Originally Posted by lukemelo216
I agree with this 100%. I was running my own company, but I didnt enjoy it as much as I thought I would. It just wasnt for me. Now I am the maintenance and snow manager for another company. Its a perfect fit. All winter long I have been hearing we have no money we have no money becasue of no snow. Well I told them maybe next year we should look at a few seasonals. I wasnt apart of the selling this past year. But they didnt like seasonal last year becasue we had the big blizzard and on one account that was seasonal they got smoked, so this year everything is per push. Well guess what no money this year. Now as i am bidding the maintenance I am trying to sell snow services in with it, and we are doing a handful of seasonal contracts. The company is over 15 years old (snow for about 4 now) but hasnt realized yet that you need to have a good balance of seasonal and per plow accounts. I like to cap my snow, others dont, but that is an entirely different discussion.
As far as the spring pricing, that is my biggest concern right now. All of these companies coming in at 1/2 our cost just so they can get some work. I had a 4k contract (simple maintenance: mowing, trim bushes, and lawn care, no cleanup or anything becasue they did it as a commmunity) with a HOA that i did with my own company for 4 years. I switched to the new company and he was ok with that and said he will most likely be re-signing with me again but had to put it out to bid as always. New company came in for $1400.00 for the year. I know the company and they are hard up for $ because of no snow.
I would venture to say that the companies that are underbidding you like that will be out of business within the short term. Then the account will be up for bid again. My opinion is that patience wins out. I bid on a Target location last year. The property management company said we were "too far apart" on our numbers. I was coming in at about 19k (that's mowing, trimming 3 acres of turf, 19 zone irrigation maint, 60 yards mulch, aerating, overseeding...you get the idea, the whole schabang). Well I asked HOW far apart was "too" far apart and they told me they were looking to spend about $350 a month!!! That was 1/5 of my monthly price! I did the math and I couldn't even JUST MOW it for that, much less do everything else in the scope of work. So this January, guess what? Same location is up for bid again. I talked to the management company who told me the "contractor" they hired last year "failed miserably". I literally told the guy "I told you so."
Moral of the story is, don't compromise your prices and profits just to sell work out of desperation. Hold fast, and within a short time, that undercutting contractor that is in your way right now, will cease to exist. The client will have learned the valuable lesson that they don't want what they get for 1/2 price, and your higher bid will actually start to look refreshing, even desirable to them. Low bids cut in front of me ALL THE TIME. Do I lower prices to "compete?" No. I wait until they go out of business or get fired, then try again. Like ETW says, that's just my 2 cents. Take it or leave it.
Thanks for all the business insight, ETW. I look forward to meeting you here in Nashville next Feb!