Underbidding ruining the Industry

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

  1. Adamp247

    Adamp247 LawnSite Member
    Posts: 79

    People are cheap. They want you to make $10/hr while doing work for them. It's not just in the lawn care industry either... I started working with a reputable roofing company. They're probably the most expensive company in the area. Even though 99% of our work is through homeowners insurance, people STILL don't like our prices. I always have to remind them that the insurance is going to pay for the roof. If the end price is $9000 or $14,000, they still pay the same deductible. Why would you slack on quality for your insurance company to save money?? lol.
     
  2. MDLawn

    MDLawn LawnSite Bronze Member
    Posts: 1,284

    Ok and isn't the cost of living higher??? As in a $150k house here is $300k there? So that six figure salary is no different than the $60k here? Just saying.
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  3. A Leaf Above

    A Leaf Above LawnSite Member
    Posts: 223

    Their salaries are partially subsidizing their business venture ...by showing a loss on their biz it actually makes them more money on the personal side ...taxwise that is .....you will actually pocket more money by losing money if you are running your biz as a llc or corp ...plus the rightoffs you get by having a biz ...example ...gas and truck which he probally owned previously is now run threw biz and therefore is deducted pre tax ....biz looses money so his personal tax base goes lower ....why do you think you see a biz for 3 years then closes it in a couple years and same person reopens doing same thing under different name ?

     
  4. White Gardens

    White Gardens LawnSite Fanatic
    Posts: 6,776

    I lose out to bids all the time.

    If I lose a job, I tell the customer that I always bid on the high side to cover Murphy's law, and if the job comes under estimate, then I'll make sure they get charged less.

    I also tell them that if I loose a bid, 90% of the time (landscape installations/hardscaping) the winning bidder is skimping on the process or materials in order to make the job profitable. Just doesn't lead to a quality install in the end.

    I even used to defend a couple of the "higher end" landscaping companies when people would tell me how expensive they were on their estimates. Well, I can tell you right now that there is maybe one or two companies in the area where I haven't fixed their work. I am thoroughly amazed at the corners that are cut even from the higher end guys.



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  5. KrayzKajun

    KrayzKajun LawnSite Fanatic
    Posts: 10,742

    Cost of living is way higher up north. The house my brother bought in Virginia for $600k is worth maybe $275-350k down here in Louisiana. As a police officer i made around $35k in 2010 and overtime was non-existent. .
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  6. MDLawn

    MDLawn LawnSite Bronze Member
    Posts: 1,284

    Thanks krazykajun, you're the guy I was talking about. People fail to realize the costs living in big cities. Yes your paycheck is for more but I'd think it's safe to say the same percentage of that check from the city and your police check paid for required living expenses.
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  7. newguy123

    newguy123 LawnSite Bronze Member
    Posts: 1,094

    I couldn't speak to the landscape/sod install industry, as I don't provide that, I'm mainly maintenance.

    But yeah there are a lot of underbidders out there but I don't think it's ruining this part of the industry. I know some would say different, but I don't buy it. Think about this...how many LCO's are there in one given area. Usually there are not even close to the same number in "fly by night" companies. Now, if you're referring to other LCO's as "underbidders" that might be another discussion. My point is that there are so many legit businesses operating in one area that a few underbidders (in my opinion) isn't going to ruin the pricing of the industry, there just isn't enough of them to effect it that way.
     
  8. MDLawn

    MDLawn LawnSite Bronze Member
    Posts: 1,284

    newguy123, it's like I said in my first post. I'm not sure that the people that go with the low priced guys would even go with the normal/higher priced companies. They just are not willing to spend more and to think they'd just go with the higher priced person if that's all that was available is just plain wrong. They wouldn't go with anyone. Do some good customers get swayed? Maybe, but possibly the service is bad and they hire the better company. When I run into estimates where the person tells me they've had multiple companies over the past few years just screams "I'm taking the lowest priced company and when they can't do it I'm hiring the next low price company.". So I agree that there is a customer these low priced guys can't handle. The thing is that you have to have something separating you and a striped lawn is not it. It's service, are you there when you say you will be? Are you consistent and do everything possible to make sure your service is reliable. People want quality for sure, but they want consistent quality more. I've met a ton of people saying "They were really good, but you never knew if they were going to show up." This is we're the other guys, part time AND full time, mess up.
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    Last edited: Oct 20, 2012
  9. MDLawn

    MDLawn LawnSite Bronze Member
    Posts: 1,284

    Striped lawn IS NOT IT I meant to say
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  10. 32vld

    32vld LawnSite Gold Member
    Posts: 3,984

    Food in the supermarkets are the same. So is the dept stores and mall, that $35,000 Chevy 1500 here is still $35,000 there, gas is pretty much the same.
     

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