yourself one cent. It's not worth it. You'll be cussing under your breath every time you cut that lawn - AND you'll have turned yourself into a lawn wh0re.

ed2hess
03-16-2009, 06:59 PM
This is real simple....guys that got regular jobs making over $30K and doing this part time have NO reason to lower anything. They simply replace with another customer. Guys doing this to put meals on the table lower the price to hold the customers. If you have great sales skills go out an replace the customer later and then give them 30 days notice.

kaferhaus
03-16-2009, 07:09 PM
If you lower your price, you're telling the customer that you were overcharging them to begin with. The economy is going to turn around (it always does) and then try raising your prices..... you guys already forget how hard that is to do even in a great economy?

Fox Lawn & Garden
03-20-2009, 11:54 AM
Just a follow up. I got outbid on ALL municipal mowing jobs. The rotten LOW BALLERS!!!

Damn, who in their right mind would do a football field for $35? This fields has 2 fences surrounding the field. Inside, outside, everywhere....$35.00

I think it's going to be a REALLY tough year. Lost $600 worth of work in one day...