What is the difference in High and Lowball bids?

Discussion in 'Lawn Mowing' started by MOW ED, Jul 22, 2006.

  1. MOW ED

    MOW ED LawnSite Fanatic
    Posts: 5,028

    In your opinion, what is the difference between a highball bid and a lowball bid?
    Most cold call customers will ask 2 or 3 LCO's for an estimate and will usually take the lowest one. Now I am not going to get deep into this (you can) but if that LCO that wins the bid is the lowest, is he a lowballer? On the other hand what is the difference in the guy that is charging much more than the others for the same work? Wouldn't he be considered unethical because he is a highballer?

    This pricing thing can be complicated but the one constant is that MOST cold call customers I have dealt with are price driven and could care less about my reputation, equipment, insurance, uniform etc. That is not to say that these things hurt you but the doorway to you showing them what you have is the PRICE to mow. Referral customers are not much different but you may get a job even if you are a little more expensive because they know you. That differential in price is as different as the personality of the customer.

    So what is the answer to it all? It is a little different for everyone. In my 11 years I admit to being both a lowballer and a highballer. I didn't know it at the times I bid but I have given way low and way high bids. I did land both typse of jobs and over time either lost them or dropped them. The business end of this stuff is constantly changing but a constant is that customers are driven by price. What is yours?
  2. Markf

    Markf LawnSite Senior Member
    Posts: 407

    Do yourself a favor and read the article in the latest PRO magazine written by Roger Cook. It discusses this issue. It is very informative. Good Luck.
  3. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    The difference between a lowballer and a highballer is conversion, yes. If price is all that matters, then I may not want them as a customer but it isn't so much about doing the SAME work cheaper, it is about seeing if I can find a way to do it faster while I earn the same money. In that sense, the customer ultimately gets what they pay for, if they want the cheapest then maybe I just do it another way which involves less materials and labor, and in more than a few cases, if that is all the customer wants, then we have ourselves a deal.

    So, someone wants their leaves cleaned and they don't want to pay a lot (what else is new? :laugh: )
    Well, if I don't have to haul them, it's a fairly quick job to blow them in the woods or into a pile someplace, it is a LOT cheaper if I don't have to haul them. More than a few are more than pleased with this arrangement, of course the biggest pitas want the leaves hauled and the grass cut and the sticks picked up and all the fancy stuff and the frill and the thrill for the cost of the grass cut and really they were thinking $35 was a bit high... Sorry, no can do.

    So will I lower my price to be competitive? NO, I will not get paid less in order to gain a customer, I can only do so much for the money they pay, part of what they pay for is because of what I know means they will likely get a good deal. Now, I can racetrack their lawn once over at 6+ mph... I'm still the king of the quick and dirty, it looks cut, hey, that good enough for you, if it is then it's good enough for me and thank you, I still charge the same / hour but since it took less time, it costs less. Does doing a better job cost more? Yes.

    What it boils down to is a lot of people want something for nothing, that's their interpretation of what I just said. But that doesn't work for me, and I find 9 out of 10 customers are like that, they all want something for nothing.
    Well, they can call someone else, but one still has to be ingenious enough to catch the opportunity, if I can do a job in less time because they don't need the frilly edges, then I can do it for less money.
  4. Precision

    Precision LawnSite Silver Member
    Posts: 2,995

    lowballing is the "art" of using you low / money losing price to gain tons of accounts and "make it up in volume"

    Highballing is the "art" of "well if I have to do this crappy job I might as well get PAID".

    lets say bids for mow and blow on a standard 1/4 acre property are $95, $100,$105 monthly, then no one is a low or highballer. Just different desires or expense levels.

    same lot and prices are $50, $95,$100, well we have probably found a lowballer

    same lot and prices are $95,$100 and $160 well we have probably found a highballer.

