Price Lowering?

Discussion in 'General Industry Discussions' started by say'n somthin, Mar 22, 2007.

  1. say'n somthin

    say'n somthin LawnSite Member
    Posts: 38

    Well tis the season once again. I do not know what it is, but our area is attracting alot of competive pricing who do not know their operating costs. I have lost ten jobs this week because the customer is looking for the best price instead of the best quality. While I try not to, it really bothers me and SUCKS but I know business is business. I was called out to the same lawn again this year and the gentleman explained that another company bid lower than me already when I gave him my quote. The company last year quit so he called me agian. When should you budge on your prices to compete even though you shouldn't? It is really bad out here, seriously!! $20.00/per cut trim and free spring clean-ups.
     
  2. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    Nono, when someone calls a second time for an estimate for the same work I've already placed a price on, the price goes up. If it was $30 last year, it's $35 now, and if they call again next year, it's $40. I do that and found soon I had time to deal with people who are serious about hiring me for the work I do, and price today is much less of an issue, I get what I quote and sure I still get price shoppers but it has helped.

    In half the cases they never even found someone else, and I'm really not sure why they keep calling but if I've already wasted my time once or my price wasn't good enough last time, then why would things be any different today? We already know that if anything has happened to the price, it probably went up, it sure did not go down, and so their answer is as likely to be no today as it was a year ago. It is possible somedays I tell them right on the phone, same price as last year, and they're like oooooh ok and that is that, but if I gave them a good price the last time yet it wasn't good enough, then it goes up for sure.

    In the case of price shoppers, if I can tell on the phone that's all they're doing, sometimes I don't even leave the house lol thou other times I still do, probably out of sheer boredom. Btw, somedays when I done went through a lot of trouble to estimate a bunch of work by the time it becomes clear they're price shopping, I'll quote double the price or some other outrageous figure.
    You'll have to try this sometime, it can get quite amusing. Because I figure I'm not getting the job anyhow, so who cares what I quote at this point...
     
  3. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    See because there are two types of customers, and two kinds of Lco's out there.

    Check this out:
    You have price shoppers, and you have people who pay what you ask.
    And you have Lco's with many years in, and you have new Lco's.

    It gets better:
    9 out of 10 potential customers are price shoppers. Yes this is very frustrating, but...
    9 out of 10 Lco's are new, or newer than you, at least after 2-3 years, might take 4 or 5, idk exactly but kinda in that range.
    So it stands to reason that anyone with more than a few years in the business should let the free market take care of itself, by allowing new Lco's to service the price shoppers, you eliminate all of this headache and stick to your regulars and pick up a few new customers here, and there.

    btw I am not sure if it's really 9 out of 10, but I am sure it's at least half in either case, but anyway...

    Here's the thing, by your 4th or 5th year, really by your 3rd you are likely to stick it out a bit longer, and it becomes a worthwhile investment to hire someone who will be here year after year after year, thou it costs a little bit more, the consumer realizes they don't have to go through the stupid rigmarole every dang year (not to mention, neither do you).

    Some price shoppers don't care, they will call Lco's every single year to get the cheapest price. Others do care, a few mention how frustrating it is to have to go through this, but the answer is simple: Stop price shopping and you get a guy like me who sticks around. But keep on price shopping and every year you will have to find another Lco, two years at the most, maybe you get three out of one, but the fact is price shoppers put Lco's out of business... So an Lco either goes out of business as said, or he realizes what I am talking about and moves on to better waters, either way the price shopper finds themselves out of an Lco on a somewhat regular basis, and the process starts again.

    Yes, it does take a few years, but seniority definitely has its privileges.

    I'm not getting into statistics on new businesses, but lets just say there are always enough new Lco's to take care of most if not all the price shoppers. sorry long winded, hope that made sense thou heh
     
  4. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    Right on Topsite.
     
