Does everybody start out as a "lowballer"?

[Beth n Rod 1,279]

Is it unavoidable? Does everyone start out as a lowballer when entering the industry? Why? What do new business owners have to do to avoid this early on?

[Beth n Rod 1,279]

The main problem about 'lowballers' aside from the common reality that we understand they are novices, is that for established companies who have higher costs associated with doing business, they are left to contend with the dilema of perception in the eyes of the consumer. Lowballers skew the perception of cost and make it hard for those who's operating expenses are higher, to justify them to the client who is only interested in getting the best bang for their buck.

Not everyone understands the axiom "you get what you pay for". This doesnt mean that everything is priced through the roof, but being priced competitively, ensures that no matter who gets the job, the job is profitable. For example: When people want a job done and a lowballer lets them expect it to cost $150 when the majority of other contractors would charge $300+ because of operating and mobilization expenses such as; fuel costs, payroll, insurances, taxes, etc. There is no profit left in the job. Added to the fact is the more established contractor will have the dilema of trying to convince the client why they should pay them 300 vs 150 for the lowballer which is going to be a difficult road for many including myself.

Realizing that a major portion of our market is the average client who's income is in the average bracket (ambiguous for the sake of regional differentiality, but representational of the majority of clients many of us have) doesnt much care for your operating expenses and cannot readily justify the price. They are thinking of the money they are saving. Not the potential damage or the lack of insurance of the lowballer they are considering hiring. Mentioning these points to a prospect after the fact can come accross as bashing and may be seen as a hard sell tactic. Regardless of the fact that the lowballer may not be around for the next service or that they may do a bad job and it reflects on the industry as a whole, lowballers create another hurdle for those who have to contend with the conditions they created and the quality obtainable because of the condition that may not be reversable, and justify those costs to the client. Perception is now becoming a negative one.

By raising consumer awareness of the potential for lowballer campaigns, we can help avoid the uphill battle and keep the pricing competitive and lessen the lowballers capability of ruining the profitability in our business we have worked so hard to establish.

Consider these points to bring up in a consultation:

• We are insured (liability, workmans compensation, vehicle and equipment) We are licensed.
  
• 'X' # years experience in providing quality workmanship, service and repeat business.
  
• Certification(s) obtained and referrence to the issuing organization.
  
• References and photos
  

Note also, Pricing surveys by posters here on TGS help us all to understand the market in relation to our area so we can price accordingly. When the pricing is in a closer range among area service providers, say .05%-.10% (for the purpose of example), then we are talking more in the realm of company specific costs. The consumer is then left to consider the more important things like quality, product, service, experience and if applicable, warranty!

I stick to my prices. People will try to negotiate or haggle anyway.

I go straight to the point if they do. I will ask if someone else is giving them a lower price and if so, what are they getting in comparison. I have rarely found anyone giving more for less, comparatively, to the regular services we already provide. This is competitive. We have often been told that we are higher than most others and that being the determining factor in their decision to hire us. But not everyone is a smart shopper or values the 'get what you pay for' axiom. There are so many variables other powerwashers accross the country have to contend with that I would not say this is the only solution. I would only propose it as a guideline for referrence.

But the one thing I do hold true is, educate the client. We are in a young industry that is not widely realized, so the ground work must be laid for all of us to be supported on. And lets not forget the diversity of those who live in areas that are not so affluent and wealthy. I hear the struggle is tough.

Rod~

[Beth n Rod 1,279]

Sometimes people go with a lower price one time, and then regret it and you get them the next time. We have had that happen. Also we have heard about competitors on the street who seem to make it a mission to learn a competitor's price so they can undercut it by a few pennies and snag the customer. To them I say, put your price on the table, discuss your service, and may the best contractor get the job. The two are not synonymous.

Beth

:soapbox:

[CCPC 26]

Originally posted by COOPER

I am glad I dont have enough time to wine about who is a "lowballer or not. Yall need to worry about getting out and getting more business instead

of staying on here all the time wining (sp)

Discussion of this industry and all of its ups and downs is what this bbs is all about. Its great forums like this one that helps to raise the quality and the standards of such an unregulated industry. Besides the important topics disscused on this forum on a daily basis, its entertaining to swap stories and opinions with hundereds of other fellow PW'shrs. Obvouisly you gain somthing from the "whining" that goes on in here or you would'nt be "whining" about the "whining". :lgsad:

[PressurePros 248]

Great post Rod. I am a firm believer it is our responsibility to bring up the standard and perception of this industry. I think every homeowner has either experienced or heard horror stories of gypsy contractors whether they be roofers, asphalters, painters, mechanics etc. If you treat your customer as a friend first, a salesman second, you will gain the trust neccessary to educate them. A salesperson needs to learn to overcome objections effectively. The more educated WE become, the more effectively we can do that.. which is why after years of corporate experience as a trainer I know for a fact that dropping price to gain a customer should be the absolute last resort. If we keep competing with the underpriced contractor we are doomed to mediocre profit and the same customer perception we have now.

