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Do the good ones weed themselves out?

Discussion in 'Lawn Mowing' started by DFW Area Landscaper, May 31, 2004.

  1. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    Just like everyone elese, I've got low margin accounts and I've got some high margin accounts. It seems like I've got a few more low margin accounts than I do high margin accounts, though.

    Anyway, this one account I signed this spring is $36.97 per cut, weekly. I've been clocking our times on this account. My employee and I can do this account in 27 to 30 minutes, plus drive time. That may not seem like very high margin to anyone else, but in my area, that's good money. I've been wondering if I should go back to the high margin accounts and offer to reduce their bills. But everytime that thought crosses my mind, I realize that the low margin accounts aren't going to agree to price increases as easily as the high margin accounts would agree to price reductions. If you lower all the money making accounts but never get a price increase on the low margin stuff, that doesn't make sense.

    Anyway, this high margin account called and cancelled service this afternoon. He said he really liked the service, but due to the cost, he was going to start doing it himself. (Isn't that the reason they always say they're cancelling if they didn't sell the house???)

    Anyway, I got to thinking that over time, do the good margin accounts weed themselves out, leaving you with only the low margin accounts? I get the feeling the low margin accounts know they're getting a pretty good deal. So far, in 17 months of being in the business, I've never had a low margin account cancel service. I've had several high margin accounts sell their homes and cancel, but this is the first time I've lost one to the "I'm gonna start doig it myself" excuse.

    I'm certain I lost this one to a lower bid. Why would the guy make a decision to start doing it himself now that we're just entering the 90's and 100's?

    DFW Area Landscaper
  2. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    Its called panick. You are panicking right now. In no way should you reduce the prices you already have. To gain respect you must know and sound like you know your business. Going back to reduce would make you look real unsure of yourself. Everyone loses some sometimes. Actually over time the cheapo's will elimanate themselves and leave you with higher profit ones if you play your cards right.
  3. EZTarget

    EZTarget LawnSite Senior Member
    Posts: 295

    i must say you sure come up with many good posts (unlike myself) that you have put a lot of thought into. if people are shopping around you are most likely right. because if they shop they find better prices and because they were shopping they don't have much of an issue with changing service for a cheaper price. 36.xx seems like a pretty good rate for our area (DFW) and u can knock em out pretty quickly. what is a low margin property for you? i guess if you are still makin a profit, just keep on chuggin and while the high margins come and go you can keep enough of them to make a good difference.
  4. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116


    No panick. I considered dropping prices on some high margin accounts for about three seconds, but no. I wouldn't dream of it. Common business sense says you don't do that. I'm just trying to figure out if the high margin accounts will automatically weed themselves off your schedule over time while the low margin accounts stay with you year after year. Because if that happens, well, that would be really bad.


    $36.97 is way above average for me on a weekly mowing customer with no extras. I encounter a lot of resistance just going above the twenty five dollar figure, unless it's really, really big. It seems that everyone in Lewisville thinks they should be able to get their lawn mowed for 25 bucks. I don't know if things are much better in Flower Mound. My hunch is that the folks over there are a lot more "house poor" and the difference to those guys between $27 and $30 every week is just as substantial as it is to the folks in Lewisville.

    DFW Area Landscaper
  5. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    ++++what is a low margin property for you?++++

    The worst of my low margin accounts is one we do first stop on Thursdays. $33 per cut. Our best time, myself and one employee: 41 minutes. Worst time: 55 minutes. Average time: Probably right at 50 minutes.

    That's time on property.

    My goal is that when I have a minimum $2,000 worth of mowing work lined up every week, I'll go back to the low margins and demand a price increase. No increase, they're dropped. I've got several others that are almost this low margin, but they're all due to excessive drive times, primarily.

    DFW Area Landscaper
  6. EZTarget

    EZTarget LawnSite Senior Member
    Posts: 295

    man i figured flower mound would be good money but as i have heard here before the richer dont always want to pay more. guess that is how they get rich! i am finding that 30 is more acceptable than i thought here in arlington. i was afraid i would be stuck at 25.
  7. brucec32

    brucec32 LawnSite Platinum Member
    Posts: 4,403

    Yeah, don't lose faith. You will always have some attrition for a variety of reasons. Sometimes a guy loses money or a job and no matter how low you are, he's gonna cancel to try to save money. I doubt knocking $3/week off the price is going to change his mind.

    I wouldn't ever voluntarily lower a price if the customer is paying! That said, I was always careful not to "go for the gusto" when pricing, meaning not try to squeeze every dollar I thought I could get out of someone, because I found that if I was too high they often didn't stay customers for long. They would eventually realize they were paying above-market and find someone cheaper.

    Others are the opposite, they are willing to trade more time selling and replacing turnover if they can get top dollar from more customers. I always found turnover demoralizing and dealing with new customers always more trouble. So I tried to give them a little more than they paid for so they had no reason to shop elsewhere. What I lost in income I made up with a smoother schedule and less time wasted giving bids and getting new business to replace those who left. It probably all evens out.

    My "rule of 3's"

    3 minutes into talking to me they start to relax and little and have figured out I'm not a used car salesman type or a total idiot. By the time I've done a lawn 3 times they know I do good work and aren't suspicious and pay their bill when it comes in.. By the time 3 months have gone by it's routine and they are referring me to others. After 3 years it's like I'm part of the family and I don't even have to call first to ask if I see something extra that needs doing in the lawn. After 12 years in Atlanta it got really easy to start up in the Spring. Replace 3 or 4 customers who moved or died and that was it. That allowed me to fine tune my mower inventory to exactly what I had to do, which helped improve efficiency, and fine tune my routes to minimize drive time and backtracking. And it allowed me to enjoy the springtime rather than dread the phone ringing all the time at night after I got home from a work day.
  8. QualityLawnCare4u

    QualityLawnCare4u LawnSite Gold Member
    Posts: 3,758

    Its funny that you started this thread when was thiking the same thing this weekend. This past year I lost every single good account I had and kept ALL the bad ones. I still have the low margin one but thankfully have picked up some good ones. BTW the accounts Iost were 18 of them in less than a month, now you want to know what pannicky is LOL The worst low margins have are 2.5 hours $40 (including driving time) PITA that hate with a passion to do. Business got so bad was scared to drop them but is now getting better. 3 more good ones and Im dumping these two,

  9. nriddle77

    nriddle77 LawnSite Senior Member
    Posts: 269

    First of all, I'd like to say that I always enjoy reading your posts. As mentioned above, you obviously put a lot of thought into them.
    This is my fourth year in the biz, and I have some great customers that I have had from the beginning. I'm sure others here have had their favorite customers for much longer than that.
    One thing that I try to do is to develop a relationship with the customer. The idea is for them to see my as a friend or just a person, instead of a company. I think that this makes them more loyal to me. I take a few minutes whenever I have them, and ask about their jobs or familes, and tell them about mine.
    I also try not to say no. If they want something done, and it's resonable, them I try to do it. Even if it's not highly profitable for me, I know they will appreciate it.
    There are plenty of other people who can do the work I do, but I think the little things like friendly conversation can go a long way to build loyalty.
  10. EZTarget

    EZTarget LawnSite Senior Member
    Posts: 295

    yea what he said! (see what did i tell ya!)

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