Lowballers!

[Ric]

I don't do mulch, but they are spending a lot on 10 yards of mulch. Also the amount of gas they will use through out the season is probably going to be $700-1000 just for that property. They are not going to have any profit margin

Iagree with what you are saying but at the same time your figures may not be accurate. Who's to say what a company can buy mulch for or how much money they spend on gas? With no overhead, the discounts some of the businesses get and using the who you know advantage it would be hard to say what this individuals profit margin is and how much he wants or needs to survive. Everybody's wants needs, and bottom line are different.

 

[ericds]

True, like I said I don't do mulch often, and when i do I only do a little for residential. I mostly just mow, lead cleanup, and snow removal for half acre residential lots. I don't have any commercial, yet, but I was just trying to make a point that after all costs, such as gas, materials, and paying helpers that the company wouldn't do well on that client

 

[motoman]

eric, An intelligent buyer would throw out the low ball, especially in view of the relatively tight grouping of the other bids. I am not in the biz , but I imagine such a job is very attractive to you. If the "market" works properly you and your competition would be busy when the low baller cannot perform. Then your bid can go up due to the risk you take fitting that big job in. If that seems absurd. The flip side (theory) says there are too many suppliers.

 

[Ric]

eric, An intelligent buyer would throw out the low ball, especially in view of the relatively tight grouping of the other bids. I am not in the biz , but I imagine such a job is very attractive to you. If the "market" works properly you and your competition would be busy when the low baller cannot perform. Then your bid can go up due to the risk you take fitting that big job in. If that seems absurd. The flip side (theory) says there are too many suppliers.

An Intelligent buyer? That's the problem, when it comes to money intelligence gets waived every time. They will get the job done as cheap as they can, that's the reason for the bids. If they're putting a job out for bid they are not taking bids to pay the highest prices. There are just to many small businesses out there willing to work cheap and do a reasonable job. That's the reason so many complain about the Lowballer.

 

[motoman]

Ric, My talk is just as a bystander, so perhaps i should stop... You as a buyer (of things) are intellligent if you can get satisfactoy things cheap. It stretches your resources. If the lowball guy is doing a satisfactory job in the same geographical area something is wrong in the "free" market. Has he hired illegals and paid slave wage? Does he have a secret machine (s)? His bid is so much lower either that is true or all the others are expecting windfall profits (unlikely). An unlikely scenario is that he is doing "loss leader" so once others are driven out of business he raises prices to recover his previous losses. The latter has worked for book stores who drove the little guys out. If you guys with the group of higher bids wait you will see this other guy fail unless he has a secret, or doesn't know he is going broke paying himself to be low bidder.

 

[Ric]

Ric, My talk is just as a bystander, so perhaps i should stop... You as a buyer (of things) are intelligent if you can get satisfactory things cheap. It stretches your resources. If the lowball guy is doing a satisfactory job in the same geographical area something is wrong in the "free" market. Has he hired illegals and paid slave wage? Does he have a secret machine (s)? His bid is so much lower either that is true or all the others are expecting windfall profits (unlikely). An unlikely scenario is that he is doing "loss leader" so once others are driven out of business he raises prices to recover his previous losses. The latter has worked for book stores who drove the little guys out. If you guys with the group of higher bids wait you will see this other guy fail unless he has a secret, or doesn't know he is going broke paying himself to be low bidder.

Now don't get me wrong because I know where BHLC and some of the others are coming from and I'd be Pis***off also, but I think the thing about this guy that has under bid everyone is the fact that he is doing the job at very little cost to him. All he is spending is time. His bid is much lower than the others that is true but at the same time the others I could guess are looking for big profit margin. I'm guessing that most likely this guy doesn't pay insurance or any thing else, he's most likely showing up to do the job with a residential equipment all purchased from Home Depot for a grand total of 2 or 3K so what overhead is involved for him besides gas and some two stroke oil and at the present he is buying his gas using a Winn Dixie card a dollar a gallon cheaper than the pump price to save money and he is using every trick in the book to cut his cost.

