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On LawnSite.com, the online discussion forum, (and part of the Turf family) a member asked:

“Why am I missing the mark for commercial maintenance bidding? I’ve established a man-hour rate and a job cost. I determine the best estimate for how long it will take to service a site. I mark up the price of subs 10-15%. I gain as much information from the manager I can. I walk the site 1-3 times taking pictures, notes, etc. I factor in less drive time if it’s a site we’ll be at all day. I provide bids in a timely manner and follow up. Is commercial work that competitive? I bid on probably 300K of maintenance this year and didn’t get a single one. Looking for feedback.” — author, NC

Commercial Bids

Here are the responses (edited for content and clarity; location given when available):

“Have you been able to get any of those failed bids to tell you why they didn’t go with you? It’s pretty cut-throat so most likely they just got lower bids.” — VA

“If you’re not getting bids landed but you’re giving them the price you need to profit, don’t sweat it. Don’t go lower than needed to get the bid! Let the low-ballers run themselves out of business. I always found residential more profitable anyways, although my experience with commercial maintenance was limited to HOAs and small apartment complexes.” — MO

“Yes, some, and almost always the response was ‘It just came down to dollars and cents.’ Some of these sites were much larger, so I’m assuming it gets even worse the bigger the property. I see the larger companies that have ‘arrived’ getting the accounts and I think surely they aren’t lowballing. —author, NC

“Nowadays it’s the large companies that tend to come in low. It’s all about volume. Before I submit a bid, I ask the property manager what their budget is. If I’m not awarded a contract I ask them what it went for. Most will reply.”

“The biggest lawn outfit in my area is always the cheapest and they do a lot of the apartment complexes. I don’t compete in that area, nor would I want their employees on my property. I’ve been contacted by several complexes for a bid, and they always tell me they have to put the work out for bid every x years to see if there is a better price. I tell them thanks, but not interested.”

“It would be helpful to know exactly which kind of commercial accounts you are targeting. Apartments, office complexes, banks, restaurants? At these places the owner usually isn’t on-site, a property manager is spending someone else’s money. With HOAs, you deal with people who are spending their own money with you.” — GA

“Primarily really large HOAs with lots of road frontage and common areas. Had some townhome opportunities. I happened to meet a lady on the HOA while I was walking and she shared what they were paying and their budget. I was in absolute shock at how low the current price was.” —author, NC

“My wife is the boss for a commercial real estate company. Pretty large one too. I can’t even get many of their properties because I’m ‘too high’ and I can see the numbers being charged. A lot, or most, of them are volume driven, like others say. But the companies are all about dollars. I bid one contract and they didn’t give it to me because I was $130 more. You just have to keep networking and get in. Bidding is hard to get from cold calling.”

“Commercial accounts are won by efficiency. Efficiency will get them the best rates. Find ways to be more efficient and your bids will be lower and you will be in the running to win the contract.” — Midwest

“Say your competition is running very fuel efficient diesel mowers, and you have a bunch of big block gas engines to feed. Their fuel costs are likely half yours and they will have an advantage in terms of pricing.”— NY

“I can’t imagine fuel cost being enough to lower a bid by much.. It’s just hard to get commercial. One of my accounts is a grocery that opened with one store. I’ve been with them for eight years and now they have five other locations. I’ve maintained them all and they don’t call anyone else. You just have to get in with the right people and network.”

“First, no property manager is sticking his/her neck on the line hiring a company they don’t know. So you have to have a foot in the door, be known and trusted. If you’re not ‘in their world,’ find a way in. Second is price. They almost always accept the cheapest price unless the decision lies with a board (like a HOA.) Theory of operation, accounting, and profit/overhead recovery can be totally different by bidder. You determine your price by pay per hour, fuel, etc. Larger companies look at profit per truck, not per person per hour. They pack five to six guys in a truck and operate at $42 per hour. They divide up overhead and operating costs over more people. Most do mowing and maintenance at break-even; they make money on upsells.”

