[GLAN]

Geez guys

So much at stake. Would keep me up at night attempting to figure out what to do.

But.....here is my thinking based on what has been posted.

2006....you gave him a 10% discount for his current maintenance.
2007 He wanted a 20% discount.......now forget about 2008 work that doesn't exist yet

I am wondering if you had made any adjustment in price....adjusting up the base price from 2006 to 2007?

If not......we're looking at 30%..........big hit huh?

Also if not and you agreed to another 10%.....that would be 20%...still a big hit

Today......I feel that every year there has to be an adjustment up in rates......so if you had done that, no saying you didn't......If you had agreed on another 10% on an increase of what ever %.....lets use 4%.......you would be operating at 16% less than prior to 2006.

Phew.........not a trend you want to continue with.

You did what you did.......Both parties are happy......You are making a profit..........so, it's all good. Right?


I have experienced alot of games and scam tactics through the years......Some games I have played as well.........One thing I learned.......not to discount........reduce service or plant size and quantity....just don't discount.......

I would rather give them something than discount.....

Give them a shrub, tree, flat of flowers....Something that will to them have a percieved value, that cost me alot less. There are those character types that feel the need to bargain.....Where I am located......it has become a huge thing........everyone wanting you to do your work at the scrub estimate price...

Happens to me quite often.....I have been told many times a prospective customer sees our work, has been seeing the work we do year after year, etc....... Wants us, cause they are fed up with the crap........and just doesn't understand why I can't do a full service maintenance contract for $150 - $200 or more less for the year........Or why my design/install bid is so much more.

Should I feel guilty because they want me? but only want to pay me less than what I am asking?

I have sat down at their kitchen table and compared estimates.....line item for line item.......it doesn't compare. I apply plant food in the spring and Treflan........they don't. I do 5 ferts, they do 4..........the entire contract goes like that in comparison. What is amazing is they look at you like deer in headlights. Most just don't get it.....They want me to produce my results for what they paid the scrub.........I leave and they are insulted......LOL

This past Sunday morning I went on an estimate.....BS'd for an hour........She literaly ripped the current guy a new a-hole.....Had him for several years. Got the neighbors accounts. She said he was good to her and didn't raise his rates often and not in the last couple years.......I even found out that due to her complaining he lowered his price $50 for the 2006 season. He did sod for her last year, rapped her and did a terrible job, curb strip sank......sections of the back sank where he ran underground drains from the gutters to the back beds and daylighted to the bed where the soil is erroding and the hole gets bigger and bigger with each rain..........on top of that he couldn't keep the sod in good condition. By the time he got to her to spot seed in the back was end of October.

This woman knows where I live........knows full well the work we do. I came in $200 more for the year than what she paid last year.

I said to her......at what point do you pay the lowest you can find and not get what you expect and hope for and contracted for. And how far will you allow it, when the integrity of the landscape deteriorates......and the provider can't or won't fullfill his obligation.

I didn't sign her......she'd let me know in about 2 weeks.

[TrickyDick]

Voodoo- it's more like 18%. It is also important to know that we were going to do the job for 28-29k (after the inevitable negotiation) so the real discount is more like 4k. There is also not much doubt that we will make back that money, provided he doesn't die or we have some crazy falling out in the next year. Problem is we will have to make it up by being sneaky. Frankly, if it was solely my decision I would have said NO NO NO but partnership is all about compromise so you have to choose your battles. I personally hate to play these games but if forced to do so I am damn sure going to make sure we win. In this case that means cutting some corners on the maintenance, using fewer, cheaper more vigorous plants in his many planters and, like I said, "rounding up" on T&M work which will be substantial. It should also be said that while he has "negotiated" his price every year he has ordered quite a bit of extra work without worrying about the price on that, giving us plenty of opportunity to make back our dough.

Whatever. I'm still pissed. I hate this crap.

[agla]

The worst thing about negotiating a price is that it looks like the price was guestimated with the idea that maybe you can get it all, but you added fat to it. So you not only lose money when you accept a counter offer with no exchange, but you lose some credibility as well because it looks like you overchaged to begin with.

People only underprice jobs when they want the job more than the customer wants you to do the job. When you can be comfortable with the idea that it is not a disaster if you don't get the job, it shows. When that shows, the customer has to realize that it is up to him to decide how much he wants you rather than playing the game of how badly do you want him.

