Can You Experts Help Me Understand Our Competitors Bids?

[chipmaker29]

Hi All,

I have a question for all you guys that have more experience than myself in this business. Yesterday we bid a job for an older gentleman that need a sizeable amount of work done. What he wanted done was as follows:

*Take out 24 total trees (most are ash & walnut)
*Grind out all stumps
*Cut trunks & large limbs into 6-8ft sections and stack in homeowners backyard.
*Cleanup all brush/limbs etc.

The smallest trees are about 18" diameter and some twice as large and most are from 40-70ft tall. Some are over the homeowners house and some close to powerlines and some sandwiched between his house and powerlines. Probably 6 that would have to be taken down very carefully to avoid incidents. Others cannot be just fallen either. You would have to top alot of them out and then you could fall some of the trunks where they are at. ALOT of work for sure. Although we are more than capable and equipped to do this job, it is HUGE for us and would be the largest single job that we have ever tackled. We are slow and needed the work so we were planning on bidding a bit lower than normal so that we would have a better chance of landing the job. The guy is a retired engineer and stated he would pay cash money once job completed. Obviously the guy is intelligent and fairly well off.

Ok now for the crazy part...we spent about 40 minutes really looking over the job and seeing where we could cut cost so that are bid would be as good as possible. We ended up @ about $10,000 for the entire job, start to finish and we thought it was a very competitive bid. After we gave homeowner our estimate, he chuckled and said u guys are not even in the ballpark!! We were amazed!! He proceeded to tell us that he has had 12 companies give estimates. Some were as high as $12-$15,000 but he had 3 companies that bid $3,500-$4,500 for this job!!! WOW is all we could say. He ended up giving the job to a company that has 3 total crews in different counties and their bid was $4,000!!! They are an insured, decent company. The have good equipment and crews. They are gonna do the job with one bucket truck and a crew of 4 guys.

We are still failing to understand how the heck any company can do this much work for such a cheap price!! Can any of you tell me how they can do this much work for cheap cheap!! We figured up & they would be taking out each tree and stump, chipping all the brush and raking/full cleanup on each for what averaged out to be like from $100-$150 a tree!!! HOW can anyone afford to work for that? Were we way to high or what. HELP us understand this one!! There is just no way we could ever come out at that low of a price for SO much work!!

Any input would be appreciated!

Thanks guys!!

 

[outofmytree]

Tough to say how close your price is to what my own would be but it is common for companies with multiple crews to underbid in tough times just to pay wages. I quoted a removal for a tough E.cladocalyx with 1.5m DBH that would have weighed an easy 10 tonnes, ran over the house and needed a 42m EWP to complete safely. My bid was $3500 to fell and clean up no stump. The winning bid was from a company that runs 6 crews and was $2200 including stump. Go figure.

 

[Saw Dust Smoken]

employees

Company with employees payroll are getting desperate to keep revenue rolling. Tough time drastic measures. They can do this for a while. Until equipment needs replaced and cant afford it.

 

[treeslayer]

Company with employees payroll are getting desperate to keep revenue rolling. Tough time drastic measures. They can do this for a while. Until equipment needs replaced and cant afford it.

exactly. bidding to cover payroll gets work, until lack of profit meets equipment expenditures.

I've seen really big clearing jobs go for way less than $100 a tree.

 

[lego1970]

If the HO is telling the truth it's probably for payroll as others mentioned. I recently took a job working for a fellow I know who landed a sweet contract doing line clearance. We were paid production instead of hourly so I worked my butt off. I knew he was on a shoestring budget, but last week he couldn't pay us. I like the guy as a friend and having owned a semi for 5 years I know what it's like constantly be robbing Peter to pay Paul so I feel for him, however I had to quit him and take this other job that will have reliable paychecks. There were other reasons why I quit, like him sleeping in when I needed the credit card to fuel the trucks, showing up at the job site spending two hours bull####ting with his buddy groundsman so when I got down I end up dragging and chipping brush instead of moving to the next tree, not communicating with the HO and electric companies, etc, etc. It sucks because I just got done spending $350 to take my ISA Arborist test and now I'm not gonna be doing anything tree related. The new job pays a lot less and I have no desire or intrest in the job, but I need a reliable paycheck and the benefits will ease my mind since I haven't had health insurance is quit some time.

