View Full Version : curious about pricing <LONG>
08-13-2004, 08:18 PM
I'm not writing to whine or even complain. I am curious about customer behaviour. This is my first year doing this on the, shall we say, "up and up". You know, insurance, tax liscense and the like.
I have a customer that I picked up last year and she has always been a bit fickle. She'd call saying that she wanted something done so I show up and it was, "You know what, I decided to do something different. She'd still hire me but instead of cleaning out a flower bed, I'd end up hauling stone and spreading it down the edge of her 450 foot drive. Always charged her $27.00/hr/man and billed it as such. Always myself and a 2 man crew. No complaints.
Last week we had a bad windstorm. She called to have me clean up a couple of trees that blew down. I have a 2 man crew to work with me on such jobs. We did the cleanup. It took 3 men 3 hours a piece for a total of 9 manhours and 3 truckloads of wood. The city is allowing free dumping of storm debris so I didn't even charge for the hauling.
Left the bill. Today, 3 days later, I get a call. She wants me to justify the bill. I told her it took 3 men 3hours a piece for a total of 9 manhours and 3 truckloads of wood.
I told her $27.00/hr. All of a sudden she took offense to the price. Remember, I've always charged this. She said that she never agreed to pay for more than one man. Tried to explain that it was more than a one man job.
She said she'd pay it this time but that she would be looking for someone else.
She said that $25.00 was uncalled for. I tried to explain about taxes, gas, insurance, work comp and the like but her only comment was, "cost of doing business. The customer should not be charged for these things." Well, I say, where's this money to cover costs to come from?
Have any of you had a similar experience and how did you handle it?
Most customers have had no problem with price including this lady, until today.
I had one customer earlier in the year tell me I was a bit pricy but $27.00 doesn't seem too far out of line given the quality and speed of work.
DFW Area Landscaper
08-13-2004, 08:39 PM
I charge $.60 per man per minute...$36 per man hour. $27.00 per hour is too low, in my opinion, for non-recurring work. Don't get me wrong, if you could get customers to commit to regular shrub trimming, like maybe every 60 days we automatically come out and do it, and you could actually book a schedule based on this stuff, $27/hr would work. The problem is idle time. Residential customers won't commit to having you automatically trim the shrubs every so often. They want to call you when they want it done and then they expect you to come running. Because they aren't committing to future revenues, you have to make more when you are working to make up for the idle time.
Does that make any sense?
Example: I'm bidding an HOA that is estimated to eat up 49.5 man hours per week (on average) for 52 weeks per year for 36 months. I think it makes sense to lower the hourly rate for a commitment like this. But for Joe Blow who wants you out on a one time basis, you simply can't lower the rate. If it's gonna be feast or famine, you need to make sure you're feasting when you do have work.
DFW Area Landscaper
Cutters Lawn Care
08-13-2004, 08:47 PM
That's the reason I never tell a customer our hourly rate. What do they need to know for. I tell them a price and if they don't like it then the work doesn't get done. When you start telling a customer you charge $35-$45 per hour they think you are ridiculous. They think your just cutting grass. They don't respect the yard guy. I've only had one residential customer even ask if I had insurance. Most don't even care they just want it done cheap. No respect is given to this industry.
08-13-2004, 08:58 PM
Never never tell them an hourly rate. People cannot handle the truth about how much an hour it costs to run a business.
I always give a quote for the whole job. The only catch to this is that your bidding skills have to be up to par.
08-13-2004, 09:31 PM
How do you justify the fee without telling them the hourly rate?
Too many lowballers around here???
Cutters Lawn Care
08-13-2004, 09:41 PM
I justify the fee by the customer telling me what they want and me giving them a price. Lets say the customeris wanting something done and I project it's gonna take 10 manhours. I tell them it will be $400. Plain and simple. If you call a painter to paint your house, he gives you and estimate not his hourly rate. When I go out to eat the menu tells me what I'm gonna get for the price they charge. I really don't care how they get the price. If I think it's fair I order it. I don't ask what % of the price goes to food cost and labor cost. I really don't care. I just want to know what I'm gonna get and the price it will be. If you start telling your potential customers your hourly rate you will have problems landing jobs.
DFW Area Landscaper
08-13-2004, 10:27 PM
++++If you start telling your potential customers your hourly rate you will have problems landing jobs++++
I strongly disagree. I've done thousands, probably tens of thousands, of dollars worth of bed clean ups, tree removal, tree pruning, shrub trimming, etc. on hourly charges this year. In fact, just landed one today...$72.00 per hour for a two man crew...estimate was 6 to 8 hours plus approx $200 for mulch...but the mulch is also sold by the actual amount used (in my case, it's $3.00 per cubic foot). That's a high end estimate of $776.00 on a residential customer that I've never done business with before.