That guy made you feel like you needed him more. It is just that - a feeling or an emotion. Once you get past that it reasoning takes over. When you reason things out, you might see that you can keep busy all season long at full value, but instead you will commit a good portion of you manpower to working for less. Your market is not far from mine and I know the biggest obstacle to expansion is getting help rather than getting work. A lot of guys grow their profits by dropping lower profit jobs as they can replace them with higher profit jobs while using the same amount of man power.

I think that one of the biggest misconceptions about the landscape business that people have going into it is this. Most believe that they can grow by getting more and more jobs and all they have to do is pay good wages and they will have more people and make more and more money. Few have the ability to manage much more than four to six people and they get stuck right there.

Being stuck at a certain amount of employees is not bad and does not keep you from growing profits, but the way you grow it has to switch from trying to sell more jobs to trying to sell more profitable jobs. That way the same man power moves more material and makes more money.

Cutting rates on maintenance work but still making money on it does not seem like a bad thing. It would not be a bad thing, if you could just reach out and grab more help and have them doing it on the side while your regular guys did other things at higher profit. The problem in this market is that your good guys get bogged down in the discounted work and you have to pass up the higher profit work because you don't have the manpower or management to do both. That is when it kills you.

I know this because I did this years ago like an aweful lot of other guys did and a lot more are doing now. I learned better ways working for other people and found it is a lot easier to get more money out of less jobs than to charge less money and do more jobs.

[johnkeegan]

Well spoken Agla.
I must do things differently because I would never take 20, 18 or even 10% off a bid I gave. First off, as you stated, it would look as if I overcharged to begin with. If nothing else, it would make me look unprofessional. That I'm just bidding willy, nilly. Or, as you say, that I'm desperate.
Call it stubborn, but I would rather lose the job but retain my pride. Learn from it. Then move on.
From past experiences it always seems that the long-term, penny-pinching customers that I was afraid to lose ended up being replaced by more appreciative (and lucrative) new ones. Ironic. Before I was so busy catering to the tight wads that I didn't have time to evolve properly.

[TrickyDick]

I agree wholeheartedly with every word Agla and John said. I would rather lose the job then play these games but like I said- when you're not the only chief you have to compromise sometimes.

This one's going to piss me off for a long time and I have to tell you...feeling good about my job is more important than money and on this one I've got neither.

[johnkeegan]

...reminds me. I have the utmost respect for anyone that can operate their business as a partnership. I don't think I have the patience to do it. I guess dealing with the challenges of one partnership (ie. being married) is all I can handle.

[Jake Wolf]

I always give people my best estimate. For maintenance, I offer a prepay discount is they want to prepay the year - 10% and a 5% for a half year prepay.

If my price for installations is out of their current budget, I'll work with them to scale back the scope or do it in phases. If I'm not making the right profit on the job, usually it's not worth my time. You have to have a margin of error priced in. What if that big, discounted job goes south? You've just killed the profit on everything else you've worked on for the year.

[Dollar Spot]

Don't apologize for being an expert in your field, doing quality work and making a honest, reasonable profit. Above all please don't second guess these fine, admirable traits.

[GLAN]

I love you guys...

[Daniel Hanson]

If you know your costs and you know what you need to amke on the project then there should be no negotiation. This guy has money and obviously has made it by doing this same thing to other people who he deals with but I would have flat out told him from one business man to another that this is your price, its not negotiable and thats wht he will pay. The promise of future work doesn't pay your bills in the mean time.

I've quoted more commercial and high end residential contracts where the property managers/owners have tried to negotiate and every time I tell them this is the price, take it or leave it. If they are too cheap to pay you for your services, your experience and your time then you don't need them. They will kick you to the curb the first time somebody comes by with a lower price.

[cutntrim]

Like others have said, I'll negotiate service but not price. I'd rather walk away from a job then leave money on the table and be thinking about that every time I'm on that jobsite. But you gotta do what you gotta do. On the positive side maybe it'll help you to focus on getting as efficient as possible in the delivery of the services he's paying for. If you can beat your labor estimates for doing the work, then you'll earn some of that discount back. Think of it as your own little challenge game.

[jwholden]

It comes down to the more years you are in the business the better you get at knowing when to hold them and when to fold them. The most successful business people have the shortest learning curve on this task.

I had some guys at my house this week to stretch my carpets. With transportation, I figure the guys spent a minimum of 14 man hours on the job. The return per hour ends up being around 29 dollars an hour gross. I know that the overhead is lower in that business but where can you go on 29 dollars an hour?

Better to learn the lesson late than never.