Underbidding

[tomtrees58]

can you sleep at night look be hind you at all times duck and move out of town tom trees

 

[TDunk]

can you sleep at night look be hind you at all times duck and move out of town tom trees

This is exactly why i was going to keep my mouth shut.

 

[DKdeOhio]

just my opinion...

Hey T-Dunk -
Don't get stressed about the negative feedback on this thread. You're just facing the brunt of the frustration honest tree guys (and gals) face in the industry with 'Chainsaw Cowboys' jumpin' out of every truck to make a quick buck. But I hope the message rings with some clarity - if you are an underbidder, you are absolutely setting yourself up for failure. As already noted, you will never make a living, and you'll get a reputation as a lowballer (great point from earlier) and people will expect those prices ("well you cut old man Johnson's elm for $200!")...you'll be in a continous cycle, working a hazardous job for little compensation, always trying to keep equip fixed, etc....my advice, is to work harder and smarter, not cheaper. If you are willing to educate yourself (trees, PPE, business, etc.) and plain old' work harder than the next the guy, you'll find success. Of course, what do I know - I'm just a part-time "Super Trimmer" (thanks lxt....)

 

[TDunk]

Hey T-Dunk -
Don't get stressed about the negative feedback on this thread. You're just facing the brunt of the frustration honest tree guys (and gals) face in the industry with 'Chainsaw Cowboys' jumpin' out of every truck to make a quick buck. But I hope the message rings with some clarity - if you are an underbidder, you are absolutely setting yourself up for failure. As already noted, you will never make a living, and you'll get a reputation as a lowballer (great point from earlier) and people will expect those prices ("well you cut old man Johnson's elm for $200!")...you'll be in a continous cycle, working a hazardous job for little compensation, always trying to keep equip fixed, etc....my advice, is to work harder and smarter, not cheaper. If you are willing to educate yourself (trees, PPE, business, etc.) and plain old' work harder than the next the guy, you'll find success. Of course, what do I know - I'm just a part-time "Super Trimmer" (thanks lxt....)

DK, I'm not even really sure if the negative feedback is directed towards me or not, but nun the less i thought the topic should have been brought up. That's the only reason i posted it. I'm confident in the work i do. I do good work at a fair price and that's all i need to worry about. I wasn't trying to bad mouth him at all (and i even said that in the original post) I was just trying to lead up to the fact that people who do under bid all the time end up hurting themselves in the long run. But thanks for the support.

 

[tree MDS]

I dont know if the underbidders generally know that they are doing it or not. I have the bidding advantage of having worked in the same area for pretty much 20 years-12 on my own, so I've heard alot of prices and think I have a pretty good idea what things should be. Well when I come in at say 2400, and some guy says 1500-I look like the thief and in the homeowner's eye that 1500 IS what that job is worth. It doesnt matter if this guy goes out of buisiness eventually, he is still killing the biz for everyone else-and making it look like I'm a thief while at it. So all my years of trying to be fair and get as close to top dollar and still get work are negated, in short now I have to start learning to bid all over again??- based on what? How can you figure a bid against someone that has no idea what they are talking about? I try to bid so that can afford to run a real buisiness, would'nt it be so much easier if we all did.

 

[2FatGuys]

I'm a "part time Super Trimmer" also. But, I have to clarify that. We ONLY do removals. I respect the profession too much to try to present myself as the ultimate answer to all tree health issues. I would rather do what we do best and enjoy it, than to try to do "anything for a buck" just to get by. We started doing removals for friends and family only. We (2 of the 3 partners) heat with wood and saw it as a source. That was 30 years ago. Our team has worked well together, with two of us experienced (30 years and 20 years) climbers and all three of us experienced in proper SAFE saw use and experienced in rigging. We do not intentionally under bid others, however sometimes our price just happens to be lower. We would rather do a few great jobs at a decent pay level than to work our tails off for next to nothing.

 

[2FatGuys]

...Well when I come in at say 2400, and some guy says 1500-I look like the thief and in the homeowner's eye that 1500 IS what that job is worth...

