Would you give a 5% price reduction to renew a contract?

Discussion in 'Business Operations' started by Toro 455, Jan 21, 2013.

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  1. jrs.landscaping

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

    50% I would walk, we were outbid by 60% a few years ago. He assured them "his equipment was paid for and his overhead was low:rolleyes:." We were asked to match his prices and politely declined. Two years later he was bankrupt and we got a raise. Sometimes customers don't know how good your company is until you leave and they hire the other guy.
     
    Last edited: Jan 30, 2013
  2. weaver

    weaver LawnSite Bronze Member
    Posts: 1,293

    Agreed... No way at 50%, would have to walk...
     
  3. 205mx

    205mx LawnSite Silver Member
    Posts: 2,342

    I would. Then once you get growing a little more and they are a smaller part of your sales, raise it 10%. You'll have been there a while, they should be happy and comfortable with you. If then they decide to go along, it's not a big deal.
     
  4. weaver

    weaver LawnSite Bronze Member
    Posts: 1,293

    He's been mowing it for 30 years... What's it gonna take for them to know or get comfortable with him?

    :laugh::waving:
     
  5. 205mx

    205mx LawnSite Silver Member
    Posts: 2,342


    Do you know what merger means? New players!

    :)
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  6. weaver

    weaver LawnSite Bronze Member
    Posts: 1,293

    Ya but that was two seasons ago, the new people just recently asked for the 5% cut. The old managment is the one's who asked for the 50%...
     
  7. 205mx

    205mx LawnSite Silver Member
    Posts: 2,342

    Well 50% is out of the question. Our industry's standard is 25-45 % profit margins
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  8. mowman74

    mowman74 LawnSite Member
    Posts: 2

    Im not surprised with that offer. TAKE IT! Make it up elsewhere. Dont loose a contract over a 5% drop.
     
  9. Groomer

    Groomer LawnSite Bronze Member
    Posts: 1,421

    Toro, I'm curious to know your market demographics? Sabina shows a pop. of around 2 thousand, do you service columbus and those areas? Nice to be in Fla., you ain't missin' anything up here!
     
  10. Toro 455

    Toro 455 LawnSite Member
    Posts: 238

    It was during the drought! It amounted to two mowings at the reduced rate. Then when fall arrived it was back to normal...Well normal plus core aeration, fall fert & weed control.
    It sure sounded generous when I agreed to it though.
    And I kept my job. At the old rate. Well, the old rate minus 5%. I'm doubting at this point that they'll even apply the 5% discount to me. It was just a blanket letter to all vendors.
    To keep these accounts a person at least has to appear like they're trying to go along. I can wait for this to blow over.
    If I made an issue over this they'd have 60 people trying to bid this job out from under me. Probably for less than the 95% they'd be paying me. This customer doesn't accept outside bids. They're OK with me. And I'm going to make sure it stays that way.
     
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