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tiedeman
03-28-2006, 02:18 AM
How many people actually will offer customers, "I will beat their price" deal?

I mean, if you do an estimate, and then tell the customer, "I will meet or beat any other estimate that comes your way."

Steve
03-28-2006, 07:13 AM
Hi tiedeman,

This is a good question. One to make us all think.

My take is if you do something like this, you will need to have some sort of addendum stating the quote needs to be provided by a licensed and insured LCO. Then you will need proof of it somehow.
Also maybe you should further have something that if you can't meet or beat it, you will do something as a relief value. For instance 'If I can't meet or beat it, I will ..........'

What if someone just lowballs and now you have to meet or beat it?

I think it is an interesting concept to try and see if it works but just leave yourself a way out.

I wonder what others will say on this though.

kc2006
03-28-2006, 08:45 AM
I recall someone on ******** did this, they had good results and they had it stated in the ad's that the other quotes or your current company had to be insured and licensed.

A good little story to make you think otherwise though. One of the older bigger companies in town put a bid on a small mulch installation job that a friend of mine also put a bid on. It was 8 yards of mulch, x amount of edging, putting down a pre-emergent in the beds, and part of the bed, and a small section was on a steep hill so the mulch would need to be carried up in a 5gal bucket. My friends price was 900, my price was 775 without seeing it and the reputable company was $335. Now I know he doesn't have mulch in bulk at his shop because I know where he lives, the mulch alone is going to cost him almost 200 dollars. So if those people called, you'd have to meet or beat that price and I'm sure they'd complain if you said you couldn't.

tiedeman
03-28-2006, 07:28 PM
But even if the guy said $700, which would be lower than both of yours, there is a good chance that he would land the work.

More and more I think customers are price driven, yet I do agree they want quality. But if they had a choice between the quality of the service or saving money, I think that people would choose the price.

Steve
03-29-2006, 01:10 AM
When you talk with potential clients are you able to feel out which ones are more price driven and which ones want quality before you give them a bid?

tiedeman
03-29-2006, 01:37 AM
True, but in my honest opinion, in regards to the maintenance side, not necessarily the installation side of lawn & landscaping, customers are price driven. Let me explain, with the installation such as landscaping, it is usually a pretty descent size project that will be there for many years to come so the customers want a quality job and will usually pay top dollar for quality.

Now in regards to service, they are there all the time to maintain the place and nothing really changes. It is kind of like the phone company or electrical company. You always try to save a little money each month with these type of companies because they are always there long term, so why not save some money.

With the application side of the business I notice two things drive customers:
1. The number one thing at first is price...always.
2. Then the number two thing is controlling weeds or making their lawn lush

If after the first or second year, you have not achieved number "2" then they will try to find someone else, based on price all over again.

Perfect example is this week. I gave two estimates on Monday, and will be giving another one Wednesday. The reason that I got the work was because I was $70 cheaper for the entire year compared to TruGreen. The gentleman that I talked on the phone with yesterday (whom I am giving the estimate to on Wednesday) told me point blank, "TruGreen is coming to give an estimate as well, and I am a salesman, I sell hydro products to companies, and I know what is involved when they buy my products, and more than likely I will go with the cheaper priced one just like they do."

Steve
03-29-2006, 01:42 AM
You know, I think you are onto something here. The meet or beat idea isn't such a crazy idea after all.

Provided you have a way out if you can't meet or beat it.

It could actually make you more money! What if in this case instead of being $70 cheaper for the year, you were $40 or $30? You would get the job and maximize your profits!

tiedeman
03-29-2006, 01:54 AM
True,
I am not purposely trying to be cheaper though in regards to applications. *It was just that I was cheaper than TruGreen and usually I am.

For example, there was one lawn last year, approx 12,000 sq ft that TruGreen charged them $72 per application. *I go in there, I can do it for $57 per application. *It only costs me approx $28 for the material, and I made $29. *51% [profit margin. *Might not seem like a lot, but I was only on that property at the most 10 mins. *So I was making approx $2.90 per minute.

