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Your market?

Discussion in 'Commercial Snow Removal' started by big acres, Oct 12, 2009.

  1. big acres

    big acres Senior Member
    Messages: 653

    I've read alot about how business is going for everyone this year and many are struggling, dealing with lowballers, and some are doing great. I think alot has to do with the market your in.

    For instance, I am in a market where you can drive a good 60 mile radius and see nothing but pavement, endless retail and subdivisions, and plenty more beyond that before you get to cornfields. The decision-makers, and people in general, I think are more savvy. I don't mean they are necessary smarter than say a business owner in a small town, but they are hammered by dozens of sales pitches by legit companies before they ever even see a true "lowballer". By lowballer, I mean beyond the bottom of the pack, but some uninsured dude talking out of his arse. I think they generally can spot these guys a mile away since they see soooo many presentations and pitches from legit companies... but that's just my theory.

    I'm curious to here some of you guys describe your market, how it differs, challenges, etc... We are fortunate to be having a great year, and finding plenty of people looking to upgrade vendors and pay more to get better service, but the stories here tell me that I am lucky to be in a bubble.
     
  2. wizardsr

    wizardsr PlowSite.com Addict
    Messages: 1,553

    Well, things change even from one end of town to the other. My old man is drumming up work in Rogers this year, and he's running into a ton of accounts that have guys doing a "great job" for all of $50/hour. If you were the customer, would you switch to another company if you were getting great service for dirt cheap?

    I've run into some problems this year in the Golden Valley area, the center of our service area. There's stuff going for $60-70 to "large" companies, and the customers are getting service that they're satisfied with from these "large" companies who are just using subs anyway. I've been able to build my business around selling high quality service. Unfortunately, many other contractors have caught on to that as well. So it seems to be one way or the other, a customer that's happy with the cheap guy and cant be convinced otherwise, or happy with the current provider (many of which who offer the same level of service and pricing we do), the unhappy customers willing to pay for quality seem to be few and far between.

    Pricing has been weird this year. I've got a couple I increased and they signed no questions asked, and a couple who added more services (for more money of course). On the other hand, I have some that we've had to renegotiate the contract, because they like our service, but times are tough, and they're struggling with the decision to stay with a known quantity for a higher price, or take their chances with someone else. The prices are dropping due to the high unemployment and resulting influx of credit card plowers, and none of us are real happy about it.
     
  3. Brant'sLawnCare

    Brant'sLawnCare PlowSite.com Addict
    Messages: 1,754

    Well there are a lot of strange things happening this winter. You just have to keep the clients you have, bid on new work at YOUR price, and not compete against lowballers, unless they are attacking your client. Then you have to weigh the benefit of the account. It just depends. Around here it seems as though there are a lot of smaller to medium sized clients that are very loyal to the service they have. It's the big places around here that everyone fights over! Those go for so dirt cheap. I look at the bid sheets and don't even know how I can honestly compete with some of those companies. I would rather plow 2 resi's @ $35 a pop and make around $1xx/hour than plow a big lot that's very tolling on the equipment and have to work an hour for $55. That's just dumb in my book. Basically it all comes down to finding your niche in the market. If you want to get big with loaders and such around here, you have to be really cheap and very very very competitive. And maybe those companies are doing fine and making easy money. I don't really know for sure. But I know of many "medium" to "smaller" sized companies around here that are doing fine, have loyal customers, and provide great service. It just depends on what you want to do.
     
  4. augerandblade

    augerandblade PlowSite.com Addict
    Messages: 1,054

    Credit Card Plowers Hey Wizard thats one I"ll remember this winter. Thats good!!!!
     
  5. LwnmwrMan22

    LwnmwrMan22 PlowSite Fanatic
    Messages: 27,987

    The big stuff here is cheap too, around $50-60 / hour.

    The smaller commercial stuff, if you can find it, is okay.

    I'm north of Biggie, and we do okay, but we're having a hard time getting people to commit, as anyone with a pickup now has a plow, and we have to convince our customer to stay at last year's rate.

    We had a school district go out for bid last year, the bid was awarded at $60 per equipment hour. The guy went out of business, so it's going out for bid again this year, but not until NOVEMBER 5TH.

    I'm not sure I could find enough qualified subs at that time. If you're not full with work, are you going to be one worthy to trust to be at work each time?
     
  6. big acres

    big acres Senior Member
    Messages: 653

    Good input guys.

    WizardSr... I guess there are microcosms of the "small town market" syndrome with the metro. We have seen some of the bigger landscape "install only" companies get into mow & snow with no clue what they are expected to do for the 25% lower prices they are quoting... coincidentally in your area too. Lost a big landscape install for a longtime account to "a guy with a bobcat aspiring to become a landscaper". They now have a high-end business park with thousands of feet of poly edging installed above grade.

