Underbidding ruining the Industry

Discussion in 'Business Operations' started by MaidstoneLandscape, Oct 10, 2012.

  1. MaidstoneLandscape

    MaidstoneLandscape LawnSite Member
    Posts: 4

    Does anyone else find that there is a lot of fly by night and small one man companies driving pricing down? Im in Ontario, Canada and I recently have come across quotes so low to install sod and sprinklers that I cant even cover my costs and labour. Ex: 3500sq.ft. of sod removed, 15 yards of soil added, graded and new sod layed, 8 old bushes removed and $250 worth of new shrubs installed for $2000. Sod in our area is .21 cents per sq ft. I have come across so many examples of underpricing this year I am disgusted by it.

    This type of pricing is ruining the business for all of us

    No offense to one man companies that are keeping industry standards
     
  2. Big Bad Bob

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

    The fact of the matter is, that most customers don't care if we make a profit or not. They just want cheap. What you want to concentrate on are those few customers who realize you can't get quality for cheap.
     
  3. MaidstoneLandscape

    MaidstoneLandscape LawnSite Member
    Posts: 4

    Yes customers want cheap and dont care about our profits, I realize that. I have plenty of customers that pay well for quality work, but as time goes on and prices are driven down there will be less and less of those customers. We already here about how great of a deal so and sos neighbour got last year and he wants the same price, but the company did it is no longer around. So all that was accomplished by the company was to drive down prices for the rest of us trying to feed our families. As an industry we have to start working together and not against each other to keep pricing somewhat standard.
     
  4. ptjackson

    ptjackson LawnSite Member
    Posts: 211

    I think the right answer is Big Bad Bob, it's relationships. There are free phones out there yet many people pay a premium for an iPhone, there's the McDonalds $1 menu but I'd rather get one from the local guy down the road I go to each week.

    There's absolutely no possible way to "work together" or coordinate efforts, there will always be someone willing to do it cheaper. So the question becomes how can a business show themselves to be worth the money or develop more relationships.
     
  5. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    That is when you point out to a potential customer that company lost money and is why their out of business.
     
  6. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    Does anyone else find that there is a lot of larger companies acting like a fly by night low baller doing sub work for a national maintenance co depressing prices. Claiming they do it just to meet payroll.

    You don't have work you lay people off. Cut back costs.

    Instead you chose to keep the national maintenance parasites alive. If you didn't low ball for them the prices would not be getting depressed.

    This type of pricing is ruining the business for all of us.

    No offense to all companies that are keeping industry standards.
     
  7. MaidstoneLandscape

    MaidstoneLandscape LawnSite Member
    Posts: 4

    Guys this thread wasn't about how to handle it or what to do when it happens, I wanted to see if this was happening across the country. I've never had a problem getting contracts but now I'm seeing guys doing work at half the price. We just tendered a snow contract for a city and 3 bids were in the 35,000-42,000 range and the winner was at 16,900. This is ridiculous and needs to stop or it will hurt us all in the end
    Posted via Mobile Device
     
  8. jrs.landscaping

    jrs.landscaping LawnSite Silver Member
    from Maine
    Posts: 2,716

    We bid on city mowing a few years ago, four cemeteries, one was over 80 acres with 1.2 Mil headstones, had to be bagged and trimmed with each mowing. The average bid was around 115k. They awarded it for 29k, the company didn't make one month. There were 2 other packets they were awarded and the city let them keep those contracts. It is rediculous but the worst part is I see no end to it in the near future.
     
  9. Mark Oomkes

    Mark Oomkes LawnSite Fanatic
    Posts: 11,872

    Not sure how long you've been in the industry, but this has been going on since I can remember. And I've been in it for over 30 years.

    I will say it does seem to be worse the past 5 years or so.

    Yes, the nationals and others are just as guilty as solo guys who don't know their costs and don't care.

    This is a result of turning services into a commodity. Or the Walmartization of the service industry.

    You won't stop it. There is no way to stop it.
     
  10. gcbailey

    gcbailey LawnSite Silver Member
    from WV
    Posts: 2,561

    I think a lot of it too is trying to compete with every fly-by-nite Joe Bob too. I have tried to explain to certain demographics of residential customers before why my price is $15 more. Well all Billy Bob here is doing is paying for gas and beer money, whereas I'm paying, fuel, insurance, workers comp, etc....

    The average customer could care less if you are a legal business or not, they just "want the grass cut" and everything is fine until a window gets broke.
     

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