Discussion on quantity and low prices

Discussion in 'Lawn Mowing' started by Soupy, Mar 9, 2005.

  1. Soupy

    Soupy LawnSite Gold Member
    Messages: 3,125

    There has been a lot of talk lately about how low prices/quantity as being profitable. I have said that low prices are bringing low profit for many companies in the green industry. Most of this talk is related to the mow only side because that is what most are trying to do lately.

    I would like to get some friendly discussion going on this topic. What are some of you guys thoughts on this.

    I will start by saying my previous mentions of low profit caused by low prices is a little out of text. I know that company (A) with many low profit lawns can gain more net profit over company (B) with a lot less high profit lawns. But I would like to discuss the idea realistic. Do you guys think a new, or fairly new company (or even a small established company) can create/gain such a high quantity of lawns in todays market using low prices? My answer would be no and this is were my suggestion of low prices brings low profit came from in previous threads.

    The reason I say No is because the market is saturated with guys mowing and offering low prices already. You can not come in and build such a large customer base on low prices unless you go even lower. That brings the question of how low can you go? And how many customers do you need based on these low prices to make it worth it.

    Lets hear your thoughts on how low prices can be profitable in todays market. Remember, I am talking todays market, not 20 years ago. So we can leave comparisons to past companies out. I personally don't know any large companies in my area that charge a low price. The low price guys in my area are the guys working on the side, or retired men supplementing their income. Most don't stick at it very long. But long enough to keep prices down.
  2. Turf Dancer

    Turf Dancer LawnSite Senior Member
    Messages: 681

    This thread leaves to much unasked. Most of the residential lawns I service are average for here, they take 25 to 30 minutes with a 21" mower. There are a few under the table guys who keep prices low they are doing these lawns for $12 to $14 so it is hard to get $20 to 25 for them even if you are legitimate.
  3. Soupy

    Soupy LawnSite Gold Member
    Messages: 3,125

    I know I left things out. I want it to be a discussion and not just a question. If you think it is/not possible give some brief comments on why. I was going to add that we should base this scenario on 8K lawns etc. But thought I would leave some things up for discussion.

    What size lawns are average for you? I guess a low price outfit using only 21" mowers would go after the under 10K lawns to keep profitable with labor rates. don't know, because I don't see it happening. I guess they could go after larger lawns with larger mowers and lower rates. Larger lawns would probably be the idea market actually because competition is slightly smaller. But there might not be enough of these large lawns in an area to meet the quantity criteria.

    What do you think a company would have to price your 30 minute lawn at to gain a large amount of customers. Lets say 2000 at least.
  4. Turf Dancer

    Turf Dancer LawnSite Senior Member
    Messages: 681

    2000? Well there are about 4500 houses in this town! So to get 2000 would be impossible! For the record most of the residential lawns are around 3000 sq ft. and they are all bagged! No mulching here, I am going to switch all new customers to mulching and all my commercials are going to be mulched this year also. That should help keep costs lower. Less trips to dump. I am setting my minimum to $20 this year.
  5. Soupy

    Soupy LawnSite Gold Member
    Messages: 3,125

    This is part of why I think it is impossible to compete with low prices on a large scale. There was a thread last weak about the need to raise rates on current customers. A couple of guys said that they didn't think we needed to raise rates and can make up the profit from low prices by being more efficient and gaining more customers.

    With guys like you mentioned (and they are a dime a dozen) how does one gain a large quantity base. With all the lawn companies out there already charging bottom prices where are all these customers going to come from? Remember I am talking about many customers. I still believe that a strong business will survive on a smaller scale with high profit prices.
  6. Eho

    Eho LawnSite Member
    Messages: 205

    I think that a good mix would be the ideal situation for a company. Example: I've seen people say you can mow 30 lawns at 50 dollars or fifty lawns at 30 dollars and make the same amount. I see ther point, but you have to have the ability to be very selective to do this. Like I said, you can be profiable either way( with a lot of small, cheaper accounts, or with fewer bigger, more expensive accounts) I say as long as you are mowing as many as you re capable of, the size shouldnt matter. Just charge what you feel is appropriate for the size of the lawn. The ideal situation is to have enuf business to be selective about choosing what type of lawns you want.
  7. lampeslawnservice

    lampeslawnservice LawnSite Senior Member
    Messages: 323

    Yeah the low priced competition is driving our prices down. The unemplyment here in southeast Iowa is really bad. Factory after factory shutting down. In a town of 30,000 with one or two good factory jobs left, everybody is going to wal-mart and hauling around mowers in the trunk of their car. Nothing against them, because they can operate that way. Me I have comitted to my prices and have to convince homeowners why they should pay a higher price for their lawn care. It's frustrating, especially when people don't see you trash a spindle, clean out decks, sharpen blades, and all the other fun stuff after you leave their house.
  8. lampeslawnservice

    lampeslawnservice LawnSite Senior Member
    Messages: 323

    By the way I have not let my prices slip!
  9. Randy Scott

    Randy Scott LawnSite Bronze Member
    Messages: 1,915

    Personally, low-dollar pricing is for the guys who couldn't succeed on quality work and salesmanship. Their last desperate attempt is to gain market share by cheap prices and cheap service.

    Apparently it works for some and I guess it is profitable for them. Unfortunately, for me, as hard as I would try, I couldn't do that. Quality and being the best has been in my blood my whole life. I couldn't mentally be known as the millionaire company of poor quality. Sounds whack, but my pride would get in the way.
  10. Mo Green

    Mo Green LawnSite Bronze Member
    Messages: 1,487

    I feel the same way. I have a hard time not doing the best I can.

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