Creating Lowballers?

[oneness]

It depends on who you're talking to. To me, it is someone who does shoddy work with sub-standard equipment and chems, doesn't run a reputable business (insurance, taxes, etc etc) and charges less than the job would demand if done correctly by a reputable company.

If someone is running a reputable business, using the proper equipment and chems for the job, and does a good job, but charges less than I do, he's not a lowballer, he's just competition. Face it, we live in a free-market capitalistic society. We don't gripe when we can find a product of equal quality at a lesser price at this store or that store, but we cry holy hell if we lost a job to someone who bid $50.00 less than we did....Maybe their prices are fair and ours are too high???

Who says a pressure washer should make $50.00/hour, or $100.00/hour? I'm all for making money, but some act as if they are going to go broke if they can't make $50.00/hour or more.

If I had to have my car repaired, and I could take it to one of two shops, both with equal capability and credentials, I'd take it to the guy who decided he could live with charging $59.99/hour rather than $89.99/hour. As someone mentioned in this post already, some can live on $35k/year....Some don't think they can.

 

[MR ALAN]

Mike,
I think the word lowballer is used way to loosely in this industry. Some folks who use it have no clue what it really is.
I find it funny where someone posts that they have a budget cold water unit and have a large area to clean. They put their bid in at .XX a foot and lost it to someone who bid half of that. They call the other guy a lowballer, get everyone to chime in that lowballers ruin the market, and yet do not realize that the "lowballer" had a hot unit, surface cleaner, etc and was able to finish that job in a few hours and move on to the next.
Just because someone can not complete a job in a reasonable amount of time, due to inferior equipment and then tries to overcharge to make up for the extended time, is no reason to call the realistically equipped person who can get the job done to all standards a "lowballer"
I charge what I need to cover all my costs and make some money for me as well. If I beat everone elses bid by a hundred or two does that make me a lowballer? If I charge more than everyone else, does that make me a gouger?
This hourly rate thing, whether it be $50.00 or $100.00 is funny as everyone has different expenses. Even in the same town, one guy may charge 50 and the other guy a 100 but the 50 guy makes more money.
Not everyone has the same payments on mortgage, trucks, equipment and such. Some have shops as the city will not let them have commercial stuff at home, and others work from home.
So the way I see it, is if someone is charging enough to make it a successful business, but they are only charging half of what everyone else is, they are not a lowballer, but a smart business owner. I have seen enough posts by you to say that you are not a lowballer, and the above statement that some may view you as the lowballer is nonsense.
So if one guy charges $300.00 for a housewash and does one a day, and the other guy charges $225. and does 3 a day, then who is the real loser there? Techniques and equipment make a huge difference. Volume is a magic word.

 

[Larry L.]

one guy may charge 50 and the other guy a 100 but the 50 guy makes more money.


Only a true lowballer will think that way ,I would think the 100 guy would make more than the 50 guy.I guess it depends on how loosely the term lowballer is used,broke and needing to pay bills,budget cold water unit,not knowing what to charge,having the wrong eqt.,having better eqt. is not excussed.A fair market price in one area maybe a lowballer in another area,if your not getting the fair market price in your area "your a lowballer" nomatter how you look at it.One thing for sure I'm not dropping my price from a 100 to 50 to see if I can make more money .

 

[oneness]

Alan:

I agree...By using the right equipment and the right chems, I can now do a typical 2000 sq foot ranch style home in between 1 and 1.5 hours, including setup and breakdown. An hour every time if I'm hustling. Say I charge $100.00 for that house, I'm still making pretty good money.

Who determines what the "fair market price" is for any given area?

Larry:

You're a nut.

 

[MR ALAN]

Originally posted by oneness
Who determines what the "fair market price" is for any given area?

Bingo, that says it all. Shall I call al my comp and ask them? Who really knows?

 

[Larry L.]

The area itself determines the fair market price just like your garages,gas stations,ect.,ect.