  5. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    Now if you are new, with 1-2 years in, then you do what you have to do, brother I am not joking I am the king lowballer LOL I did it, too. You bet I've cut 2 acre lots for 50 bucks and other stupid crap like that lol!
    It used to make me so mad, but now I still find the stuff frustrating so that never changes regardless of pay lol you just get used to it, and your pay increases over time like at a real job.

    You have to, the better waters belong to the long-term Lco, new guys start out at the bottom, sorry to be like that but that is how it is, so yes you lower the price until you have the customers you need to basically survive and it sux a bit but if you paid attention, I am telling you it gets a LOT better with time...

    I would advise some patience, at least in va I think we have another week before the grass starts to grow, idk, but right now ALL the price shoppers are out, I don't want that. But watch out because I got an ad running 24-7 in the newspaper so when things get busy, I'll be ready, which is why I say keep passing out those flyers.

    It takes years, this is my 6th but I'm ready for it and I am not lowballing so the new Lco will have plenty of work, see that is how it works. I don't not lowball because I want the new Lco to have more work, I do it because the IRS gets on me and I've got to the point I can not bargain with them anymore, see what I'm saying is you probably still can, a little bit, idk...

    Because I got away with some tax stuff but now I can't do it no more so I HAVE to get paid, this choice is eliminated for me but if you feel like getting cute with the IRS for a bit, I did it, worked for a few years lol and you do need to check into doing your taxes and I started my 1st year with taxes but I didn't know what I was doing and stupid is good in this case.

    'nuff said, have fun and good luck.
     
  6. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    In Texas, we get a lot of that too. Every year there are dozens of flyer's and cards being passed around. This is typically one or two guys with a truck and a few 21' Mowers. Around July of each year these guys have broken equipment and it is 100 + outside. They stop trying to mow. We gets tons of calls in the summer.

    We have to be selective, because we don't know why we are getting the call. Did the Owner decide it was too hot? Did the owner stop paying? Did the Mow and Blow guy take off?
     
  7. kmann

    kmann LawnSite Senior Member
    Posts: 298

    Truer words can't be spoken. If your clients are based on who's going to give the lowest price, you are in trouble.
     
  8. Woody82986

    Woody82986 LawnSite Silver Member
    from DFW, TX
    Posts: 2,128

    I was impressed. I had a lady call today wanting to set up weekly service on her lawn. She said she couldn't get ahold of the company that did it last season and suspects that they went out of business because they also missed the last two service visits of last season. So I went and looked at it, arrived at $30 per service and called her and told her $30. She said, "Well... we were paying the company $25 per service last season... could you do it for that?" I asked her where last season's company was and why she thinks I charge just a little more than they did. She started laughing and said she got the point and that $30 per service would be just fine...
     
  9. Big Bad Bob

    Big Bad Bob LawnSite Bronze Member
    from zone 5
    Posts: 1,074

    don't let them be your competition. you are working the wrong neighborhoods. remember, quality of customers trumps quantity of customers. i would rather have 20 good paying, loyal, appreciative customers than 100 cheapazzes. when you find that magic number where you can work, pay your overhead, support your family and have whatever you want, then don't budge from that price. i know several of the ,"i'm the cheapest in town" lco's and when i tell them that i give my price and if it's unacceptable to the customer, i thank them for their time and leave they always exclaim, "how can you just walk away without negotiating?!!"
    i just say, "it works for me." i have plenty of customers and they are all topnotch. i picked them. i didn't let them pick me.
    since i've stopped trying to be one of those,"i'm the cheapest in town" lco's, i have been much happier.
    there is a rule of thumb i learned on lawnsite. if you're getting more than 1/3 of your bids, then you are too cheap. i find this to be very true. you have to be a businessman to do this. you have to know your costs and you are in it to make money. not just beer money but real money.
     
  10. Big Bad Bob

    Big Bad Bob LawnSite Bronze Member
    from zone 5
    Posts: 1,074

    sorry. double post.
     

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