On the average 3800 sf home, a painter will charge between $3500 and five g's. If the person is just looking for a freshening, and the paint is sound, why can't I go in and charge $800? I am asking for 20% of what he would have paid and on top of just a painting, his windows will sparkle, his sidewalks will look new, his mulch will be edged and smoothed and his lawn statues are mold free. Besides all that, he leaves in the morning for work, and all this work is completed without a shred of evidence we were there by the time he pulls into his driveway at 5:30. Mike W, we debated this before. This is not percieved value, this is the real thing.

[Mike Williamson 198]

Sometimes people go with a lower price one time, and then regret it and you get them the next time. We have had that happen.

I've had this happen, and then I've had people who didn't even know they didn't get either what they paid for, or who paid too little and didn't get what they expected. An example would be a couple of customers in the past month who called for roof cleaning. Both had relatively dirty roofs, and both had wand marks all over the the place. Neither roof was visibly damaged, but you could see where the algae had begun to grow back quickly in the areas where the previous contractor hadn't cleaned as well. When I asked each when the last time they had the roof cleaned, on told me 6 months ago, and the other told me 8 months ago. I told them what I'd found, and explained that it should be a MINIMUM of a year, and typically 2 years or more before they start noticing heavier algae growth, and I explained why they had to pay again several months later.

As explained in several posts in this thread, that's a large part of the problem..the homeowner doesn't know what to expect...they don't know how their roof or house should be cleaned, until someone like you or I come along and show them. Most of my clients don't bother getting bids...they just call someone, and if they like the price they schedule it. I'm sure it's different for higher cost deck work, but for residential housewashing and roof cleaning, it seems most don't get more than one price. So when an inexperienced or improperly trained contractor comes along and bids a house or roof wash at $100.00 the customer just jumps on it.

Excellent post, Rod.

[Mike 64]

The only difference with the proposals is the price:

Company 1 says they can do the job at $590.00

Company 2 says they can do the job at $500.00

Company 3 says they can do the job at $485.00

You tell me who the customer is going to give the contract to? Is Company 3 considered a lowballer? Having some kind of certificate will not eliminate what one considers to be a lowballer.

Your correct. If a guy owns a legit company, pays for his license, insurance and can afford to do a job cheaper then you, that does not make him a lowballer, that making him a competiter. Theres nothing wrong with this.

If I go to grocery store A to buy milk at 2.00 a gallon, because store B sells it for 2.75 a gallon, does that make store A a lowballer, or are they just trying to give the consumer a good deal to get their business. Milk will never be the same price from state to state and neither will PW services. Just because I'm 50.00 cheaper then you doesnt make me a lowballer.

And for the true lowballers, the ones that dont have any insurance at all and do jobs for little to no money, will you ever be able to stop it, no not really. Then what can you do? ...take your time, do a good job and show your customer what they are getting for their hard earned money.

[Mathew Johnson 123]

I stick to my prices. People will try to negotiate or haggle anyway.

I go straight to the point if they do. I will ask if someone else is giving them a lower price and if so, what are they getting in comparison. I have rarely found anyone giving more for less, comparatively, to the regular services we already provide. This is competitive. We have often been told that we are higher than most others and that being the determining factor in their decision to hire us. But not everyone is a smart shopper or values the 'get what you pay for' axiom.

Rod~

Rod, That was an awsum post with some sound advice. I haven't yet figured out a good response when someone tries to haggle on the price. I have now!