 

[Cody]

<font color=e87400> Need to tell a newbie how much to charge, tell them to go here --> <a href="http://www.powerwashnetwork.com/showthread.php?threadid=6352&perpage=10&highlight=pricing&pagenumber=1">Pricing Defined</a>

 

[OrangeCrest]

The Famous Book of Cody

=)

 

[timhays]

when i first started i thought the going rate was much higher than i found it to be,armed with entry level equipment and a general advice on what to charge it didnt take long in a full time market to realize in rder to compete on a large scale i would need to invest in the equipment and techniques to compete at the prices at the time i thought were low and make a living.

i cant define a lowballer because there are too many variable in there defense..the way i see it we have all struggled to make it in this business and the ones who can do what it takes (whatever it takes) to survive the first several years to build a reputation and learn the ropes,can then afford the satisfaction of charging top dollar and maintaining steady work.

as far as i am concerned there is no lowballer,,only people who are new to the business and dont know the market value and cost of doing business and others who have been here a while,usually there prices reflect the difference.

one thing is for sure there are several markets pick the one that you cater too and dont worry about the others.

 

[oneness]

Good advice, Tim!

I too found actual prices to be less than I was led to believe by some on the boards. I was laughed at quite a few times by homeowners before I caught on...

 

[Bully Wash]

Prices: what the market will bare, what the customer seems is fair.

Service: How professional you are.

Quality: How good the work you do is.

I do not compare my work and prices to others in the area I service. My price may be higher or lower depending on several factors.

Repeat business, weekly, every other week, monthly, as needed, one time cleaning etc.

 

[Cody]

Originally posted by MR ALAN
What is the true definition of a low baller?

<font color=e87400><ul><li>One who “repeatedly†sells their services for less than Fair Market Value (aka. What the Market will bear). <li>One who sells their service’s on “price†alone</ul></font>

If I beat everone elses bid by a hundred or two does that make me a lowballer?

<font color=e87400>Most Likely YES! There are 2 bits of criteria that would need to be known for a definite yes. 1. How often are your lower & 2. What percentage is $200 of the final bid. If you’re lower 7 times out of ten & your lower by a percentage of 25% “on average†(this doesn’t mean that being only 10% on average lower is ok!). Then you are a lowballer.</font>

<b>Not everyone has the same payments on mortgage, trucks, equipment and such. Some have shops as the city will not let them have commercial stuff at home, and others work from home.
So the way I see it, is if someone is charging enough to make it a successful business, but they are only charging half of what everyone else is, they are not a lowballer, but a smart business owner. I have seen enough posts by you to say that you are not a lowballer, and the above statement that some may view you as the lowballer is nonsense.
</b>

<font color=e87400>Here lies one the biggest problems in the industry. What one person calls a successful business.
I could write several pages on this subject alone. I’m gonna condense it here. No one here can define a successful business for anyone else. Hence the problem. To me, the only real definition of a successful business is one that will provide me a healthy income with minimal management. If I have to deal with issues of the business more than once a week, it’s not successful according to my standards. Or, one that at least affords me a lavish lifestyle for my constant efforts. Anything less is just it would be just a job. My standards here are pretty popular in the general “professional†business world as a business “ownerâ€. To some however a successful business is merely one that provides them an income which is at least as much as they could make at a decent paying job or a little more & they are they’re own boss. Bottom line with this issue is: If your competitors are not aspiring to create a viable business that will support them without their constant supervision or at least provide them a lavish lifestyle, then your competitors are a drain on your market because they are most likely selling on pricing based on such rather than pricing to sustain a real business. </font>

Originally posted by OrangeCrest
I have been wondering for a while if not giving a ball park figure to a newbie or someone trying to get into a new market, actually creates "Lowballers," because they don't know what to charge, but would charge as much as the next guy if they knew the going rate. <font color=e87400>REREAD MY PRICING POST</font>

Gas stations post their prices for everyone to see. Any grocer can go into their competitions store and lower their prices to try to beat their competition.

<font color=e87400>Your comparing apples to oranges here. Retail pricing is based on “tangible†sales, whereas service’s are “intangibleâ€. Big difference. Costco, Walmart, Target, all carry Emerson Microwaves & all pay nearly the same thing for them.</font>

<b>Now, if a newbie comes along, or someone who is trying out that particular market, they can lowball me only because they didn't realize, or take in account all what was required in order to complete that job.</b>

<font color=e87400>Getting lowballed rarely has anything to do with mis-bidding a job. It most often has to do with shear ignorance &/or stupidity in manners of Business!</font>

<b>Giving them a ballpark figure, I feel, levels the playing field and actually leaves the decision on who is the better man, price being removed from the process.</b>

<font color=e87400>Or more likely, it serves to give them a basis to underbid you thus forcing your prices down in the long run. Think about that some!</font>

Originally posted by jon chapman
basic economics. If a business is successful, others will enter that business until market saturation, the profitable will remain, the others will get out. ( hopefully sooner than later.) Then the cycle starts over again.

