Bad Economy!!!!!!!!

Ron Musgraves

Ron Musgraves

Exterior Restoration Specialist
Staff member
capitalize, in a bad economy take the work from the guys that are going out of business.

Funny the other day and women called and said i didnt want to use you becuase your to expensive.

The reason was that the guys she was using is gone. she dialed two in the book and no answer.

$$$$$$$$$$$$$$
 
I always said they will drive themselves out of business. How long can you possibly last, if you give your services away?
 
There will be more company’s right behind them though. I just called two people back that I submitted bids to last week and lost them because of price. My prices weren't even that high. Do you really think it's possible to survive if you’re new to the business without any clientele? I'm starting to feel no hope for this industry and your wasting your time to try to sell to them off your service.
 
sharkpw said:
There will be more company’s right behind them though. I just called two people back that I submitted bids to last week and lost them because of price. My prices weren't even that high. Do you really think it's possible to survive if you’re new to the business without any clientele? I'm starting to feel no hope for this industry and your wasting your time to try to sell to them off your service.
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You have to be competitive. It could be your 2 high?

You need to know what the market is. Low ballers are not what the common person on the web thinks they are.

Because a guy does something lower priced and makes more money and teh customer got a good job, thats not low balling. thats beating you....

A low baller is a guy who looses money and often does a good job or a bad job. either way he spent money to do the job.

Someone who wins a bid makes money and does superior work is not a law baller.
 
I think you can turn a profit and still be what I consider a lowballer. Lets say I bid a house wash at $400. It takes me four hours to do. I carry liability insurance, WC insurance, have an advertising budget, my equipment investment is $18,000, I am full time so I have to provide for my own retirement plus pay higher taxes on SS, I also have fuel costs, cleaners, etc. I do the job and net $315 considering my overhead. This work is my only source of income.

Another bids the job at $175. He has no insurance, his advertising consists of home made fliers in zip lock bags with rocks left in peoples driveways, he has a full time job that pays retirement benefits plus covers most of his living expenses, he has a $350 pressure washer, chlorox and a 24' ladder. He takes 8 hours to do the job and nets $130. He thinks this is great.

Its hard to compete with that mentality.
 
lowballers?

Doug. I used to have a $350 pressure washer. I now have thousands and thousands invested in equipment. I can charge less per job now and make alot more money per hour then i used to and do a much better job. Working smarter not harder should always be the goal. If you do that you can make more money and still beat the "low ballers".
 
bears said:
Doug. I used to have a $350 pressure washer. I now have thousands and thousands invested in equipment. I can charge less per job now and make alot more money per hour then i used to and do a much better job. Working smarter not harder should always be the goal. If you do that you can make more money and still beat the "low ballers".
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My first year I didn't have the equipment I now have either. The difference was I realized that with only a homeowner cold water machine I could not take this business to where I wanted it to be. Reading these boards also educated me on proper methods including pricing. I made a large investment in January of 07 in pro equipment. From day one I carried insurance.

Why would you drop your pricing when you were able to go faster? If people were paying at a higher rate before why drop your rates when you increase your speed because of your investment in equipment.

I exagerate a little in the example I gave but not much. I have had guys cut my pricing by as much as 40% sometimes. There is no way I could run my business at those rates. The sad thing is that those guys can't either and they are already out of business and don't even know it. In a year or two they will be gone and a new idiot will take their place.
 
I carry liability insurance, WC insurance, have an advertising budget, my equipment investment is $18,000, I am full time so I have to provide for my own retirement plus pay higher taxes on SS, I also have fuel costs, cleaners, etc. I do the job and net $315 considering my overhead. This work is my only source of income.
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doug, you just gave and example of a guy that's paying to work. that s a true low ball
 
Ron,

Great chatting with you today.

G.L. ~ 2 mill, workers compensation, 12,500 contractors bond.

Marketing dollars are going up for '08 as we need to keep the "operation tempo" going. Already have Service Magic, Craiglists and online yellow pages working.

Our website is almost completely done...yes we are getting a website after all these years!! We need it as we are planning BIG things for '08 & '09 :).
 
I actually charge similar prices to when I started almost 8 years ago, but my hourly rate has doubled from $50 to $100/hour. Due to experience and better equipment, I have been able to double my productivity.

When bidding commercial jobs, many times (not always - depends on the job) I will offer a 10% price guarantee against any written bid from a licensed and insured company. I find it much easier to sell quality over price with residential work. Homeowners are, generally, more interested in getting a good job than on saving a few dollars.

