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Am I charging to much

Discussion in 'Commercial Snow Removal' started by 76chevyman, Oct 13, 2003.

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  1. 76chevyman

    76chevyman Member
    Messages: 46

    Hi there im new to the site and i thinks its a great site and im hoping to make it to the BBQ.
    Ok last year i had a commercial account at a hospital and for the first plow i charged 1200 and like 8 or 900 each one after and each fall i was doing 3 plows because the hospital wanted bare pavement all the time now this year another contrater comes in and bids at like half first plow 500 up to 5inchs and 5-10 750 and 10 + 900 and sanding was 350 he has no walkway clearing in the contract and i do please help me should i lower my price and keep the account or let it go this account in in New york and i live in Connecticut
    much thanks
     
  2. JustUsDe

    JustUsDe Senior Member
    Messages: 181

    Welcome to Plowsite!!
    First off I am not sure how you came up with your price. So to tell you to lower it would not be a correct answer.
    I can offer the following advice.
    First you need to figure out your cost of operating.
    Insurance, licenses, fuel, advertising, maintenance, wages, and depreciation. That should give you your basic operating costs. You need to figure out how much profit you expect to make off of each job you have. All these items added together should give you a round figure of what you need to charge an hour to meet this figure. Once you know your needed hourly charge to operate in the black. You than can figure out how to competitively bid a job, rather you bid it per push, or event or seasonal. You need to know your operating cost plus expected profit.

    If you are bidding the hospital job per push figure out how long it takes and times it by your hourly figure to see if you are too high or too low.

    DO NOT LOWER YOUR BID just to get a job if you cant make money off of it. You can take a little less profit on some jobs if you think they will lead to more jobs or extras.

    Just my 2 cents, I hope I helped you some.

    Ray
     
    Last edited: Oct 13, 2003
  3. myo

    myo Senior Member
    Messages: 193

    JustUsDee said it pretty good. Good luck! and Welcome to Plowsite:waving:
     
  4. micah79

    micah79 Senior Member
    Messages: 303

    Search for threads on lowballers on here. You will see how frusterated many of us are. grrrrrrr:gunsfiring:
    Ray is giving good advise so I won't reapeat what he is saying.
    Micah
     
  5. 76chevyman

    76chevyman Member
    Messages: 46

    I based the bid on the guy i under bided last year he was charging 1500 a push and 1000 every plow after on the same storm and the hospital was happy with my service last year they said i was the most dependable person they had and they best plowing theve ever seen and yes im going to add up everything and figure out a hourly rate but i just dumoed 2000 in the truck this week and if i get a sander theres another 2000 :mad: thanks for the help guys
     
  6. digger242j

    digger242j Senior Member
    Messages: 672

    It's a cutthroat business, isn't it?
     
  7. JustUsDe

    JustUsDe Senior Member
    Messages: 181

    I don't want to sound mean or arrogant but it looks like what goes around came around.

    Again you need to know what your bottom line is and properly bid that job. Taking someone else's number and low balling him is not an estimate. Once you have done that and have your numbers ready. Place your bid and sell the fact that they are happy with your service.

    Ray
     
  8. micah79

    micah79 Senior Member
    Messages: 303

    Just keep bidding less and less and see what happens.
    Eventually businesses like mine won't even be around anymore.
    I refuse to bid so low that I can't afford reliable equipment and insurance, and pay taxes.
    Why do so many people think that they have to under bid $. Sell your quality, promptness, and reliability. Lowest price is not necessarily the best value. Don't be afraid to tell your customers that.
     
  9. SnoJob67

    SnoJob67 Senior Member
    Messages: 384

    I won't kick you while you are down... but I am glad to see my fellow plowmen feel just as I did the first time I read your post.

    Now you have learned your first big lesson in the biz.... If your customer base hires you because you are lower priced than the last company, who do you think they will hire to replace you???

    Don't dispair. If you change your tactics by selling yourself as dependable, quality conscious, etc. you will soon have customers that care about more than saving a dollar or two...if you have not already bit off more low profit accounts than you can chew!

    Also, I want to reinforce what Micah said. I always tell a new potential customer that we are not going to be their low bid, but that we are professional, timely, quality conscious, etc. etc. ect. Don't be so intimidated by customers, you deserve to make a comfortable living too. How much do they charge for a night's stay at that Hospital? Can they afford to pay a professional a reasonable fee for top notch service? You bet they can!
     