<font color=e87400>Basic Business Strategy: If an industry is successful, Keep others out as long as possible! When others get in, the cycle WILL NOT simply start over again, it WILL cycle “progressivelyâ€. Take if from the guys that have been the biz for a while. 15 years ago, I rarely saw a pressure cleaner & they weren’t for sale at Home Depot….</font>

Originally posted by the_GUNN_man
One thing we all have to remember is that we were all newbies once.

<font color=e87400>Where we started from makes absolutely no difference. What we have to consider is where we are now & how to maintain our competitive edge. If that means not “helping†every player out there that would gladly undercut your price on a job, so-be-it! </font>

Originally posted by oneness

Contractors helping each other, whether they be newbies or have been in business for a long time, can only help the industry. Sure, the market may become saturated, but that'll happen with or without my help. I'd rather help a new guy, and know he's using the right chems, the right equipment, and has a better grasp on the kind of money he can make. A guy who is happy with $20.00/hour will be happy with that with or without me. If I offer help, MAYBE I can help him realize he's worth more than that.

<font color=e87400>What about when you teach them something which they use against someone else here that you like? Some people here can lose THOUSANDS of dollars from the loss of just ONE customer. Would it sit well in your craw if that happened to someone here you are friends with, what if it happened to you. It's nothing but obvious to me that I have WAY more to lose than I do to gain in helping newbies, or helping anyone in my market for that matter (in a way that gives them an edge against me.) These forums are not for contractors, they used to be but now they are for newbies & vendors.</font>

<b>It depends on who you're talking to. To me, it is someone who does shoddy work with sub-standard equipment and chems, doesn't run a reputable business (insurance, taxes, etc etc) and charges less than the job would demand if done correctly by a reputable company.</b>

<font color=e87400>Incorrect, that would be better described as a Fly-by-nighter, whom of course usually lowball too.</font>

<b>If someone is running a reputable business, using the proper equipment and chems for the job, and does a good job, but charges less than I do, he's not a lowballer, he's just competition. </b>

<font color=e87400>No he’s a lowballer if he does it consistently, see definition at top of page.</font>

<b>I agree...By using the right equipment and the right chems, I can now do a typical 2000 sq foot ranch style home in between 1 and 1.5 hours, including setup and breakdown. An hour every time if I'm hustling. Say I charge $100.00 for that house, I'm still making pretty good money</b>

<font color=e87400>Pretty good money is debatable. How much are you making when you consider driving time, selling time, future employees & future overhead of a legitimate business location & most importantly, how many hours can you realistically keep your machine busy during a regular workweek? Did you sell that same job for $200 when you were slower? If so, then why can’t you sell it for the same thing now, especially with your enhanced knowledge & equipment. <I>this one always cracks me up, get more knowledgeable, better equipment, a reputation, then drop prices??? Not saying your’re doing this, but many many do!</i></font>
<hr color=#C1CDC1 width="100%">
<font size=+1><center><b>Who determines what the "fair market price" is for any given area? </b></center></font>
<hr color=#C1CDC1 width="100%">
<font color=e87400>Asking this question shouts out ignorance! But, it’s ok, I’m here to try & fix that. Bully Wash has already said it in the post above, but I’m going to expand on it some.

The FMV is set by the “market†<i>with the help of the seller</i>. It’s what the market will bear. The trick is that YOU as the seller must “tweak†your prices into the this zone to find it. So many contractors will never try to tweak their prices, so many contractors fall to pieces with 2 “no’s†in a row. You build your business on <b>NO’s</b> not yes’s!!!!!

Ok, now your saying, Cody, YOUR NUTS! Build my business on NO’s. Your outta your freakin MIND! Nope, not at all. The NO’s are the key to achieving maximum returns for your efforts. The formula is defined by “Closing Ratios†In a “typical†market you probably shouldn’t close more than 10 out of 30 estimates. Many contractors have boasted closing 25 out of 30, stating that they’re sales skills are excellent. Well perhaps that’s why they are closing so high, not likely though, most likely they are just a lowballer, and if by some strange chance they are a super salesman <i>(& a top salesman based on a national average)</i> then they are a stupid businessman, because they should adjust they're pricing, they are ignoring the statistical indicators that are SCREAMING at them to raise their prices.

