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I keep losing bids to this guy

Discussion in 'Commercial Snow Removal' started by glenspot, Oct 21, 2004.

  1. glenspot

    glenspot Senior Member
    Messages: 255

    I think I already know the answer to this question... But I'll bring it up anyway.

    I have a lowballer in my area. This guy does residentials for flat fee's of $200 a year. He under bid me for a local credit union...he's going to do the whole lot for $35.

    Other than charging a minimal fee, I can't rip this guy, though. Everybody seems happy with his work. He runs a construction company during the summer, so he has all the proper insurances and equipment.

    He just doesn't want to make as much money as may be possible.

    At his rate, he must make around $40 - 50 an hour, on average. My bids are usually nearly double what he is bidding.

    Again, this is my first year....So every account is a big deal to me. However, at this rate, I'm only going to end up with a half dozen (if that).

    Do you recommend that I think about dropping my rate?

    Or stay expensive, and just have very few accounts....but HOPEFULLY grow as the years pass.

    Last edited: Oct 21, 2004
  2. The Boss

    The Boss 2000 Club Member
    Messages: 2,099

    Don't drop your rates. If that guy is plowing lots and drives for that cheap, more than likely he's not making any money. Keep your head up, accounts will come to you. :nod:
    :gunsfiring: Lowballers :gunsfiring:
  3. Mick

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

    Yes, keep your rates up and stress quality. That guy will get a full route; then you can get yours. You'll manage to get a few in the meantime. I don't even try to compete with guys like that. I've lost the Post Office bid every year, but I keep bidding it. I do that to make him keep his bid low and have one less good one he can take later. I actually have sent a few to them to fill them up. Then I can take the ones I want; turn down the PIAs. It works, it really does.
  4. glenspot

    glenspot Senior Member
    Messages: 255

    Good point

    Good point, Mick.

    His schedule will fill up if he's scooping up everybody he can. I hadn't thought of that.

  5. Robhollar

    Robhollar Senior Member
    Messages: 766

    Id rather make twice as much in half of the time. I dont know if that makes any sence to you but it does me. Dont ever cut your rates to get a job, thats no different then taking money out of your bank and giving it to your sub. Id rather sit at home then cut my rates. I have better things to do then to give anybody anything for free. Anyways the guy who undercutting you is likely to get in over his head then, when his customers are good and mad cause they arent getting the service they had been promised them stop by and drop your card off to remind them they have other options.
  6. richardlewis

    richardlewis Member
    Messages: 37

    he will stop plowing soon probably next year because he wont be able to afford to stay in business
  7. Dwan

    Dwan Senior Member
    Messages: 879

    Has it snowed yet? You will get a few calls after the first snow fall. New at the work? You will find that people that sign contracts early in the year are looking for low prices not so much reliability or quality, but after the first snow fall they are looking for someone to do it at any price. Keep your eyes open during the first snow fall for lots that still need done, have a contract ready if asked to plow and tell anyone that cals that your contract price is say 25% lower then your onetime price if they sign up for the year. Make your contract price what ever you are charging now and rase it 25% for one time calls. See if you can offer something your compition does not offer, like long term contracts of more then 1 year. Mine are 1 year, 3 year and 5 year aggrements and I find most want the 5 year aggrement.
    As for that contractor that runs another business in the summer he will be around forever, get to know him and send him and callins you don't want. see what his hourly price is then tell the callins you beleve he charges more. then call him and say you got him another plow job for more then he is making now. Not only will he like that but he will see that he could make more then he is now and may rase his price on his other jobs to match. I have helped others new in the business rase there pricing this way.
  8. Mdirrigation

    Mdirrigation Senior Member
    Messages: 413

    You say this is your first season , thats the key . Maybe he is not underbidding you , you could possibly be too high , second , he may be someone who is doing this a while and already has word of mouth. The first couple of years in any business is difficult .
  9. Tarkus

    Tarkus PlowSite.com Addict
    Messages: 1,113

    Yes it can take you a few years to learn the ropes and establish a reputation
  10. GreatBigTuna

    GreatBigTuna Member
    Messages: 30

    He may also be using plowing as a loss leader to get his foot in the door for additional buisiness during the spring summer. There are some guys around here that use cheap plowing as a successful tactic to push for more spring business. They are hardly lowballers as they are fully insured and provide quality service, but from their point of view, the benefits they receive are the additional exposure to new customers, additional work in thier main line of business and the ability to offset their overhead costs for the winter. It hurts to compete against these guys, but when you look at it from their perspective, its just good business.

