In defense of Low Ballers

Discussion in 'Starting a Lawn Care Business' started by Cosmic Hippo, Mar 14, 2009.

  1. Cosmic Hippo

    Cosmic Hippo LawnSite Member
    Messages: 26

    Defense of WHAT???

    I bet you're mad already. lol

    Ok, just a little thought experiment here...

    Firstly, what lowballing is versus competitive pricing is sort of relative and subject to opinion. Don't know where the line is drawn. But, just as to the concept of significantly underbidding one's competitors, pricing below market, etc. (lowballing)...Here are a couple reasons it might not always be unwise:

    1. Get the ball rolling. It is axiomatic here that the first and foremost thing anyone wishing to launch their business MUST do is, simply get out and get working. So if you price low enough to get a quick set of accounts, you are out there in the game. You got your lettered vehicles out, People see you out working, they see your work, you're meeting people, making connections. These benefits might offset the low profit margins in the beginning. It is a launch pad. Ok, bad metaphor, I can see all the crash and burn responses already. But it is a way to raise your chances of at least being out and working.

    2. Overhead. No, I am not cruising the neighborhoods with a push mower in a 2 door hatchback trying to mow for beer money. Neither do I have near the equipment that you established guys have. And I don't believe I should. I think it is terribly unwise to go into massive debt to launch this business and equally unwise to sink many thousands in savings into it. A sensible balance must be struck early on, and it will differ from person to person. But we beginners' overhead is, or should be, much lower. For me, my little group here has a plenty of experience in maintaining all types of equipment. I believe we can keep running for less than buying premo stuff. Even considering all the extra maintenance, I like the math with this strategy. So overhead for us is lower. We will not need to recoup as much in profit. We can charge less.

    3. Branding. I believe nearly every succesful business has built a solid brand, even if they don't think of it that way. Some of you guys have been in the business a long time and have built a brand far more valuable than Joe Blow's Lawns. Your brand should cost more because people associate it with the product/service that you have produced. If I am some ceo who is having business technology problems and I need a consultant, I can look in the phone book and call "A-1 Buziness Techno Guy" or IBM. If I choose IBM, I expect to pay more. And if my tail is on the line, I will pay the extra dough because chances are those guys can fix the problem. And of course, A-1 would be insane to charge IBM rates. A-1 those

    4. Experience/Expertise (related to #3)The "Been there, done it" factor. Many of you have seen it all, done it all. Have all the gear. And your market knows it. You command a higher rate of pay based on your proven record of excellence. Lawyers that have succesfully tried many cases make lots more than new ones. Great surgeons same thing. Craftsman, artisans, tradesman, etc. If it is a stretch to compare lawncare with the preceding, I still think anyone with a history of excellence can and should be paid more than the apprentices and newbies.

    The defense rests.


    .....the beatings will now begin.

    Where am I wrong?
  2. ambersLawnmowing

    ambersLawnmowing LawnSite Senior Member
    Messages: 333

    Lowballing is ALWAYS unwise. Open your eyes, If you start taking work from someone getting $40 to mow and you charge $25, then the next year you charge $35 so you can afford some equipment to make your life easier. Do you think that customer will stay with you or move on to this years lowballer? More then likly move on. So now you have no work, and no money. As for Over head, I have done this 3 years now, debt free, You are just starting and are NOT debt free, who should charge less? Should i because i am debt free? Or you because your mower has no payments and 0% interest for the first 2 years? Most people just starting have more debt then people that have been in it for awhile.
  3. White Gardens

    White Gardens LawnSite Fanatic
    Messages: 6,776


    So you keep your routes tight, overhead to a minimum, and you can low-ball.

    As business grows, let me know how the lower prices affect your biz after you break the glass ceiling and you need to add.. More equipment, more crews, and so on.

    So, why not charge more and keep the market value higher for everyone else who doesn't low-ball.
  4. Cosmic Hippo

    Cosmic Hippo LawnSite Member
    Messages: 26

    My eyes are plenty open. And incidentally, I don't have debt. I am fanatically against it, as I must have not made clear in my original post. Still, fair enough. You make a good point. But I am not sure you have refuted any of my defenses specifically. Yours is certainly a valid point and I predict unanimously held on this.