I also believe this guys life style could play a big part in what he has to bid. Is the guy living in a half million dollar home with a $2500 a month house payment, I seriously doubt it's more like a twenty year old double wide and drives a 1984 F-150 Ford pickup and is as happy as a pig in you know what and his only overhead is his beer money :drink:

The thing about the Lowballers is they don't care about there bottom line and what type of profit or how much they actually make after taxes at the end of the year which they probably don't even file. They live day to day and for the present and that's how they run there business that's the reason there here today gone tomorrow.

 

[antnsue]

Hi. Interesting thread. I think it is just best to let the market set your prices. When we started we were a bit expensive and gradually we dropped our quotes and hourly rate until we found a level that got around 70% of jobs quoted for. We figure around 70% conversion is about right. Other wise you are too cheap. Can't figure out why you would lowball. No need too. Plenty of work out there, just have to make sure your competitive with others in your area. That's it. Different areas will give you different rates. Know your areas. Know the market in those areas.

 

[motoman]

Ric, Two things I picked out of your examples...His tractor is a big box unit. In my limited lawn mowing and studying this forum I know now that durable , capable equipment is the best investment for commercial use. If the lowballer has 2-3 Intek 24's (my only ref) he's on his way to broken commitments and limited mowing capabilities. This result over a couple years will reduce whatever reputation he had to a low level. I understand when I pass a pro here with his trailer and top end equipment . You cannot perform daily with marginal stuff . I am willing to fuss with my Crafstman whenever. The other item to be just touched on is overhead. A bean counter concept which is seldom fully understood and a science. I am not an accountant, but I believe many small business people are close or below breakeven points and don't know it. The cash flow keeps them afloat. There are several examples in my family. I admire small businessmen and know that the satisfaction gained will overcome a lot of facts. You might not believe the factors a cost accountant would evaluate to determine if a profit is being made in a particular enterprise. Anyway , in a former life I had my nose rubbed thoroughly in bidding and evaluation of vendors. If customers don't investigate , shame on them. They will pay in the end.

 

[Ric]

Ric, Two things I picked out of your examples...His tractor is a big box unit. In my limited lawn mowing and studying this forum I know now that durable , capable equipment is the best investment for commercial use. If the lowballer has 2-3 Intek 24's (my only ref) he's on his way to broken commitments and limited mowing capabilities. This result over a couple years will reduce whatever reputation he had to a low level. I understand when I pass a pro here with his trailer and top end equipment . You cannot perform daily with marginal stuff . I am willing to fuss with my Crafstman whenever. The other item to be just touched on is overhead. A bean counter concept which is seldom fully understood and a science. I am not an accountant, but I believe many small business people are close or below breakeven points and don't know it. The cash flow keeps them afloat. There are several examples in my family. I admire small businessmen and know that the satisfaction gained will overcome a lot of facts. You might not believe the factors a cost accountant would evaluate to determine if a profit is being made in a particular enterprise. Anyway , in a former life I had my nose rubbed thoroughly in bidding and evaluation of vendors. If customers don't investigate , shame on them. They will pay in the end.

Motoman I agree with everything you said, the guy probably wont be in business long but long enough to mess someone else or another business up. You are correct in saying they're close or below breakeven points and don't know it, and they depend on there daily cash flow keeps them afloat, that's exactly what they want. What they will eventually end up doing is working for the banks or HUD doing foreclosures because they don't have equipment needed or are not able to do any type commercial or residential work. The big problem with lowballers finally going out of business is when they do there's two more to take his place and for the guys that have the legit business and has had for a number of years busting his hump it becomes a battle he can't win.

 

[Ric]

This thread puts me in mind of a thread or Rant I started back in 2011 about the guys just starting out in the business and earning the name of lowballer ya'll mite find it interesting reading and comparing what was said then as to now, it drew about 6 pages it was called humm-breaking-into-professional-lawn-care-business

http://www.lawnmowerforum.com/comme...ing-into-professional-lawn-care-business.html