When do you start lowering your prices?

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mikewhite85

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So part of this is just me blowing steam- the other is seeking genuine advice.

When bidding my thought process used to be something like "What will other tree services bid on this and how can I do it for a little bit less and still do a good job?" I didn't always make a ton of money per day but we were busy all the time. There was a ton of competition in Los Angeles.

Sold the old company, moved to rural PA a few years ago, and started another company with the thought process of "What do I need to make a good profit and do a great job?" without putting into consideration what other companies are bidding.

There's really only one other professional company in town (with several "have saw will travel" types) and I'm the only certified arborist within a half hour and probably the only company with worker's comp (though everyone says they are "fully insured"). I have 2 great/reliable employees I pay well, 2 larger chippers, and mini skid with BMG. Generally we gross 2-3k per day.

I was basically 2-3 weeks booked out all year but I'm really slowing down now and seem to be losing every bid from the last couple weeks.

My question is- when do you start considering lowering your prices, if at all? This will be my second winter with this business though we worked all winter last year.
 
What do you focus on doing? Keep prices up on what you do best / better than other companies. Maybe discount prices on work that you can do, but generally don't, but will do to keep cash flow??? Offer a "winter discount". But be real careful about setting the expectation that you are the cheap guy or those are the only calls you will get. That is why I'd suggest keeping prices on your specialty, but lower on stuff you don't normally do. That way when somebody calls to ask, for example, "can you quote me a removal" you can say "we aren't doing removals right now".
 
Your prices have to meet the market if the market wont meet your prices.

Or you change markets

IMHO Your better off getting and keeping regular clients (and staff) if there is a consistant downturn for a while than pricing yourself into hibernation while your competition builds.

Jobs bring more jobs.
 
Probably also important to note that you havent worked many winters there, the last one might have been a rarity and your landing on the norm work wise for the area. Its up to you to gather that kind of intel
 
Take on smaller jobs that pay the bills when work is slow. Keep the guys busy doing other work around the shop or even, take some time off and enjoy some free time. (it's hunting season) We've all hit the slump on occasion and then, out of nowhere, it picks right back up.

Did you lose your bids to a new company? Maybe the companies you lost the bids too are already IN their slow time and bidding low to keep their bills paid. There's a million reasons why you didn't get the job but don't despair. Stay active and have good exposure to the public.
 
Talk to your clients. Ask them politely why they went with your competitors; highly likely you will learn how to adapt. But, don’t get into a mindset of undercutting to get the job as that is just a race to the bottom.


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Thanks, guys. I appreciate the advice!

Last winter we took out hundreds of dead ash trees for the county, school district, and borough so perhaps that was an anomaly. There is a newer company in town I suspect where many of the residential jobs are going.

Over the weekend I called, emailed, and/or texted a bunch of bids from the past couple weeks and offered a 20% winter discount. No success yet but we'll see. We've got work this week but nothing on the schedule for the following. Worse case, I'll just spend more time studying for the BCMA exam. Overall we had an excellent year so I have some money saved.

I do appreciate the advice from all. Thanks again!
 
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