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Mack

Dismayed by lowballing/undercutting

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Many years ago I was on this forum and I read something that I put into practice a lot.

 

Skyhuck (of this parish) wrote that when he goes to a job he doesn't think so much of his costs but how much the guy with the transit and six inch chipper will charge to do it.

 

So lets say a couple of big take downs, remove everything, three days £650 a day throw in a bit for fuel etc £2000 or thereabouts.

 

So he turns up with an approximate day rate of £1300 but knowing what the competition will charge he goes in at £1800, secures the work, knocks it off in a day with the mog etc. Magic! 

 

So the moral of this story is you SHOULD worry about what others are charging, you may well be doing yourself out of money, but don't change tack based on one lost job.

 

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@Mick Dempsey

 

I agree to a point, but my personal opinion is you can’t charge on what you think a job is worth, you have to think of your costs/profits, and if you can’t operate for what it costs you to run and be profitable then you need to re-evaluate.

 

We all do it differently and I can only comment on how I do it and I am fairly confident in my approach having seen the results, still doesn’t make me right as there are many ways to do things and be good at it.

 

For what it’s worth we operate like Skyhuck, we are for the most part genuinely cheaper than our competition because we can achieve the work faster.

We are also consistent in our pricing, as I purely look at time and resource required and potential to run over, so my long standing clients know what to expect and usually have accepted the job before I send the written quote because they know what we charge for a day’s work.

 

Huck has been going a long time and I know he will be the same, he is not pricing to win he is being market competitive using his kit to his advantage but not under selling himself to win work, there is a difference.

 

So when I’m beat on a price I move on, if someone can beat the minimum we need to earn in a day it’s not worth “us” working for free.

This is not a criticism, I don’t get bothered by being beat on price it’s a competitive market place after all and I know what “we” need to earn to continue to grow and invest.

Edited by Marc
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15 hours ago, Mack said:

True it probably is on the cheap side, but its going to be an easy day.  I didn't think it was 'low ball' cheap though.

Dont worry about it, you can only price at what you think is a reasonable rate irrespective of the customers or competitors perspective. Your client base will ultimately be built up over many years from customers that like you, your work and your prices.Really there is no such thing as undercutting ,its  just other outfits happily  working for less and for customers not prepared to pay more.They will never be your customers.

 

Bob

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If you haven't done already, work out all your costs inc staff together with some form of a plan for gear replacement, truck, chipper, servicing, money that you need to put away to purchase any new gear or plant you hope to purchase over whatever time frame you set yourself.

Allow for things you may need to introduce or increase, employers liability, advertising etc..

Look at what money you want for a year and realistically how many days you believe you will be on site allowing for quiet spells, breakdowns, bad weather etc..

That gives you a pretty decent day rate guide..

If you can increase it on jobs your quicker at due to gear or ability, great!!

If it's a genuine day and your undercut, you can accept it as you know exactly what you need from a days graft,

if your busy and up on your workload estimations, an easy day comes up and you decide to lower your cost because there's tea and biscuits on tap your free to do so



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Some good reading here.  

 

Its pretty frustrating losing work in this manner but yes it happens all the time and it won't stop unfortunately

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It happens. Worry about your own price and stick to your guns. Don't go in cheaper 'because your quicker/better' etc. There's always someone quicker and better than what we think we are. I just priced a big job up and got undercut by £11k...walk away and let them make their own cross....

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A typical ( private ) customer does not produce a contract / specification of works ....so  each individual company are quoting for the exact same thing , you may find that the winning contractor will not spend time avoiding shrubs or damaging the lawn etc etc and advise the client that leaving the wood in situ will save  her plenty of money , doing this is not about low standards but proposing a more cost effective solution to the client ., also some times the winning quote has just got it wrong and underestimated the job by mistake ...we have all done it I am sure !! 

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The only time I care about being under cut is when you price for TM and see the local Gardner out with a few cones and barrier tape. 

It's hard to find enough time to worry about my own game let alone someone else's though 

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it swings both ways.....seen plenty of jobs overpriced........£450 to do 20ft maple that took 2hrs to fell chip and sweep up etc...just worry about the ones you do win. Everyone can misprice jobs:o

 

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