Scared to death to quote 25 bucks

Discussion in 'Lawn Mowing' started by DFW Area Landscaper, Apr 14, 2005.

  1. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    With all the downward pressure on pricing, I'm scared to quote 25 bucks. And that's a sad state of affairs for this industry.

    Just got a cancellation from a customer. Seemed very happy with the service last season. $26/cut. Cancelled out of the clear blue sky this morning by e-mail. I've e-mailed him to see if his cancellation was a quality issue, but my gut tells me it was a pricing issue. We've always shown up on the day we're supposed to with this account. Never a complaint.

    Now, a year later and with gas at $2.19, I'm quoting the same lawn at $23, which looks to be above market rates. Everything has gone up since I started this business. Lawn prices have not held. They've actually decreased over the last three years. Substantially.

    The reason I decided to get into the business was my neighbor's LCO. She hired a company called Evergreen Lawn & Landscape. She was paying $27/cut, plus another $5 for bed weed maintenance. Weekly. Last year, Evergreen put a door hanger on my door advertising $25 cuts. This year, he's dropped the price to $20.

    That's 26% less than what he was charging for the same lawn four years ago.

    Same pricing pressures for chemical apps. There is a company spending large dollars on door hangers in my area advertising $29.95/apps up to 5,000 square feet. I mean, these guys are spending thousands on door hangers. I've already gotten three door hangers at home from them this spring. I'm still able to sell apps at $38.97, but I suspect the cancellations are probably gonna start coming in at some point and the $40 apps are a thing of the past. Chemlawn must be getting their azz handed to them right now. Who knows if he does good work. But why not try him out and save 33%? If they suck, you can always go back to Chemlawn or Lawn Doctor. The reality is, that's how most americans think.

    Last week, a lady on my street called from one of my door hangers. I love to get customers on my street. Anyway, she is calling me just days after Evergreen delivered their $20 door hanger and justmowit delivered their $21.95 door hanger. Mine don't have a price on them. I quoted $25. She said she would think about it. You don't have to be a brain surgeon to figure out why she never called back.

    Bottom line is, price decay within the industry is rampant. Amazing. With the exception of long haul fiber transport, I can't think of any other industry that has seen price decay over the last three years.

    DFW Area Landscaper
  2. Toy2

    Toy2 LawnSite Bronze Member
    Posts: 1,924

    I'm sure its everywhere, I know around here if I push a LCO into a lower price, they will do it....remember the $15.00 guy, he is still around and I'm sure he is busy.....the other companys have the manpower to push the price lower, get the job, lawn monkeys hit the lawn running and go on to the next many employees do you have?
  3. Envy Lawn Service

    Envy Lawn Service LawnSite Fanatic
    Posts: 11,062

    I feel your pain. It's absolutely nutZ!!!
  4. DFW Area Landscaper

    DFW Area Landscaper LawnSite Silver Member
    from DFW, TX
    Posts: 2,116

    I just can't understand why an LCO would reduce prices to obtain customers. I know justmowit has had tremendous success advertising cheap yard mowings. They are way ahead of me in every aspect of the business, so I hesitate to question anything they do. The guys are just brilliant. And they are probably reading this post. But why charge $19.95 when you can get $5 more for the same job? It makes sense if customers who wouldn't pay $25 for lawn service, but would pay $20, are becoming patrons of the industry. But if the low prices aren't bringing more customers into the market, it just doesn't make sense to me. I don't think we will ever know if lower prices are causing more people to patronize the industry.

    This was addressed in my thread "Is it lowballing or is it smart" when I found justmowit's cheap, cheap door hangers all over town last summer. My suspicions were partially correct, in that the advantage of advertising low prices is now gone because everyone has come down to that level. It didn't take long, either. I addressed the fact that justmowit was meeting with tremendous success by lowballing, but once everyone else started doing it the pricing advantage would be gone. Well, in my market, only the hispanic owned LCO's were still advertising $25 cuts this spring. All the other LCO's are cutting their own throats with price decay. I'm about the only LCO who doesn't print a price on my door hangers. There are days that I can't keep up with the phone. (This isn't one of them or I wouldn't be here posting.)

    One thing's for sure: The poor guys who are still out doing the work themselves charging $25 to $28 per cut (like me last year) are in for a long and brutally torturous season.

    At the end of the day, I suspect that justmowit's success is not due to low prices on their door hangers. In my opinion, they have been successful because they are not afraid to spend money on advertising, they are requiring next day credit cards, they dictate terms to customers instead of the other way around, they are not driving out for estimates and they are just smart. It's more a function of getting the door hanger on the prospect's door at the right time of year, just as they are thinking about hiring a service. I suspect they would have had very similar results with last summer's cheap cheap ad campaign if the prices had been higher. I don't know. But that's my suspiscion. Maybe they've already tried it both ways and the low prices made the phones ring more. I just wonder how things will work now that everyone else has priced their services lower to match justmowit? I think we will find out once the spring rush is finally over. Obtaining customers May through August is a very different game than it is in March & April.

    DFW Area Landscaper
  5. QualityLawnCare4u

    QualityLawnCare4u LawnSite Gold Member
    Posts: 3,758

    I feel your pain. In my area a yard that was 35 3 years ago is now down to 25 and gas and equipment is a lot higher than it was 3 years ago. I actually had to drop my minimum price last year by 10 bucks!
  6. Steve9

    Steve9 LawnSite Member
    from Texas
    Posts: 228

    Its the Walmart way. Low profit per account, high volume of accounts

    Which is more profitable? 100 lawns at $20 a cut or 50 lawns at $40? payup
  7. mommacutz

    mommacutz LawnSite Member
    Posts: 120

    Guys I know this comparing apples to oranges but this just made me think of the dry cleaning industry. Remember when a pair of slacks could cost you $4-$5 a pair? Then someone started a $1.99 any piece, now a lot of the older more established dry cleaners have turned to $1.50 a piece. It just appears to me that all service related items are going down. My grandma cleaned homes for living. She can't believe how much people are charging now. She could easily get $75-80 per home when she was doing it 20 years ago. Now for the same home their only charging about $40.00. Again I know it's apples and oranges but it's still the service industry so don't rag me too bad.
  8. tonygreek

    tonygreek LawnSite Gold Member
    Posts: 3,440

    that had more to do with the advent of business casual in the corporate world and less about true pricing competition. now that there's been a rebound in business formal dress, it's a question of how they can dig themselves out of the pricing hole that they had to dig. probably more of an apples to apples comparison, especially as the typical lcos realize they can't sustain themselves at lowball prices.
  9. Mo Green

    Mo Green LawnSite Bronze Member
    Posts: 1,487

    I don't understand why a customer, who is happy with the service they are getting, would cancel over $2 a cut. That's only $8 a month. To me that is crazy. Are things getting that bad???
  10. DLS1

    DLS1 LawnSite Bronze Member
    Posts: 1,619

    Wow Justmowit must have everyone thinking they can get low low prices in Dallas. I think he has ruined your market. I bumped all my leftover $25 yards to $30 and no one complained.

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