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Tn Lawn Man
01-04-2005, 01:30 PM
Ok, with all this talk of low-ballers, Scrubs and the like, I would like to throw out a ridiculous question. (Oh, and I am really bored right now)

Is it possible that low-ballers are good for business?

Here is the thought behind them possibly being good for business.

I am "Joe Customer" who has traditionally gone with either Johnny down the street or the lowest priced LCO I can find. With that, of course, comes usually: a poor quality cut, poor customer service and they never stay in business very long causing me to switch LCOs mid-season on a regular basis.

Ok, I am sick and tired of always having to "hassle" with my lawn care needs. So, I bite the bullet and call one of the more established companies. The bid is considerably higher but I decide to do it.

Everything is great. Great service, great cut, the works.

Customer begins to think....well maybe the higher price is worth it. I don't have the "hassles" that I used to.


BTW This actually happened to an out of state friend of mine. Got sick and tired of wondering if his lawn was going to be mowed this week or not. Found a new LCO and has been happy for over a year now.

MMLawn
01-04-2005, 01:33 PM
Just do a Search as there are probably 10,000 threads on this very subject as it has been discussed many, many times before this post. Enjoy, as you'll find a lot of reading and opinions on it.

GrassBustersLawn
01-04-2005, 01:42 PM
Is it possible that low-ballers are good for business?


NO!

They are bad for everyone, INCLUDING THE CUSTOMER!

Mike

bobbygedd
01-04-2005, 02:42 PM
no, they are not, simply because there are alot of guys doing great work at lowball prices, and there are alot of guys doing crap work at premium rates. an example is: there was a guy here, excellent at everything, from treatments, to mowing maint, to retaining walls/landscaping, everything. he got his over head up so high, by buying so much equipment, he actually had to start lowballing , just to get enough work to keep his operation afloat. a cheap price will get your foot in the door, a quality job will keep you there.

rodfather
01-04-2005, 03:05 PM
Only good thing about lowballers (the ones you know of) is throwing work their way that you don't want.

olderthandirt
01-04-2005, 03:31 PM
Only good thing about lowballers (the ones you know of) is throwing work their way that you don't want.
As a wise man once said " Only if they last long enough before there out of business" :D

Mac

Flex-Deck
01-04-2005, 04:23 PM
no, they are not, simply because there are alot of guys doing great work at lowball prices, and there are alot of guys doing crap work at premium rates. an example is: there was a guy here, excellent at everything, from treatments, to mowing maint, to retaining walls/landscaping, everything. he got his over head up so high, by buying so much equipment, he actually had to start lowballing , just to get enough work to keep his operation afloat. a cheap price will get your foot in the door, a quality job will keep you there.

"A cheap price will get your foot in the door, a quality job will allow you to charge as needed." I changed the last sentence of bobbygedd's post. And we have to define "low baller" as compared to someone that is efficient and can make good money at "lower prices".

I am not going to sit here and play a "I am worth so much an acre, and by golly that is what it will cost the customer" when the going rate may be a bit less. I am have placed myself in a position to charge the going rate and make a very very good bottom line.

bobbygedd
01-04-2005, 05:05 PM
what does "as needed" mean? as needed to live in a $100,000 house? as needed to live in a $300,000 house? as needed to live in a $1,000,000 house? what is "as needed"? there is no such thing as "as needed", since our "needs" and desires are not the same. the market has been set, period. you don't charge "as needed", there is a definite point of customer resistance. the cap is there. the ONLY WAY TO DO IT, is to put the cart before the horse. how much will the public pay for this service? ok, when u figure out that number, then u must figure out how to run your business to that number. i know a guy who lives in a roach infested one bedroom apartment. all it takes to keep this simple minded guy happy is his rent money, a daily pack of cigarettes, a 6 pack, and a couple hamburgers. he so stupid he thinks he's living large. his prices are dirt cheap, but he's charging "as needed". so his "as needed" is alot different than yours and mine

mtdman
01-04-2005, 05:07 PM
Every winter this topic comes up. Is it because people have nothing better to do than whine about scrubs and lowballers?

Personally, I don't care. I'm sure that just like most things in life, lawn care service prices operate on a bell curve. Some companies are at the high end, some at the low end, most right in the middle at average. The high end people are most likely the full service people that aim at the high end customers that have money to waste. The lowballers suck up all the cheap people that still expect Johnny Neighborhood to mow the lawn for $5 and a glass of milk. Most of us aim at the middle and get average prices.

Any way you slice it, I don't care. I don't spend time worrying about lowballers, high ballers, or other average competition. Focus on yourself and the things you can control and you'll do just fine. It's worked for me for 9 years now.

rodfather
01-04-2005, 05:11 PM
Focus on yourself and the things you can control and you'll do just fine.