It helps if most of your clientèle is in higher-end neighborhoods. Their referrals will expect the same level of service, as will their referrals, and theirs...
 
Ron Musgraves said:
doug, you just gave and example of a guy that's paying to work. that s a true low ball
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How is netting $80/hr paying to work? Most of the guys who do residential aim at $100/ hr gross. The numbers I used in the example I just made up but if I could do two jobs a day like that, five days a week for fifty weeks a year I would have a net income of $157,500. If that's paying to work sign me up.
 
if you only making 80 per hour on residential, I would say you cutting it very close.

If you factor in all the marketing and other costs of residential work you need to produce way more than that.

Doug, i believe you getting offended for no reason. My point was my definition of a low baller. Nothing more, no saying your one. I wouldnt know what your margins are.

Your wife having a job and extra income should not factor in when you talking profit.
 
No offense taken Ron. My wife's income is never used when I factor what my business is doing. The $315 number I used in the example was net cost. I took out $85 for advertising, chems, gas, etc. The total price for the job was $400.
 
Doug, $400 is a much better number than some of what I read guys are charging for house washes.. so congrats for that. I just wanted to point out, without being a broken record that there is no way a company can net $315 (78%) on any job, espescially since a one man show is more expensive to operate than a company that has crews (contrary to popular belief). You are talking about gross profit. True company net profit is more like 10%-25% if you are doing things the right way.. ie paying yourself a salary.

Here is an article on How To Raise Prices AND Double Your Volume
It will explain the difference in how you define net profit.
 
Exactly right Ken. I couldn't possibly keep the whole $157,500 I mentioned previously. Some would go to me as a salary and the rest would have to stay in the company. I was just pulling numbers out of the air to make a point earlier. The point being a company that is full time, properly insured, properly equipped, that has fixed costs each month that could range into the thousands cannot compete on price with someone who does not have that overhead.
 
Several years ago I had three fence companies quote a fence job at my house. One company was a full time fencing business. One for sure was a part time guy who was a fireman. Not sure about the third. All three bids were within about $200 of each other with the average cost being $3,000.

The part time guy probably could have really undercut the full timers. He could have done this because he already had retirement benefits, insurance, and a salary from a full time job. He chose not to. Good for him. I don't know why he did this but my guess would be he knew what the going rate was for a full time business and decided it was better to do fewer jobs at a higher profit margin, than cut everyone else's prices, get lots of business, work his tail off and make the same amount of money. Maybe he wanted to go full time somewhere in the future and didn't want to screw up pricing he would have to live with later.

I don't see that same type of thinking in this industry. There are just too many chumps running around with almost no overhead working for what turns out to be not much more than minimum wage.
 
Good Example

Doug Dahlke said:
Several years ago I had three fence companies quote a fence job at my house. One company was a full time fencing business. One for sure was a part time guy who was a fireman. Not sure about the third. All three bids were within about $200 of each other with the average cost being $3,000.

The part time guy probably could have really undercut the full timers. He could have done this because he already had retirement benefits, insurance, and a salary from a full time job. He chose not to. Good for him. I don't know why he did this but my guess would be he knew what the going rate was for a full time business and decided it was better to do fewer jobs at a higher profit margin, than cut everyone else's prices, get lots of business, work his tail off and make the same amount of money. Maybe he wanted to go full time somewhere in the future and didn't want to screw up pricing he would have to live with later.

I don't see that same type of thinking in this industry. There are just too many chumps running around with almost no overhead working for what turns out to be not much more than minimum wage.
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Tired of it

I see it all the time in fleet washing. some idiot with a pressure washer thinks he can wash a truck! he thinks if he makes $30 an hour he's a hero. these guys are slugs. the only way they can compete is by low balling. once saw my "compitition" working out of a ten year old conversion van with a home depot special pressure washer and some Zep car wash. another guys works off the back of a F150. he sprays acid all over the place, thinks he's "cleaning". we got some revenge today though.....did a demo this morning, posted it on web site...http://fleetwashchemicals.com/?p=441.

two saying to never forget,

you get what you pay for & what goes around, comes around

Dave A.
Fleet Chemicals
(804) 798-8200
www.fleetwashchemicals.com
 
yea we dont have alot of that in fleets around here. alot of those small time guys cant cater to alot of these jobs. most cant bring water on site, or reclaim and also offer a good quality wash like we do. Thats why I like fleets. Residential is a diffrent story. its just a mess anymore... so many people out of work, so many people willing to do anything for a buck!
 
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