To lower the price or not to lower the price, that is the question...

Discussion in 'Business Operations' started by Right Touch, Mar 13, 2009.

  1. Right Touch

    Right Touch LawnSite Senior Member
    Messages: 382

    now that spring is on its way here in jersey,the phone is ringing for landscape design and paver work. i ran in to some problems last fall losing a couple paver driveways to a company i never heard of coming in much much lower than my price. Im not going to use the term that everyone uses on this site, because hey it is what it is. If they can do it that cheap, more power to them. My worry this spring, because of the economy, is that we will continue to lose jobs to lower priced bids. My thoughts are to express myself as professionally and as knowledged as possible to the customer so that they want to use my company, then if they have a problem with our cost, to possibly work with them on the price. We also have a 10% Spring Discount Special that I make sure I tell the customers immediately so they are getting a discount already without me actually having to just tell them im lowering the price. I know some people are going to say this is suicide, but the reality is that I'd rather lose a little profit and keep my guys busy than have no work because noone can afford to pay full price this year. Its a huge internal dilema I am having because everything inside me is telling me not to lower my prices, but every estimate so far has brought up the words "economy, recession, and price shopping" and its beginning to get a little frightening. Is anyone else having this internal battle?
  2. Right Touch

    Right Touch LawnSite Senior Member
    Messages: 382

    just wanted to add something else to my thread. I know their are 10 million other threads about low ballers, so i dont want this to come off as one of them, and we have many loyal customers both in construction and maintenance that come right to us for everything from mulch to patio installation, so im basically just talking about the people who call us from advertisements or internet searches. I know their will always be someone lower in price, but is there any way to work with the customer with the price or do you think thats just suicide...

    FCPWLLC LawnSite Senior Member
    Messages: 352

    I never reduce my price as it is what it is. Lowering it will only hurt me. I do however, give cutomers options. Lessen the scope of work to fit budget or allowing them different payment options. Credit Cards or splitting up into payments. If your cash flow is good and you can offer the option of mutiple payments, you may land jobs that the other under capitalized contractor can't do. If the other guys can't offer easy payment plan, then you look more favorable and affordable.
  4. jhastrello

    jhastrello LawnSite Member
    Messages: 105

    I absolutely agree with Michael above. Options yes, lower prices no (not unless I'm taking something out of my services in exchange for lower prices).

    Now, on the other hand. . . .

    If you have a crew that you are paying, and they are not busy - you 'might' want to do a job or two just to 'pay the bills'.
  5. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    Funny how we all have "our numbers" I can do that job for xxx.xx while he can do it for xx.xx, only you know your over head, and only you know your expence,

    I have lowered my prices on a few customers, and even done free work,

    as a Business owner we have certain oblagations to our community. you would be amazed how word of mouth spreads when you have someone, in trouble. and they need FREE work. best advertisement you can get is from free work.

    call it what you will, Lowballing, stupid, or just plane ole screwed. the truth is were all in this togather. and we will do what ever it takes to survive.

    Best of luck with your decission
  6. ed2hess

    ed2hess LawnSite Fanatic
    Messages: 14,546

    I think most the guys holding the line have stable jobs and are doing their business for fun money. The few of us that do this full time understand that we don't want to lose customer and so if they ask we usually meet any competition. We bid an upscale hotel last week and our bid was $450 dollars/mo. over a national company. We know they want us in there pretty bad but they asked us to go half way. We want their business so we will probably do it.
  7. HenryB

    HenryB LawnSite Bronze Member
    Messages: 1,849

    You have to ask yourself are you in business to make money or to "keep the guys busy"? Don't be stupid cut back on workers trucks etc. Not saying you do but too many guys do jobs just to keep their guys busy. Their is no faster way to go broke. Once your broke do you think your guys will work for free just to "stay busy"?
  8. jhastrello

    jhastrello LawnSite Member
    Messages: 105

    Ed - sent you a PM on something.

    HOOLIE LawnSite Gold Member
    Messages: 3,981

    There's nothing wrong in working for less profit than normal, to keep the company going. Guys are too quick to lay workers off. That's the easy route out. I've always felt as a business owner, I'll do whatever I can to keep good workers employed before I just dump them. What are you going to do when things pick up then...suddenly you have only half your workforce, equipment, etc...gotta think long term as well.
  10. phasthound

    phasthound LawnSite Fanatic
    Messages: 5,158

    One thing to consider in this economy might be to stress the maintenance side of your business.

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