Downward price pressure

Discussion in '<a href=http://www.plowsite.com target=_blank ?>Sn' started by Deere John, Dec 11, 2000.

  1. Deere John

    Deere John LawnSite Senior Member
    Posts: 327

    This season, I noticed that some (only two) customers were asking about price breaks for OUR efficiency. We invested in vee plows and other small things to allow us to take on more work, and the customers are doing the math to get up the nerve to ask for a break.

    I responded with a qualified NO, based on our costs to provide a finished product ( with some detail). Question: I was wondering if others have noticed the same thing, particularly those using the push boxes that improve efficiency so much?? Are people noticing the time vs. cost ratio for your services?
     
  2. John Allin

    John Allin LawnSite Bronze Member
    Posts: 1,489

    If they have noticed, they aren't saying. And if they do, my answer will be "no", just like yours.
     
  3. Alan

    Alan Member
    Posts: 1,185

    We make improvements in efficiency for OUR benefit, not so we can cut out own throats. Nobody has approached me with that yet, but I'm sure they will at some point. I'm not about to even consider it.
     
  4. blades

    blades LawnSite Member
    Posts: 6

    Deere John,

    I'm a real newbie here (first post), and have been loitering this past weekend, as I'm seriously considering getting a plow for my truck.

    My guess (regarding your question) is that this sounds like automotive supplier tactics, and this may be the result of a trickle-down theory. The auto (and other large) companies put a lot of pressure on their OEM suppliers to actually give price concessions each year on thier product, the logic (if you can call it that) being that the supplier is getting better at making a particular part, and should be improving in terms of both process and efficiency. These concessions are actually demanded by the larger companies, and are typically negotiated up front. I think GM is typically 4% reduction per year for the first 3 or 4 years of a product cycle. All this results in, however, is a higher up-front piece-price to the large company, as these concessions must be built into the price of the supplied product.

    What does this have to do with you? The smaller companies attempt these same tactics with THEIR vendors, whoever they are, in an attempt to reduce their costs. Usually doesn't work, though. More OEM suppliers should try to use the same logic you presented to your customer. Unfortunately, when dealing with large companies, there is no such thing as logic.

    Sorry for rambling so much :)
     
  5. landscaper3

    landscaper3 LawnSite Bronze Member
    Posts: 1,354

    We picked up a few accounts (new ones) they had me come over for a estimate and when I gave them the estimate the customer siad WOW thats too much can you work with me on price, I siad no I cant I have set prices and its late in the season for me and im real full and cannot ajust my costs, at least 6 asked me too, got 3 of them made them sign a contract which they didnt like but WE - DO - NO - WORK - TILL - CONTRACT - IS - SIGHNED. I even tell them if they want me to run one over for them to sign ill be glad too. If they say mail it ill look at it I say until contract is back no work is to be performed. I run a hard and direct system from being burnt by residential people so now all go on contracts. The ones who have no problem signing are the ones youll get paid by and the ones who dont want to sign are the ones who MAY not pay.
     
  6. GeoffDiamond

    GeoffDiamond LawnSite Bronze Member
    from Maine
    Posts: 1,651

    Last year I started useing the F 650 on private roads, for years we just beat a 1 ton down them. Only last year we used the F 650, I think after the first storm i got 6 phone calls asking if the price would go down, because it took less time. My answer everything no, no, no, and no.

    Geoff
     
  7. RB

    RB LawnSite Senior Member
    Posts: 306

    I would acutally consider giving them a price break.

    If a customer asked me for a price break I would polietly ask them how much of a break they need. I'd then try to find out why they are askign for a break. Maybe they just received an unsolicited bid that is a little lower than yours. They like your work and want to keep you, but they are in business and you know you probably won't be there next year if you don't lower prices. How much do you want the job?? I'd also ask myself if I can afford to give them a break.


    I guess for me it would have to be a win/win -- what am I getting out of this deal by lowering prices??

    Am I crazy??

     
  8. GeoffDiamond

    GeoffDiamond LawnSite Bronze Member
    from Maine
    Posts: 1,651

    if you give them an inch they will take a mile. In the snowblowing biz it's true.

    Geoff
     
  9. Alan

    Alan Member
    Posts: 1,185

    I won't dicker, period! If I can't work for my rates I'll park the truck. If you want a cheaper price get somebody who does cheaper work.
     
  10. RYAN

    RYAN LawnSite Member
    Posts: 211

    I never budge on a price. The time it takes to do the job should have little or NO bearing on price. Say my truck breaks down one day and I have to remove there snow with a hand shovel. Are the going to let me triple charge them sice it took a lot longer? I doubt it. And I won't budge either.
     

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