Underbidding ruining the Industry

[knox gsl]

Originally Posted by MDLawn

I notice it. But the other thing I notice is that probably 95% of everyone on here will ask what is the cheapest price they should get a mower for? Where can I find the cheapest place to dump grass/dirt/etc..?. Where can I get the cheapest mulch from? Where can I get cheap cheap cheap cheap cheap...... EVERYONE is looking for the deal and how can anyone blame them? Maybe one would say that the above is just how you run your business to keep costs down. Well maybe you buy the cheap mower and get bad service, maybe you dump at a site that doesn't take care of the environment like it should, and maybe the cheap mulch is a bad product. So maybe one gets burned and pays more next time.

With those big city contracts, maybe the person in charge was thinking "I'm going to save the city soooo much money by hiring this cheap guy that I'll get promoted", well they probably got demoted.

This type of stuff exists in ALL industries. Once you have a good "brand" it seems to be easier to attract the customers willing to accept a more expensive contractor. Think about the ridiculous stores in a mall that sell T-shirts with their name on if for $35-$50!!!!! I bet they sell a ton too. Why? Because that's the brand to have and people who care about that purchase it.

There are a few on here such as Jim Lewis Landscaping, Earth/Turf/Wood, PerfectEarth, IdealLandscaping, and many others who I'm sure have an established "brand" where people understand they are one of the best but come at a cost, just like the T-shirt example. I'm sure they get the calls from cheap people but they may get soo many calls they just wade through the BS and get what they want. Or people just don't call them because they know they aren't cheap.

JowMow starting out does not have that. I don't think everyone intentionally makes the choice to under estimate, many just have no clue how to. I think many of us weren't business geniuses to start..... And some others don't have aspirations to "make it big" for themselves. I saw a guy near me who had a beat to snot Ford Ranger with a 5x10 trailer that had no mesh on the gate and a beat up Stander. Yea he charges way less, but the people he mows for will NEVER choose me. Why, well I'm too expensive. And if every lawn guy charged appropriately that person would not ever have a lawn service to begin with. They'd mow it themselves or hire the kid down the street. I honestly can't believe how many people get a lawn mowing service, but again many of those would NEVER go with me or anyone if everyone charged accordingly. Unfortunately there is a market for cheap mowing and those customers don't mind hiring a different guy each year.

My question would be why do these guys flourish in times many others call tough times and use the word "lowballer" in every other sentence???? Thats what I want to know. Not how many cheap guys are out there, but how do these businesses overcome them? I think a lof of these guys and gals would answer, "Because they aren't my competition". But I still think they have a special nack for getting it done....

I agree with you on this, I have spent the majority of this year's advertising on setting a brand for my business and it has worked so far. I am able to charge a better rate and get better customers because of it. I did like most of us when we started out, I took everything that came along. I learned a lot from this in a good way. I am more selective in the work that comes in and price it higher than in the past, and actually close more sales than when I was starting out. Most of my advertising is targeted at people who make over $100K/year and it seems to work well.

[seabee24]

What i find funny about this industry, Just try and make a compressive budget, leave nothing out, add depreciation, cost for mechanics, managers salary, owners profit, leaf nothing out.... Then figure FAIR labor rates, one that could support a family (10.00 will not do that)

After all that, I can't honestly see a ton of room for profit.

[jrs.landscaping]

Originally Posted by seabee24

What i find funny about this industry, Just try and make a compressive budget, leave nothing out, add depreciation, cost for mechanics, managers salary, owners profit, leaf nothing out.... Then figure FAIR labor rates, one that could support a family (10.00 will not do that)

After all that, I can't honestly see a ton of room for profit.

My buddies father worked in a factory, after over 20 years he was making a little over $10 per hour which is what we start guys out at. What employees do with their money is their business, if they can get a better wage somewhere else I am more than happy to give them a good reference. It might be different in other areas but around me people WILLING to work would be happy starting at $10 per hour. So what is a fair wage for a lawn worker?

[seabee24]

I know a ton willing to work at 10.00 as well. But they hardly ever have a penny to their name.

Can $10.00 working 45 hours per week, pay food, rent, electricity, gas, car, insurance and other normal bills for a family of 4 in your area? I know it will not cover it here.

[Weekend cut easymoney]

Lots of low bidders in Texas as well...so I'm supposed to be mad because someone can do things cheaper than me? I need to have a better strategy than those folks....I welcome the competition, it brings more business tothe industry as more folks can afford to have work done...after they get burned a few times, they migrate toward quality...and also many of those cheap startups go out of business
The free market is brutal...especially when the labor does not necessarily require lots of specialized skills....I've had my fair share of customers try and haggle me down and I say adios...and get my fair share back later
To me there is no such thing as underbidding ....all is fair in love, war and business ....i used to get all cranked up about it too
Posted via Mobile Device

[Pythium]

I think the reason for the recent surge in "lowballers" is the economy. So many people lost their jobs and cutting grass is fairly simple to do, anybody who ever has had a lawn has had to do it. You can get a used truck, trailer and home depot mower for cheap and call your self a landscaper.
I have a good friend who mows, solo and we worked out all his costs and found he was undercharging significantly. He didn't care, won't raise prices because he gets jobs with his. The Wal-mart approach low/no margin- high volume. Yet, he still works a part time job at UPS to make ends meet. SMH

[32vld]

I know a guy that charges less to get work. Been at it for 12 years. He is afraid to raise his mow rate of $25 week on his long term customers.

