Big Question?

Discussion in 'Pesticide & Herbicide Application' started by rcreech, Aug 15, 2008.

  1. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,043

    Question for all you guys?

    Yesterday it was a reality check for me when I went in to my Lesco dealer and seen where prices had gone.

    I only needed 4 bags of a fert that I don't use regularly and it was $27.00/bag. I didn't get it either! :nono:

    So.......this brings me to questions!

    Do how long can our business be viable with this kind of input costs?

    Hate to say this...but is this a good time to get out? If we have humongous increase next year and lose 50% of our customers, our business isn't worth JACK!

    Reason I ask....our business is worth a lot while in tact. If prices go up accordingly, then we must also.
    At $30/bag it will cost close to $100/acre (our cost in product alone). That means we would have to charge $200/ac to keep the same profit.

    I do have my fert for next year, but still have to worry about replacing it. What do all of you think? Are you worrying about this as much as I am? :dizzy:
     
  2. lilmarvin4064

    lilmarvin4064 LawnSite Senior Member
    Posts: 757

    It's not good. We are going to lose customers. Many people are simply not going to be able to afford it. But there are always some that are willing to pay for a nice lawn no matter what the cost. These are the customers we are all going to be fighting for. Sell them excellent service and results and they will stay. easier said than done, I know. The only option to reduce our costs is to think of more inventive of ways of doing things + reducing costly inputs. Less P,K, and slow-release. more biosolids and iron. start thinking liquid. Improve your marketing skills.
     
  3. ted putnam

    ted putnam LawnSite Platinum Member
    Posts: 4,537

    I'm not going to lie...I've lost a lot of sleep and some weight, more than the usual for this time of year:)worrying about this. I agree with lilmarvin. I've thought seriously about selling out. Problem is, I've put a lot of blood,sweat an tears into this and besides, I love my independence. I'll put my pencil to it again around Christmas an let the cards fall where they may. I've had some let downs this year already.#1 FERT PRICES skyrocketing.(Gobbled up my price increase in a hurry)#2 Prodiamine has let me down(22 inches of rain from 1st of march to mid april...for a state that normally gets 45 inches annually)...going back to split apps of PE-M. More broadleafs than in the past and now late germination of crabgrass running me ragged. Already working on streamlining processes and new program development for next year. May have to let my part timer go next year. Sure hope things get better:cry:
    P.S. Interested in Phasthounds 16-2-3. Got a guy not to far away using it and have heard he's pleased. Concerned about longevity and cost effectiveness though(getting that 1#N per app)???
     
  4. LawnTamer

    LawnTamer LawnSite Gold Member
    Posts: 3,988

    I am worried about it too. Our fert costs have skyrocketed. I went to someone's house to do an app. She apologized for not calling to cancel, but said her phone was disconnected, I noticed her power was turned off too, seems her husband had lost his job. Scary stuff.

    Here's what I am looking at trying.

    1. Diversify more. We have dabbled a bit in pest control, (I used to work for a pest control company). I don't like having to go into people's houses, but the material costs are very low. Also looking at pushing shrub and tree sprays more.

    2. Find ways to use less fertilizer. I have been experimenting with this idea and having great results so far this year. We often set a plan, X amount of NPK and Fe per K, per app, but I think a lot of our lawns don't really need anywhere near so much, especially if the client is willing to mulch. I pushed mulching this year and have managed to use substantially less NP&K this year.

    If I pull up to a lawn, and it is a new client, or the lawn is pale, I'll hit it at the full rate, but if it is green and healthy, utilizing nutrients well, then I go substantially lighter, and so far my lawns look every bit as good as last year. On average, I am using 30-35% less NP&K/1,000.

    3. The one I hate! I am just flat out working harder. I am carrying the same load as last year, but with about half the help. I just lost both my helpers to school, usually, I'd hire at least 1 temp, not this year. I will be doing about 300 apps/month, which wouldn't be bad by itself, but I will also be mowing 55-60 accounts/week. Needless to say, I am scheduled to work every Saturday for the next 8-9 weeks.
     
  5. greendoctor

    greendoctor LawnSite Fanatic
    Posts: 8,941

    I am working in a market dominated by high volume, low prices and low quality. Also, there are no operations that do strictly applications. So I set myself apart by doing things different. No granules, no spot spraying. I am DOA certified and all of my clients see my license. They also know it is me who will be doing any applications. Not some illiterate labourer from a third world country who has no idea what he is doing or how to do it correctly. My prices are very high, so the cost of fertilizers had not hurt me. I use all liquids. Including 28-0-0 70% slow release triazone solution. Last time I saw my UAP rep, he told me some golf courses are starting to use the mix I use on fairways. Never thought I would see the day someone else in Hawaii would use a liquid. It has become too expensive to broadcast 16-16-16 at 250 lb/acre like how they used to when fertilizer was cheap. The one thing that hurts a little is the price of fuel. Filled up the truck yesterday, $140.
     
  6. cod8825

    cod8825 LawnSite Senior Member
    Posts: 501

    I know espicially on the thread that was stated about reconsidering next year with fert prices. I am going to look into using transition products. But my prices here are not increasing as fast as some areas so I still have a little buffer. I have thought long and hard about how to specialize in bed maintenance. Not sure how to sell it though. A lot of my clients simply do not have nice looking flower beds next to their pristine lawns.

    Matt
     
  7. Terraformer

    Terraformer LawnSite Member
    Posts: 184

    Rod,

    I've been reading all the posts about the "cost of doing business" for several months now. I have pretty much shut down my business for the summer, because of the high input costs. In my immediate area there have been a number of plant closings (IE., GM and Leer) and people are feeling the pinch.

    While I understand the global market demand for N,P,K I do believe that JDL/LESCO, including many others, are going to shoot themselves in the foot come fall 2009. I say this because many farmers in my area are also complaining about the huge increase in fert and herbicide prices.

    I am not going to ask home owners for a 3X increase in price come next year. I'll just wait it out.

    BTW - I have delayed the purchase of a ride on fert/herbicide machine, because of the ridiculous prices. I'll continue to use my ATV for applications.

    Lastly, you are correct in questioning the viability of business beyond 2009.

    John
     
  8. olive123

    olive123 LawnSite Senior Member
    Posts: 500

    my city buys from a bid list. To give you an idea, last years bid price was from lesco on 15-0-15 and was .223 per lb. 11.15 per bag. I was told that the bid price coming up for the new year is 39.00 per bag. I am glad i dont do those all inclusive quarterly fert and tree sprays anymore...:dizzy:
     
  9. sclawndr

    sclawndr LawnSite Senior Member
    Posts: 326

    Rising fert prices don't necessarily mean the end of the world. It does mean that after years of throwing fert around like money in a brothel we need to rethink what we're doing and the way we're doing it. CL and the other big guys have everyone, customers and smaller LCOs alike, so brainwashed to throw a pounf of N out on each app that you'd think it was written in stone somewhere. Nothing could be further from the truth. We've cut fert rates by 30% this year with no noticeable effect and plan to cut even further next year. If we're getting reasonable rain and the customer mows correctly, we're good. If it doesn't rain or the customer insists on poor mowing habits, then a pound of N wouldn't matter anyway. Either way, we keep our material costs in line.

    Another option is to do some upselling - aeration for example, is a huge help to the yard and is very profitable. You could also consider perimeter pest control and tree and shrub spraying - both very profitable as well.
     
  10. lawnproslawncare

    lawnproslawncare LawnSite Senior Member
    Posts: 437

    You guys should check with the john deere golf stores. They have been getting rid of chem and fert products this year like mad. Some stuff is under half off. I would bet this is due to the jd lesco merger
     

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