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What Price Posts

Discussion in 'Bidding & Estimating' started by 32vld, Mar 7, 2013.

  1. 32vld

    32vld Senior Member
    from LI, NY
    Messages: 620

    If all someone is going to respond to a thread when asked what should I charge is to say if you don't know your costs, then don't respond.

    Reason is this when a member is new he needs a lot of good advice.

    There is more then knowing one's costs to coming up with a good price.

    A person starting out has not had the experience to figure out the time for every type of job.

    Along with the new person starting out usually has very low costs compared to an established business. So even if the new guy was to charge a price to get the same profit as the establish businesses the new guy is going to leave too much money on the table.

    So inadvertently the new guy is going to be a low baller ruining the local areas pricing structure.

    Then the guys that all the want to do is rag on the new guy will be starting threads and posting on other's threads how the low ballers are killing this business in their area by taking all the profit out.


     
  2. Sawboy

    Sawboy PlowSite.com Addict
    Messages: 1,591

    Actually......aside from area market rates......no there isn't.
     
  3. fairwaymowing

    fairwaymowing Member
    Messages: 90

    Couldn't DISAGREE more.
     
  4. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    In a way its true. If the market said driveways are going 400 in your area,and your cost say you have to have 700 not much you can do. You might have to cut expenses .
     
  5. bhmjwp

    bhmjwp Senior Member
    from kcmo
    Messages: 309

    Grandview, I agree with you 100%. All this talk about knowing your operating cost vs bidding is crazy. What you really better know is the going market rate, and position yourself high or low in that range. Yes you need to know you cost to be able to figure if you are profitable or going broke! But what in the world does how much I spend on a truck matter to the customer!
     
  6. Sawboy

    Sawboy PlowSite.com Addict
    Messages: 1,591


    Care to expound on that? The two absolute most important factors in ANY business is current market rates and cost of goods (the inverse of profit margin).

    Please tell me what other major factors there are in determining a RATE which allows for your acceptable PROFIT.
     
  7. fairwaymowing

    fairwaymowing Member
    Messages: 90

    I can't stand posts like 'what are you charging per driveway'. What good does it do to know what I charge up here in Rochester, NY? If the price is good, are you gonna move here? It's a crock. I disagree with babying these people, telling these people the prices, etc.....it's pointless. There is a million threads on this site like that.....contribute something meaningful. People should be able to figure out market price themselves, period.
     
  8. Laszlo Almasi

    Laszlo Almasi Senior Member
    Messages: 326

    I see some of everyone's points here. However, I do feel that helping in educating someone, on pricing for their area, that is new to the industry will only help to strengthen our industry and its pricing. If you do not feel it is important to help the new guy figure out what to properly charge then you can't complain down the road when he takes your account because he underbid you. It is what it is.

    Any given area has its own pricing limits and it is our job as business owners to bid our jobs accordingly with the area. Once you know what you can charge "then" it is our job to figure out how to make our businesses more profitable with what we have at our disposal. However, you will always have to deal with the plow guy working for "beer bucks".

    I think pricing consistency is extremely important. So much so that I contacted a friend that is on the west coast and talked to him about my current/future business plans. I contacted him for two reasons, 1) to make sure I wasn't going to alienate him because I was getting into the same area he is and 2) to talk about pricing structures so that I didn't inadvertently cause damage to the particular industry. Luckily, he has absolutely no objections and thinks it is a good idea for me. And I was also right in line with my pricing intentions. He even invited me out to his location to see how he does things so that I will be successful too.

    Bottom line is that we can act like children and not be willing to help others out, in our industry, to be profitable and charge a proper rate or we can act like adults and all get in line and help to establish pricing structures that will help us to all be profitable in the end run. It will also give us more strength when the NSPs come in and try to take our contracts over. I'm sure some will disagree but I feel if everyone took the time to consider everything, they'd realize this is something we almost "must" do. I think after a couple of years you will find that you will be making more money, working less hours and keeping more contracts with less fuss. Just my $.0002 worth as this economy is even killing the value of my opinion.
     
    Last edited: Mar 8, 2013
  9. Sawboy

    Sawboy PlowSite.com Addict
    Messages: 1,591

    Whoops. So it was the OP you disagree with. Then we are in complete agreement on your disagreement! LMAO
     
  10. Sawboy

    Sawboy PlowSite.com Addict
    Messages: 1,591

    Laszlo, I agree with helping people, but the OP's point is that unless you're just going to say "charge x" then we shouldn't respond. That's not helping anyone. The OP gives the impression that we are unhelpful by trying to educate thru knowledge of cost of operation to lead you to pricing, instead of just saying "I charge $50"
     
  11. Laszlo Almasi

    Laszlo Almasi Senior Member
    Messages: 326

    I see your point but I don't think the OP meant it quite that way. Maybe he/she should have used different wording perhaps. I think a lot of times its easy to misunderstand the point someone is trying to get across just by a brief comment in a posting. I know I have in the past.
     
  12. 32vld

    32vld Senior Member
    from LI, NY
    Messages: 620

    My position was not that all is needed to say is charge X dollars. Reread my post.

    Some people are helpful. The one's that do not want to help are the one's that should not respond to those seeking help on pricing.

    There is more then knowing costs and market pricing.

    How to determine the time it takes to do jobs is just as important.

    There is no point of knowing costs, knowing how much to charge when the time to do a job is over or underestimated by a large margin.

    Then making the new guy aware that the job is too large for the equipment that they have. Making the job take too long, causing them to lose money because labor costs will be more then estimated.

     
  13. Sawboy

    Sawboy PlowSite.com Addict
    Messages: 1,591

    Ok. You're right.
     