Good point.

Shuter
01-04-2005, 05:17 PM
I believe a good business is built more on reputation more than price.

If your business is lowballing and scoring accounts from customers who base the decision on price, than that's the type of client you will have.

If you keep a price for services that the market will bear and you service clients that do not have the attitude about price your business will do very well.

My business is based on the second and I do very well picking and choosing my properties. Every year there are guys around knocking on doors and leaving flyers, but for the past 4 years I have not lost any customers.

DennisF
01-04-2005, 08:22 PM
I don't think lowball LCO's have any real effect on this business. Like Bobby said, the market price for lawn service is already set and most legitimate LCO's charge the going rate out of necessity. The lowball LCO will pick off a few cheapskate customers that care only about price. Then after the lowballer realizes he can't make it on the prices he charges he either goes under or raises his prices up to the market level. Either way, there is no real long term positive or negative effect on the business.

But keep in mind that market price is a relative term. By that I mean that different areas of the country have different price structures for each type of service that we provide.

An LCO on long Island might be able to charge $40 for mowing on a 12K SF property, but the same size property in another area of the country might only fetch $25.

PTP
01-04-2005, 09:25 PM
[QUOTE=DennisF]I don't think lowball LCO's have any real effect on this business. Like Bobby said, the market price for lawn service is already set and most legitimate LCO's charge the going rate out of necessity. The lowball LCO will pick off a few cheapskate customers that care only about price. Then after the lowballer realizes he can't make it on the prices he charges he either goes under or raises his prices up to the market level. Either way, there is no real long term positive or negative effect on the business.
QUOTE]

It is interesting that Wal-Mart is still in business. Basically, they are the lowballers of their industry.

I would be willing to bet that a lowballing LCO, properly run, could be much more profitable than 95% of the LCO's on this forum.

Interesting note - at $16 per cut - mow, edge, trim, blow - I can still make a profit.

lawnman_scott
01-04-2005, 09:27 PM
I think the price you can get depends on you and the way you present yourself also (im not saying image is everything, but its something). I see some estimate/bid sheets, and cant believe anyone would actually use something like that to seriously try to get a new account.

jajwrigh
01-04-2005, 11:07 PM
Thats like asking if AIDS is good for the immune system....

bobbygedd
01-05-2005, 06:42 AM
Thats like asking if AIDS is good for the immune system....
that is so true. i laugh when these guys tell me that competition in general doesn't effect thier business at all. how rediculous. competitors cost me money, period. wether they are lowballing, highballing, speedballing, whatever, the fact that they are there, limits my potential

Soupy
01-05-2005, 07:22 AM
[QUOTE=DennisF]I don't think lowball LCO's have any real effect on this business. Like Bobby said, the market price for lawn service is already set and most legitimate LCO's charge the going rate out of necessity. The lowball LCO will pick off a few cheapskate customers that care only about price. Then after the lowballer realizes he can't make it on the prices he charges he either goes under or raises his prices up to the market level. Either way, there is no real long term positive or negative effect on the business.
QUOTE]

It is interesting that Wal-Mart is still in business. Basically, they are the lowballers of their industry.

I would be willing to bet that a lowballing LCO, properly run, could be much more profitable than 95% of the LCO's on this forum.

Interesting note - at $16 per cut - mow, edge, trim, blow - I can still make a profit.

Wal-Mart sells a product, not a service. The Wal-Mart Murray mower is the same Murray mower at the mom and pop store. I wouldn't be idolizing Wal-Mart anyway. Not only do they put small business out of work, but they have also been putting vendors out of business too. They have gotten to were they dictate the prices from the vendors and several have went out of business because for some reason they thought they needed to lose money so they would have a presence in Wal-Mart. I'm talking big companies that are losing millions a year. I predict that the Wal-Mart chain will see it's day of reckoning. Sadly, they will bring a portion of America down first.

DennisF
01-05-2005, 09:42 AM
that is so true. i laugh when these guys tell me that competition in general doesn't effect thier business at all. how rediculous. competitors cost me money, period. wether they are lowballing, highballing, speedballing, whatever, the fact that they are there, limits my potential

You've got to be joking. Your competitors limit your potential? That means that your competitors are in control of your business. If that's the case...you're doomed.

Look at it this way. Your competitors don't want you in business since you are taking business from them. Any business person would like to be the only game in town, but it just doesn't work that way.

Our free enterprise economy allows for competition and competition is good for everybody. Once you understand that competition is good and you adjust your business to the market, your business will do very well.

bobbygedd
01-05-2005, 09:54 AM
You've got to be joking. Your competitors limit your potential? That means that your competitors are in control of your business. If that's the case...you're doomed.

