Commercial Cutters/manufacturer Relationship

Discussion in 'Lawn Mowing' started by 65hoss, Feb 28, 2002.

  1. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    All the discussions about being lowballed and making $xx amount per hour made me start doing some thinking.

    Costs are continuing to go up. Cost of living goes up. Business insurance goes up, fuel, parts, trucks, etc are constantly going up. When people ask why should the lawn guy be getting $75-$100 per hour, do they realize how much money we have spent to do those kinds of #'s? Now, this isn't the topic I want to throw out there for you guys. Its just a starting point for my comments.

    Have any of you noticed how the prices of mowers have been going up over the last couple of years? Example is my Lazer HP. I bought it new in 2000 for $6700. A year and half later the exact same unit is $7300. I'm not knocking exmark, as many of you know I love that company, but all of them are going up. Its all the companies. If our prices are not able to go up due to market constraints, how can we keep affording to pay higher and higher prices for equipment? Is there not a limit to what we can spend on quality machines, especially if our contraints don't change?

    I made this comment to the eXmark distributor about 2 weeks ago. I just flat out said that the prices are constantly going up but most of us are finding that the prices for cutting are staying the same or going down due to market penetration by people that have no clue that their prices are not making them any money. We are the end user. We are the guys buying this stuff. We are the ones putting the equipment to use. We are the ones that keep the manufacturers in business. Without the commercial cutters, they don't have a product. At some point, all manufacturers are going to have to get the point that continuing to inflate prices on us will only hurt the market and themselves in the longrun.

    I completely understand that technolgy and materials cost money. I think everyone in this industry (end users and manufacturers) need to understand each others situation. Maybe we as the end users have done a very bad job at keeping the manufacturers educated on our situation. Many of us find that our market pricing is stagnant, so as the cost of machines goes up the profit margin on us goes down. As it affects us more and more, it will eventually eliminate our cash flow to buy more equipment.

    To put my money were my mouth is, I am going to email this link to several manufacturers. Not to get a response necessarily, but maybe to help each of us to learn something from the other and eventually make this industry stronger. Hopefully I will not get blackballed for this. :)


    Please guys, lets keep this clean.
     
  2. MOW ED

    MOW ED LawnSite Fanatic
    Posts: 5,028

    Using the pricing structure of the Exmark (not picking on any one,its just the one you used) I see an 11.1 increase in price. That does seem a bit high but then I would be interested in why they had to raise prices. There seems to be lots of mowers going out the doors and mayby they are trying to hammer the market while it is hot.
    Not to get off your topic but I do see 2 bright spots for me this year. Gas prices are 1.17 and my supplier said that fertilizer prices went DOWN. Both offset by insurance raises. Slightly even is better than a loss.

    I have been looking at prices of mowers over the past few years also and see the big jump in prices. Is 11% too high? I don't think I could raise my mowing rates 11% every year which leads me to think that mayby they were behind a bit and this might just be a spike to bring them back in line with their costs ( thats the optimistic side of me that seldom is revealed).

    Just go to the Tuff Expo in Louisville and you will see that it is BIG business. Lots of overhead but potential for lots of profits. The guys that build the stainless steel mowers have their own jet.

    I really think that they were dealing with a relatively small market and wanted to expand. The comparably lower prices of the old days drew people in. I never saw this many guys runnin around with Z's. Now that there are people doing this type of work, there is replacement and expansion. When your biz grows, you need a new mower, when the stuff you have gets old, you need a new mower.
    These big companies have lots of bean counters and people that advertise and even project trends on how many mowers they expect to sell. They all have to get paid and unfortunately, we have to pay them.
    Great post.
     
  3. Richard Martin

    Richard Martin LawnSite Fanatic
    Posts: 14,700

    You also need to remember that mowers and other lawn equipment is like anything else. The price will continue to increase as long as demand is great. The dealers will charge what the market will bear. I know that you will counter this with the dealer is hardly making a profit at the high prices and I say bull! I have 2 Dixie Chopper dealers near me. One sells a lot of Choppers but charges more than the smaller dealer who only sells a few. It's the same way with Exmarks. Why can 2 Exmark dealers within 20 miles of one another have a price difference of over $1000 for the same exact machine. And the lower priced dealer is getting ready to move into a much larger, newer facility.

