underbid jobs

[Jhelm]

depends on circumstances

It is fairly common for a certain type of self centered person to lie about other bids, I see or here friends do it somwwhat regularly. For instance bragging about how they got another $1,000 of the new car by sayig another dealer was that much lower. Sure car salesmen are not known for truth telling either but ..Circumstances matter, if market price for tree is 2k maybe 2.5k from the big name service and your customer twists you into 1600 on the basis of a 1200 competing quote from a guy with a Poulan Wildthing and no insurance I think you have a little lattitude. On the other hand if you are bigger outfit pricing at 2k and then wish for another 500after thinking about a bit longer then, well, you eat it and go on. Chances are if you are that larger outfit you have so much to bid and keep going you dont have time to rethink every bid and also the expieriance to not underbid in th e first place.

 

[reachtreeservi]

I tell the customer I'll give them a bid within 24 hrs. I look at new jobs in the evening ,ask what the customer wants , then return and walk the job the next morning. Things sometimes look differant after 8 hrs. of sleep .At this time I write down the order of work ,Figure how much time it'll take , consider how dangerous it is , then come up with a price I can make money at. I call the customer that evening , and give them a price.Once I give them a price verbally , I stick to it.

 

[pigwot]

When I was young I recall bidding against a few quotes homeowners "claimed" they'd received, and realized only later that I was giving away the skills and abilities I had brought to the table because I was anxious to get the work. After that I focused on what was the hourly rate I needed to make . Estimates were based on that figure (which included wages, taxes, liability, workman's comp, and unemployment insurance and state gross receipts tax, wear and tear on vehicles, saws, ropes, rigging, etcetera, AND, most importantly a target profit margin for hours spent in the field doing the work, doing the estimates, and at home at night entering data in the computer and doing the payroll and calling customers, wholesale suppliers...and on and on...). Did I underbid jobs: yes. Did I overbid jobs: yes...did they cancel one another? All-in-all I believe they did. I never walked away from a job, despite an off bid. I felt my name was more important. I did explain the predicament to the homeowner in a calm, rational manner, explaining the unforseen complication. Surprisingly more times than not the homeowner offered to increase the amount paid to meet me halfway. Commercial contracts were different, in that I did some work for condo associations, builders, and property managers. For them I gave a fixed hourly rate, usually 10 to 15% above the going rate, and billed the actual time of the jobs. Some days were better than others.
I do not now have a crew, sold my trucks, chipper, all but a set of tree gear and my stable of Huskys. With retirement comes the ability to do just what you want to do for neighbors, friends, and family. All the other high-risk, stressful stuff gets sent to all the great friends I've made in the tree business (age and climbing don't always mix well- enjoy your youth!).
The two things I would advise is that:
1. you know your cost structure, and make sure you are making enough to pay your help well, insure their health and well being, and put enough away for your retirement, and
2. Be Safe, (a young fellow, whose pruning skill I was just admiring a few months earlier fell to his death, leaving a wife and children and doubtless many satisfied customers and good friends behind).
Sorry to be so longwinded, another risk of retirement is lots of time on your hands...

 

[Ax-man]

EXCELLENT POST, I couldn't agree more especially the health and retirement comment. Now how do we get everyone on the same page like you have just desribed that are actively employed in this business.

Larry