Originally Posted by Lite4
... So, how does this make me a piker? Just sounds like good business to me.
Never said you were a Piker Tim, you're putting words in my mouth now.
What I said was there's a lot of contractors who don't know how to run a good, profitable business these days, in a lot of different parts of our industry. A lot of that is because they don't mark anything up (to keep their quote low and hopefully land the job) and so they think
they're making good money on the job they do (because they figure they're making money on the labor end), only to find out they're out of money a few years later and can't figure out why. They're now out of business and off to some other life. But in the process, they undercut the pricing so much in the industry that it made a lot of the rest of us who price things correctly seem like we charge unreasonable prices. Guys who do sprinkler systems at half of what we would do them for because they're using the cheapest brand they can find, using fewer zones, zoning improperly, not installing proper coverage, etc. - those guys as pikers. And guys like that have nearly dominated the irrigation, lawn care, drainage, and general landscaping parts of our industry to the point where THEY are the normal quote the customer gets and companies like mine are the exception.
Many residential homeowners have this notion that they need to get 3-4 bids when they hire a contractor. Which isn't a necessarily bad idea, I guess, if you don't have a referral or something. But what goes along with that is another notion that the main reason you need to get 3-4 bids is to find out who the "rip-off" contractor is and who the more reasonable ones are. So you get 4 bids for a sprinkler system and 3 of the contractors give you a price of $3,000-$3,800. Then another company comes along, they have a much better presentation, much better proposal, information, reputation, all that. But their price is $5,800. Almost double what your other bids are for. At that point, you're thinking, "Well, they sound great. I wish they were more affordable though. After all, its' just water, right? It's a tough call. What they said makes sense. But maybe it was just a sales pitch. This is why you get lots of bids right? They sound good, but it looks like their just really overpriced. I guess I'm going to go with my 2nd most favorite bid and save a few grand. I just can't see spending that much more. It's too high."
So those other 3 contractors they got bids from could be all pikers. I see it all the freakin' time. We have 3 FT irrigation technicians who charge $75.00 an hour simply because there are so many crappy irrigation systems out there that weren't designed right, totally installed wrong, or broke quickly and now need repairs. So many cheapskake contractors out there winging it and installing crap systems. So we have a tough choice as a company. Either keep our pricing where it should be and just know that we won't land many jobs - or go with the flow and cut our prices down to their levels and figure out a way skimp on the installation. I just refuse to do the latter. But it means that we don't land nearly as many irrigation installs as we used to, just 5 years ago.
These guys in the irrigation industry don't mark up materials at all. And even their labor rate is way too low to be sustainable. It's short-term thinking. They're thinking that $40 an hour is plenty to pay for their workers and have a little left over for them. But when you consider the overhead of running a company all year, keeping employees all year, all the other expenses in running a professional company - that's not even close to enough money. We all know that certain things keep eating even when they are sleeping. So if you don't land jobs for a few weeks or winter business is slow, how you gonna keep paying for your shop, your truck payments, workers, cell phone bills, and all the other things that keep charging you money all the time, even if you aren't working? Part of the way a smart contractor pays for all that stuff is by recovering overhead from mark up of product. These pikers don't do that. They are just using short term thinking and there's so many of them they make the consumers in the market place think that WE are gouging them. We're not. We're just the ones pricing things accordingly so we can have a sustainable company.
Fortunately, though, there are a few aspects of our industry that haven't been totally ruined by pikers. Probably because they require more skill and more perceived value from consumers. The hardscape (pavers, patios, outdoor living spaces, etc.) and the lighting are the two best examples. A fair amount of people - in the market I work in - will still pay top dollar for a nice outdoor living area in their back yard. They don't want some cheap hack doing it who doesn't have very many good samples of their work or a crappy warranty. If they're going to drop $30k on a new living area in the back yard, they want it to be really nice in quality and creative too. Not many landscapers have been able to figure out how to do all that, and do it well. And consumers are good at figuring that out. So if you're one who does know how to design very creative outdoor living areas, you have a great reputation, and you have lots of examples of your work, it's still fairly easy to land those jobs. The bad part is that even though maybe only 10% of our competitors are really good at hardscape, that 10% still equates to a lot of companies to compete against. They're good at doing them and they've figured out ways to do them cheaper sometimes (and offer less of a warranty because of it.) So it's getting harder and harder every year for us to remain competitive in that realm. We still do well because we market like crazy and get a crap load of leads. But every year we have to work harder and harder to land those jobs.
The lighting industry is another example of one that hasn't yet been ruined by cheapskate installers. Sure, there are plenty of them out there who install lighting systems without any artistic vision or who just throw a bunch of pathway lights out and a couple spot lights and call it good. They pull jobs away from us sometimes. But most of the higher end clients - people who really buy lighting - have learned that they don't want that
kind of lighting system. They want a really nice quality and artistic lighting system. They want to see great photos and examples of your work. They want to get an idea that you can make their home/yard look like that one around the corner with the amazing stand-out lighting job that looks so much better than the others. And they heard you DID that job. So they care a little less about cost and more about that look their after. And there's little competition for it. Most LCOs and even a lot of landscapers are afraid to get too much into lighting. It seems to complicated. Then those that do, just often don't do it well so they find it hard to sell jobs. There's just not a lot of real good quality competition in lighting. So we we still price things how jobs should be priced. Good money on the labor end and good money on the materials end. The consumer is still getting lights at the price they'd be able to buy them for and we're making great profit. It's one of the only parts of our industry that hasn't been taking over by cheapskate contractors.
That's what I was saying. And no matter where you buy your product from, it doesn't sound to me like you're one of those guys. So not sure where you got that impression that I was calling you that.