My cost is much cheaper because I find the cheapest suppliers and bargain with them on cost. *Just like this year. *I teamed up with my buddy from the local Ace Hardware to buy me some products. *As long as I could guarantee him that I bought so many bags during the year, he would honor the prices. *I just stopped in their today, picked up 10 bags of combo products, dropped $450.00. *I turn around, and apply that and make $712.50, with a profit of $262.50. *A 37% profit margin. *

Now, sure I could travel approx 30 miles away, pick up the same material for probably $405.00, but then I have to worry about travel time, and making that trip every time I need something. *That way, this guy is only 2 miles from the shop. *I can place an order with him, and he will have it delivered within 3 days. *

I usually try to shoot for a 30-40% profit margin on applications. *I am not purposely trying to come in lower, I just can. *Since I am still trying to make a major jump into the application side, I also want to draw in as many customers as possible, and the only way that I can do that is with price at first...like I said above, after that its quality.

tiedeman
03-29-2006, 01:58 AM
Back to the whole beat the price thing, lately I have been sending out direct mail letters to TruGreen customers telling them that I will do the application for 15% off the price that current applicator does it as. *I actually look at this way...I am not really losing money, I am probably making more money off from that deal. *

For example, lets say that TruGreen does a 15,000 sq ft application at $90 an application. *My price, based on my sq ft price would be $71.25. *Now if I go by that 15% off from what TruGreen does, I would charge the customer $76.50. *I am still coming in lower than TruGreen, getting a customer, and actually making more money

Steve
03-29-2006, 02:17 AM
Very good thoughts.

The thing I like about the 'meet or beat the price' offer versus the 15% offer is you could be making more on the 'meet or beat' offer.

What if it only too 5% or 10% to win the bid? You would maximize your potential profits.

This makes me think of advertising ideas you could use.

What if part of your brand was that you will meet or beat any competitive price?

Then next I wonder when you give bids, should you ask the homeowner to get bids from other companies first before you bid? Should you tell them to call you once they get 1 or 2 other bids?

How best would it be to handle this or market this?

tiedeman
03-29-2006, 02:21 AM
Why I use this technique is because most of the customers that I am going after right now are maintained by TruGreen. I would say 90% of them. And I already know approx what TruGreen charges in the area. I thought that it would be a great and easy way to get my foot in the door

tiedeman
03-29-2006, 02:22 AM
now I talked with a guy down in Oklahoma, that got 250 lawn accounts in about 3 months. *How did he do it, he would put his price on all the doorhangers that he sent out. *It worked too! *Go you imagine getting 250 customers in just 3 months all because you took a chance, and wrote the price right there on the doorhanger of marketing material.

He took the idea from the guy that does $25 lawns. He knows that he was doing "lowballing" yet was doing it to get his foot in the door because this was his first year

Steve
03-29-2006, 02:39 AM
That makes sense.

Then once you get the customers over time you could raise the prices and keep the ones who stick with you. But at least you get the customer base.

I think it makes it easier for you if you know how your competitor prices the jobs. So then you know you can offer a cheaper but still profitable price when you write it on the flyer.

tiedeman
03-29-2006, 02:53 AM
I agree. If I really want to do, I could do applications that I only make $5 a pop, but I don't want to do that. I know that I don't have to do that. That is the main key. If you can get away with charging more, then do it. Don't always leave so much on the table

Steve
03-29-2006, 03:04 AM
And potentially offer other upsell ideas. If you ever go to Jiffy Lube or the like, they get you in with a cheap oil change and then tell you all your filters and everything need replacing. That's where they make their money.

tiedeman
03-29-2006, 03:06 AM
Of course, when I come and do a property estimate, I already have the measurements for the lawn, so I can give them an aeration bid right then and there as well.

I also tell them about my all organic applications or phosphorous free programs, and how I can control weeds in landscaping beds as well.