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Low price leader

Discussion in 'Lawn Mowing' started by R&GSweeping, Feb 6, 2001.

  1. R&GSweeping

    R&GSweeping LawnSite Member
    Posts: 30

    A quick foreword: Because everyone knows where everyone is from on this forum I will keep this post very generic. SO my question is this: how do you beat the low price leader?

    With maintenance/landscaping jobs I can compete with the price of my competition (them included). But with parking lot sweeping its another matter. Company "A" sends out 2 employees in their trucks. And with 2 employees in their trucks they will beat your price. It seems to me they are losing money. How can this company survive? How can I compete with this? I've thought about throwing in free services just to get new accounts. Basically how do you beat the KING of CUT THROAT?!?

    AND since this is a generic company I will not mention the quality of company "A"'s work.

  2. Trimline

    Trimline LawnSite Member
    Posts: 33

    I'm not to familar with the sweeping business but had an idea. What if you advertised and traded referals with a sealing company. If they do a good job an refer you, you may get the job without being the cheapist guy in town. This won't work if sealing company does sweeping (i don't know if they do). Even if you had to through them a small percentage it might be worth it. This would be good for the sealing company as well. With you doing the maintance it would be doubtful anyone else would get the sealing job next time it needs it.

    I might be way off, just a thought.
  3. kutnkru

    kutnkru LawnSite Silver Member
    Posts: 2,662

    You ride the wave of your pricing structure and weather the storm until they go out of business.

    We have a similar scenario in our area for lawn care. The lawns that used to be at LEAST $40 to cut are now being done by cut-throats who offer mow-trim-blow for $18 or even $22 a cut. We haven't dropped our prices but are riding out the wave of low ballers and so far it has worked. People will see that they get what they pay for.

    If they are happy with the opposition then I truely do not need them dragging down my profitiablity. And for this i am thankful for some of these types out there.

    Just my .02
  4. GREG R

    GREG R LawnSite Member
    Posts: 105

    In our area we have the same problem, big company low balling (my price $35 cut+bag, low ball $17.50 cut and bag)
    and they do one damn good job too. I don't see how they are making it.

    So my thought on this subject is, let them fill their schedules, and I will come along later after they are
    out of business. They can't stay in business without
    turning a profit.....the question is for how long can.
    Every year someone goes out of business and we all know
    why. "stick to your profit margins"

  5. kermit

    kermit LawnSite Member
    Posts: 138

    Thre will always be somebody willing to be a little cheaper than you. There costs may be lower of they are more efficient. Look at a big company like Wal-Mart, who charge less than the small stores located downtown. They charge less because they have less labour costs per sale plus more volume per square foot of floor space. They get a better deal per square foot of retail space and pay less for the goods they retail. Often their retail price is cheaper than my wholesale price. How can the little guy compete? Sure as heck not on price! We,as an industry, are lucky because we are not selling the same product as our competitors. We all supply a slighty different level of service. I know that I can't compete strictly on price so I don't even waste my time on bids which I know will go to the lowest price. I am well aware that I am not the most efficient company in the area and more power to those who are in the commercial side of the business, but I don't waste my precious resources on low profit jobs. I concentrate on what pays me a high profit. Just like the small retailer downtown you can't compete on price alone or the big guys will tear you up. Companies like Wal-Mart have NO service so the little guys who have good service can survive if they offer something that Wal-Mart doesn't have.
  6. kutnkru

    kutnkru LawnSite Silver Member
    Posts: 2,662

    Good point kermit.

    I just figure that if they want to cut 200 lawns to only make $3600 thats okay by me but I am still going to stand my ground and when I reach that mark I will be doing somewhere in the range of $6000 to $7500. I think waiting for the right customers is definitely smart business.

    Just my .02
  7. VLM

    VLM LawnSite Member
    Posts: 189

    You are all right on the money. Sooner or later the low ballers drop to the wayside and then we can pick up the pieces. I always ask perspective customers if they have had lawn service before. If they say yes I know I'm in business because the cheap guys are a dime a dozen but only last a few years. Just stand your ground and keep giving high quality service and every thing will work out.
  8. R&GSweeping

    R&GSweeping LawnSite Member
    Posts: 30

    Hey guys thanks for all your replies. I know I just need to ride out the lean times especially being new (just over 1 year). The problem with this particular company is they have been in business for a while and they pretty much have the market here.

    I know what the hourly cost are to operate a sweeper regardless of how big or small they are. Especially with 2 guys in the truck. Your talking at least $28 bucks per hour. Then I see them going into a business sweeping an hour and charging $22 bucks..... I just don't see how they stay in business. Your talking about a $60,000 - $70,000 dollar truck you're trying to make a return on your investment. Its just doesn't add up.

    Any way thanks for all your help.
  9. kutnkru

    kutnkru LawnSite Silver Member
    Posts: 2,662

    We have many contractors in our area that are operating on either the "old" money from their fathers and grandfathers, or they are just plain lucky enough to have a signature on their loan card so they dont have to feel the pressure of where the next meal is coming or what do you do when the invoices are outstanding and you have enough operating collateral for 3 days work and its Monday.

    I feel your pain my broth'a.LOL
  10. 65hoss

    65hoss LawnSite Fanatic
    Posts: 6,360

    I really don't care what others are charging. I give my price. If they don't want it, so be it. I can have all I want by the end of march anyway. I would rather do fewer lawns and make the same money. Maybe its me, but my good customers trust me. People will get tired of dealing with these low ballers sooner or later. They hate not knowing if they will show up this week or not (or next year). I have people that will chase me around the yard to give me a check just so I will be sure to show up next week because they have had so many problems in the past.

    Be firm and the good account will show up. Especially word of mouth business. I can go broke sitting at the house. No since in working myself broke.

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