Price fixing

[Max_rob]

Here is a thought for you all. We all know that calling up your competition and agreeing that you will charge x number of dollars on projects is illegal. But if you notice, gas stations are always doing this as a daily ritual. I mean if you drive by a gas station at 8 am then go back at 10 am the other gas stations have thier prices within a cent or two of the first. This is price fixing anyway you cut it. So then, why would it be so horrible to do the same in our industry? Just some thoughts on this would be nice.

 

[Tim Smith]

I agree

Myself and a group of local contractors meet monthly and discuss different issues. We do not price fix, but we discuss prices and different ways of given estimates, which has help standardize the market in this area - causing us all to be able to get more for our services.


The key is to educate your customers as well as your competition.

 

[timhays]

i am all for standard pricing,but this area is a long way from that.

i can tell by the phone calls i get from advertising there are some lowballers out there,even the legitimate competition reminds me of the commercial you see on tv where a gentleman comes on and introduces himself as CRAZY EDDIE WE GIVE AWAY THE PRODUCTS,AT CRAZY PRICES,PLEASE BUY OUR STUFF BEFORE WE REALIZE WHAT WHERE DOING.


I have a major yellow page competitor around here that cleans 10 houses a day at crazy prices,i know what i have to do to compete,but i dont want to open myself up to doing poor quality work.

whats a man to do? my ethical standards are off the charts but i dont like being beaten by conartists either.

 

[oneness]

If gas station A drops, or raises, their price, and gas stations B, C, and D notice and drop or raise their prices accordingly, that isn't price fixing, it is competition. If station A drops their price by 5 cents, then station B has to decide whether they can drop their price too. They may drop it by 4 cents, or 6 cents, etc. They have to do that to stay competitive. That goes on in all areas of business. Price fixing would be if stations A, B, C and D got together and all agreed that they were all going to keep their prices above a certain amount so that no one really has to compete.

If I'm doing houses for $200.00 each, and find that a competitor is charging $150.00, I have a choice to keep my price the same or change it to stay competitive. That's no different than the gas stations.

As to whether there is price fixing at the refinery/supplier level, that's an entirely different issue.

 

[charlie]

I personnally don't like to discuss my pricing to anyone. Many times I am on the high end, but I do things different then my competion. Calling them up and saying to them we should all be in the same pricing is obsurd. Business is business. Now talking to other Powerwashers on how to solve a problem is what I like to do and do.


Charlie

 

[MR ALAN]

I fix the price, but not with others. I fix it for me, myself and I. Everyone has different costs and methods for working. That is what needs to be addressed.

 

[Aplus]

There are several power washing companies in my area, but only 1 or 2 are serious competitors, the rest are wanna be's.

I've thought about phoning the couple good ones to see if they are interested in a little shop talk.

No need to talk exact pricing strategies, but general ideas and ranges might be a good thing. Consumers who shop around would see that prices are fairly competitive, and the best salesman would probably get the job anyway.

 

[Jon]

If I'm doing houses for $200.00 each, and find that a competitor is charging $150.00, I have a choice to keep my price the same or change it to stay competitive. That's no different than the gas stations.

Oneness qoute above can be looked at a different way, rather then say I have a choice, then drop yours to be competitive why not strive to offer more, be it quality, windows at no cost or whatever, stand above the competition, be different.

And charge more for it, keep your price at $200 and gain more business because you offer more and do a better job. Offer your customers a discount for the next job IF they refer others to you.

Jon

 

[Larry L.]

Nomatter if you fix prices are not you still have to be competitive with the competition to get the fixed prices.I've seen small companys fall for that trap years ago,the goverment stepped in and stopped it,it was the smaller companys that hallowered for the goverment to step in when they seen the fixed price wasn't working for them.A new word came about after that 'Discount' which the smaller companys hallowered again for the goverment to step in but the goverment liked the discount itself.So the goverment had to come up with a another new word for the smaller companys to use and told the smaller companys to 'LowBall the price if they couldn't discount.

 

[Jon]

Hint hint,

In Redlands there was this Shell station across the street from a Unocal station, both always one penny difference and always the highest two stations in town.

One day about 3 years ago the Shell had a few to many people snooping around and not buying gas, across the street at the Unocal a few more seemed to be snooping for things.