    If you want the price of mowers to come down, stop buying them.
     
  4. lbmd1

    lbmd1 LawnSite Senior Member
    Posts: 462

    I think Richard has made a key point regarding pricing from dealers and not from Manufacturers. The manufacturers set the list prices and let the dealer sell them at anything below that (normally). When I last sat down with my dealer in December to purchase 2 more Z Masters, he laughed out loud when looking up the price. I asked why he was laughing. He said yeah right, list price of $9995 for the Z Master I was looking at. He sold them to me for $7195 each. He's a great dealer and offers prices on target of internet pricing. Now another member of the forum contacted me recently looking at a compact Lazer or Z Master. He has 2 Exmark dealers and Toro dealer nearby. All were quoting him around $7400 for a 52" 20hp compact Z. My dealer and online internet dealers were selling the same unit for $5985. Plus he had to pay another $400 in sales tax. That's a difference of over $1400 before tax! The dealers there have little competition, are smaller in size and probably don't sell as many Z's that some of the larger more metopolitan areas dealers do. So I think that the dealer is the one that decides what is percieved as a price increase like Hoss has stated, rather than the manufacturer. I can't speak for sure on whether his increase was based off manufacturer's list, or if that was what the dealer was selling it for. I think the relationship between your dealer and the cutter is one of the strongest links you can make on your bottom line. I have dealer loyalty for the most part because of the way I 've been treated, but if it were a $1400 difference, I'd shop elsewhere.

    Mike
     
  5. Eng Mwr Guy

    Eng Mwr Guy Gravely Manufacturer
    Posts: 249

    ****You also need to remember that mowers and other lawn equipment is like anything else. The price will continue to increase as long as demand is great. The dealers will charge what the market will bear. ****

    Amen to that. Richard is 100% correct.

    The better question might be: What additional service that a customer will pay for can I provide?

    Great dealers demand top prices by providing top service. Great dealers deserve top dollar for equipment they sell. Wouldn't you agree that a high level of service dealer helps you achieve your goals?

    Guys: It is a simple formula. Service Level = Rewards received.

    If you provide me-too service/equipments whatever you will receive ho-hum profits if any.

    I can also tell you most manufacturer's are not making a ton of money. The grass looks greener but that is only because we painted the dirt to look green.

    Barry
    Ariens/Gravely
     
  6. mdb landscaping

    mdb landscaping LawnSite Silver Member
    Posts: 2,205

    when i was shopping for a ztr last year, i found that dealers prices were very stagnant. i checked about every dealer in my area for exmark lazer z's, and the prices varied quite a bit. i got quoted everything from $8300 to the price i got mine for $7300. i dont know what the cause of such a difference is, but ive been told i got a great deal in my area. it seems out in the midwest mowers are a lot cheaper. i definately agree with the comments made above about prices going up. i understand they have to go up for technology increases, but customers are just not understanding we have costs too. something will break sooner or later.
     
  7. Artman

    Artman LawnSite Member
    Posts: 154

    Keep in mind that at the manufacturer level, costs keep going up, also. Everybody wants to make more money every year, so there is constant pressure to pay workers more. This, of course, raises the cost of the mower. Also, steel, engines, hydros, etc. go up in price every year. Unless, we can find some way to cut costs, i.e. robot welding, laser cutters, etc. we have to raise our price. Also, please note that new products usually come in at a lower price and then once they are around for a while, their prices go up, also. There are two reasons for this: 1. It makes sense to launch a product at an introductory price to attract more attention to it. 2. Every new product can take advantage of newer technologies and thus cut some of the costs. It becomes pretty expensive to take an existing product and constantly revise and hold the costs down.

