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New Companies undercutting pricing

Discussion in 'Irrigation' started by Leo's, May 6, 2005.

  1. Leo's

    Leo's LawnSite Member
    Posts: 21

    My company is up here in Michigan we started the company 10 years ago and when we started there were only like 5 companies in the irrigation business, so it was very lucrative. Now there is like 4 pages worth of these fly by night companies. Anyway 10 years ago the companies that were around were bidding jobs at like 120 bucks a head. We are now at about 80 bucks a head. That doesn't pay much when you account for payroll, insurance, etc.. So my complaint is how do we compete with these companies that are coming in and bidding 40-50 bucks a head. I have done the math they are making pennies its not worth it for me to get down that far. These companies are stealing all the business from reputable companies like mine that have been around for awhile. It really sucks anyone else have these problems?
  2. QualityLawnCare4u

    QualityLawnCare4u LawnSite Gold Member
    Posts: 3,758

    Leo, I dont do irrigation but I feel your pain in the lawn and hedge trimming part. In my area the price of a 35 dollar yard 2 years ago has dropped to 20 and some will do it for 15. Me and you both know they will/can not last but its sure not helping the legit ones right now.
  3. Frog Lights  LLC

    Frog Lights LLC LawnSite Member
    Posts: 191

    The situation is very tough. You must be more cost effective and buy better. Take a close look at your operation and cut the fat. Start and complete the job in one day. I have been in irrigation for a long time and this is the same all over. I rule the market. Also it may be necessary to work further away. A short drive may yield a new developing area.
    Add other profitable business like landscape lighting to your services. Take a look at our website. This is a natural with irrigation.
    Frog Lights, LLC
  4. Rotor-Man

    Rotor-Man LawnSite Member
    Posts: 126

    $120 a head in Mich., I don't know what part of Mich. you are in, but no one bids jobs around here for that price and stays in business. Remember back to when you started out and I'm sure you were the lower bidder many times to get the work and the reputation rolling.
    Long and short of it competition is good and keeps everyone Honest, but your Reputation will get you work, and many times they are more than willing to pay more because of it.
  5. Mdirrigation

    Mdirrigation LawnSite Silver Member
    Posts: 2,630

    Dont lower your prices , the same has happened around here , there are long term contractors and we all are the most expensive , and the most experienced. The cheaper contractors are great for business . Yes , I have increased service work over 100 per cent in the last 2 years . I go after service now very agressivly , installs are fine but if price is the selling point leave it to the cheap guys , I will gladly repair it for a fee. When a company goes out of business they leave a wave of service work in their path . For every estimat you give and dont get , save the information and send them a service policy the following year .
  6. DanaMac

    DanaMac LawnSite Fanatic
    Posts: 13,156

    I've had a couple people that called to find our rates for repair. Once I told them they laughed and made comments about won't be in business long. Way overpriced. It was ten years in March that I've had this biz. Ever hear the one about the hair stylist with a sign that says "$7.00 Haircuts". And the shop next door that says "We fix $7.00 haircuts". That's how I feel. :rolleyes:
  7. telcomac

    telcomac LawnSite Member
    Posts: 32

    There will always be "Bottom Feeders" who are driven by price alone,and "Low Ballers' who will throw water everywhere for them.
    Maintain your own standard.
    Provide quality work at a fair price.
    Answer the phone!!
    Listen to the customer.
    We are a small business, father and son, and by following these guidelines have in three years increased our customer base from 40 to 200. The common complaint we hear is "My sprinkler guy never called back!" Build the business on honesty and integrity, and your reputation will get you those people who are willing to pay for the services you provide. :)
  8. sps2868

    sps2868 LawnSite Member
    from ATL, GA
    Posts: 91

    I am entering my 2nd year of business, and I don't even worry about the low-ballers. I bid 90 for sprays and 115 for rotors. I charge 75 hr for labor. Last year I picked up over 100 accounts because the low-ballers don't answer the phones or if they do they tell the homeowner it will be 3-5 weeks until they can get there to repair anything. I guarantee I am on your property within 48 hrs. even if it is only to shut off the water and assess the problem.

    I have taken the philosophy that if they want the installs at 400-500 a zone they can have them I will just wrap up all the service calls. I live on cape cod and most of these people are only here on weekends and want their 2nd/3rd homes property to look perfect no matter what it takes. I actually have 3 turn ons to do tomorrow(Mothers Day), because it is the last time they are here before July 4th weekend and need the system on so the yard is beautiful for the holiday week they are here.

    I am just aiming to take all the service of the people that understand and appreciate the word 'service'. They don't mind paying if they know they are getting a valuable 'service'.
  9. Dirty Water

    Dirty Water LawnSite Fanatic
    Posts: 6,799

    Wow, we are considered expensive in our area, and we only charged $40 an man hour for skilled labor, and $30 an hour for unskilled, plus parts.

    Either way, we are nonstop booked.
  10. Leo's

    Leo's LawnSite Member
    Posts: 21

    i appreciate the feedback and I am definetly not lowering my prices because basically i would be paying them for me doing the job.

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