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Have low ballers permanently ruined pricing?

15K views 85 replies 27 participants last post by  Chineau  
#1 ·
I've posted a similar thread a couple years back and I know there's others out there but....

As the title says, has proper pricing became totally unachievable due to either people's ignorance on pricing or the fact this is just side money to them?

I was contacted by a new owner of 3 gas stations, all within 10 miles of each other, 1 literally 2 minutes from my shop. Decent size lots for gas station (35k to 45k sq ft of pavement), each total of 8 pumps, 5 bay car wash....

Before giving them prices on each the owner says "So far the highest price including salt is $80 per push". I just told her there's no way I could even start to touch that and half jokingly asked for the guys number to see if he wants to sub.
 
#2 ·
Don't lose any sleep over this. Don't compete in this space. If a gas station owner wants to engage the lowest price instead of the best value, let him/her do that. Without even being in the business, common sense should tell the owner, this price is too low.
If that same gas station wanted to charge 50 cents a gallon for gas, I would not touch it. You don't know what you are putting in your vehicle. 'nough said!!!
 
#4 ·
I've posted a similar thread a couple years back and I know there's others out there but....

As the title says, has proper pricing became totally unachievable due to either people's ignorance on pricing or the fact this is just side money to them?

I was contacted by a new owner of 3 gas stations, all within 10 miles of each other, 1 literally 2 minutes from my shop. Decent size lots for gas station (35k to 45k sq ft of pavement), each total of 8 pumps, 5 bay car wash....

Before giving them prices on each the owner says "So far the highest price including salt is $80 per push". I just told her there's no way I could even start to touch that and half jokingly asked for the guys number to see if he wants to sub.
He's lying.
I had a poop head try to steal one of my accounts.
He came in and said he would do it for 20% less than they were paying now.
Well guess what?
Mr. Poop Head meet Mr. Shister.
Mr. Shister tells him they are paying 25% less than they actually are.
So Poophead is going to do it for 45% less than me.
But then Mr.Shister's wife found out about it, it's her business and he's husband #2.
She told him in no uncertain terms who was driving the bus around there.
She sold the business years ago,got rid of him too and I still plow her driveway.
 
#6 ·
It's a combination of a multitude of factors, some of which you state.

1) Morons who don't know how to price.
2) Morons who purposefully underbid.
3) Morons who think they can make it up in volume.
4) Moron NSP's who have turned a service into a commodity.
5) Morons who make their initial price look low, but everything else is ala carte and they screw the customer on the extras.

2-5 are generally driven by ego (or greed) and want to be the biggest.

1 is based on ignorance...whether purposefully (not trying to educate one's self) or just not knowing better due to lack of experience.
 
#9 ·
It's a combination of a multitude of factors, some of which you state.

1) Morons who don't know how to price.
2) Morons who purposefully underbid.
3) Morons who think they can make it up in volume.
4) Moron NSP's who have turned a service into a commodity.
5) Morons who make their initial price look low, but everything else is ala carte and they screw the customer on the extras.

2-5 are generally driven by ego (or greed) and want to be the biggest.

1 is based on ignorance...whether purposefully (not trying to educate one's self) or just not knowing better due to lack of experience.
Number 4 and 5 irk me the most
 
#15 ·
Let me ask a question, Do you think some of this is driven by the new culture of buy on line, get it cheaper on Amazon, big box stores driving out the Mom & Pop places?? They get what they pay for I feel and hopefully they are gone soon. I’m often told my prices are higher than Joeys Quick Plow, I say, yep I am and for a good reason.
 
#17 ·
Let me ask a question, Do you think some of this is driven by the new culture of buy on line, get it cheaper on Amazon, big box stores driving out the Mom & Pop places?? They get what they pay for I feel and hopefully they are gone soon. I'm often told my prices are higher than Joeys Quick Plow, I say, yep I am and for a good reason.
Walmartization?

Everything should be cheap?
 
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#22 ·
I was a firefighter and had a King Ranch...and then it burned.
 
#27 ·
In my area insurance companies have increased rates for everyone around 5x on average, heard from quite a few that are calling it quits.