Look at it this way. Your competitors don't want you in business since you are taking business from them. Any business person would like to be the only game in town, but it just doesn't work that way.

Our free enterprise economy allows for competition and competition is good for everybody. Once you understand that competition is good and you adjust your business to the market, your business will do very well.
dennis, if there was no competition, i would park my truck on a street, and mow every property within a 10 block radius at $40 a mow, without ever moving the truck. i'd make $4,000 a day. but this can't happen, WHY? because there are others doing this, that's why

Likestomow
01-05-2005, 10:32 AM
There has been a lot of discussion about Wal-Mart and how they have affected the marketplace. The thing we should realize about Wal-Mart is that people are very concerned about price. People flock to Wal-Mart because they know they can find the lowest price on goods. And remember, even the high-end shoppers go to Wal-Mart. Why not? You go there, don't you? Why throw money away? If Wal-Mart's concept is so bad, start buying groceries or merchandise from the high-end stores, and soon Wal-Mart will be out of business... right?

Soupy
01-05-2005, 11:11 AM
There has been a lot of discussion about Wal-Mart and how they have affected the marketplace. The thing we should realize about Wal-Mart is that people are very concerned about price. People flock to Wal-Mart because they know they can find the lowest price on goods. And remember, even the high-end shoppers go to Wal-Mart. Why not? You go there, don't you? Why throw money away? If Wal-Mart's concept is so bad, start buying groceries or merchandise from the high-end stores, and soon Wal-Mart will be out of business... right?

I do not shop at Wal-Mart. I used to shop there very limited, but I have not been to Wal-Mart in over a year. I think Wal-Mart is very bad for our economy. I have never owned a foreign auto and if I can I will pick the american made product over the others. I know it is impossible to buy everything american but when it is possible it does make a factor in my purchasing decisions. I almost bout a Laser pointer one day until I read the back and it said American designed made in china. I decided right there I could get by without that product.

I think if we all try hard enough we can make some difference in our economy. It might be very little, but every bit counts.

out4now
01-05-2005, 02:11 PM
This may interest some of you http://www.pbs.org/wgbh/pages/frontline/shows/walmart/view/

PTP
01-06-2005, 01:53 PM
I do not shop at Wal-Mart. I used to shop there very limited, but I have not been to Wal-Mart in over a year. I think Wal-Mart is very bad for our economy. I have never owned a foreign auto and if I can I will pick the american made product over the others. I know it is impossible to buy everything american but when it is possible it does make a factor in my purchasing decisions. I almost bout a Laser pointer one day until I read the back and it said American designed made in china. I decided right there I could get by without that product.

I think if we all try hard enough we can make some difference in our economy. It might be very little, but every bit counts.

A few years ago, people took care of their lawns with hand tools. Let's say that it took 10 people 1 hour to mow one acre. These 10 people were all employed for many years with their job. Then, you came along. You just bought your new Z. You figure out that it takes you only 45 min to do that same acre. You go to the owner of the land and tell him that you will do a better job then the 10 men and you will charge him a little less than he was paying. You just put those 10 men out of work.

Everything changes. You can't stop it. Is the trucker supposed to feel bad because he put 1000 horses out of work?

Instead of fighting against "the system," why don't you sit down instead and figure out how you can offer a better product at lower prices to more people.

BTW, those 10 men that you put out of a job, they each went out and formed an LCO and now everyone in the city can afford to have a beautiful lawn.

Flex-Deck
01-06-2005, 07:08 PM
A few years ago, people took care of their lawns with hand tools. Let's say that it took 10 people 1 hour to mow one acre. These 10 people were all employed for many years with their job. Then, you came along. You just bought your new Z. You figure out that it takes you only 45 min to do that same acre. You go to the owner of the land and tell him that you will do a better job then the 10 men and you will charge him a little less than he was paying. You just put those 10 men out of work.

Everything changes. You can't stop it. Is the trucker supposed to feel bad because he put 1000 horses out of work?

Instead of fighting against "the system," why don't you sit down instead and figure out how you can offer a better product at lower prices to more people.
BTW, those 10 men that you put out of a job, they each went out and formed an LCO and now everyone in the city can afford to have a beautiful lawn.

Amen - I have been saying that for a long long time.

Soupy
01-06-2005, 07:42 PM
A few years ago, people took care of their lawns with hand tools. Let's say that it took 10 people 1 hour to mow one acre. These 10 people were all employed for many years with their job. Then, you came along. You just bought your new Z. You figure out that it takes you only 45 min to do that same acre. You go to the owner of the land and tell him that you will do a better job then the 10 men and you will charge him a little less than he was paying. You just put those 10 men out of work.