It's ashame those other companies bid it so low because it hurts everybody in the business, however I don't know if I would trust the HO word. I'll do some side tree jobs, mow lawns, and when I owned a stump grinder I would make a little money on the side grinding small stumps and I don't know how many times a HO would laugh at me and say my bid was way to high and that they have had much lower bids, yet I still can drive by and see the same stumps still sitting there or the broken tree limb still hanging on years later.

 

[Ax-man]

Same old story that has been going on ever since I started in this business 30 years ago. I don't get it either how one company can cut there prices so low just to get work. I have played that game on and off and ALWAYS come out on the short end of the stick.

The same thing happened to me recently on township job. Twenty trees were involved for complete removal with clean-up of the stumps. My bid was in the middle and lowest bid was 1/2 of what mine was. I was shocked too and tried to figure out how they could even do the job for that low of a price.

Both low bid companies are into mulch making and firewood but I don't see how you can work for those low prices in the hopes of making money off the salvage.

To me there is really no profits in doing mass removals, very slim margins. Trimming trees pays better profit wise and the owners of the trees sees a value in the work done verses a removal which is nothing more than an expense to the HO which is why the low ballers get the work.

To many tree guys think with there chainsaws instead of there checkbooks.

Larry

 

[treeslayer]

Both low bid companies are into mulch making and firewood but I don't see how you can work for those low prices in the hopes of making money off the salvage.
Larry

Getting $300 + a cord up here for firewood helps, but thats a lot of work left to get paid.


It always gets them in the end.

 

[Ax-man]

Getting $300 + a cord up here for firewood helps, but thats a lot of work left to get paid.


It always gets them in the end.

Exactly the way I think. Lot of work and hours for that firewood and little money. I don't know how profitable the mulch business is but I bet after you add the hours and machine expenses in producing and road time delivering the mulch, profits aren't all that great.


Larry

 

[lego1970]

Getting $300 + a cord up here for firewood helps, but thats a lot of work left to get paid.


It always gets them in the end.

When I first read this post, I thought maybe the other tree company bid so low because they saw some value or possibly even veneer logs from the Walnut trees but after re-reading his post, the HO wants to keep all the good wood so they can't even sell the wood for firewood or otherwise. I guess the good thing is there will be less chipping or they won't have to drag out a grapple truck but man $150 a tree for complete removal seems low and
I've done some cheap ass jobs.

 

[fishercat]

a customer like that.........

Hi All,

I have a question for all you guys that have more experience than myself in this business. Yesterday we bid a job for an older gentleman that need a sizeable amount of work done. What he wanted done was as follows:

*Take out 24 total trees (most are ash & walnut)
*Grind out all stumps
*Cut trunks & large limbs into 6-8ft sections and stack in homeowners backyard.
*Cleanup all brush/limbs etc.

The smallest trees are about 18" diameter and some twice as large and most are from 40-70ft tall. Some are over the homeowners house and some close to powerlines and some sandwiched between his house and powerlines. Probably 6 that would have to be taken down very carefully to avoid incidents. Others cannot be just fallen either. You would have to top alot of them out and then you could fall some of the trunks where they are at. ALOT of work for sure. Although we are more than capable and equipped to do this job, it is HUGE for us and would be the largest single job that we have ever tackled. We are slow and needed the work so we were planning on bidding a bit lower than normal so that we would have a better chance of landing the job. The guy is a retired engineer and stated he would pay cash money once job completed. Obviously the guy is intelligent and fairly well off.

Ok now for the crazy part...we spent about 40 minutes really looking over the job and seeing where we could cut cost so that are bid would be as good as possible. We ended up @ about $10,000 for the entire job, start to finish and we thought it was a very competitive bid. After we gave homeowner our estimate, he chuckled and said u guys are not even in the ballpark!! We were amazed!! He proceeded to tell us that he has had 12 companies give estimates. Some were as high as $12-$15,000 but he had 3 companies that bid $3,500-$4,500 for this job!!! WOW is all we could say. He ended up giving the job to a company that has 3 total crews in different counties and their bid was $4,000!!! They are an insured, decent company. The have good equipment and crews. They are gonna do the job with one bucket truck and a crew of 4 guys.