The Shell station suddenly had a lot of yellow tape around it, then down came the 3 service doors and out comes the padlocks.

The mechanics were screaming MY TOOLS MY TOOLS, you cannot lock them up but the to many people snooping around said Yes we can and they did.

Meanwhile back at the Unocal the owner was in a rather heated conferance with some of those snoopy people, after some time he was making some changes to his prices.

Guess he was lucky and the Shell owner got caught.

Truth is both owners did indeed set prices, always one a penny higher and when one went up or down the other did to, within minutes of each other.

You figure out what happened, I know, I don't buy from that Unocal anymore.

Oh the Shell re-opened about 3 month later, new owner and he does not talk with the Unocal owner.

Jon

 

[Tim Smith]

Our meetings are no more than a round table. Our goal is not to set prices. By meeting, just like you guys do on this board and educating each other - our group as a whole will produce a better product improving the perception of our trade in this market.

Someone new in the business can see that there is a professional way of doing business and getting paid to do so.


We dont specifically mention price, but we discuss different ways to bid and hidden cost, etc.

If a majority of the contractors are using similar bid method and are using quality equipment & chemicals - then majority of estimates will be within a range. You will have the extreme lowballer rate, weekend warrior rate, the Pofessional rate, & the extreme highballer rate.

The key is to get everyone in the Professional rate range. Once we get everyone in the Professional rate range - let the competition began with salesmanship, marketing, work ethic, etc.


These meetings focus mainly on shop talk. Who knows, we may just form our own organization - one for the contractors.

 

[Jon]

Tim sounds like some of you guys have a good thing going, no hard feelings on who gets the job, not I take this one with low bid, you get next one stuff.

What I would like to know is what would or does happen when one seems to be getting most of the jobs?

Could he be bidding lower then the agreed range of professional prices you guys talked about?

If all of you are doing quality work with quality chemicals it would seems like a few are not going to get much work, there is only so many customers willing to pay the price in any line of business as long as you have those low ballers, weekend warriors etc.

Jon

 

[Tim Smith]

Jon

Somebody could be bidding lower and getting more jobs. They are just hurting themself in the long run. I think eventually that person will be identified. I go to put estimates on jobs, and the customer shows me the other estimates to attempt to get me to drop my bid. This happens a lot to other contractors as well - eventually that person would be identified.

We are very competitive with one another - just agree to play the game between certain guidelines. All information are volunteered only - A contractor can share as much information or as little as they feel comfortable.

Example of a Professional Rate that was discuss last meeting:

House washing - there are contractors that are washing houses at $.45 a liner foot. That crazy. Through discussion our group determines that house washing should be bid at $ .90 to $1.20 a liner foot. The competition between the group is between those prices. One may bid $ .90 and I may bid $ 1.05. add in marketing, reputation, salesmanship, & personal drive -- who gets the bid?

If guy purposely bids much lower - so be it - he only hurting himself.


More Important - this group is similar to a referral group. I do log homes, cedar shake roofs, & deck - not much for concrete unless the appointment book is empty -- So I give them the name of someone in the group.

Second - We have talk to a local paint store, hardware store, & lumber yard -- they have agreed to give anyone in this group a discount on purchases. We want to look at getting group rates on insurance, etc. We are working things out.



I am yet to find a organization that represents the contractors. So why not create one without the support of the big manufactures, etc. There are no dues, just a group of contractors trying to change the perception of our trade and make more money for our services.


Some will call it Price fixing, some will say its a union - but its working.


Jon, I read your post a lot - I think you will agree with me on one thing: If I am going to put money in your pockets (membership dues), I want you to put money in my pocket (Benefits).


You can not tell me that a huge organization with lots of members can not work-out group rates & discounts with chemical suppliers equipment dealers, and health & insurance.

Its simple: Hello I represent the organization with 1000+ contractors - can you offer us group rates?

NO -- hang up


Ask again - Yes Thank you, you just got the potential of obtaining 1,000+ customers.


You can contact and work out deals with as many suppliers as possibe - create a list of group rates with manufactures and give it to the member so that he may choose or not.

I'm doing this on the local level as mention above. Thats without the power of 1,000+ members and all the money backing me. Maybe that the reason - We don't have any money backing us, so we don't have anyone to anwer to - except for us the contractors.


Sorry Jon - got on my soap box.


Show me the benefits & I show you the money.