    Lawnmwrmn22.... good to see you back on PS. Hopefully that means you've moved alot of that would by now? I can't believe the school district is waiting so long considering the weather we've had... we salted twice already on some accounts. Might be worth pushing them a bit.

    Like the airlines, it comes down to the plows per pavement ratio. The more planes and seats in the air, the cheaper the seats... they just raise the hidden feees and dream up new ones to cover operating expenses -much like lowballers in our industry. The plows per pavement ratio just probably is more obvious in a smaller city/town.
     
  7. Longae29

    Longae29 PlowSite.com Addict
    Messages: 1,953

    In my opinion my market has gone severely downhill over the past 3 years. In the past if I could get in the door with a business, I could talk up our service, make a good hourly rate, and make some money. This year, I know that if I get in the door with a company, chances are 5 other guys have also. This year in particular I'm getting hammered on price, and hardly anyone seems to care about level of service or quality, the "lowballers" i'm worried about are the big guys in my market who are eating everything up at prices that I can't even think about competing with. The difficult part for me is our company plows, and salt with all of our own trucks, skidsters, and loaders, we do all of our sidewalks with our own crews. Seems like the big players are bidding everything at between $50-$70, and salt at a higher rate. The competition also seems to be a lot more clever with their bids, displacing costs from one area of the quote to another, in my opinion trying to be misleading. Anyway, I'm not bitching, its just been a lot tougher of a year, and our books aren't full yet.
     
  8. hydro_37

    hydro_37 PlowSite Veteran
    from iowa
    Messages: 3,790

    Our area has remained the same. Small towns are a GREAT place to live.
     
  9. big acres

    big acres Senior Member
    Messages: 653

    There are alot of industries like excavation, pavement, etc... with tons of equipment which sits during most winters. Since their work dried up in the summer, here they are... are you seeing this? The landscape companies I mentioned were installing big townhome projects of $100k and up, and now they are dead in the water and running towards the steady money in maintenance. We are also seeing smaller accounts more vulnerable to newbies, etc... but the big ones still qaulify a vendor before talking.
     
  10. jimspro

    jimspro Senior Member
    Messages: 200

    we are like longe, after the winter we had 2 seasons ago, where everyone blew their budgets by mid Jan. there were alot of unemployed guys with pickups, put plows on them, and lowballed everyone, also it seems here too service is now second to price, 3 years ago and later service was primary as long as the price was reasonable. but i hope this doesn't last long. i wont run my trucks for under 60, last year we added alot more drives, made more with less break downs, going after more drives this year too
     
  11. BMWSTUD25

    BMWSTUD25 Senior Member
    Messages: 630

    I have to say our market here is quite saturated. I really enjoy plowing and obviously its something to do in the colder months but around here its a real mix as far as pricing goes. when it comes to commercial lot A and Lot B can be the exact same size and right across the street from each other. One will go for say $45 bucks and the other for $75. Its actually kind of amusing. As much as I love doing the commercial work, I think around here there can be a ton of money made doing residentials as I could do about 3-4 driveways in the time some of these small commercial lots are being done in and the money would be far better. Problem here is it hasnt really been snowing much lately especially with larger storms so it forces everyone to try and do commercial. I have had pretty good luck last year and now this year gettting resi's to sign seasonal contracts. When I can sign two resi contracts for the same price one of local fast food places just went for for the season it seems like a no brainer to me.
     
  12. B.Bells

    B.Bells Senior Member
    Messages: 125

    Im having the same problems where i am from. and agree 100%. and i like to consider myself one that thinks out side the box. but its harder than that here. To many not working and just doing w.e they can to eat. cant blame them but at the same time its like wtf? and wonder why some company's just give up after so long of the lowballers here. they have killed our market!
     
  13. teddy

    teddy Junior Member
    Messages: 5

    Hello to all..new here.

    Had to join to get feed back, yesterday we lost a long time account of 200k plus. Yes, sad times indeed! We were lowballed by almost 50%. I tried and tried to crunch my numbers to bare minimum, and as much as I hated to walk away, I had to. We would be cutting them a check for their business in the end. We wished them the best and told them not to hesitate to call us if it did not work out. They kept asking us how they could do it so cheap, I could not answer that, I could only tell them I knew to the dollar what it cost me to do it. Maybe it was the "hold harmless" agreement they had spelled out on the contract, but I did not say that to them as they already had made their choice. Got the tough time economy story. At least it was not my level or quality of service, they commended us on that....but that is not going to keep my employees with health care much longer.
     
  14. hydro_37

    hydro_37 PlowSite Veteran
    from iowa
    Messages: 3,790

    Teddy....you should of told them they will get what they pay for and see what happens.
     