    I may loose that customer you mention...

    by the way, my sort of disclaimer was probably not clear, I am not advocating (necessarily) lowballing. Rather I am trying more to be devil's advocate here. I have made the best case I can for lowballing it. I would in fact be happy to see each of my points soundly refuted.

    So, I loose that customer...But I have been out and I have been working. I have met people, honed my sales skills, gotten better, quicker, etc. I will hope to keep all of my customers. I will treat and serve them well. If they leave, then the next guy can take them and I will move on and price higher. Only now I am networked, practiced, etc. To say that when that happens I will have no work and no money seems a leap.

    Not to get off on a tangen though, because I am most interested in my 4 specific defenses being refuted, with specificity.

    I readily concede that you who are experienced are far better than I at evaluating the issue. Be that as it may, a great lawyer with a slam dunk case still has to make the actual argument. He can't just say, "you dont know what you're talking about. I know. I am experienced." If I am on the jury, I still want to hear the case, regardless of his credentials.
  5. Cosmic Hippo

    Cosmic Hippo LawnSite Member
    Messages: 26

    Good point. So, as you see it, the risk is more long term than short term?

    Is it not possible that some have failed in this venture because they were more concerned with high margin and propping up the market?

    Sure, the lowballers are the villians because they cost you all money. Such is capitalism. I find nowhere near the same zeal or even modest caution in advising us not to price to high. Yet, that will sink us sure as underpricing. The difference is, well, who really cares about the poor sap that made that mistake, he's gone and there is more for the rest of us. And he didnt cost us any money.
  6. Nashmowing

    Nashmowing Banned
    Messages: 5

    This person is not a good business person at all!!! Any one who thinks that by having lower rates you can get more customers and keep your business afloat is on drugs. You can be competitive, but you cannot let yourself be foolish to cut into everyone else's profits.

    If a customer is searching around and looking for service, yes they are looking for cost savings, but if they call around and compare prices, they most likely when they come to you and see your rates are the cheapest, are going to do one of two things, one is think to themselves why your rates are so cheap compared to others, or think that they stumbled onto a gold mine, changes are, people who can afford lawn care and landscaping and all the good stuff, are not worried about cost, they wan quality at a good price.

    Did you know, that even some people feel the way we do about, "You get what you paid for" you pay for cheap service, you get cheap service, see my point? it doesn't always work, and in the long run you go out of business due to the lack of work.
  7. White Gardens

    White Gardens LawnSite Fanatic
    Messages: 6,776

    Really, what I feel it all comes down to is people not understanding what they are doing when charging lower for accounts.

    It's not that they want to charge lower (sure they need the work) but more of not truly understanding the market and why they are out to get business in the first place, to make money.

    I think it just stinks that we provide a biz that has nothing to set rates. In other businesses, most of the time the service is dictated by what supplies cost, minimum wage, ect.

    When it comes to something like mowing, you just show up to do it and I feel the costs and overhead is overlooked be 50% of LCO's out there, thinking "I don't have overhead", which isn't the true case because you will always have something to spend money on in biz.
  8. birtchetg

    birtchetg LawnSite Member
    Messages: 30

    I am getting up on my soapbox for this nonsense. I cant help it. In response to your post I would like to say these things.

    1. (ball rolling) While I agree that lowering your asking price to obtain a base list of customers is a good thing, lowballing is quite different. Lowballing is defined as offering a price which hurts the local industry while not being able to cover your own cost of operation. Not being able to cover your cost of operation puts you by CHOICE in the red. It also conditions potential customers and everyone they talk to about you that the price you offer is the one they should pay henceforth. And as I stated before, when you offer lowball prices that do not cover your expenses, you cannot stay in operation. Nor can any other landscaper/LCO in your area, thanks to your stupidity.

    2. (overhead). While I agree that going into massive debt is usually a poor idea, you still will have overhead as long as you have costs. Not charging enough to cover your own costs of operation will eventually catch up to you. Its like running a ponzi scheme on yourself. Eventually the deficit catches up to you. The biggest mistake I see mowers make is not factoring the cost of replacing equipment as it wears. That mower you are using today will not last forever. Neither will your truck, trimmers, trailer, blower, etc. You need to factor in the cost of replacing this equipment into your overhead. Otherwise when it wears out, you are paying for replacements instead of your customers. That is just poor business. And the reason you are paying? Because you did not ask a price that covered your cost to begin with. You were LOWBALLING.

