There may be an infinite number of wrong ways to bid a job. Here are the eight biggest mistakes lawn care and landscape professionals make.
1. Not knowing what it costs you to do a job. Bidding potential new work, as well as bidding work for existing clients, is a mentality. First, and most importantly, ask yourself this: “Do you know why you charge what you charge?” Too many times, contractors are guessing at what they think they should be charging for their work instead of structuring pricing on actual costs and rates for their company.
Implement a system that calculates your costs per hour of operation for your company based on your overhead, expenses and equipment use rates. Don’t count on your competition being right. If your competition was right, the failure rates for our industry would not be so high. I guarantee you McDonald’s knows what its costs are to build a Big Mac. Shouldn’t you know what it costs you per hour to operate?
Once you have determined your own break-even point, you can add what the market will bear in your area for the services that you offer. It’s much easier to sell your services at a different price once you know what it is really costing per hour to offer your services.
2. Don’t bid your jobs hungry. We all know that there are two things we don’t do hungry: the first is buy food, and the second is bid jobs. Know your costs, and then attract the right clientele. Once you have determined your costs, it is much easier to market your services to the right clientele. This is called “picking your lane.” Have you picked the lane that you want to run your company in, or are you trying to be everything to everybody?
3. Don’t price your jobs on the phone. It is wise to give your minimum on the telephone, but not the actual price for the job. How can you accurately price the job without seeing it? There’s much more to bidding than square footage. Establish a minimum for every service you offer, which gives you the opportunity to spend less time running around chasing leads that do not fit into your business plan or customer profile. This will give you more time to talk to potential clients who were willing and able to pay your prices. When you begin selling your services based on costs plus expected profit margin, you will want to meet your clients face to face to sell your services. Even though times are tight right now, there are potential clients that are willing and able to pay for a professional service.
4. Don’t leave your proposal hanging on the door or in the newspaper box. Why? Because too many bad things can happen. Maybe an unethical competitor arrives after you have left your estimate and sees your proposal hanging on the door and checks out your pricing, or, even worse, they remove it and throw it away.
Another reason is you have no opportunity to sell your service over the competition. When you simply leave your estimate on the door, you are not there to answer questions. Instead, leave a note letting your potential customer know that you were there and that you will contact them later concerning the services and pricing that they requested.
Give yourself an opportunity to be more successful, talk to your clients face to face.
5. Don’t bid the cheapest price. Being the cheapest may not be the best position for your company. The opposite side of that argument is that you know my costs and can do it cheaper. Therefore, in certain situations, it may be OK to take that approach.
However, smaller cannot necessarily do it cheaper; that mindset may put you right out of business. It will increase your workload and more than likely decrease your profit margin. It’s not about the number of accounts that you are servicing, it’s about the profit you have left. Which brings us back to this: what is your profit margin?
Also, by trying to be the cheapest, you are attracting the wrong clientele. If they hire you because you are the cheapest, you will more than likely be fired for the same reason. The next contractor that comes along with a cheaper price may get the job. Loyalty at this level of marketing is virtually nonexistent. Utilize your time and effort developing a customer base that is willing to pay a fair price for a professional service. They will be more loyal, and your business will be more profitable.
6. Don’t overinflate your prices to turn your potential client off. This may seem like an easy way out, but you will be sending the wrong message: that you are too high for any additional services that they or their friends may be interested in at a future time. If it’s a job that you cannot do, or do not want to do, simply let your potential client know that you appreciate them calling, but at this time you cannot take the job. This will give you the opportunity down the road to bid additional work that they need done. If you simply raise the price of your service to turn them off, you may be burning your bridges for future work.
7. Don’t spend your day driving all over town. Windshield time is a definite profit killer. Define your service area based on the services you provide and the size of your company. It’s easy to spread yourself too thin by trying to service too many different areas. Instead, spend your time and efforts establishing tight service routes.
Whether you are a one-truck operation or a multi-crew company, establishing efficient service routes must be taken into account when bidding jobs. You may offer different services in different areas. Landscaping and fertilization and weed control are services that will allow you to broaden your service area based on the profit margins they offer. However, mowing accounts should be maintained in a tighter route to help with profitability.
8. Don’t discount your service fee when you get multiple lawns at one stop or in a small area. Since bidding is a mentality, it is easy to offer discounts to clients when there are multiple lawns close together. However, a couple of things need to be considered before doing this. First of all, why did they hire you? Usually, you get multiple lawns together because of the excellent and dependable service you offer. The neighbors of a client see you doing something better than what they are getting from their current lawn guy, and hire you. Establish your minimum and stick to it. Remember, they want you.
The second thing to consider is this: if you do offer discounts for multiple lawns in row, what happens when someone moves away, loses their job, fires you or simply stops service? If you have discounted your service based on volume, you now must go back to the remaining clients and to raise their price due to their neighbor canceling service. They may not be willing to pay additional money and look for another service. However, if you haven’t offered a discounted rate, you can continue offering your service to your remaining clients without changing your price or the fear of losing another account.
Wayne Volz is the owner of Wayne’s Lawn Service and Profits Unlimited (www.profitsareus.com), a consulting firm for the lawn and landscape industry that offers software for contractors to help them calculate their costs.