We are still failing to understand how the heck any company can do this much work for such a cheap price!! Can any of you tell me how they can do this much work for cheap cheap!! We figured up & they would be taking out each tree and stump, chipping all the brush and raking/full cleanup on each for what averaged out to be like from $100-$150 a tree!!! HOW can anyone afford to work for that? Were we way to high or what. HELP us understand this one!! There is just no way we could ever come out at that low of a price for SO much work!!

Any input would be appreciated!

Thanks guys!!

is a customer i don't want or need.sounds like you appeared hungry.that was your first mistake.

 

[Lawnmowerboy48]

I work for large company and we do not bend when it comes bidding jobs. We know it costs us x amount of dollars per man hour. We do not bid jobs to win them, we bid jobs to do them right. We have lost a lot of jobs due to this. However when another company's bid is equal to just the cost of the material that we were going to use on the job who is going to come out in the long run. Know your costs and stick to them.

 

[Bearcreek]

"You might as well do nothing for nothing instead of something for nothing". Thats a quote from farming book I have but it applies to tree work as well.

 

[chipmaker29]

is a customer i don't want or need.sounds like you appeared hungry.that was your first mistake.

Whatever you say...we in NO way "appeared hungry" and i guess if we did then so did every other tree company within a 4 county area. that was work and everything is slow across the board for many people including us. i guess if i were to have bid it for $3,500-$4,000 then ya maybe that would have made me look hungry but my bid was for $10,000 because there was that much work there.

anyway...i sure appreciate all your responses and input. i agree that there is slim profit margin in large removal jobs. we prefer to do much smaller jobs and more of them. our competitors bid was ridiculous in my opinion. large companies lowballing this work just to cover overhead is crappy but i do agree that it will come back around and bite them in the ass!

well we are gonna keep @ it and good luck to all you good people here. u win some & lose some so we will get the next one and i hope you guys do too

 

[chipmaker29]

"You might as well do nothing for nothing instead of something for nothing". Thats a quote from farming book I have but it applies to tree work as well.

LOL! i like that...

 

[TackleTree]

you bid one of 2 ways. Either you bid quality paying jobs set on your price or you bid jobs cheaper and do a lot of em. I myself prefer the first way.

It s all about keeping the crew and equipment busy though. I can afford to bid more quality paying jobs because I run very low overhead. If I dont get my price thats fine I move on to the next bid. But I am not responsible for payrolls etc...

Either way one must figure out there formula to make money.

 

[Philbert]

Just a thought, if you are really curious and have the time. Ask the guy if you can come watch when the other crew is scheduled to do the job. Appeal to his vanity. Offer to bring in take-out for lunch. Wear a wig and bring a lawn chair.

If you can watch this other crew work you will quickly learn if they really do have a more efficient way to work (you win because you learn something you can apply to your own work), or they are working at a loss to cover some cash flow issues (you don't lose anything).

Maybe you will be there for some surprises (extra charges, damage roof, etc.).

Again, just a thought.

Philbert

 

[chipmaker29]

Just a thought, if you are really curious and have the time. Ask the guy if you can come watch when the other crew is scheduled to do the job. Appeal to his vanity. Offer to bring in take-out for lunch. Wear a wig and bring a lawn chair.

If you can watch this other crew work you will quickly learn if they really do have a more efficient way to work (you win because you learn something you can apply to your own work), or they are working at a loss to cover some cash flow issues (you don't lose anything).

Maybe you will be there for some surprises (extra charges, damage roof, etc.).

Again, just a thought.

Philbert

Thanks for the thought. I have often thought about that when people think bids are to high. Especially when we bid stumps for people and they say, "your bid is just to high", "i am just gonna dig it out or burn it out" LOL! i usually say (in a joking manner of course) well keep my card and give me a call whenever you start digging on that stump. i am gonna bring my lawn chair and cooler and watch ya...LOL

Things people say crack me up...it is definitely comical sometimes:greenchainsaw:

 

[BCMA]

There is a way you can compete with these low prices. Drop you insurance and workman’s comp., pay your employees under the table, do not invest in personal protection equipment.

Numbers do not lie. Unless you are looking at this job wrong, and how it can be done, these people are cutting corners somewhere. This is almost 1/3 your price. Doesn’t something smell fishy? Of course, remember, we are an unregulated industry and compliance by many is looked down upon.