    If you compete with this guy on price, you aren't going to win. If this guy really is using plowing as a loss leader, you will go bankrupt trying to keep up on price. The best advice is to dig down deep and figure out why someone should hire you even though you are more expensive.

    It's all about value. You are not selling snow removal service, you are selling convienience, safety, piece of mind, the ability for a company to stay open during a storm, whatever... My point is that you're not selling the service, you are selling the value that the customer receives for using your service. What additional value do you offer that your competitor does not? Put yourself in your customer's shoes and decide if you would pay more for whatever that value is (if you wouldn't you can't expect your customers to). Once you figure out this added value, you sell the heck out of it. You need to convince the customer that the additional value that you provide is worth the delta between your price and your competitors. If you don't have that added-value as a competitive advantage, you really are competing on price, just like a commodity, so you'll need to find a market in which you are simply not competing with this guy, or you'll lose your shirt.

    Business is not easy, and sucess has very little to do with the technical work of plowing snow. It's hard to differentiate yourself from the competition. This is your first year, so you will have an especially difficult road ahead, but if you want it bad enough, just keep pressing and don't let up. Keep trying to develop that additional value, keep your eye on what your competitors are doing and keep out-doing them. If you do these things, you should do ok. Just don't expect to get rich overnight while you are doing it. I hope this helps a bit. Good luck!!!
    Last edited: Nov 25, 2004
  11. roidman81

    roidman81 Member
    from nj
    Messages: 32


    The rates are the average of all plowing contractors combined... the market will only bear what people will pay! Simple supply and demand.
  12. intlco

    intlco Senior Member
    Messages: 183

    We have the same situation here. The big construction contractors have alot of equipment and their main work is excavation, but here, this guy will go out and bid every lot for $5-$30 only. He even bid Kmart for $50 and Walmart for $100.
    He don't care cause he thinks he making money by just keeping his equipment working. And even after he has a full schedule, he kept take more, and he couldn't even do it, so he make the places wait, and they wait for him cause he's cheap!

    If you have a guy doing this, I can assuse you that he will destroy the rates and nobody will want to pay more. It's happened out here every year.
    And don't forget, even if he losses money, he don't care, because he makes so much during the summer excavating, that he using the snowplow loss for taxes.

    In my area, the other plows also dropped their rates, so it's impossible to make good $$$.
    I personally will only sign accounts I make $$$ on or I won't bother. I got better things to do than freeze my a** for cheap people. And I'm not going to put excessive wear on my construction trucks for nothin'

    It's better to plow less jobs than loss money and ruin your trucks and equipment.
    Also, I've started charging a minumum $100 Service call for anyone who needs plowing that don't sign with me. Just like the Utility Co and A/C Heating guys do.
  13. NJ Plowman

    NJ Plowman Senior Member
    Messages: 794

    KILL HIM !!! :gunsfiring:
  14. captfudd

    captfudd Member
    Messages: 88

    Keep your chin up!

    There are alot of idiots out there who do this stuff every year, I went thru it about 4 years ago and it was a real pain in the A**. I did manage to get about 4 of the 8 back the following season, but as you show you service to your existing accounts they'll talk and you will make up for the lost revenue by new accounts contacting you!

    And NEVER lower your price to compete with a scumbag! :gunsfiring:
  15. glenspot

    glenspot Senior Member
    Messages: 255

    Jobs in the winter

    I think its possible that he doesn't know that he could be making more.

    I like the idea of calling him up starting a dialog with him.

    My guess with him is...that he makes plenty of money during the warm-weather months. And plowing for $200 a year per client is more than he would make if he didn't go out.

    And since he's ONLY plowing during the winter, then he has all day to do these little driveways. I don't think he's trying to be screw anybody .. just making a couple of extra dollars.

    And if he has employees that he wants to keep on the pay-roll, he can keep 'em on and still make a few bucks.
  16. sonjaab

    sonjaab PlowSite.com Addict
    Messages: 1,425

    We got 4 inches today north of Syracuse NY................
    Wet and heavy lake effect and more expected tonight !

    My lots and bank all plowed and salted by 8am sharp !

    Figures, The new lowballer who got the village square account didn't get
    there till 9am or so. The post office, video store, jewelry store, and LAWYERS office open at 8am !
    NO salt either.......................They won't PAY for it !
    Good thing they have a lawyer......Slip and fall city!

    I have bid that job for the past 15 YEARS and never got it.......
    TOO HIGH they tell me..................

    A Job like that I will NEVER miss!!!!!................geo