Thanks

[RyanH 14]

In my opinion, my definition of a lowballer is one who washes according to their own sense of satisfaction and completion, not the customers'. I've had customers tell me that a previous contractor did the job and finished when the job "looked good" to them. They truly thought they were finished, when in fact they had miles to go before they sleep. Sometimes a customer has high expectations and calls a contractor on the carpet when that reasonable expectation is not met. A lowballer will argue with the customer and complain that they simply cannot meet such an expectation and that it is unreasonable when they realistically don't want to work any harder to accomplish a better result. A professional will go the extra mile to make sure the customer is happy. Certainly there are customers out there who request some impossible things...we have all discussed those issues here. But, when a customer says that they want their house and windows washed, and the contractor takes that to mean rinsing the windows from a distance with water, and then the contractor maintains that that is washing, well, you get the point.

Lowballing is a philosophy of work and in general their severely deflated pricing is an internal realization that they aren't worth any more than they're asking. Lowballing does not mean pricing competitively, setting up your equipment such that you can perform faster and cheaper than others, or asking $100 less than the "big" guys out there because you can afford to live on that income. It means promising the world, giving inferior service, and then trying to convince the customer that that's the best they should expect, and that a "big" service that charges three times the amount cannot provide anything better.

I started out as a lowballer in that my first job ended up being $75 for almost 9 hours of work...very stupid. I had a brand new pressure washer, a lance, and some hose. Nothing else except the trailer I showed up with. Fortunately it was for a friend, so I didn't compromise my integrity. Since then, I have accumulated some useful tools and priceless knowledge. I still have the HD special unit and a rickety trailer, but the service I give has never vacillated and the impression I leave is always stellar. My prices are actually a little higher than the competition now, and I still operate with the same equipment available through HD and Northern, but perseverance makes up for that. And I don't advertise nor actively compete against the full timers, so hopefully they don't send evil thoughts when I go rolling down the road with my weak looking setup.

[Beth n Rod 1,279]

We have some really great responses here and I think I can safely say that for the most part we are on the same page. The differences in all of us are coming together to define a lowballer.

So far it reads,

1. A lowballer lacks integrity, committment, training, experience, communication skills, and responsibility.
   
2. A lowballer is rarely in business more than a season or two.
   
3. A lowballer impacts the industry negatively by impressions left behind and the results they produce are not always appreciable.
   
4. A lowballer skews the pricing and creates a stigma of contempt towards the contractor in general by the public the rest of us are trying to serve honestly.
   

Beth started this thread to find out if we start as lowballers. It's a very good question and I think the contributions by all here have given a diverse amount of insight into this. We all start out a little low on our prices. But what sets us apart from the lowballers? Professionalism? Ethics? Morals? Common sense? The way we progress in business and grow?

I think this is something that belongs to all of us to decide. After all, we are creating a standard here that others can follow.

For anyone who has been reading and has yet to respond, please do so now, this affects you too! :)

Rod~

[newlook 265]

Good post Mike....If I am buying a galloon of gas....I am gonna go to the station that sells it cheap. Same gas but different price.

We started out prices on the low end and to this day my repeat customers remind us that they only had to pay a certain amount of money back then and question why the price has gone up. This is something to watch out for also.

Merry X-mas everybody!!

[Mike Williamson 198]

Good post Mike....If I am buying a galloon of gas....I am gonna go to the station that sells it cheap. Same gas but different price.

We started out prices on the low end and to this day my repeat customers remind us that they only had to pay a certain amount of money back then and question why the price has gone up. This is something to watch out for also.

Merry X-mas everybody!!

This is something I will have to deal with as customers from this year call next year. I will likely raise rates for those people at a smaller ratio than I do for new customers. Better to raise them gradually over the next 2-3 years than to raise prices 30% or more all at once.

[Beth n Rod 1,279]

One of the biggest costs that we have had to pass on is the cost of insurance.

People have argued that the costs havent risen that much to justify my prices, but I dont feel like giving them a company report over the past years to help them understand the increases. Thats involving them in our business where its a need to know basis and they dont need to know. Gas prices are undeniable at this point. Especially diesel! The one fuel that is the least expensive to produce has now surpassed premium gas.

Back to our topic.

Rod~

[Henry B. 4]

But what sets us apart from the lowballers? Professionalism? Ethics? Morals? Common sense? The way we progress in business and grow?

I think the things you listed above are exactly what set us apart from the rest. I've never seen a lowballing company last more than two years. They either learn from their mistakes or the can't pay their bills and go under.

