lowering prices

[yellowdogsvc]

I generally work on the 1-10 acre tracts where a compact mulcher and big chipper are cost effective and productive. Lately, I have had some opportunities to work larger projects where the landowner does not want a large machine or it won't fit under the tree canopies.

Let's say I charge $1200-1500/day to mulch on my daily jobs or where I work 2-3 days mulching on a small tract before moving.

Does anyone lower their daily rate for large acreage? The problem I have with lowering my rate is I am not making a huge profit should I need a repair and with at or above $4/gallon, it gets expensive driving to the site which isn't close not to mention what I use mulching on a daily basis. On a larger project I have to move more support equipment and run a crew of tree trimmers, too, so I am having a hard time justifying lowering my rate to accommodate the customer's imagined budget.
What do others do?
And this isn't limited to mulching. It could be shearing, dozing, etc. so please weigh in.

 

[cat 297c]

In my area I get 175 an hour with a four hour minimum. On jobs that take more than two days I get 165 an hour. I really need to be round 200 an hour with the 140 but got so many guys down here doing it for 125 an hour with skid steers. That's all I hear when someone calls is so an so is getting 125 they don't understand its a 80 hp skid steer vs a 140 hp purpose built machine. Not to mention all the up keep on this type of equipment, folks think your just ripping them off I set down and figured it one day at 140 an hour I'm pretty much braking even with up keep on the machine fuel teeth grease wear an tear on truck an trailer insurance etc.

 

[Fasttalker]

I understand your dilemma,but the issue right now, and for the foreseeable future is going to be fuel prices. As you know it's not just the fuel you burn in your equipment and vehicles, it's every part you have to buy or order, all your supplies (hyd fluid, motor oil, grease, etc.), every thing has gone up or will soon. Unless your client has asked you to lower your rate, or you are bidding against others I would not lower my hourly rate until I saw how my expenses are running. If you still want or need to discount for the client, just knock off hours. I sometimes will knock off every 10th or 20th hour. I have found that if you ever lower your rate word will get out and everybody will want that rate. This has worked for me in the past, hope this helps.

 

[AGGIE00]

Don't be the fool that only counts fuel, labor and payment. I run at 140/hr and won't take a dime less. Equipment depreciation, truck and trailer depreciation, project consumables ie teeth and filters, fuel and lubrication, overhead and insurance on machine, truck, and liability, marketing, time bidding jobs, and finally my favorite, the unforseen repair due to the hidden object. And if you actually want enough money left over to replace the machine at the end of its life, well good luck.

 

[yellowdogsvc]

it's certainly frustrating bidding the projects that are a week or more. I have generally stuck to the "get in-get out jobs" where I can charge what I feel I am worth and what lines up with my costs of doing business. I carry liability and workman's comp and have yet to come across a competitor who is even carrying liability anymore. Some of the guys I knew that were insured dropped their insurance when times got tough. I kept it and cut back on frills.

It doesn't sit well lowering prices to "beat" another estimate. I also don't like when a prospect calls me and says "I'm getting 4 bids and looking for the lowest bid.." I generally will pass because I know what I'm up against. There is a yahoo down the road charging $100/hr for mulching with a CAT 256c and tushhogg. He has no insurance, no cdl but tows a 20k trailer, and doesn't carry a sales tax permit and runs farm tags.. That just irks me when I see him working because he will a small ad for mulching. His land clearing looks like Godzilla leveled Tokyo but hey, he's cheap.

 

[AGGIE00]

I never make excuses for my prices because I'm worth every penny, as I percieve. This is where a business built on word of mouth can make it.

 

[pjbci]

I never make excuses for my prices because I'm worth every penny, as I percieve. This is where a business built on word of mouth can make it.

My thoughts exactly. Do not lower your rate. No category of your many expenses has gone down, so why work harder to go broke faster.

 

[yellowdogsvc]

I don't want to lower prices and probably won't even if I have to do more bids to get the more lucrative jobs. I would hate to get into a contract where I lowered my price and have the job drag along with a bad taste in my mouth every day. I'd rather hunt elephants occasionally than dine on rabbits day in and day out. :licking:

 

[DIRTROAD]

I'd rather hunt elephants occasionally than dine on rabbits day in and day out. :licking:

That's a good way to look at it! Never heard that before.

 

[Robbie Hegwood]

All points are so true. Also when sticking to your price you can use this. Tell them if they have a budget you will work till the budget/hour is meet. Once they see you mulch at your price and the job you do, they will either add to your job with hours, or find you were able to do the whole job in there budget. Usually you can cover more ground than a customer anticipate's, every once in a while NOT. You can do a better job when your not under the gun money wise and the work quailty will be better and that is.....word of mouth!