They don't want to pay the actual prices for the standard tree co.

[TreeClimber57]

even the hacks come here posting, looking for ways to steal n sell the knowledge they dont have the skillset to apply!! im so fed up I put my lift up for sale & am calling it quits after this year for tree work, I might do some hit n miss stuff but only if the price is right..........

Hey hang in there.. if all the good guys hang up their gear what would the industry become.

 

[jefflovstrom]

The title of this thread is "They don't want to pay the actual prices"..

What are or what does "actual prices" mean.

I guess the question is, without gouging people how much can you or anybody charge and why should you or anybody charge that much?

When prices go up for anything, it is usually, or at least hopefully not simply because some money hungry gouging *@& is taking money away. In that case the old saying is "you can fool some of the people some of the time..but.."

You see.. what is actual price.. and how does one come to that price or how does one deserve that price.

It is NOT simply because you are doing tree work that you automatically fall into a slot and should expect NOR deserve to get the same as the highest paid tree companies out there.

Prices come at or for a reason, and for good reason people are willing to pay premium prices for some services provided by SOME companies.

Reasons are many, but can be broken down into something like this:
a) legitimate companies (registered businesses), with insurance, workers compensation, members of professional organizations such as ISA & TCIA, members of BBB, etc.
b) companies with certifications; staff who are professionally trained; staff with years of experience under their belt and lots of satisfied customers to prove it
c) equipment - the biggest and best .. trucks, cranes, GRCS, Hobbs, bucket trucks, you name it..
d) likely a few more but let’s stop here..

You see customers are willing to pay for -- safety -- professionalism -- integrity -- confidence job will be done properly and their place left as good or better than when the job began.

Training, experience and proper equipment allows one to do the job more safely, more professionally and more quickly. Customers like that..

Now there may be more; only a short list above for sure..

But as I don't really know you I cannot be critical.. Let me ask, how much of what I have listed above describes you and your company? You see if you can check it all off.. then perhaps you should charge and likely deserve premium pricing. If not; then perhaps you can tell us or me why you deserve or should even ask or expect it?

You should get a "fair" price for what you do, and the quality with which you do it. What work do you do, at what quality.. and what is fair.

If people are not willing to pay you what you consider fair; then step back and examine what the customer sees and why they are not willing to pay it. There seems to be a lot of flashing red lights here.. what IS the issue.

And frankly; if you can not say yes to at least half of above; what the *#)) are you doing in tree business at all. You should start working for somebody who knows what they are doing.. learn the ropes first and the start a company like many of us did.

Not even 1 of the above.

 

[ForTheArborist]

TC, I'm really just throwing the subject out there to hear the word on how other people are being paid for tree work. I've always understood the fact that you get what you pay for or you get paid for what you sell. No kidding.

The fact of the matter is that the customers I'm dealing with are primarily in dirty to begin with. They are looking for that bottom dollar bid, and they don't care if anyone is making/losing money, legal, or whatever. Not everyone is like that. Many people take my service over others because they understand me better than them, and they can see I have a good plan of execution. They also just trust me more based on how I am personally. They say they like the qualifications that my initiative and determination have earned/justified, and they tell me out front that they are willing to pay more for my services over others. I seem to take the money out of the dirt bagger companies' hands.


My point in the thread was that plenty of people do not hire us even though the qualifications are all on the front. The prices are comfortable too instead of so high they are going to make me rich. They are actual prices.

What are the actual prices?

Figure up the over head costs of the month, and divide that sum by 20 days x 8 hours per day. That is a fair estimate of what each hour is worth to you the owner, but now add what is going to make you comfortable enough to keep managing a productive service. That is what it is worth for the whole service. That is actual pricing.

Nothing wrong with the little company, and their actual pricing. They are legal, insured against accidents, and the owner makes off well enough to keep jim in the captain's seat year after year developing the great tree care vision.

That actual pricing will get you by for a long time, but the only way to make good money with a pack of workers and some machinery takes another kind of thing all together. 90% or more of everyone here are not interested in that anyway.