The problem with giving a firm price on a job you've never done before is you don't know how long it will take. You can get pretty close on mowing with experience and even then, rain and fertilizers can blow you out of the water on that too. But mowing has to be quoted on a flat rate price. That's just the way everybody expects it to be priced. When it comes to things like shrubs and trees, no one knows how it should be priced. There is no industry standard on that stuff. I'm getting better on pricing shrubs and trees, but since I spend the majority of my time mowing and doing chemical apps, it takes a long time to get experience.
I've done enough underestimates with clean ups and shrubs and trees that I simply don't want anymore screw ups. I've figured 2 hours and spent 3 to get the job done right way too many times. Never again. Hourly all the way. At least until I can start getting the times down to perfection, which may never even happen.
I have no problem getting business charging by the hour. And almost no one ever questions my hourly rates either. I never have to justify it. I'd say I close about 90% of the jobs I bid when I bid by the hour.
DFW Area Landscaper
08-14-2004, 04:07 AM
I have had many people ask me for hourly quotes this year. My full time customers are $35 and 1 timers ar $45. I have heard many people ask me if I am serious. I just laugh and ask say " The electrician works for $125, plumber $100, mehanic $75....Why should I work for $20?" This shuts them up pretty quick. I notice after I say this I land 75% of the jobs. I love the look on their face when they ask how much that new Z on my trailer is and I tell them !!!!!!
08-14-2004, 08:29 AM
I guess the thing that got to me was the fact that this was the first bill that did not list the hourly rate and this was the first she ever complained about it. That and the crack that ins., gas, equipment costs and such, were just cost of doing business and that my rates shouldn't include those items and a profit for me.
Am I making too much of this? For some reason it really bothers me.
Maybe I should go to a psychiatry site. [:^)
08-14-2004, 09:04 AM
If you go to a Psychiatry site they will charge by the hour and you will want to change jobs
08-14-2004, 09:18 AM
Don't wory about it as you will get it a lot and it's just part of business. It is not personal.
I have a good grasp of how long things take so I only give total price but it can be hard to do at first. I brought a stopwatch with for a while and timed everything. Keep track and you will get a book put together on pricing and it will be easier.
if i have a "bid " that wants to know what my hourly charge is and I am sure that they are just price shopping, I sometimes start playing with them and ask "Do you want to know how much I pay my help or how much my insurance costs per hour or how much it costs to keep my truck on the road." This is only after I know that I will not be working for this person but maybe i can help them see better. I had one guy tell me that that was the cost of doing business and why should he have to pay for that. At that point you can only thank them for their time and move on.
There are a lot of people that are good to do business with and you will find them so don't worry about the others. Good luck
08-14-2004, 12:21 PM
handyman, you have workers comp?
08-14-2004, 01:11 PM
Well, I guess I was throwing a little air at her with some real business facts o' life.
I have 2 contract workers for now but hope to hire them fulltime soon.
08-14-2004, 01:14 PM
I run into this too.Haven't really come up with a solution,but I can tell you that trying to explain your hourly rate doesn't help.Nobody cares what your overhead is.
That's what happened the other day when I got asked "can you send over some of "your Mexicans" to work cheaper for cash".I don't know any Mexicans and I can't say they would be owned by me.
Those who have never tried to run a business,and some who have,will never understand.
Little example though of a business that's thriving around here and expensive as hell.A certain retailer is selling some landscaping supplies at in credibly high prices.Those driving in with Fords and Chevys(no offense I own a Chrysler/Dodge) are leaving empty handed.He doesn't care because those driving Mercedes and BMW's are buying and paying full price.
Now,would it be better for him to lower his prices or tell them what he's actually getting this stuff for?No.He's doing half the work for the same amount of money.
08-14-2004, 03:26 PM
Never let a customer know what you are charging per hour. Quote them a price to do the job PLUS materials. Most people don't understand the cost of doing business. Unless they were or are in business themselves, they just don't understand all of the overhead costs that you have. I've found that it is much better to just give them a price to do the job. They must also understand that materials (mulch, stone, plants...etc) are extra costs. Put the quote in writing. Also let them know that any additional work beyond that agreed to in writing is EXTRA. Many people will play dumb and try to get more from you.
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