Calling all Commercial Guys!!!

Discussion in 'Lawn Mowing' started by Roger Salmon and Sons, Mar 20, 2018.

  1. Roger Salmon and Sons

    Roger Salmon and Sons LawnSite Member
    Messages: 36

    Alright so I rarely post on here, but after getting a bunch of commercial bid results back today I need to vent somewhere.

    For starters here’s some background on our company — my company has been cutting commercial properties for 4 years this is going on our 5th season (from Ontario Canada). We run a 4 man crew, 3 zeroturns ( 2x 72inch and a 60) as well as two push mowers and trimmers, etc.

    A few of my contracts we bid on are only one year options so we have to bid on them each year. We obviously don’t get everything we want every year, but usually get quite a bit. This year there has been the most bidders I’ve ever seen place bids. Upon receiving the results I was completely mind blown. Many of the properties probes for the entire year had been cut in half. Some even went for 1/3 what they went for previous years.

    Someone who cuts commercially, explain to me how this can occur. It’s absolutely ridiculous. I don’t care how big of company you are, there is no way you should be cutting for in some cases what works out to $8-10 / acre.


    This industry needs much stricter barriers of entry,
     
  2. AL's

    AL's LawnSite Bronze Member
    Messages: 1,040

    I feel you bro. I feel you.

    The commercials I have are small business owners. Dont have any big chains like wally world, mcd's, dollar store etc.

    But I've been preaching higher rates since I joined this site and just about everyone has disagreed in some way or another.

    That may not seem like a big deal, but I'll explain why it is, and it will somewhat answer your question of how this can happen.

    You see, this industry, as a whole, bleeds out more and more every year because of the collective conciousness of its operators and their beliefs. A lot of their beliefs are based in fear. Others in bad math. All of this trickles down to new start ups, and permeates the entire industry.

    As a new start up, well how are you going to get any business without cutting your own throat?? So guys charge $65/hr or w.e... next batch of guys comes along and do $55/hr then $40 & $20....

    Theres only one way to stop the absolute nonsense.

    And thats to STOP DOING IT! Shame and educate the ones that continue.

    The operations to scared to charge more need encouragement. The ones that failed 2nd grade math need to be taught. Guys that use this whole demographics thing as an excuse not to raise their rate are kidding themselves. I am not saying demographics do not play a part in rates. I am saying it does not make a hill of damn beans when it comes to raising your service charge 99% of the time!

    The difference between $65/hr and $100/hr on a 30 minute yard is $15. $35 (id hope you guys at $65/hr would round up to the nearest 5) or $50.

    People have money. Answer the phone, be quality. Theyll buy. $15 is nothing. Until you have dozens of clients everyweek. Then that $15 is the difference between wealth and going out of business.

    But as long as this whole "oh god no we cant charge that!" Idea is around in the minds of LCO's everywhere this entire industry will be on a collision course with bankruptcy at break neck speeds.


    Im sorry you area is filled with so many uneducated business owners. W.e you do, do not stoop to their level.
     
  3. bluetruck

    bluetruck LawnSite Senior Member
    Messages: 414

    i agree with some of your points, some not so much. in a free market, you will have "low ballers" and "high ballers" or what ever you want to call em. in my area, if you do a great job, you will find customers that want to pay a fair price. what i disagree with, are the guys on here complaining that guy #1 is charging $10 for a lawn that guy #2 is charging $40 for. my point is, you dont know what guy #1s overhead is compared to guy #2s. i personally have very low overhead because, i keep my equipment at the house, drive 30+ year old trucks, use cheap trailers, keep my equipment until it turns to dust. now another guy might have a 60k truck, 20ft enclosed trailer, 2 60" Z-turns and replaces them every few years and has a shop in order to store all that stuff is going to have a lot more overhead cost than myself. i guess i just dont feel right artificially jacking up the prices (which btw is illegal). i just dont get all the hate for the so called low ballers on the site, if they are paying their taxes, have a business license and insurance, then they can charge what the want and i have no issue with that. for the most part the customers that go for cheap over quality are not ones i want to deal with anyway. i actually like to see guys out with a push mower in the back of the truck, means theyre trying, instead of sucking down the welfare payments.
     
  4. Optimum Lawn

    Optimum Lawn LawnSite Member
    Messages: 245

    Best move I made was leaving Ontario....on so so many levels.

    "This industry needs much stricter barriers of entry"
    It is called Free Market not communism....we don't need any more barriers in fact should be way way less.

    Tough lost but diversify and keep plugging away....just don't try and compete with them prices...maybe they will disappear with-in the yr and next yr you can get your price
     
    Roger Salmon and Sons likes this.
  5. TColemanP

    TColemanP LawnSite Member
    Messages: 63

    I can see both sides of this argument.