<i>There are a few exceptions to the rules here of closing rations, but they really don't apply right now, it's another issue. Search for "Professional Lowballers" in the search index of this site to find more.</i>

More info on Closing Ratios can be found in my <a href="http://www.powerwashnetwork.com/showthread.php?threadid=6352&perpage=10&highlight=pricing&pagenumber=1#ratio" target="newwindow" title="Codys Pricing Defined Thread - Closing Ratio Statistics">Pricing Defined Thread</a> The page should load where you need to start reading. Read the first 3 paragraphs you see.</font>

<font color=e87400>OK, I'm going to bed now. Happy Reading.</font>

 

[Bully Wash]

Cody you sure love to give others headaches with your lectures.

Cody says If I have to deal with issues of the business more than once a week, it’s not successful according to my standards.

The above quote by Cody needs his explaining a bit more and I ask you does this include ordering chemicals, mixing them, selling, servicing your equipment, fueling up and all the other little details all of us do to keep our equipment in running order?

That asked what is your feelings on a one on one Emailing help to someone not any place close to you that can do no harm in any way to your business?

Say a guy from NY, WA, Canada sends you Email asking for personal help, would you offer that person any solid advice or stick with your won't help anyone attitude?

 

[OrangeCrest]

Cody...

Good input... Food for thought...

****************************************************
My Comment:

Giving them a ballpark figure, I feel, levels the playing field and actually leaves the decision on who is the better man, price being removed from the process.

Cody's Responce:

Or more likely, it serves to give them a basis to underbid you thus forcing your prices down in the long run. Think about that some!
****************************************************

I totally aggree, but in the same sense someone can also tell someone to overbid so they an come in with their regular bid and look reasonable.

You really have to just take anything from here and weigh it to see if it is truth or fiction.

Yeah... I use Bleach and amonia for a good house wash... That's killing off competetion.

Note: Everyone should know the combination of bleach and amonia creates a poisoinious gas. (in case some may just try it...)

Some ask to find out for legit reasons, others ask to do just as you said: Lowball.

 

[Cody]

Originally posted by Bully Wash
The above quote by Cody needs his explaining a bit more and I ask you does this include ordering chemicals, mixing them, selling, servicing your equipment, fueling up and all the other little details all of us do to keep our equipment in running order?

That asked what is your feelings on a one on one Emailing help to someone not any place close to you that can do no harm in any way to your business?

Say a guy from NY, WA, Canada sends you Email asking for personal help, would you offer that person any solid advice or stick with your won't help anyone attitude?

<font color=e87400>Not much more to explain really. Not sure what you are asking in that first sentence prior to the "and" Please specify.

As for the rest of that first paragraph, well... Yes that's what it means! I don't want to order, repair, mix or fix. Not sure if you got the memo but there are positions for things like that, "maintenance tech" "managers" to name a couple.

As far as email help. I'm sure there are a few here on these forums that can answer that one for you. It's a big ole NO! I don't help them when they email me. Whenever I make one of my trademark post, I get emails, as many as 30 or 40 at times. Most go unanswered. Primarily because they are stupid! After my last "Pricing Defined" post. I had about 10 people emailing me to help them with their pricing! Unbelievable! All they were asking me was already in that post! Some asked for my pricing guide as a reference for themselves. Yeah, sure, I'm going to give that away! These are the people that everyone wants to help, idiots that can't even grasp that post!

There are people on these forums I will more than gladly help in anyway I can. Some may not say it a loud but there is a little "inner circle" on these forums. There's those of us who have similar views & have been around here for 5+ years. We may not always agree on somethings but I consider them friends & will gladly help them.


</font><b>OrangeCrest</b><font color=e87400>

The problem is that when you post to charge $.xx for something. It is now written on the internet & becomes law. Everyone believes the written word. Then the price is taken out of context. Perhaps you posted a price in the 30th post of a thread, what happens when Joe Newbie doens't read the rest of the post, only your price? What about demographic pricing differences. Joe Newbie won't see that, he'll just use your $.xx in his area & for everything. Thinking $.xx is ok for Commercial 100,000 sqft & for Residential driveways.

The problem is that the prices you post WILL be at some point taken out of context by some eager beaver with no clue of basic "business" math.

