Landscape Management, October 2010
Surviving the Undercutters Contractors fight lowballers in a battle for core business TAKE AWAYS 2010 Price Setbacks 1 Bidding low just to get the job 2 Sacrifi cing profi t 2011 Price Goals 1 Making internal cuts and driving effi ciency to reduce price and maintain profi t 2 Offering ancillary services where price slashing isnt as great to make up for losses in core business LANDSCAPEMANAGEMENT NET OCTOBER 2010 S14 W hats the biggest obstacle to growth today for the average landscape contractor Certainly the prolonged recession comes to mind for most contractors as that tops Landscape Management readers list of top success blockers But a mere fraction of a percentage point behind sits lowball underpricing competitors Giuseppe Baldi calls them the undercutters Weve had customers tell me they can fi nd someone to do it for 20 so why should they pay us 30 says the landscape maintenance manager of Arlington TXs Baldi Gardens Competitors get scared and want to give stuff away explains Todd Dilley general manager of Minneapolis MNs The Lawn Ranger They think they need business at any cost so weve lost business to people driving the price down too much and its just not worth us doing the job for so little Dilleys had to lower prices 5 though theyve been trying to resist price wars Hes hoping to hold steady and increase prices 2 to 3 next year Nationally August was the 21st consecutive month in which more owners reported cutting average selling prices rather than raising them according to National Federation of Independent Businesss September Economic Trends report Widespread price cutting contributes to the high percentage reporting declining sales revenue Plans to raise prices were unchanged at a net seasonally adjusted 10 of owners On the cost side 3 of owners cited infl ation as their No 1 problem and only 4 cited the cost of labor so neither labor nor materials costs are pressuring owners to raise prices NFIBs report reveals Without pricing power and sales volume profi ts are not able to recover Only 18 of businesses reported higher profi ts while 42 say profi ts are declining Competitors in Matt Griffi ns region are driving pricing and profi ts down In our area there are
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