If I hear one more contractor use the excuse that they can't get work because of so called “low ballers”, I think I am going to scream. Believe it or not, there will always be companies working without insurance, or licenses, and paying their employees cash. There will always be people who have regular full time jobs that do “landscaping” on the side, many of them are your own employees. There will always be new start up companies and kids out of high school or college who are going to jump into their own landscaping business only to run it into the ground within the 3-5 year average. Always.
You have two choices.
- Continue to stomp your feet and complain to anyone who will listen, or
- Accept it and focus on growing your business.
But, but, but.
"But" nothing. It's how it was, how it is and how it will be. Period. End of story.
If you're still reading this, I have made my point and you have come to the realization that, as the Borg say, “Resistance is Futile”. You have also taken the first step in solving this dilemma: finally admitting that "you" have a problem.
The real question and focus of today's Trade Secret is what can you do to overcome this problem, yet still keep your margins where they need to be (and believe me you can).
The first thing that you need to do is get in the right mindset and realize that everyone doesn't want the cheapest price all of the time. It's true. Think about your own purchasing experiences. Do you always buy the cheapest and least expensive products? Will you go to the ends of the earth to get the cheapest tools, cheapest truck and cheapest labor or have you learned that “the cheapest” is sometimes the “most expensive” in the long run?
Let's look at something all hardscape contractors use, diamond blades. You can spend $50 up to $350 (or more) for a 12” diamond blade. The fact of the matter is that they all pretty much look the same. The packages tell you that they can cut through any concrete up to 2” thick in minutes. They might even have a sticker that says something like “lasts 3x longer than other diamond blades”.
Naturally, spending $50 is better than spending $350 if the products are the same. But they are not the same. There is no way that a fifty dollar diamond blade is going to cut as well or last as long as a $350 blade. I can tell you from experience that (7) $50 blades will not last as a long as one $350 blade. Plus, when you calculate how much longer it took you to make your cuts, you will quickly see that when you factor in your labor, the more expensive blade was actually the better deal.
Now let's get back to design/build.
Just as you realized using the cheapest blade doesn't make sense, many potential customers also realize that buying the cheapest patio or hiring their own day laborers or working with a company that has no insurance is also a bad idea.
Maybe they don't care because they don't know the difference between a well built patio, with the proper base, solid edging and tight cuts. Maybe they just don't know what to look for when hiring a landscape contractor or why it is so important to have proper pitch on a patio (and what could happen if you don't). There are dozens of reasons why they go with what they believe is the cheapest price or best value; however, most of those reasons have to do with the fact that they no one helped them understand why going with the lowest price just doesn't make sense and actually incurs many risks.
What if the company is uninsured or underinsured and there is an accident where someone loses a finger? Between the medical bills, new insurance premiums and a guaranteed lawsuit, the homeowners are going to be paying out plenty Depending on which finger it was, they could be liable for $100K. Factor that into the patio price and all of a sudden you're paying $2015 a square foot instead of $15 a sf. Plus you still have to remove the blood stained pavers.
What about the newer company that doesn't really understand their costs or how much labor and material is needed to do the work? Halfway through they could tell the client, “Oops we made a mistake and the price is double what we thought it would be.” If they aren't worried about their reputation, they could also just walk away and leave the property a complete mess as the homeowners now have to scramble to find someone new to finish the job or redo the work, which is even more expensive.
Remember, there will always be “low ballers” and customers who want everything on the cheap. That's just the way it is.
There will also always be people who want top quality work, from a reputable company and are willing to pay for it. That's just the way it is too.
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