    I try to compete on quality and services offered but never on price. Sometimes I am low bidder, but rest assured it was accidental. I try to price the job then look for hidden costs that I need to see to increase my price as opposed to looking for ways to reduce it to get the job (and lose money or profit).
  5. NEPSJay

    NEPSJay LawnSite Senior Member
    Posts: 492

    you are ALL wrong. Pay attention cause im only gonna say this once. When you talk about lowballing and highballing, overhead must be figured in. Example.... lco#1 will mow a lawn for say $40 and clear, after ALL expenses, $10. lco#2 can mow SAME lawn for $30 and CLEAR, AFTER ALL EXPENSES, $20. Lco#1 has new truck and mower payments, Lco#2 has no payments because he bought a used junk pickup for a grand and used run down mower for a few hundred. Both the truck and mower work well and provide ACCEPTABLE results. So now i ask YOU, which one of the two LCO's above is really LOWBALLING?
  6. Evergreenpros

    Evergreenpros LawnSite Bronze Member
    Posts: 1,155

    That assumption is inaccurate. They don't usually take the lowest price bid, they take the highest VALUE bid. Most people understand that low price = low quality, some are okay with this, avoid those people. I'd rather sit in my truck and drive further throughout the day than grunt out low priced work for the EXACT same revenue when it's all said and done.

    You have to add value to your bid and this can be done with no cost to you. Be professional, take a little time with them, sell yourself, learn their name and say it at least 3-4 times throughout the estimate. Thanks Bob, really Bob? you know Bob, Thanks for your time Bob, if you have any questions you be sure and give me a call Bob, etc etc. Work it in to your sales routine. They might not remember your name but they WILL remember you know their name which is extremely important. And be sure to look them in the eyes when you talk to them, there is nothing more annoying than having a salesman who won't look at you when he talks.

    You spoke of how they are price driven. They are like this, for the most part, because they don't know what they are comparing. At that moment they are only comparing the BENEFIT of getting their lawn mowed, they aren't thinking of reliability, personability, consistancy, etc. This is your job to explain and teach them the difference between your service and the BENEFITS they will derive by having your service as opposed to having other services. People don't buy products and services, they buy BENEFITS derived from those products and services. They could care less what mower you used because it won't affect the benefit they will get from paying for lawn service, unless they want a reel mower cut as opposed to a rotary mower cut.

    Don't think you're selling lawn mowing, you're actually selling the benefit of having a nice yard, the time they will save by not having to do it themselves, saving them the pain of having to mow their yard when it's 95 degrees, etc etc. For this they part with $XX.XX per week/month/whatever. For many people there is a greater benefit of having lawn service than the benefit they will get from almost anything else for the same money. People who NEED their lawn mowed are usually price shoppers because they are buying the benefit of not being evicted or ticketed by the city, avoid these people.
  7. WJW Lawn

    WJW Lawn LawnSite Bronze Member
    Posts: 1,330

    If Im going to do a yard for 50 bucks....and he's gonna do it for 15...he's a lowballer. Now...since the yard is 1/2 an acre...I aint no high baller. Just a high roller. Man...I charge what I charge...which is competetive in my market. If a customer doesnt want it...I dont give a flying poop...cause I stand by my work and someone will take my price, and the good work that comes with the price.
  8. MOW ED

    MOW ED LawnSite Fanatic
    Posts: 5,028

    I can see your point and I may have generalized but I will now throw you a scenario that sort of prompted me here.
    I mow for a dentist at his business. I also fertilized his 2 acre house and did his 200 tree fall clean. I have done this for the last 10 years. He moved across town and bought a 750,000 house on a river. This residence had used a different LCO with the previous homeowner and the dentist gave me a chance to bid. It is about an acre with a very steep hill accessable with a WB only. Without getting into all details I gave him a bid based on my time because he actually let me cut it to see how I can do. It was as honest a bid that I can give and I also know that he is really happy with my work but not so happy as to take my mowing bid for this property. He said I was "higher" than the current guy and he's gonna give him a chance. So no not all people go on price but in my experience, most do. Take care.
  9. Precision

    Precision LawnSite Silver Member
    Posts: 2,995

    That falls under what I call "The rule of one". One guy did this. So what. on average, quality clients will stay with a quality LCO despite reasonable rate increases.

    Quality clients know that many in our field will not be around next year and certainly don't do a good job in the year they are "in business". I mean think about it. Do you price shop auto mechanics, or do you find one that does good work and doesn't gouge you and stay there. I know I have had the same mechanic for 20 years and I am only 36.
  10. Precision

    Precision LawnSite Silver Member
    Posts: 2,995

    The guy with the almost broken equipment. because when they break down, he will not have the funds to get decent equipment or repair it.

    Just because its paid off doesn't mean its free.:hammerhead: :hammerhead:

    And why would you charge $30 if you could charge $40. :confused: :confused: :dizzy: :dizzy:

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