  14. thelettuceman

    thelettuceman PlowSite.com Addict
    Messages: 1,216

    the first sentence in your 3rd paragraph could get you in trouble with the law .... It's called price fixing ...if that is what you mean by consistent.
     
  15. Laszlo Almasi

    Laszlo Almasi Senior Member
    Messages: 326

    No, it isn't price fixing at all. It is educating newcomers as to the appropriate pricing for their area.

    "Price fixing is an agreement between participants on the same side in a market to buy or sell a product, service, or commodity only at a fixed price, or maintain the market conditions such that the price is maintained at a given level by controlling supply and demand.

    The intent of price fixing may be to push the price of a product as high as possible, leading to profits for all sellers but may also have the goal to fix, peg, discount, or stabilize prices. The defining characteristic of price fixing is any agreement regarding price, whether expressed or implied."

    That being said, charging appropriately for a given area is not price fixing. Now, if we all got together as an industry and said we are all going to charge $150/hr then that would be a stronger argument for price fixing.

    I see absolutely nothing wrong with educating newcomers on pricing for their given area. The problem with certain areas is that the supply far outweighs the demand and thusly the amount you can charge goes way down. For example, I can charge more down here in NC than I can up in MD. And the farther north I go...the less I can charge. But at the same time, I do recall one storm down here when every Joe blow redneck with a tractor and box blade was out charging $25/hr to clear commercial parking lots. I pulled into one lot...dropped my plow, got a bite to eat and as I was leaving I was "offered" the chance to plow for the same amount. Told them I'm not even going to consider that price. When they found out what they could actually be charging, their tone changed dramatically.

    The point? If newcomers don't know what they can be charging then the market will get completely crapped up and the potential profits plummet. And isn't that really why we are out in these conditions working these long hours? Profit?
     
  16. thelettuceman

    thelettuceman PlowSite.com Addict
    Messages: 1,216

    Point Conceded ... You are correct
     
  17. 32vld

    32vld Senior Member
    from LI, NY
    Messages: 620


    I can see a lawyer in court trying to prove that this sentence standing alone as proof of price fixing.

    Though to take that sentence out of context can give people that idea as one possible meaning.

    When you place that sentence in the context of this whole thread it shows that it's point was the need for businesses to know that market pricing is important to having a successful business.

    A reminder, we are here to get and give knowledge. Though we are not legally trained lawyers we do have to strive to write things that can not be interpreted to support breaking laws.

    If I could write that well I would be making millions writing novels and having them turned into movies then making millions more. Instead I'm here.
     
  18. Laszlo Almasi

    Laszlo Almasi Senior Member
    Messages: 326



    Too many attorneys try to make something out of nothing too many times. That is why our society has become so damned litigious. Personally, I don't care if some attorney thinks it might possibly, could be, sorta sounds like...anything at all. Proving any "price fixing" is a different thing. Also, price fixing does not necessarily apply to service. Now, if I were a supplier of salt and said you have to sell it for $x amount or I won't sell it to you...that's a different story.

    Anyway, we're on the same page I do believe.
     
  19. JMHConstruction

    JMHConstruction PlowSite.com Addict
    Messages: 1,072

    I agree about trying to help and not just saying "figure it out." I have a very small sidewalk crew. Nothing fancy, just a few guys some shovels and blowers. I don't have a new truck with a new blow, an office, a large fleet, or anything else a large company may have. My overhead is extremely low compared to most with a large snow management team. I do have insurance and other expenses, so yes, I have some overhead. I am still learning where that correct price area is. If I figure out all my expenses then charge 25% profit, then I'm low balling. Without experience doing bids, reading peoples faces when giving a number, and landing or being turned down from a job you have no idea what the other guys are even close to charging.

    I was under bidding in my area for my first 2 years until a friend laughed in my face when I told him what price I was doing a driveway for. I was about half from the average out here. Now I just try to save my extra profit and reward my workers until I try and get a little larger. Someone with low overhead is going to have a smaller price if you just figure overhead and add a profit %. Then they will be low balling bids left and right, making everyone else look like they are either trying to rob property owners or just being greedy.
     
  20. Laszlo Almasi

    Laszlo Almasi Senior Member
    Messages: 326

    Being a successful and profitable business isn't just about making x% profit. You should strive to make the maximum profit you can for your area. If you can make 100% profit then it is what it is.

    I'm actually in the process of revamping my summer business model to do just this. The economy is taking a dump and I must adapt and increase my profit % or I'll be gone like a lot of other businesses. I constantly look for ways to increase my bottom line and in snow plowing it's the same. Your equipment, desalting products, personnel and such all play a part. But first, you really need to know what you can realistically charge in your area.

    And you know what...I'll be about the first to toss this out: For standard prearranged/scheduled plowing I charge $125-150/hour for plow time, $80/hr for walk behind blower and one operator. I charge more if they wait until it's snowing. This is in my area mind you. And I have been told that I am neither the highest...nor the lowest...but I am in the upper 25%. I provide a better service than others so I get the job/contracts with multiple year contracts. And no, I'm not afraid for others to know what I charge. Someone can try to come in and underbid me but if you do, it's that person's own ignorance that will cause them to fail in the end. And if by some chance you can weasel into one of my accounts...when you screw it up and they call me back...I charge more. Oh, and I do have a minimum plow charge of $125. So if someone wants to do a drive for $50...go right ahead.

    And for those people that can't drive and end up in the ditch. I charge $100-125 to pull them out and I'm on my way. Why so much? Because it beats having to wait in the ditch for 2 hours or more waiting for a tow truck and that is what they will have to pay anyway.
     
    Last edited: Mar 13, 2013