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View Full Version : Competitive pricing


FL&G
01-11-2005, 09:51 PM
What is the best way to find out if my maintenance pricing is in line with other companies in my area?

DiscoveryLawn
01-11-2005, 09:59 PM
Request quotes from other companies on your personal lawn, a friend or relative.

Make sure they are correctly measuring the lawns as well.

Here is a tip. If you know the owner of one of the companies that you request a bid from (but he does not know where you live). Make sure your special needs child's bus does not come while he is in your front lawn and you have to go get your child off the bus. BUSTED!! :o

David

MacLawnCo
01-11-2005, 10:50 PM
who cares where others are pricing...as long as you show sufficient value to support your pricing, you just need to sell... well at leat to a certain degree. Would you rather be a price taker or maker?

DiscoveryLawn
01-11-2005, 11:32 PM
who cares where others are pricing...as long as you show sufficient value to support your pricing, you just need to sell... well at leat to a certain degree. Would you rather be a price taker or maker?

I think you need to know if you can compete in your market though.

If I am new in the business and just bought a new truck, spray rig, signed a 3 year lease, and covered all of my start up costs. My overhead is considerably higher than most of the other companies in town that have been around for awhile. I may need to charge $100.00 per hour to stay in business while my competitors are only charging $50.00 and they too are providing outstanding service for the same work.

Example: This is my first year without mowing and landscaping.
With my loans payments, credit card, building rent, insurance etc. etc. I need to generate a minimum of $26,000.00 after direct costs to cover my fixed expenditures and pay 50% more than the minimum payments on my loans. In order to do this I need at least $33,000.00 in sales (just to break even) This does not include my taking a draw. Now, I would love to be able to do this with just 10 fertilization customers and charge them $3,300.00 per year. Or better yet, how about I charge them $5,600.00 per year and pay my loans off in one year? Who cares if TG/CL, Scotts or another local LCO is only charging $275.00 per year for the same client. After all, I set my prices based upon what my costs are right?

NO!!

It's a combination of both. You have to know what the market will bear in order to know how much you can realistically ASK for your services in order to cover your costs. With this information you also decide whether or not you really need (and can afford) $26,000.00 in overhead to start, you can set sales goals for how many customers you will need as well as how much time you can afford to spend on each customers lawn etc. etc...

Maclawn, I know you know this stuff. I'm sure you can explain it better than I can.

Right now my prices are as low as I can afford to have them. From what I have found in our area I am still in the 80th percentile +/-. I would love to be the most expensive lawn care operator in town but I do not have time to spend per sale or the name recognition to accomplish that. I have found that being in the top 20% or so keeps me as competitive as I can afford to be and still close sales even though nobody knows who I am ...yet.

David

Soupy
01-12-2005, 03:09 AM
It is good to know your market so you don't accidental leave money on the table. It's really not about setting a price that you are comfortable with after covering cost. It's about making as much money possible with out pricing yourself out of the market.

When calling for estimates, make sure you call companies that are respected and ones that you look up to. Don't call the guy with a flyer made with a black marker and run through the copy machine. You want to compete with the right companies.

I learned the hard way. I started pricing jobs low and raised prices with every couple of bids until I was only landing half the jobs. I then started raising prices every year on the low paying jobs until I got them up to market. I would have much rather known what the middle market was right out of the gate. I then could have priced those first few jobs a little higher.

FL&G
01-12-2005, 09:27 AM
Thanks for the feedback. This is my first year full time.