    Last edited: Oct 13, 2003
  10. micah79

    micah79 Senior Member
    Messages: 303

    76chevyman

    SIMA has a brochure you may want to look at or give to customers. You may also want to look at joining SIMA. John Allin and Chuck Smith both have books as well. I know John's book is awesome and I would definately reccomend it. I have also heard that Chuck's book is available again. It has been highly praised as well. I am going to order a copy soon. It is nice to hear the advice of these true professionals.
     
  11. 76chevyman

    76chevyman Member
    Messages: 46

    Thank you all for your advise. But last year i got the call from the hospital wicth was my first commercial account they said there last person was totaly unreliable and did very little for plowing so i told them i gave quility work and always showed up and i even included that in the contract so i figured underbidding 200 bucks wasnt all that bad unlike the lowballers that under bid u like 600+ so i defeienty dont think i quilifie as a lowballer but think i gave a competitive price last year. If anyone thinks other wise please tell me i would like to hear so in hopes it helps my buisness much thanks again to all for the advice
     
  12. Santo

    Santo Banned
    Messages: 255

    If the phone doesn't ring , then your charging too much.
     
  13. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    This brings up an interesting subject. What is your definition of "Lowballer"?

    My definition is: Any person who knowingly and deliberately uses another person's bid as a guide to submit a lower bid.

    An honest bid is a bid submitted based on one's own criteria for establishing the amount bid (unless that criteria is another person's bid).

    Just my advise, but don't lower your bid. If you do, you're saying you charged too much in the first place.
     
  14. micah79

    micah79 Senior Member
    Messages: 303

    I like what you said Mick. I have the same definition, but I like the words you choose.
    To add to Mick.....and also, if you do you are HURTING snow plowing business as a whole. Trust me 76chevy man, we (or at least I) hate lowballers on here, just read the threads on this topic. I'm not saying I hate you, cause I'm not sure you are a lowballer. It just kinda sounds like thats what you have been doing. As said earlier, just start focusing on your quality as a selling point. It sounds like you do excellent work. Why would you want to seel yourself short. After all we all need to make a living. Why not make what you deserve.


    And Santo, I'm not sure I see eye to eye with what you are saying. You say that if the phones aren't ringing then you are charging too much. It is not that simple. I have noticed that a lot more customers fire on the basis of bad quality, reliability, and lack of promptness, than they do on price alone. Remember! Most businesses subscribe to the "If it ain't broke, then don't fix it" theory. If you do them right then they will keep you.
     
    Last edited: Oct 13, 2003
  15. SnoJob67

    SnoJob67 Senior Member
    Messages: 384

    76Chevyman-

    You read all the posts following the one you made at 1:24 and you have to ask "if anyone thinks otherwise?" Either you are kinda thick-headed, or you are just some newbie coming here trolling the boards looking for a reaction. Kinda like offering a steak sandwich to the members of a forum for Vegans. Wake up and smell the sewage!

    I would say the general consensus is that you don't cut some working man off at the knees by undrpricing him...especially when you don't even have a clue what your costs are to run the damn business. If you threw a dart at prices you pinned to a dart board I would have more respect than when you tell us you just simply cut $200 off the price of some guy that did half the job.

    Thing is, you should be just as upset as the rest of us because that $200 may have paid for the truck repairs and/or the sander you discuss in your second post. :dizzy:

    Next time someone performs the unethical task of showing you what the last guy charged, tell them there is no way you could plow it for that, but you will go to the office and really sharpen your pencil. If they tell you they won't pay more, they have saved you all the BS of bidding something you don't want, anyway.

    Sorry for being kind of a jerk, but it seems you could use a little tough love if you ever want to become part of the flock here.
     