As for gas stations.. they're cheap af
Ya.... I'm definitely looking for new insurance when the renewal comes up. I've been with Travelers for 15 years but every year for the past 4, up, up, up, and never had a claim. Workers comp same way.
 
#29 ·
Speaking on behalf of a person who has not plowed at all. But has been researching for over a year...I think part of the problem is the guys complaining about it.....when new guys ask they get mostly smart ass or belittling comments, (who wants to hear that all the time)..then there is the figure out your overhead cost answer, but when he does his price is still too low...alI i can say is once I start making the big coins you guys make, I will strive to not have the ego and arrogance that seems to come with it. It seems to be the same with the whole green industry and hardscape.
 
#33 ·
I’d say the low baller is helping now: they are quitting in my area! Just got 3 new sites today since the other guy didn’t show up the last storm. Now i have all the sites for this client in one town at my prices + a bit cause of last minute. Next I’ll get the other town‘s sites.
 
#35 ·
I'd say the low baller is helping now: they are quitting in my area! Just got 3 new sites today since the other guy didn't show up the last storm. Now i have all the sites for this client in one town at my prices + a bit cause of last minute. Next I'll get the other town's sites.
That's what went on all year for me landscaping.....
 
#46 ·
It's a combination of a multitude of factors, some of which you state.

1) Morons who don't know how to price.
2) Morons who purposefully underbid.
3) Morons who think they can make it up in volume.
4) Moron NSP's who have turned a service into a commodity.
5) Morons who make their initial price look low, but everything else is ala carte and they screw the customer on the extras.

2-5 are generally driven by ego (or greed) and want to be the biggest.

1 is based on ignorance...whether purposefully (not trying to educate one's self) or just not knowing better due to lack of experience.
Yup this all makes sense. And by lowballing we are basically talking about someone who is at least 30% below a sensible rate, right?

I think some companies use snow the same way others use lawn mowing. As a loss leader to give their guys someplace to make hours and keep them paid. If you have a guy who can execute $30k hardscaping jobs every 2-3 weeks in the summer at a big margin, you don't mind paying him 70% of revenue for 4 months in winter.
This might be #6 for Mark's list. (?)
 
#50 ·
And by lowballing we are basically talking about someone who is at least 30% below a sensible rate, right?
Negative...no real set answer to lowballing.

Could be some AC that undercuts you by $10 to get the job.

Could be a newbie that thinks a $25/time cut is big bucks.

Could be a huge company that uses mowing/plowing as a loss leader and then screws the customer on extras.

I had another example in mind, but I can't remember it.
 
#47 ·
Speaking on behalf of a person who has not plowed at all. But has been researching for over a year...I think part of the problem is the guys complaining about it.....when new guys ask they get mostly smart ass or belittling comments, (who wants to hear that all the time)..then there is the figure out your overhead cost answer, but when he does his price is still too low...alI i can say is once I start making the big coins you guys make, I will strive to not have the ego and arrogance that seems to come with it. It seems to be the same with the whole green industry and hardscape.
To paraphrase @Rook here, it's "do or do not. There is no try." Read for a few weeks then get out there and start giving your numbers and pitching potential clients. If you pay attention you will find out very fast when you're working, whether or not your numbers are correct.
The insurance thing is no joke. Every 4-5 years for the price of my insurance, I could get a nearly new 60+ HP tractor and snowblower. You have to hit certain revenue numbers or you're going to be out of pocket in summertime for the winter insurance.

This forum is incredibly valuable. I've run into a lot of conflicting opinions, but not really seen any bragging or showing off on here.
 
#48 ·
Speaking on behalf of a person who has not plowed at all. But has been researching for over a year...I think part of the problem is the guys complaining about it.....when new guys ask they get mostly smart ass or belittling comments, (who wants to hear that all the time)..then there is the figure out your overhead cost answer, but when he does his price is still too low...alI i can say is once I start making the big coins you guys make, I will strive to not have the ego and arrogance that seems to come with it. It seems to be the same with the whole green industry and hardscape.
I'm more than willing to teach anyone. I've got a dozen more years on the green side than I do on the white side. For years I subbed out all of my plowing on my turnkey accounts but my source wanted to retire so....

