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No ones a Lowballer

Discussion in 'Lawn Mowing' started by smallstripesnc, Feb 4, 2013.

  1. Landscraper1

    Landscraper1 LawnSite Senior Member
    Male, from Southeastern Ma.
    Posts: 755

    Walmart is successful, mostly because they get everything from China. Retail is a very different business than services.

    Here we are living within the same area. We pay around the same for gas, insurance, equipment, labor, and taxes. This is assuming we are all legit. To be competitive we must balance quality with efficiency. That or cheat.
     
  2. jrs.landscaping

    jrs.landscaping LawnSite Silver Member
    from Maine
    Posts: 2,715

    The worst are in the commercial market. Every year you hear the same thing "man I wish I could land some big commercial accounts, those guys have expensive trucks/equipment."

    So that company underbids the current contractor because the contract is worth $25k. They never sit down and figure out it costs them $25k to maintain the contract :hammerhead:

    $18,000 is less salary than we pay the guy on the trimmer. If you want ALL of the headaches that go along with owning a business for $8.50 an hour my hats off to you :drinkup:
     
  3. GMLC

    GMLC LawnSite Platinum Member
    Posts: 4,353

    You can save a couple bucks on a product at walmart but even walmart prices are still in the range of other stores.
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  4. White Gardens

    White Gardens LawnSite Fanatic
    Posts: 6,783

    There is such a thing as business ethics.

    When guys are dropping prices just to generate gross sales, then it goes against business ethics.

    Personally, we're to the point that I could care less about the guys (big or small) driving down prices. Why? Because at some point there will be some sort of cost increases such as fuel or equipment that will hurt these companies to a point where they can't profit anything at all, and when they go to raise prices on their clients, they'll loose accounts left and right.

    At that point I'll sit back and watch the carnage, cover our butts and wait till the market re-establish itself.

    It's a race to the bottom and it's fun to watch.



    ...........
     
  5. Eric's Lawnservice

    Eric's Lawnservice LawnSite Member
    Posts: 166

    Wal-Mart's prices are cheap simply because they have cheaper products. They compete with quality stores such as Macy's with misleading adds that don't mention the true quality of the product. Kitchen aide mixers for example. WalMart is 100.00 cheaper on the same "appearing" mixer but if you read the fine print you will find it is half the power as the one sold at Macy's. This scenario is the same in the lawn business. It may look like a good deal but it's really a half powered knock-off. The fact is WalMart and lowballers make a killing from people who can't afford or don't care for a quality A product.
    And yeah I recently bought a mixer for my wife.
    Posted via Mobile Device
     
  6. MOturkey

    MOturkey LawnSite Silver Member
    Posts: 2,741

    I haven't read every reply, but my definition of a "lowballer" is someone who prices their services so low that their profit margin is extremely low, or non-existant. This usually happens because of ignorance or desparation, more often the former. In a capitalistic society, one can choose to charge as little, or as much, as they choose, but often those with little business acumen jump into mowing considering only one expense, the fuel they burn in their equipment. They don't think about equipment replacement, the true cost of operating a tow vehicle, or the perils of operating without liability insurance. They likely work on a cash basis, showing no income, hence are not worried about self-employment taxes or income tax. In all likelihood, their business plan is not long term, but simply a way to seemingly make a few extra bucks for the time being. An example would be a fellow I know who uses his dad's non-commercial Z to mow in one of the communities I service. His approach to the business was to watch other LCO's and see where they were mowing, then approach the property owner and offer to mow for one half of whatever they are currently paying. That, in my opinion, is lowballing, not someone who has little overhead, chooses to live simply, doesn't care about having a new truck, is perhaps single, and bids a $40 yard for $35.
     
  7. Eric's Lawnservice

    Eric's Lawnservice LawnSite Member
    Posts: 166

    This should be in Webster's
    Posted via Mobile Device
     
  8. skorum03

    skorum03 LawnSite Senior Member
    Posts: 354

    You're right and if someone out there is trying to cut for half price is probably offering work of about half price quality. There is always a lot of turnover when this happens and the jobs will come back to the "non-lowballers"

    YardBros Outdoors
    www.yardbros.com
     
  9. Darryl G

    Darryl G LawnSite Fanatic
    Posts: 8,033

    In my experience, bids for a well defined scope of work will generally be plus or minus 20%, so within a 40% range. There is a reason for this...there is a certain cost of doing business and there is a certain amount of time and resources that must go into doing a job. In order to bring the price below a certain level something has to be compromised.

    Let's take a lawn that on average would go for $50, based on my 20%. That would mean one contractor might bid it at $40 and another at $60. That's a normal range. It wouldn't be fair for the $60 guy to be calling the $40 guy a lowballer. However, if someone were to bid it at $25 or $30, that would be lowballing in my opinion, and logic tells me that they're going to have to cut corners somewhere in order to provide the service at that price, and that their long-term ability to continute to provide the service at that price is questionable. It's not uncommon for some companies to deliberately lowball jobs just to get them and then once they have the job to exceed their price, citing all sorts of reasons that they claim could not be forseen...not something that's easily done for mowing services though...the scope of lawn mowing is pretty easy to define.
     
  10. GMLC

    GMLC LawnSite Platinum Member
    Posts: 4,353

    I agree with those here who say 20% in either direction is acceptable.
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