  15. MileHigh

    MileHigh PlowSite.com Addict
    Messages: 1,827

    Out here trucks are at 85-95/hr, shovelers are 30=45/hr, atv's are 50-60/hr.

    There is no residential market out here....and if there is I want nothing to do with it...They all want a very high trigger with service based on a prior phonecall...ridiculous.

    The sun usually always comes out the next day after a storm here....and that what all these darn homeowners are thinking....the commercial clients all care about not getting sued by everyone slipping on the snow and ice. It's all zero tolerance - 2 inch trigger out here.
     
  16. teddy

    teddy Junior Member
    Messages: 5

    If someone (low baller) has a hold harmless agreement on their snow contract and everything is a act of God, I would worry a bit about their response time, or if they would even show up for that matter, they have nothing at stake!
     
  17. big acres

    big acres Senior Member
    Messages: 653

    No offense, but with all the snow you get, I can see where a 2" trigger might be called zero-tolerance. Here it would be 1/10".... most medical, banks, etc... get some kind of service at any precip.
     
  18. Silentroo

    Silentroo Senior Member
    Messages: 147

    Two things to remember,

    1. In most cases Retail is hurting, as is commercial office. Over the last three years the occupancy rate in Minneapolis has dropped 15-20%. Even those that shops that are there are struggling to pay cam costs. They are tightening. Property managers are looking to cut costs where ever they can.

    2. If my administrative costs are minimal I can be considerably lower in price than you. I have been accused of 'destroying' the market by a number of my competitors. But yet each year I have been in business my customers give me more and more of their properties based on my service level, and I gain Market share when they tell other property managers.

    Here is my question If I am covering my costs, Paying all my bills, paying all my subs, and making a great living am I low balling if I am 10-20% under market. I know I am not the lowest in town however I have doubled each of the last three years. Will do it again this year. Snowy, or not I will still make money this year.

    Just because you pay more does not mean you get better service. Would you be willing to pay twice the going rate for salt just because you got better service? Would you pay a worker 10 - 25- 50- 75% more just because he gives better service? Not and stay in business. Too many companies have gotten used to charging an hour and a half for an hours work.

    I can point to account after account after account that I make great money on that the company I took it from was making 25-30% more. They either were making lots of money or had unreasonable costs. EVERY one of these customers would say they are getting better service for less money.

    Just because you think your skid is worth 85 an hour does not make it so. I have Subs begging to work for me for the last few years. They will take less money to work for me because they know I pay fast and my check is good. Contractors are hungry and would rather work for less knowing they are going to work. I will pay less this year than last and still have twice the equipment I need available to me. So should I pay 60 when I can have quality equipment from guys I know and trust for


    Longae29

    It is basic business to price services at different levels of profits. Walk into a Gas Station, They make pennies on soda, and dollars on chips. Why, to keep you coming back. If I know how to price services to make a greater percent on the work across the contract rather than equal on all services it is not dishonest it is good business. Millions is spent each year on research on consumer behavior and purchasing decisions. To use that information to your advantage is not misleading it is good business. I think you are not giving the customer enough credit for understanding what they are buying. Second if I can keep an account by making your numbers look out of line it is a competitive advantage that will be short lived.
    Yes this industry has bid with fraud for years.Minneapolis has actually seen a lot of change in the last three to four years with contractors actually explaining to their customers what, how and why they got their numbers.
     
  19. buckwheat_la

    buckwheat_la 2000 Club Member
    Messages: 2,254

    Well this is a recession huh, here in the great white north we are having similar problems, however i know that we are going to be okay, it is a mater of being diverse, and working harder to keep customers, but this year i still think i am going to be okay. i hope that things work out, and i hope that some of these companies that are playing the lowballer card are going to get theres in the end, everyone well suffer, but hopefully things well find balance too. worst comes to worst, stick it to those contracts when they call you up because their lowballer contractor has left them high and dry.
     
  20. teddy

    teddy Junior Member
    Messages: 5

    Your points are well taken, my admin. cost my be a little higher as I provide heath insurance to my year round employees.... I'm not just in this for myself, sure in the end the change goes in my pocket. But I try to offer the guys a decent living and a fare wage for what they do for me. No subcontractors, been there done that. My position may differ from yours... these are the dreaded all-inclusive contracts I hate so much. Where I have to wager my best educated guess or take a second mortgage on my house kinda contract. I've done the jobs for quite a few years so I know how many bags of cc, how many tons of salt, how long it takes, ect. I buy bulk directly from the mine. I charge the same labor rate per ton as I did 15 years ago so I am by no means inflating the price.

    Maybe I've done this to long and know what my costs really are. Maybe the lowballer could teach me a thing or two.... I'm old school, I look at what I stand to loose, not what do I have to loose. Gotta know when to hold them and know when to fold them!