The only thing that aggravates me are people who think everyone makes bank and doesn't realize the difference between net and gross. True, if you price correct you should come out ahead but in my area at least there's a lot of "daddy money" from guys either mowing or plowing thinking that they are making money when they aren't even covering their materials and fuel.

Honestly, most of these guys are part-timers who aren't relying on this industry (plowing) and the lawn/landscape industry to provide for their families and their employees.

I've taught a lot of high school kids over the years that there's more to cutting grass than charging "$1/minute" or whatever mentality. Any comments I make is to make someone think. There's a lot of hidden variables that guys don't "think" about in the beginning then they are panicking when they down either during the mowing season or plow season because they didn't "think" enough to save up for backup equipment because they weren't charging clients enough throughout the year.

So to sum it up I don't think a lot of guys are coming across as having egos. A lot of guys who have been in ANY industry for any length of time have to give a little eye roll or snicker at guys who think if they are charging $100 that they are pocketing $100. When it comes down to it if you need help you'll get help. If you want someone to hold your hand all the way there's not a lot of guys willing to do that.
 
#54 ·
Speaking on behalf of a person who has not plowed at all. But has been researching for over a year...I think part of the problem is the guys complaining about it.....when new guys ask they get mostly smart ass or belittling comments, (who wants to hear that all the time)..then there is the figure out your overhead cost answer, but when he does his price is still too low...alI i can say is once I start making the big coins you guys make, I will strive to not have the ego and arrogance that seems to come with it. It seems to be the same with the whole green industry and hardscape.
Funny funny, this has a lot of truth to it. I left my ego alone in my early 20s for the most part (thats my ego speaking) and im not a fan of beating up someones hard work even if i feel it looks terrible. Pride in my work is what i pretend to live on. Im pretty sure my ego rears its ugly head more then i want. There is a lot to learn out there from the older generation, except from @Mark Oomkes his ego is exhausting to climb. Always falling off that mountain.
 
#56 ·
Jealousy is ugly on you...
 
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#58 ·
I used to do 100% of my snow removal in house. I find it makes more sense to subcontract out most of my snow removal now, because the vast majority of commercial accounts pay peanuts, my employee wages are through the roof, and I have never had much difficulty finding subs willing to work more cheaply than what I would pay my own employees to do the work.

I sub out about 80% of my snow removal. The remaining 20% are our most lucrative accounts that have zero tolerance for snow / ice and are willing to pay extra for premium service.

If snow removal wasn't tied into landscaping, for the most part, I would get out of the snow removal business.

I don't touch residential snow removal. I find it is a waste of time.
 
#66 ·
I've been stiffed by more residential than commercial customers.

I do both and make money at both so maybe both of you are wrong.
 
#68 ·
12 years pushing snow now when I bought my first machine one of the guys who had been at it for long time said to me every year you will see someone start up and figure they are rich with a hand full of cash, it is true.
what work for me is showing up and push the powder and I say it is working cause I have customers on my list 12 years now not all stick with you but for the most part those lowballs simply don't matter.
in the race to the bottom don't look for me to lace up.
 
#74 ·
I started plowing in 1986. It took me 3 years of plowing in 3 adjacent towns for me to figure out that there is no $ driving between houses. I picked 1 town, drove around, found neighborhoods and driveways I wanted to plow (no point in advertising to people that had no ware to push the snow). went to town hall got "List of persons" or "voter registration List" and sent the WIFE a letter explaining what I do. the next year I made more $ with less time plowing. (actually more time plowing less driving between houses). I have not advertised in 10 years. all word of mouth. The BEST advertising you will get!
 
#76 ·
Everyone runs their business differently, I know of several that lowball to gain market share quickly. Keeping volume collections flowing money/cash flow can sustain the business or illusion thereof for a long time. Enough time to make others/veterans susceed their share.
Owners build a book and sell to an unsuspecting newcomer that quickly learns the true value of the book... Its how its played, the original owner comes out wealthy, probably not Kennedy family wealth but enough to keep their lifestyle at which theyve become accustomed. Its been my experience that they are not genuinely nice people, they will use and step on everyone in their way to get what they want.