Everything changes. You can't stop it. Is the trucker supposed to feel bad because he put 1000 horses out of work?

Instead of fighting against "the system," why don't you sit down instead and figure out how you can offer a better product at lower prices to more people.
BTW, those 10 men that you put out of a job, they each went out and formed an LCO and now everyone in the city can afford to have a beautiful lawn.

As a business owner you always want to figure a way to operate cheaper (legally and morally). As you do this, you are still running into lowballers etc. that are not making money and going out of business leaving you with a depressed market.

My point is that there are not always cheaper ways of doing business. Every year it cost more to operate due to rises in insurance, equipment cost, labor cost etc. etc. But the prices keep coming down. So you add more and more work to cover the loss. Now you are doing twice the work for the same money.

Your 10 man example is exaggerating. As a industry grows and better equipment etc. are created to do the job easier. A whole other industries opens. It takes people to produces this new equipment etc. So jobs are created for these 10 people. There is not a shortage of jobs in the U.S. There is a shortage of moral business owners that hire our jobs out to other countries.

Edit: By the way I didn't get your point. What exactly was you trying to tell me.

Gautreaux's LNG
01-06-2005, 08:50 PM
The biggest problem is that lawn care industry requires very little skill to start! Before you jump on my I was in the business for 6 years and grew my business to a nice LCO. But ANYONE can buy a 21" push, and poulan weedeater and blower from Wal-Mart and start a "lawn care business"!

They can get work by charging $20 for a yard you get $35-40 for because it takes them an hour and they figure they're making $20 / hour.

The lawn care industry is not as regulated and a landscape design/install firm or a pesticide application business. Therefore it's a lot easier to get into. In the beginning I worried to death about these lower priced business. I all my years I NEVER lost a customer because someone came behind me and offered a lower price. Yes we have been underbid on some jobs upfront but that's life.

You will never get rid of the lowballer so you can't do anything about that, many times a lowballer ends up with PLENTY of work, works 60 hours a week, but can put any money away or make enough to afford employees, taxes, work comp, and new equipment.

and that's why CONTRACTS are so important for your business, when you sign up a new customer you know you're there for atleast one year!

Soupy
01-06-2005, 10:15 PM
The biggest problem is that lawn care industry requires very little skill to start! Before you jump on my I was in the business for 6 years and grew my business to a nice LCO. But ANYONE can buy a 21" push, and poulan weedeater and blower from Wal-Mart and start a "lawn care business"!

They can get work by charging $20 for a yard you get $35-40 for because it takes them an hour and they figure they're making $20 / hour.

The lawn care industry is not as regulated and a landscape design/install firm or a pesticide application business. Therefore it's a lot easier to get into. In the beginning I worried to death about these lower priced business. I all my years I NEVER lost a customer because someone came behind me and offered a lower price. Yes we have been underbid on some jobs upfront but that's life.

You will never get rid of the lowballer so you can't do anything about that, many times a lowballer ends up with PLENTY of work, works 60 hours a week, but can put any money away or make enough to afford employees, taxes, work comp, and new equipment.

and that's why CONTRACTS are so important for your business, when you sign up a new customer you know you're there for atleast one year!

I agree.. But we can try our butts off to educate these guys. Every person we convince to start out right is one less person that adds to the problem.

Gautreaux's LNG
01-07-2005, 12:23 AM
That's why I went into the dealership side..... The Lawn Care guys will come in and I talk business with them all day. They ask plenty of questions and I try to educate them on cost of doing business and what they should be charging. Many have a lot of respect because unlike alot of dealers I was one of them, I know the business and I want to help them grow their business the right way! If I make them stronger it will make me stronger!

One lawn mower at a time!

Likestomow
01-07-2005, 12:31 AM
...Edit: By the way I didn't get your point. What exactly was you trying to tell me.

What he was trying to tell you, Soupy, is that you need to study economics (like in college).

And it's "What exactly were you trying to tell me"?, with a question mark at the end.

Soupy
01-07-2005, 12:55 AM
What he was trying to tell you, Soupy, is that you need to study economics (like in college).

And it's "What exactly were you trying to tell me"?, with a question mark at the end.

Ooh! You got me on a grammar error! He did not give a good example of economics. What college did you study economics at?

Soupy
01-07-2005, 01:13 AM
What he was trying to tell you, Soupy, is that you need to study economics (like in college).

And it's "What exactly were you trying to tell me"?, with a question mark at the end.

He quoted me on something I said about one company. He then offers a scenario about a whole industry. I understand that industries change. But how many industries flourished and created new jobs because of the change.

