Underbidding

[Slvrmple72]

Around here, certifications,PHC, etc. don't mean anything at all. So it wouldn't matter if i had all the certs. in the world and offered more than the competition, they'll usually go with the lowest bidder. I'd say about half the people around here would rather have it done safely and spend a little more (Those are the people i do the most work for) but the other half just want it done as cheap as possible.

I started out in this business dealing with the cheap customers. Never Again! They did not care about anything else but the price of the work. They are not worth the time or energy. There is a sucker born every minute rings true in this business both for the customer and for the fly by night outfits. If you are giving quotes for work that are less than what it would cost the homeowner to buy/rent the equipment needed and attempt the job themselves than why in the heck are you even trying to successfully run a tree business?
LXT, I understand your frustration. When times are tough a lot of multi-skilled people jump into sidework to help supplement their income and unfortunately many of them are ill-prepared/ ill-advised and wind up giving away their work for free. Just talk to any young buck who has dollar signs in his eyes after doing the tree for 500 bucks that a professional crew wouldnt touch for under 1200! Who do you blame? The kid ? The homeowner? The previous undercutters who set the stage? Watch that same kids eyes get really big when you start talking about insurance, liability, and help him realize how he got "taken" buy a clever old codger with a lot of money! It takes money to make money. The disparity between the haves and have nots continues to widen and it is ignorance in financial matters and sound business practices that will continue to widen this gap.

 

[Slvrmple72]

For a bit of clarification, I'm not a jump out of the pickup, badmouth the guy down the street for exorbitant rates, door-knockin' type of guy. Never done any of those things and never will. All my equipment is bought and paid for w/in the past year and a half that we've been working. I know we don't have as much experience or training as the majority of people in this forum or even on the local scene here but we're still young and have a long way to go. We do good work and people are starting to notice. My question is this. If I don't have enough work to keep me busy more than a day or two a week now, how can I start a "real" business and assume that everything will simply fall into place? I still lose jobs because of the price and I would rather take a few hundred dollars off the bill than sit at home on Sunday. I want my equipment on the road so people see it. Yeah, the other guys around here may hate me because they know I'm funding my "business" with my day job but I'm not about ready to go full time if the work isn't there. And if I hadn't been sinking my paychecks into equipment the past year I'd be like the hacks around here with one or two saws and a pick-up. I'm trying to get my equipment and client base built up before I need to depend on it full time. Yeah it hurts the established businesses but I didn't get into this for their sake. I did it for mine.

Blakes, sorry for being hard on you earlier you just gave the initial picture of being a sucker but in hindsight helped liven up a good thread. When it comes to growing your business: you will know when it is time to jump out of the nest.... and into the fire You have the right idea, keep your overhead low, avoid financing, and keep the advertising out there where people can see it! ( Back of the chipper in big print works wonders!) There is nothing more satisfying than working for yourself, having buddies who know the score and are there for you in a pinch, and the satisfaction of a job well done and well paid!

 

[tree MDS]

To answer your "dig" in the first quote above: No, I don't plan to stay with very little overhead. That's why I don't lowball. But for now, with my "very little overhead", I have no need to chrage an hourly rate for a 70' bucket truck sitting by the curb (since it can't get in the back yard) while a climber (usually me in our company) goes up the tree and pieces it out, roping it to safely miss the ornamentals all around the base of the tree. I accomplish exactly the same task, in the same amount of time, with fewer man-hours (less guys standing around), and no machinery overhead sitting idle.

I don't do the job without going through the exact same process you describe in the second quote above. We just have a different basis for determining that daily rate because we don't always have the equipment cost to account for. As I stated earlier, we do only removals. We are usually called on to do the close quarters jobs or the ones that fall in the complexity range between "Bubba's Tree and Tax Service" and "Big Jim's Impressive Fleet of Tree Stuff". We sledom beat "Bubba's" price (and don't want to), but we are successful when our price is compared to "Big Jim's".

I am in no way saying that low-balling is a good thing!

Dude, I wasnt rippin on you, thats why I said "I'm not being sarcastic," just for the record friend.