Because tree service allows for shady business practices, lot of guys are going to get by on not charging for taxes or just keeping the money for taxes. Companies that incorporate taxes into their prices do raise the prices, but just because another bidder has his price just as high, doesn't mean he won't be pocketing that tax money. Who can tell??? It's a shady market.

Then there are the fees for insurances and quality gear money. If the customer doesn't have to pay for the costs of all of these things, then bye bye professional tree guys. Just the clientele that choose the pros or know no other options than the pros will keep pros in running and available.

 

[ForTheArborist]

Unfortunately, owners, you are in a business that is subject to the beating business ventures take.

When Home Depot posted up around the entire USA, nearly the entire hardware market went under. No more little stores. Sam Walton's creation did some what the same thing, business owners gripe about Walmarts coming to there town, but do the average people? They like their prices, so they get along with Walmarts and Home Depots too.

I was an avid athlete, in college, and running a crazy college kid business. Myself and all of the others that had done that work for a long time were put out of business. The market was super saturated, and the method of making it or breaking was completely overturned. Some of the originals stayed, but most of us got out because the money was not worth it, or it was to be cold hearted scamming your own people.

I learned something about running a service back then. The only person that can save you is you unless you work for someone else, then the boss might save you.

Now I had that whole market taken out from under me in a matter of 1 year. Maybe it will happen in the tree service industry too. Based on statements on this website this market may be slipping away too.

 

[TreeClimber57]

They are actual prices.

What are the actual prices?

Figure up the over head costs of the month, and divide that sum by 20 days x 8 hours per day. That is a fair estimate of what each hour is worth to you the owner, but now add what is going to make you comfortable enough to keep managing a productive service. That is what it is worth for the whole service. That is actual pricing.

Well, when you calculate the costs of the month, ensure you include the following (and more).

a) any office costs - heat, rent/mortgage, electrical, internet, postage or shipping costs, website, computer, software licensing, cell phone, office phone, furniture expenses, office supplies, upkeep costs
b) any vehicle costs - licensing, annual inspections, maintenance, any other gov't fees that are vehicle related for commercial vehicles, any trailer costs - inspections, maintenance, fuel, etc.
c) operational costs - tool replacement, new tools (most of this is capitalized so be careful on new tools - depends where your capital threshold is dollar wise). fuel for saws, oil, any chipper fuel, chipper knive replacement or sharpening, rope replacement, factor in breakage, wear, etc.
d) depreciation expense - life of vehicle or tools - cost of replacement and factor over life (for each and every tool, trailer, etc) -- do same for computer - office furniture, etc. (this is an actual expense - when you purchase the equipment it is NOT an expense as is capital in books). This will be several thousand dollars a year; perhaps tens of thousands or hundreds of thousands if big operation.
e) legal fees, bookeeper fees, insurance, membership fees (TCIA, ISA, BBB, etc), subscription fees, etc.
f) labor costs - what your workers cost - INCLUDING YOUR OWN PAY - any income taxes, or other gov't deductions paid by company, workers compensation, etc.
g) any other items - fines, parking, etc.. that may not fit into above.

I may have missed some as am doing out of head here, but EVERYTHING INCLUDING YOUR OWN PAY is in here.

Divide out over the time you have this done.. remember that the above needs to be annual costs. If you only factor work for 8 months or 10 months of year - factor that in as some costs continue annually.

Once done.. THAT is what you need to charge - MINIMUM. That should, if done correctly cover your costs and allow you to continue forward. Now if you want to factor in growth; you can adjust accordingly; but new equipment is actually capital not expense on books.. but company either needs slush buffer in cash or borrow to get capital equipment.

What that actual dollar figure is depends on how big you are; where you are located, etc. It is also driven by local market to a large degree.

So I can not give you an actual price. I can only give you some idea on how to calculate.. and you do NOT add in enough to make you comfortable or carry on after the calculation, that is part of the calculation. It to a large degree depends on what you need or want to pay yourself. Keep the business and personal expenses seperate; even if you are the sole owner of company. Keeps clearer in your mind, and easier to factor out.