I still don't know how what I said had anything to do with what he said.

I don't know why you felt compelled to try and insult me. But, if you want to be childish and play games then I will start grammar checking your post too.

Yes, Lowballers are great for business. Sorry I disagreed with you. I knew I should have bought stock in all the specialty stores back when the discount chains started popping up.

PTP
01-07-2005, 05:40 PM
Edit: By the way I didn't get your point. What exactly was you trying to tell me.

Let me try to be more direct.

The lawn industry is changing. For that matter, all industries are changing. Remember when you had to sell your firstborn in order to get a CD player? Now they are a dime a dozen. A similar thing is happening here.

Here is the main point. You must change with the changing industry or you will not survive. It does no good to try and fight against it and tell others what the problem is. You may be right about the problem but the fact is that the industry is still changing and it will do so with or without you.

lawnwizards
01-07-2005, 11:51 PM
I all my years I NEVER lost a customer because someone came behind me and offered a lower price. Thats the general concensus at lawnsite. no one has ever lost a customer to a lowballer. if this is the case, then why are there so many threads about lowballers?

Soupy
01-08-2005, 12:31 AM
Let me try to be more direct.

The lawn industry is changing. For that matter, all industries are changing. Remember when you had to sell your firstborn in order to get a CD player? Now they are a dime a dozen. A similar thing is happening here.

Here is the main point. You must change with the changing industry or you will not survive. It does no good to try and fight against it and tell others what the problem is. You may be right about the problem but the fact is that the industry is still changing and it will do so with or without you.

Yea, but you keep comparing service industry against retail. We are selling labor and you can not reduce the price of labor. Labor price should always rise, unlike retail prices.

I agree that it's life and it's going to change. But I will do my best to slow the process.

PTP
01-08-2005, 12:07 PM
Yea, but you keep comparing service industry against retail. We are selling labor and you can not reduce the price of labor. Labor price should always rise, unlike retail prices.

I agree that it's life and it's going to change. But I will do my best to slow the process.

There are so many things that you can control though. Now, I am not the best business man in the world but I am trying to follow my own advice. Here is what I have been able to do.

I will charge most people $25 to mow their lawn. That is $5 less than I charged last year. I reduced my overhead. My total overhead when I pull up to a house is less than $15,000. It will end up being closer to $10,000. I will have a crew do the work for me. My total cost per yard is $15 so, anything above that and I am making a profit. I always use every piece of equipment every time that I pull up to a house. Only the equipment that is working is making me money.

Can you do that? If you are in my area, you had better be able to. If you pull up to a lawn and it cost's you $25 to mow it once you have figured out all of your expenses and you need to charge $35 in order to make a decent profit, then you won't be in business long.

There are many things that you can control. You can control your equipment. Do you use the most efficient mowers? I don't mean do you use the fastest or the cheapest. Is the stuff that you are using giving you the most bang for the buck? Are your employees productive enough? This year I plan to have at least 150 lawns per crew per week. Can you streamline billing?

There are many things that you do have control of. So what if you can't reduce the labor cost.

BTW, If all goes well, my crew leaders should be getting between $800 and $900 per week. But if they mow 180 lawns and give me a $10 profit per lawn, then they are worth it.

Soupy
01-08-2005, 12:50 PM
Yes, we all need to try and run with as low of overhead as possible. But with everything going up every year you can't always do that. I just seen a thread were one guys insurance went up 18%. I have the same insurance company but have not received next years renewal. Gas is always going up etc.

The whole problem is that most of these lowballers are not making the profit they think they are. They will come in and lowball you no matter the price. So your new $25 price will get lowballed too. the price keeps going down, and down until you can't compete. There is no way that you can keep lower your cost to keep up with these guys. This industry will crash because of them.

I have been doing this for 13 years and in 13 years the price of lawn care has not changed much, but the cost of operating has gone up. These lowballers are charging what I charged 13 years ago.

I use old trucks and buy good used equipment when possible. My last ZTR purchase was a homeowner that had a 52" Hustler Z with 28 hours on it. It was les then a year old and I paid $4500 for it replaced a 96 Dixie Chopper that I sold for $2000 . You tell me were you can find better deals then that. I do all my own repairs and buy my parts on line. I have no debt. I really can't see how they operate cheaper then me. even if they do, they certainly are not operating 40% cheaper, but their prices are 40% cheaper.

I'm not crying. I do have a good business going, but it isn't growing at the rate it would if these fly by night guys were not bringing the industry down. I'm just being part of the discussion and giving my opinions.

Edit: My biggest expense is marketing which is high because of these lowballers.