How Did I get under-bid by Half?!?

[soiset]

I bid a job for which I got a referral - it was the banker brother-in-law of someone in the neighborhood that I had done pruning work for. The job was a red oak removal. The oak was multi-stemmed, about 30" dbh (under stems), near the property line, and extending over the client's house. I bid it at $1200, knowing I could use the work, and thinking that would be competitive, and knowing it would be pretty technical.

The H.O. got back to me today, about a month later, and has let me know that the job was done for half as much. They did the job the same day they gave the bid(!) My assumption is, then, that there was a fair-sized crew, maybe two climbers and two ground guys, and that it still must have taken most of the day.

So, ($600 - associated business costs)/4 guys for a day = wtf?

Sometimes I really think I'm in the wrong business.

 

[Fruitbowl]

Just ran into the same situation out where I live. I estimated my time, charged my normal man hr. rate, handed the client my proposal and she told me she had another bid for just about half of my price. I get about 85% of the jobs I bid on so this shocked me at the difference in price. The "other" company has been in business for a long time with plenty of overhead as well. I think people are just desperate for ANY work. Hang in there!

 

[treemandan]

well its pretty disgusting, sure is. I can see cheaper rates in the winter ( sometimes) cause there are no leaves but what you described is pretty bad.

I know you have to go cheap but this kind of stuff is sending the wrong message. I would not go so low as to make myself look like a joke, sure not.

I think its due to idiot business owners.

 

[soiset]

well its pretty disgusting, sure is. I can see cheaper rates in the winter ( sometimes) cause there are no leaves but what you described is pretty bad.

I know you have to go cheap but this kind of stuff is sending the wrong message. I would not go so low as to make myself look like a joke, sure not.

I think its due to idiot business owners.

I have three possible explanations, and I've asked the client what company did the job in the hope that I can narrow the selection down:

1) As you said, an idiot business owner (which is not exclusive of the next two explanations)
2) Someone desperate for simple cash flow, taking a loss on the job.
3) Jackleg "tree service" that doesn't pay taxes, have insurance, pay worker's comp, etc. paying the workers cash, by the hour, under the table. Let's see: $600 - $40 expenses - 4 workers x $12.50/hr x 6 hours = $260 for the boss guy.

 

[Slvrmple72]

Gonna see a lot of that this year. Some are trying to put off the inevitable loss of their business or worse, the loss of their home! Looked at a Cherry behind a garage for a lady down in Massillon. Didn't want her daddy, 61 trying to climb a ladder and cut it down, multiple stems about five going the wrong way. Said she had a quote from XYZ tree for 1800 which seemed right for all of the carrying or the use of a crane, cleanup, stump, etc. and then tells me some fella wanted the wood over the winter and would do it for 500!!! Then why didn't you jump on that price! I can't afford it. I told her the tree is healthy and will probably outlive her father, especially if he trys to do it. If a storm takes a limb out or dumps the whole thing on the garage then you are out the 500 deductible on your insurance anyhow.

 

[lxt]

This year seems to be "how low can you go", Im busy! but.... the only thing helping me is being more knowledgeable and faster than my competitors.

I`ll only last so long at this rate, hopefully things pick up, people get back to their real jobs and I can raise prices and work at a humanly pace, I cant complain though.......busy, but doing more for the same $.



LXT...............

 

[Deleted member 27831]

I have three possible explanations, and I've asked the client what company did the job in the hope that I can narrow the selection down:

1) As you said, an idiot business owner (which is not exclusive of the next two explanations)
2) Someone desperate for simple cash flow, taking a loss on the job.
3) Jackleg "tree service" that doesn't pay taxes, have insurance, pay worker's comp, etc. paying the workers cash, by the hour, under the table. Let's see: $600 - $40 expenses - 4 workers x $12.50/hr x 6 hours = $260 for the boss guy.

I used to work at a company that sometimes bid on municipal projects, usually with a lot of competition. The running joke in the office was that if you won a bid you probably screwed up the estimate (and underbid). One way or another, it sounds like the above is a case of this.

 

[soiset]

I used to work at a company that sometimes bid on municipal projects, usually with a lot of competition. The running joke in the office was that if you won a bid you probably screwed up the estimate (and underbid). One way or another, it sounds like the above is a case of this.

I know how that can happen, but I can't see anyone looking at this job and underestimating the complexity of it. Maybe I should ask the HO to take a good look at his roof!

 

[jrizman]

Im a small deal, i bid a job this winter for verrrry little. just dropping lombardy poplars and hauling brush. i figured the estimate so low i didnt even want to do it, but a days work is always good. however, they still didnt get back to me.
you just have to think of it as no loss really. if they paid that little, you didnt want the job anyway.

keep up your quality, hard work, and business practices that have gotten you to where you are... I think in the long run things will pan out!

 

[BC WetCoast]

Could be 4 guys desperate for work. Get the job and split the $ evenly. ie $125 each for a day's work (plus some for expenses).

 

[John Paul Sanborn]

I know guys who specialize in big removals that regularly beat competition by half, how they do it is with mechanization, working big and getting two or three jobs done in a day.

One guy has a 75 ft bucket truck and a 100 ft spider lift, 2 sized loaders, a Freightliner straight bed for logs, and an 18 and 22 inch chipper. Oh and 2 large forestry body dumps, on of which is a retired Asplundh crew box.

I climbed for him on a monster basswood that one stem had blown down, he had that one all cleaned up by the time I got my rigging set in the center stem.

