what came first, the price...........

Discussion in 'Lawn Mowing' started by bobbygedd, Nov 3, 2004.

  1. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    ok, i'm a little confused myself, but i'll explain my question the best i can (you know, i'm not the sharpest knife in the drawer). ok, so, what came first, the price, or "what the market will bear?" example, did someone one day set the standard price by starting a lawn business, buying the equipment, insurence, etc, then figuring out what it was costing him to operate, then finally comming to a conclusion on how much he needed to charge to make this work. OR, was it the other way around? did our great forfather of grass first figure out what the public would be willing to pay for grass cutting, then structure his overhead around that?
     
  2. Littleriver1

    Littleriver1 LawnSite Senior Member
    Posts: 811

    I think it was a progression of duel economic paths that continue to cross each other at undetermined intersections in time and place. In place because each area of this country is different in climate and economic growth. Both of which change up and down at uneven levels as time passes. One economic path was the customer " the first customer" to "the last" which we have not met and may never meet. I hope I never meet him. His economice path has grown thanks to Mr. Ford and Mr. Drake. The second economic path was the growth of the green industry. Those of us that take it serious and grow in reality and all the equipment manufactures that take our money and share it with their employees. As long as our customers keep spending we will be in the service industry. What will the market bear? No one really knows untill one tests each of his customers. If you have 10 customers and charge each $50.00 per and raise each one by $5.00 and loose 1 customer, are you making more money? The answer is yes. In reallity we sell time. If you want more time to sell, manufacture it any way you can. If you loose 9 customers, I guess you maxed out. Only a dumb ass would give up 9 customers to learn this lesson. Then only a dumb ass would give up a fin and never know the truth. If you can not make it in the market you are in, you have 2 choices. Find a different business or find a different market.
     
  3. Runner

    Runner LawnSite Fanatic
    Posts: 13,496

    O Kayyy! That about COVERS it! That's alot more answer than I could have come up with for this question! lol Great reply, if you don't mind me saying. :)
     
  4. karen1122

    karen1122 LawnSite Member
    Posts: 69

    Littleriver1 - An eloquent take and local application of Mr. Alfred Marshall's baby - Supply and Demand.

    Bobby - Did you learn this technique in your boat?

    www.netmba.com/econ/micro/supply-demand/
     
  5. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    no, could you teach me more?
     
  6. karen1122

    karen1122 LawnSite Member
    Posts: 69

    Bobby,

    Your expertise already appears to include "baiting the hook". Maybe Geo could comment on his experiences.
     
  7. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    let's not bring deadbeat geo into this. but, i don't understand how supply and demand pertains to my question. if it did it would mean that, the first lawnboy, being the only one of his kind, could charge astronomical fees for his work, and then had to lower them, as more and more lawnboys entered the scene. i don't believe that the first lawnboy was able to price his product thru the roof, because he was the only one of his kind.
     
  8. Evergreenpros

    Evergreenpros LawnSite Bronze Member
    Posts: 1,155


    Demand always comes first. You can create a demand or satisfy an existing demand. People buy benefits associated with products or services. People wanted the BENEFITS of having their lawn mowed and the BENEFITS of not doing it themselves. They put a price on those benefits, that is what they are willing to spend.

    The benefits go up and down throughout the year with each customer you service. This is why you can service a customer for 3 years then out of the blue they cancel (barrring any other type of occurance like quality decrease, etc.). They have come to the conclusion that the benefits derived from having lawn service does not justify the cost any longer. Maybe they believe a new boat or car will provide them will a better value of benefits to dollars spent. It could be that that $120 a month will provide them with more benefits in their IRA. Everyone is different.


    So in short, it is demand AND supply that always determine price.
     
  9. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    back to my original question. did the lawnboy need to first figure out what the public would pay, and structure his overhead around that? or did the lawnboy first figure out what his overhead would be, then structure his prices around that?
     
  10. DUSTYCEDAR

    DUSTYCEDAR LawnSite Fanatic
    from PA
    Posts: 5,137

    we all know the lawnboy just threw a number out there
     

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