  16. Pickering snow removal

    Pickering snow removal Senior Member
    Messages: 151

    Lowballer

    Snowjob , Mick , Micah, i so agree this is become a nightmare season for us has well , i refuse to cut the throat of my fellow contractor what 76chev has done there is no other nice word than your a lowballer likewise so is the fellow that undercut you.
    We have lost close to 30% of our contracts this year to single truck operations that went in seen our bid and said they could do it for half , i built our buss one cust at a time 8yrs ago i took over a company that i had subbed for for years because he retired i took nothing from anyone i stayed with that persons pricing then over the years slowly raised the price to the increase in operating cost , i never i repeat never have looked at another persons bid and said i would do it for less. This year i met a president of a condo threw my auto repair buss he said hey bid this place for snow removal he hands me his file from past years i look at it i bid the place and said you should stay with your current contractor he is giving you a good price this is all during our company getting undercut i could of said hey ill do it for that but one i know the current contractor and he has been around a long time i just couldnt do it back maybe iam just stuipd or maybe i have what they call morals, has it stands know 3 trucks will be parked this year has i am forced to cut my over head down to the loss of work i have three very good drivers that wont have a job this year, iam trying my hardest to bid new buss that have opened this year to fill the slots we have lost i probley wont get them cause i know this buss from front to back and know what a fair price is for a job i wont bid a job just to say i have another. So to JOHNY LOWBALLER i hope your equipment runs threw the worse of weather i hope you really know what 24/7 means for a snow contractor. last but not least cust loyality only goes so far when a guy does it for half.
     
  17. Santo

    Santo Banned
    Messages: 255



    If you go to buy a new blizzard and one price is $5500 and the other is is $4750 which price will you pay???
     
  18. digger242j

    digger242j Senior Member
    Messages: 672

    I agree that Mick's definition of "lowballer" is a valid one.

    So, how about when they show you what your competitors are bidding right now? Here's a thread about "reverse auctions"that I posted a while back. Presumably, the outfit that had the contract the previous year was included in this bidding process. There's a lot more traffic here now that the season is at hand, if anybody cares to comment on this practice.

    The whole issue of how prices are arrived at has a lot of gray areas. One contractor may be able to bid more competitivley because he employs more talented operators than the other guys. His costs are lower, so he can be as profitable even though he charges less. Another contractor might be willing to work for a little less profit, so he may underbid you based simply on that. A third might simply work harder than you. I'm not sure any of them would qualify as "lowballers", although it might feel like that to you.

    I don't think we should be too hard on 76Chevyman because it seems like he belongs to yet another segment of the business, a segment that also underbids everybody else--those whose prices are low because they don't understand what their true costs, and thus their true profits, are. Those who base thier prices on "Well, I'm sure if the other guy made money at that price, I can stand to make a little less and still come out ahead", without being able to calculate whether the other guy's price was profitable in the first place. They hurt the business as a whole, by driving profit margins down. In the process they hurt themselves as well. 76Chevyman has come here to learn, hopefully to not repeat past shortcomings. (It's probably an unfortunate fact that his competitor is making the same kind of mistake, but even more agressivley.)

    That's why PlowSite, and SIMA, are good things--they educate us all. Our professionalism is enhanced.

    Also, that's why I have no problem with customers or potential customers visiting here. They'll learn that professionals get paid professional fees. Those that make their decisions based on low price alone will usually get exactly what they pay for.
     
  19. Mick

    Mick PlowSite.com Veteran
    from Maine
    Messages: 5,546

    I have paid the higher price because of customer service. In at least one instance, this involved a truck and a plow ( to me - major bucks). I had previous dealings with this dealer, knew they would provide service when needed and had stood behind their sales.

    The other factor in your example which makes it different, is that each dealer is setting his price and is known to the other. Undercutting like that reminds me of the "gas wars" of the 60s. The little guy would lose because the national retailers could take a loss on one station and make it up at another location.

    Now I just came up with this idea. How about a manager/homeowner putting on a auction? He'd notify all snow contractors in the area to be at a certain place at a certain time. Then hold a "reverse auction" - lowest final bid wins the contract. At least that would be fair - everybody has the same chance. With lowballing - the current contractor doesn't even have a chance.

    Remember - if you get the contract because you knew the previous guy's price and were able to underbid, expect that you're price is going out to others to see if it can be done cheaper.



    (Just saw digger242j's post about "reverse auctions". Guess my idea wasn't original):eek:
     
    Last edited: Oct 14, 2003
  20. digger242j

    digger242j Senior Member
    Messages: 672

    Gee, Mick, something about that sounds familiar....

    :)

    On edit--You posted your edit while I was posting this post--I figured that's what had happened....
     
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