Tree - We have had opportunity to be on both sides of your example. We turn down a lot of jobs that would be better done by a bucket truck or crane. But when we do price a job, we look at what it really takes to do the job. We have bid on a few jobs requiring climbing and been beat by a guy needing to make the payments on his new bucket truck. We have also beat a previous low bidder because we have very little overhead. It's not always unfair bid practices. Sometimes it's simply the economics of your choice to maintain a fleet of equipment that may not be needed on all jobs.

We have had the frustrations of the local "hacks" also. I know what you mean about them. But there are legitimate bidding practices that, due to a variety of overhead costs, produce lower cost options for the customers.

 

[tree MDS]

Tree - We have had opportunity to be on both sides of your example. We turn down a lot of jobs that would be better done by a bucket truck or crane. But when we do price a job, we look at what it really takes to do the job. We have bid on a few jobs requiring climbing and been beat by a guy needing to make the payments on his new bucket truck. We have also beat a previous low bidder because we have very little overhead. It's not always unfair bid practices. Sometimes it's simply the economics of your choice to maintain a fleet of equipment that may not be needed on all jobs.

We have had the frustrations of the local "hacks" also. I know what you mean about them. But there are legitimate bidding practices that, due to a variety of overhead costs, produce lower cost options for the customers.

So you wish to stay with "very little overhead"? -not being sarcastic either.

 

[Metals406]

I think most businesses have this problem. I started a fab shop 4 years ago, with about 15 already operating locally. That same year, another 15 shops opened. The competition was crazy. I set my rates on the average of the going rate, while other shops were much cheaper (And a lot of their work was too).

I also do carpentry, and have had the same experience. I remember a deck remod I did on a turn of the century home. None of the lumber dimensions are used anymore, so everything had to be custom made/fit (and there was a lot of ant/rot damage). I estimated the job, and started work the next week. The middle-man for the homeowner came up to me when the job was done (and it was time to get paid) and told me the homeowner had a guy tell him he could build both the rear and front decks from scratch for $500.00!!??

I told him to send that guy to my house, 'cause I wanted a deck for that price. . . . Seeing as the materials for just a remod totaled $850.00.

 

[corndogg]

I have old paid for equipment with no payments except for advertising and fuel/disposal. Lowest possible overhead I would say. I bid jobs for what their worth I would say. I bid them as low as I can without feeling stupid about it and I get underbid constantly! Why would I climb into a tree with a chainsaw if I'm not gonna come out with a decent chunk of money? Any less and I'm just keepin' busy. I'll sit home rather than do it cheap.

It seems after I tell them the proper way to do the job and give them a price, their next mission is to get it done cheaper. And they will definately find someone cheaper! If they do say "go ahead" I have them sign the proposal and give a 25% down payment. Now the job is as good as done. Otherwise the next doorknocker or guy workin' down the road will definately do it cheaper as they are already there.

 

[corndogg]

As far as building a business. i don;t think there is much loyalty these days. Lowest price wins. I've always figured the value of a landscape or tree business is what the equipment will bring at auction. It's only worth more to the guy who owns it and can make it work for them.

 

[TDunk]

Around here, certifications,PHC, etc. don't mean anything at all. So it wouldn't matter if i had all the certs. in the world and offered more than the competition, they'll usually go with the lowest bidder. I'd say about half the people around here would rather have it done safely and spend a little more (Those are the people i do the most work for) but the other half just want it done as cheap as possible.

 

[tree MDS]

Around here, certifications,PHC, etc. don't mean anything at all. So it wouldn't matter if i had all the certs. in the world and offered more than the competition, they'll usually go with the lowest bidder. I'd say about half the people around here would rather have it done safely and spend a little more (Those are the people i do the most work for) but the other half just want it done as cheap as possible.

Tdunk, a little off topic here but how do you like the 362xp? what size bar do you run? I have a trusty ole 262xp thats getting a lot tired, I've allways run a 18" bar on it, that was one of the best/most reliable saws ever.

 

[corndogg]

I'd say about half of the services around here trim with spikes also. I tell the customers: No matter who you hire, never to let anyone use spikes on their live trees and explain why. They are usually very appreciative. Also the certified arborist thing. If I've gotta do it right, then they should too damn it!

 

[DKdeOhio]

Lower prices DON'T always equate to Lowballers...