Beth, you mentioned having other companies trying to find out what you charge, your not the only one! I've had many people call up asking how much I would charge for a 200 square foot deck and list more details about the job than the average joe would know. The funny thing is, I have caller ID so once I tell them I have to see the job before I can give them a proper estimate, I give them a call back. I usally pretend that I had another question for them or couldnt find their street in the map but most of the time I don't worry about it. Expecially when they answer the phone as xyz powerwashing can I help you? LOL

The funny thing about this is knowing your competitors square foot price won't do you any good. For example, if you measure a deck and it's 11' 6" do you go up to 12' or do you go with the actual measurement. Plus you have to take into consideration any stains on the deck or previous sealers. Lattice, number of steps and also railings and pickets. Some guys price pickets at $1 each some do the actual square footage of each picket. See what I mean? We have basic square footage prices that we use as a base, that's it. Depending on the conditions, time to completion and in some cases the customers attitude the price may be adjusted.

Remember that guy I asked you about a few weeks ago that wanted me to look at his wood siding and see if it needed done again? I priced it at my usual rate then quadrupled the price... I don't think I have to worry about him calling anytime soon. If he does, I'll set him up for my next available appointment (if the temperatures hold) on December 6th 2006.

[Beth n Rod 1,279]

I think we are on the same page Henry. We get those calls too, and you are right. They are easy to spot. We never give phone quotes, but not for that reason. If you go to a Dr. you expect to be examined before a course of treatment is suggested. It's the same doing decks. You simply need to see it, I don't care how much they can tell you on the phone. There is always too much they can't tell you. They are not the pros. We are.

Beth

[newlook 265]

I think it is a customers nature to question any increase in service -- no matter how small of an increase.

Rod, you are right about not having to explain your entire business for a customer to justify why you are increasing your price. My repeat customers know my company and what it represents. When we hint that our prices have gone up....yeah, we raise some eyebrows but the customer always know that when we increase our price....it it because we had to do it. Our prices have never gone up on a "just because" reason.

What Mike says makes good sense....gradually increase vs. "shock and awe" :) Sure you may lose a few customers during this transistion but you probably lost them for all the "right reasons".

Rod....want to fax you something about our company that was ran in the local paper out here. Describes the foundation of what our company philosphy is all about. Need a fax #.

[Henry B. 4]

Hey Carlos,

If you don't mind, can you send me a copy of it also? My fax is 301 353 1677

[newlook 265]

Henry,

This is the newspaper article about how we go into the business.....thought you had the article already? Let me know

[Henry B. 4]

Hey Carlos,

I'm not sure if I do or not honestly. I've faxed and been faxed so many different things I lose track after a while. I may be getting senile. <G>

[Beth n Rod 1,279]

Carlos, we would love it. 301-540-8112 or email it, which ever works.

Beth :groovy3:

[newlook 265]

Henry and Beth,

It's on its way....give it a few minutes.

[Celeste 341]

This should probably be a new poll (Henry), but when you speak of increases, how much are we talking........2-3%, 4-5%, over 5%??? Gas prices alone would seemingly justify slight increases.....they're certainly making everything else go up.

Celeste

[newlook 265]

We increased our prices this past summer for the first time in 3 years. Average increase sat at around 7% for residential power washing.

Our commercials contracts are handled differently as the price is "locked in" for a certain amount of time (usually around 18 months).

[Mike Williamson 198]

This should probably be a new poll (Henry), but when you speak of increases, how much are we talking........2-3%, 4-5%, over 5%??? Gas prices alone would seemingly justify slight increases.....they're certainly making everything else go up.

Celeste

Definitely! Shipping costs are higher, so supplies are higher, etc etc. The increases aren't dramatic, but they add up.

We increased our prices this past summer for the first time in 3 years. Average increase sat at around 7% for residential power washing.

Our commercials contracts are handled differently as the price is "locked in" for a certain amount of time (usually around 18 months).

If handled fairly and correctly, price increases probably won't be all that noticeable. Say my expenses for gas, insurance, supplies, overhead, etc has gone up $2000.00/year over last year...That's around $165.00 per month...If I wash an average of 30 houses/month, each homeowner is only going to see an increase of $5.50.

[Henry B. 4]

Hey Carlos, yes I had read one of the articles you sent me. The other one you sent was new but I'm glad you sent it. I think we have a lot in common and I look forward to talking to you about it one day. Maybe at the convention if you make it.

Hey Celeste, Why's everyone cracking on me about the polls?? At least they seem to be pretty popular. Maybe I should change my title to the poll king?

[Beth n Rod 1,279]

People are ribbing you about the polls because they LIKE them.

Sometimes you worry to much.

Beth :groovy: