Does volume make up for low price?

Discussion in 'Business Operations' started by HBFOXJr, Jan 18, 2012.

  1. landscaper22

    landscaper22 LawnSite Senior Member
    Posts: 829

    The main reason the high volume stores make more, and have their prices lower is because they buy in extreme volume. So, Walmart orders thousands of an item and the small store only orders 2-3 of that item. Walmart gets a much better price, so they pass the saving on. This industry is a little different. I guess if you go buy 30 FS-80 trimmers at the same time you could save money on them. But you are selling services not goods. So, other than maybe a discount for buying large quantities of equipment, you are going to have basically the same expenses whether you are a large LCO or a small one. Again, the main way to have high volume/low price in this business is if you can concentrate all your business in one area. I could do major volume and offer nice discounts if I could do 20 properties all side-by-side each day, without packing up and moving my truck. That is why I do offer good prices on larger accounts where I can spend several hours in the same place without moving.
     
  2. grass-scapes

    grass-scapes LawnSite Bronze Member
    Posts: 1,552

    Or hire 4 or 5 guys per crew, paying them 8 bucks an hour, get it done in a lot less time, move on to the next one. If one guy quits, hire another, and another....

    keep the labor cheap and plentiful. Thats the way the big guys do it.
     
  3. MDLawn

    MDLawn LawnSite Bronze Member
    Posts: 1,284

    I actually thought I read something this past year that high end retailers did better profit wise than the major discount retailers. They said this was because the rich got richer and the rest cut their spending. So the major retailers did less because the the majority of the population was spending less. Are the stores crying poor...no. But just recently I heard jcpenny was changing their strategy by not having "sales" and just pricing stuff lower on a regular basis. Sounds like a "volume" sales place is hurting a bit. But high end retailers were doing great.

    My point..... The high end is out there and people are willing to pay. Question is how many really make an effort to get these customers as its not east. Low end volume is just easier to acquire. Each system can work and each of us needs to choose which one works for each of us. Me...it's higher end or not at all. I don't feel any need to be a massive company serving massive commercial clients. I want that personal touch. Also maintenance work can lend itself to be more of a volume business anyways, but not always. Choose your side and do it better than everyone else.
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  4. wbw

    wbw LawnSite Fanatic
    Posts: 5,516


    I am not knocking this approach. There is certainly a niche for this and the profit margins are certainly much greater. My real concern is that I think you are more limited on the growth. Everybody in business number two priority should be "How much can I sell this thing for?". I am an old fart and it is becoming more and more apparant that you have to retire someday.

    P.S. This topic is of great interest to me and I hope we can keep this dialog going for a little while. sorry I didn't respond sooner but I went out of town this week. I honestly think that I am able to go out of town whenever I want because I don't provide that "personal touch".
     
  5. MDLawn

    MDLawn LawnSite Bronze Member
    Posts: 1,284

    Wbw, when I say personal touch I don't necessarily mean me actually doing everything. I've been reading threads by etwman, ideal, pro turf, and perfectearth. I can't speak for them as I do not run their businesses. But they all agree about having that "personal" touch/communication with their clients. Each also run uniquely different business. I think one guy talked about meeting one of his clients each day for lunch, coffee, etc.... He's not running a mower, he's keep great communication lines open. Some talk on expansion while others feel they've reached their "sweet spot" with the amount of customers. Three out of the four seem to pretty much run the business side and are out of the field. That's my ideal situation too. But I think you'll agree that maintenance and installs probably need two different business models. But I don't know. I don't want to be bound by working a job (solo op) but rather run a business and like you said be able to take time and also retire. So please don't think when I say personal it means being solo doing jobs myself. I'd rather be meeting a client for lunch, maybe stirring up some new business.

    This is a good dialogue and it's good to get a perspective from others who think differently, as long as we're all civil.
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  6. MDLawn

    MDLawn LawnSite Bronze Member
    Posts: 1,284

    Didn't see this. Etwman seems to do this and from what I read he's is in the $1-2million range for sales. From his thread it seems like they do 8-10 large high end installs/year. He has I think 10 something employees whereas to do that much in mowing sales you'd need a ton of employees right?

    But like I said before. Choose the business model you want and do it better than everyone else.
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  7. wbw

    wbw LawnSite Fanatic
    Posts: 5,516

    Most definitely. And I was certainly thinking of maintenance and not installs. I like the recurring business and I think that the business itself is more marketable with steady income from repeat customers. I need to point out, in case I haven't already, that I service/maintain swimming pools. I have built pools in the past although never in the volume needed. Servicing pools and maintaining lawns are very, very similar businesses.
     
  8. wbw

    wbw LawnSite Fanatic
    Posts: 5,516

    As far as the "personal touch" goes I expect my guys to provide this as much as I do. I tell them that how we make our customers feel is more important than what we actually do for them. I remind them all the time that "It is hard to fire someone you like."
     
  9. MDLawn

    MDLawn LawnSite Bronze Member
    Posts: 1,284

    You're definintely right about the steady income, it's something you can count on. What's interesting is that some of the large install only companies are offering maintenance programs, mainly to their install customers only, to control the maintenance side of thier installs and to create another revenue stream. 10-15 years ago you could go it alone on installs but today is a little more select market.

    I'm not sure what goes into maintaining swimming pools but when it comes to lawn maintenance there is just such a major investment in equipment and that first $800 craiglist commercial mower is only going to go so far or last sooo long. I mean new machines are pretty pricey (yes you don't need new) and to have a high volume, low priced business with tons of employees means lots of machines, trucks, etc... hard to see how low pricing could work for the average guy that starts a lawn buisness. Not to mention just starting out and getting a large volume of customers, and employees to do the work, is not easy nor cheap especially in a market domintated by many with a similar outlook. Hard to differentiate yourself.

    I'll add a spin on this that may change peoples opinions on what I say. Currently I am part time but have been contemplating a switch to running a full time business in landscaping/maintenance. It's been interesting to say the least. I've had the people approach me saying "Wow you do such a better job than my current service, what do you charge?" After evaluating their property and giving them a price people will say no based on an extra $20-$40 per month, $5/$10 per cut, etc.... Many just "want it done" vs really wanting a quality job. But I've also had others jump ship immeditately and take up my services. A friend I used to work for, who is part time but pretty much runs a full time business with employees now, would walk away from more work and not bow down to each customer who balked at his prices. I learned a lot from that. I honestly think he probably makes more, part time, than 75% do on here full time. He's got a great full time job and makes more in landscaping than the full time.

    I'm really going to be crunching numbers this month to see what I need to do, but I don't think I can or ever will be the low price volume guy. I'll find another line of work before I create those headaches.
     

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