Well when I come in at say 2400, and some guy says 1500-I look like the thief and in the homeowner's eye that 1500 IS what that job is worth. It doesnt matter if this guy goes out of buisiness eventually, he is still killing the biz for everyone else-and making it look like I'm a thief while at it. So all my years of trying to be fair and get as close to top dollar and still get work are negated, in short now I have to start learning to bid all over again??- based on what? How can you figure a bid against someone that has no idea what they are talking about? I try to bid so that can afford to run a real buisiness, would'nt it be so much easier if we all did.

I am not sure about you, Tree MDS, but I don’t base my estimate on anyone’s elses prices. I base my estimate on what it will cost me to do the job and make a profit. Maybe the job you discussed is a $2400 job to you, and a $1500 job to me. That makes me a low-baller? What if after paying all of my overhead (and remaining ‘legal,’) I still walk away with $600, but it takes me extra time. Then its a good job for me. By your logic, if Davey Tree bids the same job for $3200, are you a lowballer?? Its a ‘$3200 Tree’ to them....
I don't think you look like a thief because you quoted more, happens everywhere in all aspects of business. Sometimes I'll pay the lowest price, but other times I'll pay more because I like / trust the saleman(woman) more. Just the way it is in a capitalistic society (sans unions.)
To me, economics plays a major role in the dictation of pricing. Yeah, I’d love to charge what the “Big Dogs” charge for tree work, but that is not realistic for me, or to many consumers who choose ‘who will do the work for them. That $2400 tree job is only worth $2400 if you can sell it to the consumer; if you can’t then its not a $2400 tree job. Maybe it is a $1500 job, or maybe a $1350 job to a better salesman than you or me. I know that in a good majority of jobs I do, I am NOT the lowest offer.... Some people just price shop, and you’ll never get all those jobs. Others are just un-educated (on trees) just waiting for you to educate them and make them a life-long customer. Thats the way I see it.
To me, the lowballer is the guy who charges ‘pennies on the dollar.’ If that $2400 tree gets cutdown by some yahoos for $500 – yep, them’s probably lowballers. The guys who find out what you charge and then “beat” that price by a couple hundred – yep, lowballers. The morons from Arkansas chasing prices (see above) – yeah, I’d say they are lowballers too. But, I don’t worry about those guys, because they’ll be bagging my groceries in the near future, not doing tree work....

 

[corndogg]

I agree with Ohio. Nothing wrong with Wal-mart doing it cheaper because they can sadly. But I think we should still worry about the lowballers because they make us all look bad and even though they will be bagging groceries there is a never ending supply of lowballers out there. How many of you guys are licensed with the cities you work in? This may be the first step in cracking down on hacks. about 50% of the cities around here require licensing but never seem to enforce. None require arborist certification YET. If we can push all cities to require licensing and certification and enforce then bye bye weekend warrior. Suck to pay all the licensing fees but I don't see any other way. Should have list of phone numbers to call in unlicensed door knockers. What do ya think?

 

[Blakesmaster]

For a bit of clarification, I'm not a jump out of the pickup, badmouth the guy down the street for exorbitant rates, door-knockin' type of guy. Never done any of those things and never will. All my equipment is bought and paid for w/in the past year and a half that we've been working. I know we don't have as much experience or training as the majority of people in this forum or even on the local scene here but we're still young and have a long way to go. We do good work and people are starting to notice. My question is this. If I don't have enough work to keep me busy more than a day or two a week now, how can I start a "real" business and assume that everything will simply fall into place? I still lose jobs because of the price and I would rather take a few hundred dollars off the bill than sit at home on Sunday. I want my equipment on the road so people see it. Yeah, the other guys around here may hate me because they know I'm funding my "business" with my day job but I'm not about ready to go full time if the work isn't there. And if I hadn't been sinking my paychecks into equipment the past year I'd be like the hacks around here with one or two saws and a pick-up. I'm trying to get my equipment and client base built up before I need to depend on it full time. Yeah it hurts the established businesses but I didn't get into this for their sake. I did it for mine.