 

[tree MDS]

To answer your "dig" in the first quote above: No, I don't plan to stay with very little overhead. That's why I don't lowball. But for now, with my "very little overhead", I have no need to chrage an hourly rate for a 70' bucket truck sitting by the curb (since it can't get in the back yard) while a climber (usually me in our company) goes up the tree and pieces it out, roping it to safely miss the ornamentals all around the base of the tree. I accomplish exactly the same task, in the same amount of time, with fewer man-hours (less guys standing around), and no machinery overhead sitting idle.END QUOTE. Then why would'nt you charge the same? Not critisizing because I did the same thing for years- just trying to help the industry- is not climbing much more dangerous than a bucket (or at least supposed to be)- just something to consider.

 

[TDunk]

Not to sound like the "site" idiot here, but is there two diff. hourly rates then. A higher hourly rate for climbing then a lower one if a bucket truck is used. Maybe i just mis-read.

 

[ckliff]

That whole deal right there is kinda pitiful.

And you have what kind of a problem with someone starting up their own business?

I'd say the guys got guts!

 

[OLD CHIPMONK]

Allows me more time for fishing & meeting new clients, while golfing. Having fun while working !!!!:hmm3grin2orange:

 

[corndogg]

No problem with starting new business. I'm a new start up. I think everyone agrees that working too cheap will not help anybody including new guy.

 

[Gunsmoke]

I think both sides have a valid point...BUT... I am a full time stump grinding contractor who lives in an area (NE Ohio) where things are REAL tuff and the haves and the have mores are on the rise and the "ain't got muchers" are the other class. The grinders in my area are 1/2 way keeping things priced ok. I refuse to work for a low wage w/ the headaches of being a biz owner. These "Wal-Mart" stump grinders and tree services will learn that w/ diesel @ 4.19 per/gal that being so low cost that they will never make it. I owned my own semi (truck/dump trailer) years ago and you realize that you bust your butt and have a ton of responsibility and bills and you haul for peanuts that the first 10k Cat engine rebuilt will take you out of the game. Same goes w/ this and every other biz..... YOU HAVE TO FIND YOUR BREAK EVEN POINT! I know guys who think they are HIGH ROLLERZ but all they have is cash flow. I learned through trucking that you can't drop your pantz to get work. If you have to your better off working for someone and let them worry about it. I'm in comp. w/ a guy south of me who's name of his biz says that he is LOW RENT...all he does is whore the market. If he had any sense he would work w/ the rest of us and keep his prices up.... but he s_cks! o well! good luck this season and hope to see most of us back next season!!!

 

[Blakesmaster]

Thanks to the guys who backed me up. I think the point that the rest were trying to drive home was not to try and sneak jobs away from the ones who depend on the work to feed their families when I have another source of income. I get that and have actually walked away from a job simply because I found out that my boss had also bid it. Don't bite the hand, ya know? I'm simply lookin' for an honest buck, same as everyone else but I do it a bit cheaper to help get more customers and get my name out there.

 

[Gunsmoke]

I see where you're comin from man. It's tough out here and you gotta do what ya do. I wasn't slammin you.... I just learned a hard lesson w/ my semi... "RUN HARD AND SET YOUR $ ASIDE FOR BREAK DOWNS!!!just keep in mind all your bills, plan for big break downs on your on your equip. and advertise and keep bustin your rear. You guys are doin it right by paying for all your iron that does help out 4 sure. This economy s_cks but keep your prices in the middle and get after it.
Good luck to all of us... :chainsawguy:

 

[corndogg]

We don't hate you Blake. Just honest opinions, that's what we all come here for. The more experienced ones say that even though costs have gone up in past years the average price of work has come down. It doesn't take a genius to smell something wrong with that. I have tried to better educate myself so I can offer a better product rather than lower prices. With rising costs, lowering my prices only means I have to work alot harder. I'm not interested in that. Tree work is hard enough work already and you can't do it forever . The years click by too fast.