    3. (Branding). IBM, landscapers are not. And most property owners look at landscapers as unskilled work, no matter how long you have been in the business. While some people are loyal to a specific company or person, in this day and age most are not any longer. So while you are coming in and lowballing the prices to get business, you are putting both yourself and the established company under. And you are right, a squared away LCO with an established reputation can usually charge a few dollars more. But again, lowballing is not about a few dollars. Its about charging so low as to not cover costs. As I have stated time and time again, I think most guys get into this business without knowing how to actually price. I have a buddy that started a landscaping business without even building a budget. Then when I finally convinced him to do so, his budget was missing huge amounts of dollars that never even occured to him to factor. Which is one of the reasons he thought he could operate so cheaply. I tried to convince him but he thought he was right. He currently works at wal-mart.

    4. (Experience/Expertise) Not really going to respond to this one as much. When I got into the business I didnt make the mistake of letting everyone know I was the noob with less experience than the established companies. I presented myself as a consummate professional that was every bit as good as the companies they had seen before. And you know what? People thought I was an established company with a loyal customer base just based off of my professionalism. Only lowballers would cost themselves money because they felt they were not worth as much.

    Conclusion: I think maybe there is some confusion between competitive pricing and lowballing. I defined lowballing in my opinion in my rant. Competitive pricing is charging the customer less while still covering the costs that your organization accumulates while operating, with a little left over for profit. If that makes you lower than the next guy then that means you are running your business more efficient. Thats good. But like I stated before, most owners that do not have a back ground in business dont actually know what their costs are until they have dug themselves a hole. By the time they realize their mistake, thier company, and the local industry pricing has been permanently crippled. That my friend is why lowballing is stupid. That is why lowballers are hated by everyone who is established. That is why you are either stupid, a joke, or do not know how to run a business. I have so much more I would love to rant about but my fingers are tired of typing. Oh, and just because you look up big words to type in your diatribe does not mean people will take you to be an intelligent person if what you are saying is foolish.
  9. 4.3mudder

    4.3mudder LawnSite Silver Member
    Messages: 2,227

    Hmm, I 'm glad that I started younger and bought all my equipment. Now, I did not buy best of the best, but I did buy Stihl. I knew better than to buy some weedeater brand from walmart or ryobi from home depot. I have grown, so I needed a couple other big pieces of equipment. I did not go out and buy a 10000 dollar mower. Why, SHoot, I woulr have to work for x maount of months just to pay it off, who wants to do that? I look around for deals on used equipment, and I mean used.

    I bought a exmark lazer z parts mower for around 440 a piece. I put, oh, 800 dollars into one and 600 in the other, now, that may seem like a lot, but, that is 1240 for one and 1400 for the other. I sold one for 2100, so after all expenses and crap, it was like I almost got a mower for free. Finding a good used mower would be way more that I can say, but, I would rather buy somehting used, fix it up, and run it. If you have knowledge and skill to work on these machines, it helps out a whole lot in the long run. What is labor rate at shops now, 55 or 60 an hour? There is no way in hell I would spend that much, no way, I work on my own stuff, save the money, and use it for something for constructive like buying savings bonds or put it into a savings for a rainy day. Thats all.
  10. ambersLawnmowing

    ambersLawnmowing LawnSite Senior Member
    Messages: 333

    Debt isnt just something in the credit world. It took some sort of money to get your equipment. That money that was spent was either from Your personal account, or from the business account. If from you personal account the business needs to repay you, If it is from the business account you Just cut into the profit, I dont see how you have a profit before you went and bought the equipment. So i am guessing you choose A. personally finance you equipment for your business. Great Now your business maybe be debt free but You arent.

    Also you cant move on and price higher because you already killed the market.

    Also 4.3 Mudder. You say that the shop make $40-50 an hour to fix mowers. What is your labor worth? I know i pay myself hourly but For me to work on a machine is going to cost my business the same amount. When you worked for someone else did you work for free sometime? Answer is no, so why do it for your own business? I am not trying to get into a fight with anyone just point out some business points that may have been over looked.

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