    In our area we have the "low ballers" as well, but as mentioned most of the time they are smaller companies with low overhead, older equipment etc. So it makes perfect sense they can afford to cut a yard for $25 that I would have to charge $50. They are probably making the same margin simply because of their overhead being so much cheaper.

    What I cannot stand is a larger company such as some of our competitors that will low ball a bid just to get their foot in the door. I understand sometimes you might take less profit on a job because it's opening the door to a great relationship and opportunity. However, these bids are for BUSINESSES. And just like any other business, they are not always loyal and will hunt for a cheaper bid. I see it year after year where a company bids a property low to get in the door with someone, then the next year they are terminated and the property hires someone for less. So all that company did was shoot themselves in the foot and took a low profit job for nothing and also tainted that property with the taste of a cheap price.

    I'm proud to say that we price bids how we need to in order to make money. If we get them, great. If we do not, oh well. It's just part of life and there is no sense in getting too upset about it.

    There is plenty of work to go around. If you are having a hard time getting work over a company that is small, has rough/old equipment then you may have more issues than just pricing.
     
    bluetruck and wishfull like this.
  6. grass4gas

    grass4gas LawnSite Senior Member
    Messages: 708

    I got out of mowing several years ago because I could see pricing going down instead of up. I’m hearing guys say that they charge the same price for the same size lawn that I was getting 25 years ago.

    It continues to be a race to the bottom...
     
  7. watatrp

    watatrp LawnSite Senior Member
    Messages: 535

    Maybe you could educate some of the companies you are bidding on. I've had very few over the years that asked for proof of insurance. I always mention that I am insured and explain some of the major "what ifs" the insurance covers. Many of the lowballers do not carry insurance. I also offer the fact that I do have backup equipment and another person to cover the account if I am unavailable. I've had the fortune of having many long term (10 year plus) clients. That should be worth something. Many of my commercial accounts appreciate that I schedule their service around their business hours. I have one animal hospital that is closed only on Sundays and even then they walk their dogs that are boarded at certain times. All of these things are small things but if explained in your bid they can make a difference. I always have my price point when bidding on a new account. If I don't get that, it's not worth it to me because I can get that amount somewhere else.
     
  8. Groomer

    Groomer LawnSite Bronze Member
    Messages: 1,918

    There really isn't more to say.

    As the inventory of equipment, used, new, in between, trailers, etc, continue to stockpile, and more and more people enter the biz, vying for that same piece of turf-it will remain a buyers market for a long time, and prices will remain flat.

    Even the guys who service long-time loyal clients aren't able to give themselves a raise consistent with today's costs.
     
  9. kinneberg lawn service

    kinneberg lawn service LawnSite Member
    Messages: 191

    Its always a battle with the low bid, expcially in a small town. I agree with the insurance aspect, companies carry nothing and thus lower costs. I have always viewed prices as perception of quality. Sure a guy can run huge mower as fast as it goes and lop the grass off cheaper can look like crap. The guys that pay attention to the cut slow down when needed take the time to adjust are the quality within this industry.

    Customer relations are also huge as others mentioned. The little things count. Often huge values to a customer although they often are overlooked by them until new guy doesnt do them.

    Lastly let the low bids take themselves out, use your knowledge to your advantage, be persistant, explanative of your bids, and dont play the low bid game not worth loosing money just to hold the job.
     
  10. TPendagast

    TPendagast LawnSite Fanatic
    Male
    Messages: 14,352

    What makes you think of the industry had tougher barriers to entry that you yourself would have ever been able to get started?

    Consider some barriers to entry of other professions.
    I couldn’t get a plumbers license in Connecticut because the barrier to entry was I had to work for someone with a license for three years and have then sign off on my apprenticeship before getting my license
    So basically companies had to train and encourage their own competition,
    Know what they do?
    Let their techs go and hire new ones after two years.

    Doctors? Lawyers? Taxi companies?
    Major barriers to entry.

    Most guys on this site wouldn’t have gotten into this business with even mild barriers to entry.

    As far as the price thing goes, how can in happen?

    Imagine yourself in the position of the company you bid for
    Do you know what economic difficulties they’re going through?
    Maybe if they couldn’t cut costs they would had to let employees go to afford you to cut their grass?
    Maybe they would have to cease operating at all?

    Some low ball wild eyed jerk with his 1/3 price might have unwittingly been the savior to the company and within a year the guys can restructure and get back on their feet?

    There’s probably a city ordinance just saying the grass has to be short
    Not awesome

    Someone says your landscape looks like crap and they can conveniently blame it on the service they hired.

    If you are losing contracts by that much of a difference
    You didn’t want the customer on the first place
     

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