& If your purposely telling them to high a price then you shouldn't even be here, that's downright decietful.

Cody.</font>

 

[Bully Wash]

Orangecrest

The problem is that the prices you post WILL be at some point taken out of context by some eager beaver with no clue of basic "business" math.

That old saying those that do not do their homework but expect others to do it for them shall fail.

Joe Newbie must be pretty stupid if he believes everything he reads, most of a post is general and not specific unless it is repair or chemical mixing and even then not sure how much is 100% true.

Cody

There are people on these forums I will more than gladly help in anyway I can. Some may not say it a loud but there is a little "inner circle" on these forums. There's those of us who have similar views & have been around here for 5+ years. We may not always agree on somethings but I consider them friends & will gladly help them.

Ok that is what I was referring to, you do help or are willing to help the chosen few.

As some of them are willing to help a few chosen ones also.

And yes I did miss your post about others doing the work of mixing chemicals, billing etc.

 

[Larry L.]

I knew a new local contactor would go out of business but I didn't think it would happen within two months.

I mentioned bout a contactor saling out several days ago,his asking price wasn't high at all with all the $$$'s he was making.

He to was washing some 14 trucks,17 to be trueful,will the one doing the buying"new guy" dropped it to 15.I meet the new guy at the watering hole and told him he had to count everything not just the gas and chemicals it took to wash a truck.Even the brakes and tires had to be counted,wiper blades ect.ect..A week later I was loaning him a spare tire for one of his rigs and I noticed he had bought a new fancy truck to pull the woreout eqt. he had bought.Two weeks later a employee stopped working for him and went to work for his self and took some of the busimess with him.Several of the accounts after a few washes "owner" started getting theirs washed elsewhere.The new owner also had another business which now is for sale too.....

Like I said,you haveta count everything,even the bread on ya table.......you can wash all the 14 dallor trucks you want if you have figured how much butter you want on dat bread.

P.S...don't forget to count the cost of washing dat knive you used to spread dat butter.

 

[AdkinsPwrWash]

I didn't read the whole thread, nor have I been doing this for several years so take what I say with a grain of salt.

Back in the early-mid 80's my grandpa had an equipment business in Houston, Tx. (where they sold/rented pw'ers and soap/chemicals etc.) So, I have got alot of helpful insight from himself, as well as my father who worked for him for many years, on the power washing business. And, while I know things have changed over the years, the general concept etc., is still the same. I have my small business, which the only reason I have it, is to supplement my main income, and to give me something to do in my spare time (which, in my career field, I have a LOT of). The money I make doing this, is mainly to support my car hobby etc., so I'm not out to make a killing. I may not use the most professional bidding method out there, but I basically figure in all my expenses, how much time/pain in the ass it's going to be, and how much money I'd like to take home with me when I'm done. While I am still very much wet behind the ears in the business, my machine ('04 alkota 5355J 3500psi @ 4.6gpm diesel fired burner, general pump, 20 horse honda gas motor) and all of my equipment is paid for, and is one of the nicer set-ups i've seen out there IMO.

I know there are many people who have more expenses etc., who HAVE to make more money per job, and while I'm not in competition persay with other companies, I don't try to step on anybody's toes, or steal their jobs away from them, but I have noticed that my bidding method works EXCELLENT for me, and I've been shocked how much bigger companies charge for what I can do for so much cheaper. A lady called me up to do some flat work for her (small front porch, a little walk-way on the front of the house, and then a rinse of her new driveway) about an hour-hour and a half's worth of work TOPS, I told her $175.00...she said the cheapest she'd got so far was $400 for the same job. Now, that was a little low I even think, but it was an elderly woman, who was doing some cleaning up around her house, and I felt bad telling her that much. I'm very upfront with the customers, and feel no need to hide anything, or bullshit them any, 'cause I feel that if I stretch the truth a little, and then they find out otherwise, then that's doing nothing but shooting myself in the foot..and, in the town I live in (roughly 200k people) word gets around quickly. I'm bidding a job right now, that is a small strip center (133' deep, by almost 400' wide) not alot of grease in the parking spots but there is a SHITLOAD Of grease/mildew on the walk-ways, and I have NO idea what to even think about charging for that one. [lm]

 

[Dan S]

The kind of attitude you have Jason you will go far.

 

[AdkinsPwrWash]

The kind of attitude you have Jason you will go far.

Do I sense a little sarcasm?