You do need to sit down and work out above; keep a record of it.. then track actual expenses.. see how close you are to what your forecast and then adjust. You will need to redo the numbers each and every year; and adjust as costs and economy change.

 

[TreeClimber57]

Now I had that whole market taken out from under me in a matter of 1 year. Maybe it will happen in the tree service industry too. Based on statements on this website this market may be slipping away too.

Not likely. The big players are actually in the higher price range, because there are REAL costs.

The reason the market is "slipping away" is due to illegal operators, who are NOT insured, NOT registered and NOT legal.

What we need in some areas is the gov't to catch a few; hammer them hard; and make an example. Then the market would come back to reality. Either that or bring in legislation making it illegal for anybody to work without specific gov't sanctioned credentials, with fines to any homeowner and company for hiring illegal operators.

Now frankly I AM NOT in favor of either; as when gov't gets fingers in things usually go bad. But unfortunately until they do people will operate illegally.

You said the tree service is shady and a lot of illegal operators will be there. No different than renovators, builders, etc. The trades where this is less likely to occur is gas fitters, plumbers, electricians, etc.. where there is licensing and official apprenticeship in place. Homeowners tend to be a bit more aware of the fact that scum exist in renovation trade and try to look out for it, they seem somewhat less aware in the tree service industry.

What you are talking about in above is big, legal companies coming in and doing things for less overhead and therefore charging less. That is legal and is part of business. In fact in tree business, the bigger players with bucket trucks and cranes can do large jobs for less cost than those who have pickup truck and chainsaw.. that is a fact. The small jobs they likey have trouble beating the small guy on pricing though..

 

[ForTheArborist]

I keep concise books on everything coming in and going out, so I'm not just some guy on the lawns around here "speculating" what the costs are. Your list is definitely much truer than the list I wrote here. I was only saving time.

Some guy wrote a while back about what to charge. He said if you work all month, and you can't pay off everything at the end of the month, raise the bill. And then he said if you're winning more than 70% of the bids, raise the bill until you're just winning 30% of them. That seems to be about right with me. 7 out of 10 of the jobs I don't get called back to do. The rest keep us busy month in and month out. I almost think that I need to raise my price, and if I did, I would still get that 3 out of 10 keeping us busy.

I really think I could be a little more clear about the dilemmas in hiring tree services, and how we are covered in all of that. Very explicative about what they are really dealing with here. I think I would book a few more out of ten then. It's all about how you explain it, and to me that part of the job seems like campaigning just like politicians.

 

[TreeClimber57]

I He said if you work all month, and you can't pay off everything at the end of the month, raise the bill. And then he said if you're winning more than 70% of the bids, raise the bill until you're just winning 30% of them.

Not sure about the 30% part; but for many 70% may be high. However, I do know one company who gets almost every job they bid on. They do not bid all that ask; they are somewhat selective in what they bid on. They are well known in the area; do immaculate work; and get likley 3/4 of the jobs they bid on. Some of their customers only call them, and would pretty much pay whatever they said the price was.

So, depends on who you are, experience and reputation to a large degree.

Also, if you are bidding on the low end of the scale for jobs, you will have a lot of competition and a lot of lowballers to deal with. If I get a call where I think the person is looking for lowest bid, then I will not bother putting in any numbers usually.. is a waste of time and resources.

 

[ForTheArborist]

If I get a call where I think the person is looking for lowest bid, then I will not bother putting in any numbers usually.. is a waste of time and resources.

I've been thinking the same thing lately. If that's what they seem like to me, I just offer them my hourly rate and what they get for that that they won't get from the low ball bidders. Sometimes that works, but they usually don't call back.

I don't think many home owners have any idea about what is involved in renovation services pertaining their home. I think I'm safe to assume they think that we are automatically getting rich with these fees. I'm sure they hear my hourly rate, and their eyes come out of the sockets. They might be scared of being charged for an indefinite number of hours too.