 

[tree MDS]

I am not sure about you, Tree MDS, but I don’t base my estimate on anyone’s elses prices. I base my estimate on what it will cost me to do the job and make a profit. Maybe the job you discussed is a $2400 job to you, and a $1500 job to me. That makes me a low-baller? What if after paying all of my overhead (and remaining ‘legal,’) I still walk away with $600, but it takes me extra time. Then its a good job for me. By your logic, if Davey Tree bids the same job for $3200, are you a lowballer?? Its a ‘$3200 Tree’ to them....
I don't think you look like a thief because you quoted more, happens everywhere in all aspects of business. Sometimes I'll pay the lowest price, but other times I'll pay more because I like / trust the saleman(woman) more. Just the way it is in a capitalistic society (sans unions.)
To me, economics plays a major role in the dictation of pricing. Yeah, I’d love to charge what the “Big Dogs” charge for tree work, but that is not realistic for me, or to many consumers who choose ‘who will do the work for them. That $2400 tree job is only worth $2400 if you can sell it to the consumer; if you can’t then its not a $2400 tree job. Maybe it is a $1500 job, or maybe a $1350 job to a better salesman than you or me. I know that in a good majority of jobs I do, I am NOT the lowest offer.... Some people just price shop, and you’ll never get all those jobs. Others are just un-educated (on trees) just waiting for you to educate them and make them a life-long customer. Thats the way I see it.
To me, the lowballer is the guy who charges ‘pennies on the dollar.’ If that $2400 tree gets cutdown by some yahoos for $500 – yep, them’s probably lowballers. The guys who find out what you charge and then “beat” that price by a couple hundred – yep, lowballers. The morons from Arkansas chasing prices (see above) – yeah, I’d say they are lowballers too. But, I don’t worry about those guys, because they’ll be bagging my groceries in the near future, not doing tree work....

What I'm saying is that having been at this awhile and knowing what others try to get per day, and knowing what I need to get per day, I break that down into an hourly rate and then try and figure out how many hours/days the job should take-based on that rate. That rate is pretty much the industry standard in my area for a real tree service thats legit and has all equipment/skills to compete, this is based on what it costs to run a real biz. I think that if I dont charge enough I'll never get anywhere, and never be able to buy new big toys when I'm older, you cant just tell yer customers "oh yeah, it just went up 400 a day, I bought a all wheel drive 80 footer"-ya gotta kind of work up to it.

 

[TDunk]

Tdunk, a little off topic here but how do you like the 362xp? what size bar do you run? I have a trusty ole 262xp thats getting a lot tired, I've allways run a 18" bar on it, that was one of the best/most reliable saws ever.

I really like mine. i have a 20" bar on it and mainly use it for firewood, but it's a great all-around use saw IMO. On the rare ocation i've taken it up the the tree with me. It may be a little heavier than the Stihl 361 but it think it performs better everywhere.

 

[2FatGuys]

So you wish to stay with "very little overhead"? -not being sarcastic either.

What I'm saying is that having been at this awhile and knowing what others try to get per day, and knowing what I need to get per day, I break that down into an hourly rate and then try and figure out how many hours/days the job should take-based on that rate. That rate is pretty much the industry standard in my area for a real tree service thats legit and has all equipment/skills to compete, this is based on what it costs to run a real biz. I think that if I dont charge enough I'll never get anywhere, and never be able to buy new big toys when I'm older, you cant just tell yer customers "oh yeah, it just went up 400 a day, I bought a all wheel drive 80 footer"-ya gotta kind of work up to it.

To answer your "dig" in the first quote above: No, I don't plan to stay with very little overhead. That's why I don't lowball. But for now, with my "very little overhead", I have no need to chrage an hourly rate for a 70' bucket truck sitting by the curb (since it can't get in the back yard) while a climber (usually me in our company) goes up the tree and pieces it out, roping it to safely miss the ornamentals all around the base of the tree. I accomplish exactly the same task, in the same amount of time, with fewer man-hours (less guys standing around), and no machinery overhead sitting idle.

I don't do the job without going through the exact same process you describe in the second quote above. We just have a different basis for determining that daily rate because we don't always have the equipment cost to account for. As I stated earlier, we do only removals. We are usually called on to do the close quarters jobs or the ones that fall in the complexity range between "Bubba's Tree and Tax Service" and "Big Jim's Impressive Fleet of Tree Stuff". We sledom beat "Bubba's" price (and don't want to), but we are successful when our price is compared to "Big Jim's".

I am in no way saying that low-balling is a good thing!