    BUT, this is called capitalism. All this competition has produced some terrific products that are more efficient, more productive, better quality that they were just 5 or 10 years ago. This helps the cutter. Cutters face competition and this forces them to look for ways to keep costs down which in turn helps the customer keep his costs down.
     
  8. Flat market and high new mower costs are the reason I have not bought a new machine since 1995.

    I will keep my old Toro gear drives. They pretty much last forever if you keep up with the driveline maintenance.

    Just remember I don't have ANY equipment payments. All that cash you put out year after year for new equipment goes right into my pocket. I also do 90% of my own equipment maintenace and have more parts in stock for these machines than the local toro dealer.

    This week I will give proparts.com a call and order $150 (free shipping over $150) worth of Toro parts for stock for this season.
    This way there are no trips to the dealer and most time I have the parts to fix the breakage right in the field.
     
  9. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    I agree Richard, that is my point. Price does continue to increase, but the end users don't have the ability to always continue to absorb the costs. Eventually it ends up at the law of diminishing returns. Then what?
    I won't argue the point of dealer making good money off the machines. They are probably the ones making the most off them. No research and development costs, no materials and labor to build them.

    My point in starting this is to show that with all the costs continuing to rise, but the pricing being stagnant for the most parts, what will be the end result when costs and revenue equal each other? Less work, higher fixed costs. More work, more variable costs.

    Does this mean it should be balanced on the manufacturer? No, I don't think so. But they should be aware that its there. But we better all be aware that this is a very real business situation. We should be working together.

    This probably should have been in the business section, but I know that too many people here never look at that forum. They never get into the business side of it until its to late. So many people just think, I cut grass. But you must look at it from a business standpoint, just because someone chooses to ignore the business side of things doesn't make it go away.
     
  10. crazygator

    crazygator LawnSite Bronze Member
    Posts: 1,048

    HOSS,
    Amen brother! I think it mostly boils down to marketing. We have (due to this and other forums) become deeper thinkers with our business. We have the ability to discuss things with others around the state/country/or world. We find things are the same all over. Purchase power is down and our collecting power is down, verses cost of products up, up, up!

    Take for instance the questions some have recently posted about the Bladerunner mower. Most think it is a dixie redone. Others like what they see. Is this mower any different? No. But marketing make some think so. How? By selling the speed issue. Commercial mowers know the more you mow the more you collect. So marketing looks at this and see's an open door begging them to enter. So here you offer a mower that can claim to cut at 15mph and transport at 18mph. This does turn a lot of heads. They start thinking how much more they can get done in an hour or day, therefore more money. (Dont get me wrong I am in no way slamming this mower, just using it as an example)

    But did this same issue of more money get raised due to the workers/owners (us) thinking "Hmmmm, we need to raise our prices. Others things are increasing so should we."? Absolutely not! Why? Because we have been treated like cattle our whole lives. We live to be pushed and turned by marketing, at least thats what they want us to feel.

    With my fathers business several years ago the market got really soft with new machinery (machine shop stuff). Many manufacturer's got scared because they couldnt sell any new machines. Many started stock piling many many machines and had to do something. So they looked at the markets around the world and tried offering lower interest rates for purchases. When this didnt work they tried 0% interest. That didnt work. Lastly they looked at what the used machines were selling for and sold the new ones at that number or below. Now what did that cause the manufacturers to do? Sell at the number to GET the customer, not at the number for the makers.

    Therefore we seem to do the same. Sell at the number to "GET" the customer. Maybe our area is overrun with LCO's. Maybe we have too many lowballers. FOr whatever the reason we seem to let the customer deside our rate, not the other way around. But lets not forget, many of us have come from the corporate BS. This just might be the price we have to pay for this freedom from all that crap.

    I do feel many think because of the rush of immigrents to our country willing to work for next to nothing has done this to us. Yes it has helped, but we must come together as a group and re-market our (USA) companies and talents to the people that want a better class of workers, Ones that are reliable and trustworthy. Only after we as a group make ourselves and our workers do the best jobs possible could we offer this or market this. We could prove the statement that "Cheaper is better" is wrong. You do get what you pay for!
     

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