He just bought a new mower. A 36" Toro WB. His daughter had to co sign. He is not interested in joining the debate on open vs closed trailer because he does not use one. The 36" fits in the back of his 15 yo PU bed. The truck looks 30 yo.

Last week I was talking with a woman at my pt evening job. Cop has a pt mow route. She asked me how much I would charge for her property.

I said about $60. She said the cop charges her $35. Then said the cop adds a $10 fuel charge. So I said now that lawn is a $45 job.

Then I pointed out he is using his $110,000 a year job without OT subsidizes his landscape business. He needs a new truck he just pays for that out of his cop salary. That if he did the math and kept his business income and expenses separate from his personal income and expenses he would realize that he probably is not even making $25 hr as a LCO. I finished with that I can't compete with his prices because I don't have a job that pays his salary.

Yet if he wanted to earn extra money he could work OT at $80 hr as a cop.

[MDLawn]

Originally Posted by 32vld

I know a guy that charges less to get work. Been at it for 12 years. He is afraid to raise his mow rate of $25 week on his long term customers.

He just bought a new mower. A 36" Toro WB. His daughter had to co sign. He is not interested in joining the debate on open vs closed trailer because he does not use one. The 36" fits in the back of his 15 yo PU bed. The truck looks 30 yo.

Last week I was talking with a woman at my pt evening job. Cop has a pt mow route. She asked me how much I would charge for her property.

I said about $60. She said the cop charges her $35. Then said the cop adds a $10 fuel charge. So I said now that lawn is a $45 job.

Then I pointed out he is using his $110,000 a year job without OT subsidizes his landscape business. He needs a new truck he just pays for that out of his cop salary. That if he did the math and kept his business income and expenses separate from his personal income and expenses he would realize that he probably is not even making $25 hr as a LCO. I finished with that I can't compete with his prices because I don't have a job that pays his salary.

Yet if he wanted to earn extra money he could work OT at $80 hr as a cop.

First guy is just plain wasting his time. But I'm gonna take a stab at your cop guy. First I know A LOT of police officers and their salaries are public record. Not one makes over $105,000 without overtime and those are not just PO's ridin around in cars. Most never touch 6 figures. Those that do are supervisors or at the top of their careers. And those that make these salaries do not have second jobs. I do have a few buddies doing lawn and tree work and they are in the $50-$70k range. I think there is an ex cop on lawnsite and he left the cop job making around $45-50k, so I think $100k is a little far fetched. I almost became a NYS Trooper and starting pay was $70k, but they're the highest paid force in the nation. Second all his expenses such as a shop, mortgage, food, etc are all paid by his salary in this firsr place. So maybe you make $50/hr but lose $25/hr to those expenses so you both are "making" the $25/hr you speak of??? That's the advantage he may have against you and probably does just as good quality. Sucks? Yes but if it's all the same in the end could you just be bitter? Also not everyone wants to work their job more for overtime. Maybe he likes doing lawns? A lot of my buddies with these jobs have unreal equipment too. Top of the line mowers, new trailers, skid steers, tractors, etc....maybe they're more efficient because of that? Maybe having that job allows them to dabble in this industry. I think that just strikes envy in most people. Should he charge more? Sure. Does he need to? Unfortunately probably not.

Listen this isn't a shot at you. But it's just like the rich kid whose parents buy him a brand new dump truck and equipment. He has a competitive advantage. Plus mowing is just filled with all sorts. If quality is on par it's hard to argue a higher price.
Posted via Mobile Device

[Think Green]

I read that article in Turf Magazine of last month's issue.
The article was based on lowballing tactics.
The cliff note's version relates to a smaller company knowing their costs, cutting out useless expenses, and staying on top of their finances. If LCO A bids 2500.00 a month for services and LCO B bids 2100.00 a month, then one of them knows a way to cut expenses to be competitive. If LCO C bids 1200.00 for the same job then they obviously don't know any better.
As far as a large LCO company competing out the smaller guys will never end as they have the staying power to survive.
Either we become more expense wise and reduce costs by diverting useless labor, living habits, and useless spending habits, or be less competitive and discontinue to grow in reputation.
Since customers are buying relationships with their service providers, being at a comfortable profit margin works for most people. However, larger accounts just want the service done for the cheapest price available. If a LCO don't know the market and cannot bid efficiently, they will get the work and the work will lose their shorts and shirts. Next season, they will either expand beyond the profit margins or expand toward the file 13 area.

[32vld]

Originally Posted by MDLawn

First guy is just plain wasting his time. But I'm gonna take a stab at your cop guy. First I know A LOT of police officers and their salaries are public record. Not one makes over $105,000 without overtime.
Posted via Mobile Device

Out in the boondocks they don't pay like they do in NYC or it's suburbs.

NYFD $90,000 without OT. Fireman salary, officers more.

NYPD $90,000 without OT.

Nassau PD $107,000 without OT and then they have a 12% night shift differential.

Suffolk PD $110,000 without OT.

Westchester PD (2006) $80,000 without OT.

All police salaries are for patrolman sarge and officers are higher.

NYC Sanitation Dept $69,000 without OT. Officers are higher.

No one can compete with them on price when their full time job is making them $100,000 and they subsidize their business with that salary.