It is amazing how fast it can go when the guy up top can rig as big as he feels safe, and not have to wait 15 min for the LZ to get cleared out.

 

[Raymond]

The guys around here that do that have beer cans fall out of the uninsured trucks when they open the doors.
They live with women getting free housing and food stamps.
They illegally dump their loads.
Have worn out (sometimes stolen) junk equipment.

Ya know how much beer you can buy with 600 bucks?

 

[soiset]

The guys around here that do that have beer cans fall out of the uninsured trucks when they open the doors.
They live with women getting free housing and food stamps.
They illegally dump there loads.
Have worn out (sometimes stolen) junk equipment.

Ya know how much beer you can buy with 600 bucks?

Depends. Are we talking about Bud Lite?

 

[SuperDuty335]

Last fall I was underbid by $30,000 on a $40,000 job; Can you say "change order"?

 

[MonkeyMan_812]

i bid a job for which i got a referral - it was the banker brother-in-law of someone in the neighborhood that i had done pruning work for. The job was a red oak removal. The oak was multi-stemmed, about 30" dbh (under stems), near the property line, and extending over the client's house. I bid it at $1200, knowing i could use the work, and thinking that would be competitive, and knowing it would be pretty technical.

The h.o. Got back to me today, about a month later, and has let me know that the job was done for half as much. They did the job the same day they gave the bid(!) my assumption is, then, that there was a fair-sized crew, maybe two climbers and two ground guys, and that it still must have taken most of the day.

So, ($600 - associated business costs)/4 guys for a day = wtf?

Sometimes i really think i'm in the wrong business.

sounds like you were victim of a hack!!!!!!!!!!!!!!!!!!

 

[MonkeyMan_812]

I know guys who specialize in big removals that regularly beat competition by half, how they do it is with mechanization, working big and getting two or three jobs done in a day.

One guy has a 75 ft bucket truck and a 100 ft spider lift, 2 sized loaders, a Freightliner straight bed for logs, and an 18 and 22 inch chipper. Oh and 2 large forestry body dumps, on of which is a retired Asplundh crew box.

I climbed for him on a monster basswood that one stem had blown down, he had that one all cleaned up by the time I got my rigging set in the center stem.

It is amazing how fast it can go when the guy up top can rig as big as he feels safe, and not have to wait 15 min for the LZ to get cleared out.

That may be true, but it takes money to run that equipment. How could they possibly operate and still make money?

 

[soiset]

That may be true, but it takes money to run that equipment. How could they possibly operate and still make money?

I was wondering that, too. It's not just running the equipment, of course, but the huge capital investment that has to be made worthwhile.

 

[Tim "Bo" Snell]

I bid a job for which I got a referral - it was the banker brother-in-law of someone in the neighborhood that I had done pruning work for. The job was a red oak removal. The oak was multi-stemmed, about 30" dbh (under stems), near the property line, and extending over the client's house. I bid it at $1200, knowing I could use the work, and thinking that would be competitive, and knowing it would be pretty technical.

The H.O. got back to me today, about a month later, and has let me know that the job was done for half as much. They did the job the same day they gave the bid(!) My assumption is, then, that there was a fair-sized crew, maybe two climbers and two ground guys, and that it still must have taken most of the day.

So, ($600 - associated business costs)/4 guys for a day = wtf?

Sometimes I really think I'm in the wrong business.

This is happening a lot around here. Some unscrupulous (IMHO) tree guys will do a number of things to make a sale, as I have found from experience: Working for cash under the table rather than working above the table (and thus not reporting their income), not cleaning up the job site (doing the bare minimum when it comes to removal), saying they'll beat any competitor's price by ___% (you fill in the blank), not carrying insurance (esp. Workers Comp) but still saying they're "fully insured," having crappy (i.e., sub-standard/unsafe) equipment (such as worn ropes that have been cut & knotted back together so many times it looks like macrame!), etc. Mind you, I'm all for competition, but not at the price of sacrificing my ethics or my safety.

 

[soiset]

This is happening a lot around here. Some unscrupulous (IMHO) tree guys will do a number of things to make a sale, as I have found from experience: Working for cash under the table rather than working above the table (and thus not reporting their income), not cleaning up the job site (doing the bare minimum when it comes to removal), saying they'll beat any competitor's price by ___% (you fill in the blank), not carrying insurance (esp. Workers Comp) but still saying they're "fully insured," having crappy (i.e., sub-standard/unsafe) equipment (such as worn ropes that have been cut & knotted back together so many times it looks like macrame!), etc. Mind you, I'm all for competition, but not at the price of sacrificing my ethics or my safety.

All of those are serious problems, yes, except the cleaning-up part. If an agreement is made with the homeowner that they will handle the cleanup for a lesser charge, or if the work is being done by the hour, cleanup isn't necessarily part of the job. If the owner pays out because they are satisfied with the job, I can't see a problem with it.

I am 102% certain that most of the "tree services" in town are operating with substandard liability insurance, if any, and that even more of them have employees that are completely uncovered, untaxed, un-everything. This exposes the unaware homeowner to REAL liability, much worse than the danger of having their garage crushed. Serious injury or death of an uncovered employee exposes the homeowner to huge lawsuits.

ETA: Go Pack. (NCSU '97)

 

[MonkeyMan_812]

I am aware of the hacks in my areas and am firmiliar with their tactics. I always mention the importance of being insured to the customer. In a not so obvious way I am saying " BEWARE OF THE HACKS"!!! to the homeowners.