 

[masterarbor]

can you sleep at night look be hind you at all times duck and move out of town tom trees

 

[Gunsmoke]

Quote:
Originally Posted by tomtrees58
can you sleep at night look be hind you at all times duck and move out of town tom trees

I would have to say that this man is pretty well P_$$ed off! He's from NY as is Blakesmaster. This is gettin ugly I'm puttin on my footy PJ's and going to bed!:fart:

 

[treemandan]

I don't understand that guy a lot of times either- Tom Trees that is.
I just got back from the firehouse where I was having a beer with my competition. He was hammered, I tend to stay sober.
Anyway we talked about an insurance job we both bid on : His= 1900.00 Mine 950.00. We both looked at each other in amazement. Turns out the homeowner kept the insurance money and had his kids clean it up.
I was pretty sure I could have been out of there in less than a day so here is the breakdown. I use a contactor with his own insurance, a buddy.
My buddy= 200
Gas= what the heck 50
I only really work in a ten mile radius( (job was 4 min from my shop) with dump sites close by and we needed the tree truck, chipper and the Dingo.There was no climbing just picking up and removing a fallen lombardy roughly 30' dia dbh. We would have quartered the logs( punky dead) and fed them to the chipper which might have been 1 load. So I figured my total operating cost for my end( which includes fed taxes) at 300.00.
So my net profit would have been 400 for a 3/4 day of not so difficult work.
I thought that was OK because around 400.00 is what I usually got when I subbed for other companies climbing crazy stuff with a crane all day long.
I don't know though, I am not in it to get rich. If I wanted to be rich I would not do this for a living.
The other guy would have been there jerking around with his overly dopeheaded guys who run themselves over with the truck they are driving. If you think that is not possible you are wrong.There would have been 3 of them and they would have... well you just use your imagination.
Open for comments but I think its reasonable.

 

[ropensaddle]

I don't understand that guy a lot of times either- Tom Trees that is.
I just got back from the firehouse where I was having a beer with my competition. He was hammered, I tend to stay sober.
Anyway we talked about an insurance job we both bid on : His= 1900.00 Mine 950.00. We both looked at each other in amazement. Turns out the homeowner kept the insurance money and had his kids clean it up.
I was pretty sure I could have been out of there in less than a day so here is the breakdown. I use a contactor with his own insurance, a buddy.
My buddy= 200
Gas= what the heck 50
I only really work in a ten mile radius( (job was 4 min from my shop) with dump sites close by and we needed the tree truck, chipper and the Dingo.There was no climbing just picking up and removing a fallen lombardy roughly 30' dia dbh. We would have quartered the logs( punky dead) and fed them to the chipper which might have been 1 load. So I figured my total operating cost for my end( which includes fed taxes) at 300.00.
So my net profit would have been 400 for a 3/4 day of not so difficult work.
I thought that was OK because around 400.00 is what I usually got when I subbed for other companies climbing crazy stuff with a crane all day long.
I don't know though, I am not in it to get rich. If I wanted to be rich I would not do this for a living.
The other guy would have been there jerking around with his overly dopeheaded guys who run themselves over with the truck they are driving. If you think that is not possible you are wrong.There would have been 3 of them and they would have... well you just use your imagination.
Open for comments but I think its reasonable.

Sounds like you need to get an accountant!

 

[2FatGuys]

Then why would'nt you charge the same? Not critisizing because I did the same thing for years- just trying to help the industry- is not climbing much more dangerous than a bucket (or at least supposed to be)- just something to consider.

Not to sound like the "site" idiot here, but is there two diff. hourly rates then. A higher hourly rate for climbing then a lower one if a bucket truck is used. Maybe i just mis-read.

What I am referring to is a company that prices tree jobs to include a bucket truck where one cannot be used. There are two large tree services that just bought shiny new bucket trucks and need to charge hours on them to make the payments. I tried, by the example given, to show that I am not "low-balling" the prices, just making an honest bid to make an honest buck. The jobs I have been seeing pricing discrepancies on have been where the new bucket truck or new 20" chipper were not necessary, but were obviously included in the price.