“Your prices are too high. Either you are not geared to be as efficient/productive as the competition, the other guy used the ‘get the job and figure out how to make money later,’ or you included too much cushion in your estimate. But maybe there’s a guy out there that forgot to carry the one on his math and is wondering why he got all 120k of work he bid this year!”

“What size properties are you considering commercial? I had a great career doing landscape management for smaller properties: banks, hotels, better restaurants (no fast food), and professional offices (doctors, real estate firms.) I gained all these jobs with personal contacts—often cold calls. I continued these relationships for years once I got them. They never even sought bids from anyone else. Of course we did everything: lawn applications, trimming, mulching, irrigation management, etc. We mowed but that was secondary to everything else.” — OH

“A great crew for residential jobs is not geared the same way a commercial crew is. Especially for large jobs. From experience, big commercial accounts are satisfied with an adequate job—the entrance and focal areas must be appealing if they offer office or retail space. If there is a problem, such as an irrigation leak or tree branch covering a sign, it better be handled ASAP with calls returned quickly. Selling landscape management is a little different for commercial. Does it need to be edged every time? Can we spray just a small area? Saving man hours can significantly lower your bid. The big companies around here mostly focus on great curb appeal. With Mrs. Smith, however, you better edge every week, not miss a spot of weed eating, etc. She will pay a premium if you deliver that. Her irrigation leaking at 4:30 on Friday? Not part of our agreement.” — GA

“I used to have three HOAs, and do fertilizer for a fourth. I got fed up. They tend to elect new presidents who think they are going to do it better and cheaper. I got the first HOA by just asking for the president, who said they were looking to fire their management company and do it cheaper. I was cheaper. The next HOA I got was across the street from my first HOA. Mine looked beautifully green while the other was brown with snow mold. So they hired me. The third HOA called me out of the phone book, and I beat the prices of the big boys. Then, the first got a new president who didn’t want to pay me hourly on sprinkler repairs. I refused and she eventually fired us. About the fifth contractor she hired to replace us told me the HOA wanted to look as green as my side…. My second HOA got a new president who was going to do things better and cheaper. He would ask me how I would fix this or that, then do it himself and bill his HOA…. He also would change my watering schedule. He didn’t renew my contract. Whoever he hired then burnt up all their lawns the next summer. The third HOA stayed with me for years, but I never raised their prices and should have. When I got busier, I replaced them with more profitable clientele. I’ve had three other HOAs ask me to bid. But I have found the competition for HOAs just to be too much. So, I don’t go after them anymore. There are two fairly large companies in my area who compete with each other and keep prices low. I find small business sites and upscale residential to be more profitable and satisfying. I go for the client who wants to pay to look great. I’m just not interested in being that large company with dozens of crews and a 10% profit margin.” — UT

“Personally I only fertilize and have a few small commercial accounts: two condos and some small business parks. But honestly, they are a pain. There’s so much trim work to blow off when I’m done it’s more of a headache. I plan on cancelling them next year. If you’re not getting your bids, there’s no money in it! You know how much you need to make to make a profit. Don’t lower your estimates. Buy new and bigger equipment? Have a bigger crew and more payroll to land jobs? You’ll never make any money. Focus on the property sizes where you are landing work and you’ll make more money.” — CT

“To commercial property managers, money is everything. The more they can save the client, the bigger their percentage. Quality not so much—get it done fast, cheap, and to the contract details. Next bid session, they will still go with a better price; they’re not very loyal. With HOAs, get to know the decision makers. Many of them have little or no experience with landscaping, so you may need to educate them. Be careful of multiple associations on the same property. They bicker and fight, often wanting separate contractors for each association. I had one property with nine separate associations! Common areas were a nightmare, everyone had an opinion, and the property management company (who managed them all) wanted the cheapest bid possible.” — MA

Click here for the full discussion.