Pricing

[picframer]

People who know me will tell you I am one of the easiest guys going, rare that I get upset and am the type that would give the shirt off my back to help someone, well most of the time. It must be the season or weather, not sure. Following my other post about additional services, I ran an ad last Friday and have a pile of inquiries for post holes. Now I already know I have next to no competition other than one fence company and rental stores, checked online, yellow pages etc. The one company that does post holes is three times my rate, the way I look at it, if I am grossing $90 an hour plus and making, in my case about 50% profit before depreciation and taxes, then I am fine. Now I know we all have clients try to beat us up a little on pricing, sometimes it's a game, I guess today I don't want to play. Three prospects wrote back to my reply saying they needed a better price, I took the dog for a walk to cool down and give this some thought, then I wrote the following "Thank you for your reply to my estimate. I am already the cheapest in the city, in fact I believe there is only one company in the city that offers this service according to clients, the unit's we use is over $28,000 so in short, no I can not and will not offer a better price. You can try a rental unit (hand held or tow) a mini excavator like ours can be rented for $450.00 a day plus $150.00 transportation from United, Hertz or CAT, I have done some research and am shocked at the number of personal injuries and back issues by people using the rental units, it would seem mainly due to a lack of experience." I wanted to get my point across without being too strong, just bugs me I guess. I've received two email replies both with about the same wording "I understand, i would like to hire you , lets schedule a day and time when you are available next , thanks xxxxxx or call me at xxx-xxxx" So I think there are times when we really have to stand our ground and not roll on pricing. I may be in a little different situation than most in that if I don't get new jobs it's not the end of the world, we have lots to do. I was just looking for something different to do with the excavators during August. In any event...........just a thought

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Andy
Halifax, Nova Scotia

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Last edited by picframer; 08-04-2010 at 02:51 PM.

[Steve]

Lawn care business tips

Andy, In such a situation, do you think they were still shopping around and looking for a better price but couldn't find one or do you think you were able to explain to them why your price is what it is and that helped sell the service?

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[picframer]

Originally Posted by Steve

Andy,

In such a situation, do you think they were still shopping around and looking for a better price but couldn't find one or do you think you were able to explain to them why your price is what it is and that helped sell the service?

I think a lot of people we deal with have the mindset we are in the car sales business, the price is not the price but the starting point for negotiations. In my case I know my costs, I know the competition and what they are charging, finally my price is my price. Although yesterday was an office day due to the weather, there are times when certain emails in response to my quote seem to rub me the wrong way, so I was thinking yesterday take a direct approach as you don't need the business and see what happens.

I have had people in the past respond they will simply rent the equipment, then they contact me a few days later saying they were not able to perform the work, my response is thanks for contacting us again and sorry to hear rock has hindered your ability to drill your holes, out rates for backhoes to dig the rock out is $85.00 per hour or a mini excavator starts at $105.00 per hour, we do not haul rocks away however we do have a trailer dump service which can haul 14,000 pounds per load for $225.00, plus HST

I will however dicker on some large wood cutting/chipping/excavation jobs, say those over $8,000 as I have room to move around.

In short you can take this approach if you know who your competition is and what their rates are.

[Steve]

I have had people in the past respond they will simply rent the equipment, then they contact me a few days later saying they were not able to perform the work, my response is thanks for contacting us again and sorry to hear rock has hindered your ability to drill your holes, out rates for backhoes to dig the rock out is $85.00 per hour or a mini excavator starts at $105.00 per hour,

In such situations where a customer basically says, thanks but I'll do it myself, do you find you still want to work with them after wards if they call you for help? Or does that kind of set off a warning they will be difficult to deal with?

we do not haul rocks away however we do have a trailer dump service which can haul 14,000 pounds per load for $225.00, plus HST

Can you explain this more? Would this be some outside service that performs the job?

[picframer]

Well to be honest, yes it quite often rubs me the wrong way and I really find no joy in having to fix a job someone else has started. What sometimes happens is the customer in this case will drill the holes in the wrong locations, I can't move a hole 3 or 4 inches so it has to be dug. In the case of trees/chipping, OMG I have seen some clients go out and buy a chainsaw or rent one only to call because they got themselves into trouble, well I can't drop everything and run to them and I don't, I have been called some interesting names because I wouldn't. It takes experience falling trees and I explain this, if you land a tree on a power line, car, house, you can't expect us to be there within an hour to fix it. I see this even in excavation.

I had a client that wanted a spot excavated out of a side hill so they could put a hot tub in, gave them a quote, response was they would rent an excavator themselves, i did ask if they had experience as this was not the spot for a beginner and they did not. Long story short, I think it was about two weeks after they called me, buddy had upset the rented excavator and wanted me to come by and bring it upright and finish the job, in this case I simply could not as I along with all our equipment was going 6 to 7 days a week, buddy freaked out on the phone.

When customers get themselves in a mess, quite often they try to make their problem ours, watch for this as they will sneak this in, it is not our problem and if you allow a client to make it your problem, you are headed for disaster.

I have had clients accept quotes over ours from other companies, call us after they were through as the results were poor at best, last year, maybe because it was our first year, we would go and fix it, this year I refuse. More often than not it costs more money to fix an issue then to do it right the first time.

In short I know my costs, I know except for mowing, I am generally lower than the competition as I do not have the overhead so I stick to my prices, at the same time there is always a cheaper way to do a project i.e. do it yourself and rent the equipment, some clients can and do acceptable work, most can't but they will not accept this until they get into trouble.

[Steve]

Andy,

I was thinking. If you get calls from customers who try to go the cheap way first, would it be worth your while to get them to give a testimonial after about what happened? Maybe take before and after shots? Then you could put this on your website and also when customers in the future do the same thing, you can say please, go to my website and read the section 'why we should have gone with you in the first place.'

Would that help seal the deal in such situations?

When customers get themselves in a mess, quite often they try to make their problem ours, watch for this as they will sneak this in, it is not our problem and if you allow a client to make it your problem, you are headed for disaster.

This sounds very interesting and insidious. I bet a lot of newer business owners totally miss this. Can you tell us some things to look out for? How do customers try to do this?

I have had clients accept quotes over ours from other companies, call us after they were through as the results were poor at best, last year, maybe because it was our first year, we would go and fix it, this year I refuse. More often than not it costs more money to fix an issue then to do it right the first time.

What is your view on the difference between customers trying to do it themselves at first vs. hiring someone else to do the job at first?

How does this effect you when coming in to fix the situation or refusing to get involved?

[douglasmcintosh]

You have a battlefield in your town??