Could fert prices going up be a good thing?

Discussion in 'Pesticide & Herbicide Application' started by rcreech, Jul 3, 2008.

  1. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,072

    Sorry to keep talking about fert prices...but since we are in the business this is a very major topic.

    This is just something I pondered on yesterday.

    The job loss around here getting higher and higher as our area thrives on GM and people are looking for "side work". I would say a large majority of my town and neighboring towns worked there. They are closing all their plants along with several other places also.

    I am going to turn the fert prices around and make them a positive. I have had a couple guys ask me about lawn care and they were kinda probing and of course I didn't give them very much info, other then the fert and gas has doubled and it isn't as good as everyone thinks.

    But I think fert is to the point that someone CAN'T start right now! If they do...they won't even be able to compete with us (Not talking about quality or service....just price alone).

    This is a very bad time to be getting into any business anyway, but a TON of guys are mowing over here (you can almost see a trailer with a mower on it at all times around here) and I think the input costs will keep them from entering.

    I was just kinda worried that the fert and chem business was going to be like the mowing business, but now I am not as worried!

    What do you guys think?
     
  2. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 17,371

    I honestly dont know. But if a feller has a 75$ fert job cant he just stop by lesco and pick up 40$ sack on his way to the job?
     
  3. LawnTamer

    LawnTamer LawnSite Gold Member
    Posts: 3,986

    Fert prices may create a small barrier. I think the main barrier is licensing and lack of knowledge. For me, I would rather be paying $4.85/bag for my 24-5-10, like I was 10 yrs ago, heck 46-0-0 was $4.65/bag. Funny, my cost of living has gone up, but my profit margin has decreased over the last 10 years.

    It is true that 10 yrs ago I was doing most my apps for only $39, but with an average lawn size of under 6k, my material cost was about $3.50.
     
  4. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 17,371

     
  5. Ric

    Ric LawnSite Fanatic
    Posts: 11,957

    Larry

    Been there done that with the saving thing. Now that my children are out of college and on their own, I down sized my living arrangements to 1,600 sq ft. Thats about 800 sq ft more than a I need. My Girl friend has her own money so I only have to please myself and I am saving money once again. You are living too good and that is why you can't save money.


    Rcreech

    I can't agree, but see your point. You are looking from the SUPPLY side of the problem and not realizing the DEMAND will decrease sharply as the price goes up. The customer can't eat grass or bag it up and sell it. They can only look at the pretty green. Our industry is rather new and only because of Thanks to the Marketing of TrueGreen do we really have a market. Prices are increasing and the dollar value is decreasing. Jobs and spendable Income is down while Foreclosure rate is way up and Green Grass doesn't put food on the customers table.
     
  6. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,072

    I agree with you Ric...but my business has grown like mad this year.

    I think I will definitly lose quite a few customers if things keep going the way they are, but I am a small player therefore my MARKET SHARE is very low.

    That means that there is a lot of potential for me to grow. TG and the others can't say that!

    I guess I am pretty pumped about it as I think the customer would rather work with a small guy as they know service will be much better.
     
  7. Ric

    Ric LawnSite Fanatic
    Posts: 11,957

    Rcreech

    My prices are still 2004 prices which were higher than any of my competitor if you can call them that. I have been lucky to not lose but a couple of customers to the economy. I also have picked many accounts this last season. People who have spendable income seem to still be looking for bang for their buck and will pay more for good service.
    i am also experiencing for the first time in my working life TIPS. Customers are slipping me 10 to 40 bucks and saying here is for the gas. Many have even ask about price increases. My margin is down to 50% now and I am working more and making about the same if no a little more as last year. But I am eating the margin in fear of losing too many customers to a price increase. I am pessimistic about the future.
     
  8. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,072

    I may be a little too optimisitc....but the upsells and "ADD ONS" are going nuts for me! I am pretty new so my sales can only go up...but they are going up much quicker then I thought! I thought I would lose business this year, and I have grown almost 30% and still picking up new accts. That is why I am pretty pumped!

    The turf is very good, but the mole side, grub apps and shrub/tree is going crazy.

    If gas hits $6 that might change...but $4.15 hasn't slowed them down yet!

    I just feel like I already have a good customer base that can afford lawn care for the most part. Most of them have "settled in life", care about their homes and probably own them.

    If I do drop some customers...I think I can replace them with people that want lawncare (already with one of the big boys) and that is why I stated I am optimistic.

    I am pretty new to this business, so I didn't get to enjoy the margins of the good ol' days...but I guess I am pretty happy with what I am currently making. I am used to farming, so this is darn good money to me! :cool2:
     
  9. Ric

    Ric LawnSite Fanatic
    Posts: 11,957

    Rcreech

    Glad you are optimistic. Someone has to be. Business is not only WHAT TO DO, but WHERE TO DO IT. Market selection will a biggie in the future. The working class man is the new working poor on survival income.
     
  10. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,072

    I totally agree with you! That is why I think the TG's and other big boys are going to get hurt more then anyone!

    They have a much better chance of losing a ton of business then picking up a bunch of new accts.

    They have upset a lot of people and they are not very well liked around here.

    I think they will lose a ton of business in the "neighborhoods" as every time I see a TG truck it is in the housing developments with tons of houses. Not to stereotype...but these are the homes that probably won't be able to afford it in my area. They are the little 1500 sq ft homes that all look alike. Not a bad thing at all...but all "working class" people that only make so much $$$$$/week and their lawn money will have to go on the table and in the gas tank.

    I guess we will see!

    That is just my prediction.

    We just need to keep the heads up and keep plowing foreword!
     

Share This Page