When we figure a job, we determine what equipment we need and how many men and how many man-hours. I'm sure you all do that. We do not, when finished determining a price, go back and add in extra equipment (driving the price up) just to be able to bill for it. We routinely see these two new bucket trucks parked at a tree job, not being used.

Just as it is unethical to "low-ball" jobs and take them under a fair market value, it is also unethical to pad the price by adding in extraneous equipment costs, not used on those jobs, artificially driving up market prices to cover a bad equipment purchasing decision. We are making MUCH more now that these two bought their new rigs. They have created our market niche for us! On a side note, we send them quite a bit of work when a bucket truck is the best logistical method of removal or when a customer should be pruning rather than removing. They are good tree services (for our area). They both just have poor pricing practices now that they have the big new toys.

 

[Blakesmaster]

i just tend to ignore people threaten me brush dirt off shoulders blakesmaster *insert random smiley thinghy here*

 

[TDunk]

What I am referring to is a company that prices tree jobs to include a bucket truck where one cannot be used. There are two large tree services that just bought shiny new bucket trucks and need to charge hours on them to make the payments. I tried, by the example given, to show that I am not "low-balling" the prices, just making an honest bid to make an honest buck. The jobs I have been seeing pricing discrepancies on have been where the new bucket truck or new 20" chipper were not necessary, but were obviously included in the price.

When we figure a job, we determine what equipment we need and how many men and how many man-hours. I'm sure you all do that. We do not, when finished determining a price, go back and add in extra equipment (driving the price up) just to be able to bill for it. We routinely see these two new bucket trucks parked at a tree job, not being used.

Just as it is unethical to "low-ball" jobs and take them under a fair market value, it is also unethical to pad the price by adding in extraneous equipment costs, not used on those jobs, artificially driving up market prices to cover a bad equipment purchasing decision. We are making MUCH more now that these two bought their new rigs. They have created our market niche for us! On a side note, we send them quite a bit of work when a bucket truck is the best logistical method of removal or when a customer should be pruning rather than removing. They are good tree services (for our area). They both just have poor pricing practices now that they have the big new toys.

Yeah, i mis-read it. I'm fairly new to the tree buisness as well as Blakes. One thing i've notices is that MOST of the people one this thread are right in the same area. Ohio, Pa, and NY. Around here the economy isn't the greatest. To make a long story short, there were 2 1/2 tree co. in our small town ( Davey's, a small two man crew, and me doing it part time) Now there's 6 Co. 3 reputable and 3 hacks. Now two hack Co. are out so work is gettign better but i just hope there aren't any more to replace them.

 

[lxt]

there is nothing wrong with competitive bidding, however I do agree with the one poster stating that keeping overhead down helps afford his customers a lower quote. I know that the bigger a company gets & the newer equip. they purchase seems to drive their prices up to compensate & offset the new debt.

I keep pluggin with some older but well maintained equipment which allows me to "trim" the price a little. I meant no offense by stating door knocking, super trimmer, etc.., etc..

Its just that in my area these are the types of tree companies springing up, the owner & his buddies work the drywall plant during the day & trim/remove....more like hack/destroy during the Eve. everybody has a day job doing something else far from related to tree work but they do tree work as a sideline.............cause uncle jim used to & showed him some things.....just enough to get him in trouble.

I bid a job yesterday 3-17, 5 cherry trees butchered by some local hack, flush cuts, stubs, tears......1/2 toppings while leaving the other 1/2 alone, absolutely wonderful hack craftsmanship!!! Owner wants truthful opinion on what to do now that the trees are severly dying back & falling apart, so I tell em & give em a nice price (its Easter) ......his reply: you gotta be kidding me, $700.00 to do that, thats robbery!!! whats his name only charged me $250.00!!

My Reply: Thats why your trees look like hat racks!!! if hes so good why didnt you call em back to fix what he did............cause he said he cant...their too big for em.

Some around here bid thinking if they make $100-$250 a day thats good money, where ya gonna go work & make that? Its the intangible`s they dont see or realize that are gonna hurt them, most have very little skill borderline "james the narcoleptic" syndrome!! but they`s a tree service!!



LXT..............................