Definition of Lowballer?

Discussion in 'Lawn Mowing' started by MOturkey, Mar 29, 2004.

  1. MOturkey

    MOturkey LawnSite Silver Member
    Posts: 2,762

    I'm new to this business, as you all know, and I immediately noticed the continuous references to lowballers and scrubs. I assumed I knew what a lowballer was, but am beginning to think perhaps it is a different thing to different people.

    I've read of many different pricing strategies and structures on here, and it seems most come up with the same basic premise:Know your costs and charge accordingly to assure a decent profit for your efforts.

    Now, as an example, I often here the "dollar a minute" thing kicked around. I haven't run my business long enough to know my actual costs, but I'm working on a ballpark figure of $10 per hour for operating my mower. I extrapolate this to trimming, etc, figuring the actual lower costs will cover most of my expenses involved in actually getting to and from the properties. Based on that assumption, I'm quite comfortable with an average of $30 to $35 an hour, because that is more per hour than I have ever earned on a regular job.

    Now, as my business grows, I suspect my goals will be higher, and I hope to eventually be at a point where I can turn away business and not feel badly about it. That point hasn't been reached yet, and from the number of people new to the busines, I suspect many of them are not at that point either. I also suspect the area of the country has a lot to do with it. I am not in a high income area, and if I stuck to say, a dollar a minute figure, I suspect I'd be doing a lot of thumb twiddling this summer. The one LCO I am friends with locally, does charge the dollar a minute average, but that is for two people, or guess what, still $30 per man hour, which would make my one-man operation right in line.

    I bid a property last week that was right next door to one I already had. It is fairly large, an office. I bid it lower than I should have, but knew I could probably do it in 2 hours if conditions are favorable. It was next door to the property I was already going to mow,with another across the street, and would make my 20 mile trip to this town profitable instead of marginal. I got a call the next day with the OK to mow. Now, I could have possibly gotten the contract charging what I really should have, but what if I didn't? I would have been shooting myself in the foot for some supposed high ground that one should never cut prices. Does this make me a "lowballer". Are there any of you who have not done something similar, especially when you were just starting out? I'm not talking about mowing for no profit, but mowing for a lower profit.

    I don't think I'm much threat to larger operations that have employees to pay for, simply because I am too small an operator to handle many large accounts. I'm going to be higher than the high school kids, but I have good equipment, and am dependable, and plan to do excellent work, so isn't there a niche for people like me? I'm just curious what many of you think. Neill
     
  2. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Posts: 7,547

    Ok i will awnser. To most here, yes you are a lowballer. Have they ever done it when they were starting out? Yes, 99% did it. Most of us were there at one point, although most dont like to admit it mainly because i think their therapist has told them that this will not be good for their self esteem.
     
  3. Flex-Deck

    Flex-Deck LawnSite Silver Member
    Posts: 2,846

    MO turkey - I think I have read many posts that are made by LCO's that talk about trying to minimize travel time - I feel you did the right thing. If you are making money - doing the job, and can gaggle a bunch of jobs in an area, the discount helps you and the customer both - you make more money by keeping the machines running, and they save money by your efficiency. Look at Walmart, They gaggle all the things people need under one roof, and guess what - they have a gazillion customers.

    Thanks Brad
     
  4. pcnservices

    pcnservices LawnSite Senior Member
    Posts: 614

    Neill, I geuss you are pushing a 21" at $10 per hour, right? I assume you dont have insurance? I suspect your goals right now is to just make a buck a hour more than what you have made at your full time job?
    Why would you ever want to turn away business? As your business grows so does your goals shift and change and you're gonna need that business to achieve those goals!
     
  5. r&t

    r&t LawnSite Member
    Posts: 9

    This is my second year $35 to $40 per hour. What im running into is these other lawn care people are undercutting me and Im tring to add more yards. Ive bid 15 yards and picked up 5 or 6. One lady told me she called 5 companys to bid her. Bid as high as you can when it gets hot you will wish you were making more than you are.
     
  6. Jeff Quinn

    Jeff Quinn LawnSite Member
    Posts: 10

    I always thought a lowballer was a guy with short legs!
     
  7. dishboy

    dishboy LawnSite Platinum Member
    from zone 6
    Posts: 4,318

    Jeff that would be a guy whose wife cuts his legs off at the knees.
     
  8. Jeff Quinn

    Jeff Quinn LawnSite Member
    Posts: 10

    I do have a one-nutted cousin. I call him "Oddball".
     
  9. Doster's L & L

    Doster's L & L LawnSite Senior Member
    Posts: 616

    Only someone from TN would make that comment. ;) :D
     
  10. MOturkey

    MOturkey LawnSite Silver Member
    Posts: 2,762

    To answer pcnservices: Yes, I do have insurance. One million in liability and inland marine on my equipment. And yes, I do have a 21 inch, but I also have a Gravely 250Z and it is to this mower I was referring. I posted a query sometime back about the estimated cost to run a mower per hour, but received zero replies.

    My $10 per hour figure is based on limited data, admittedly, but I've arrived at this through some estimation of replacement costs, etc., if experience tells you that this is way off base, please let me know, as I would appreciate the information. I've arrived at this figure using the following criteria: I know my mower uses approximately 2 gals per hour of fuel, so with fuel costs going up, let's say $3.50 per hour. I change my oil at half the recommended interval, or 50 hours, which costs me about $18, or say 40 cents an hour. I'm estimating blade life and sharpening (I haven't yet invested in a blade sharpener) as $1 per hour. I figure other routine maintenance and such as probably $1 per hour (my mower has less than 100 hours on it), and I've simply guesstimated depreciation on the machine at $4 per hour, which comes out to about ten bucks an hour. An older machine would likely have a higher repair rate, but a lower depreciation rate, so I suspect the two figures would be pretty close to the same.

    I use the $10 per hour figure on the whole job, most of which, in my limited experience, have trimming equal to about 25% of the total time. Obviously, trimming is more labor intensive, but cost for operating the trimmer are miniscule compared to a Z, so I figure this makes up for my travel expenses to some extent.

    I would hope to make more per hour than I do at my day job, but was merely pointing out that I don't require a net hourly wage of $40 to be satisfied. And, I have noticed that virtually everyone on here talks of reaching a point where the can be selective with regards to the business they solicit, or accept. There may be some exceptions with the really large operations, but I am pretty sure most smaller outfits, if they do good work, eventually reach a point where they are maxed out on work. I have no desire to grow to the point of having multiple employees and crews. If I had gotten into this business 25 years ago, I'm sure my goals would be much higher, but at this point in my life, I don't need those headaches. Neill
     

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