Why Are You Competing Against Lowball Hacks?

lawndart

How many threads have been started here about the competition selling at lower prices?

The question is always asked how can we compete with these companies? Afterall these individuals dont carry a licenese, insurance, or comp. They're not playing by the rules. It's just not fair.

Look directly in the mirror, because the reason your directly competing with them is your marketing and running your business like everyone else.

How many of you are using coupons in your print advertising? Want to guess what type of customer your targeting by doing that? Price shoppers , and its no secret around here that they love hiring based on the lowest price.

The answer is simple really. Remove yourself from this market by running, and advertising your business differently from all the rest. Create a professional image around your company while marketing to a higher end client. Why not leave the lower end stuff for these sharks to feed on, and focus your attention on the jobs that these guys can't do? You'll be paid better for it.

There is plenty of this work out there, the trick is finding it. Discuss.

Cole

Nothing to discuss, I agree with what you have said 100%. If you target low ball clients, that is what you will get, it is as simple as that.

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orson

Though I'm not disagreeing with the essence of what you're saying I run into plenty of wealthy people with plenty of money who still can't resist the allure of the low baller. Not all Wal-Mart shoppers are poor.

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lawndart

You're missing my point Orson. Earlier this year I did this kitchen, and made a whopping $2,000 competing against many others.



After I made such little money on the above kitchen I asked myself why am I competing against all of these other companies in the first place when I can do work like this.




Not many lowballers can do this type of work. As a matter of fact I was the only company to bid this project, and I was paid real well for it too. I now spend all of my efforts tailoring my business to service these types of clients, by offering high quality materials and a professional service that not many local companies can compete with. I have very few competition now, and I'm working steadily through this recession.

Ivinni

Man, that's nice work.

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Dale S.

So, i am going to be extremely open here and hope for good feedback.

It sounds great to not compete on price, but FEAR keeps me from doing it. Fear of not getting enough jobs, fear of losing market share and business volume slowly dwindling, fear of trying to find those higher end customers.

I have seen the figures on how it is beneficial to charge more for higher end jobs and in the long run your company will be more profitable for less work, but making that transition is difficult. And it's not just me.

I watched with some fascination this last Christmas season. How many retailer vendors hung on to their higher prices and did not discount significantly? Yes, their were a few, but very few. Most went the path of more and more discounts. They became what the news was all about. To my way of thinking, this is the same topic I am talking about, although they are much larger. (I know, they also had inventory issues to deal with.)

So, how do you make this transistion?

dale

dan-o

Dale-
I think everyone here can relate to the pressure you feel.

That said, retailers have very little in common with contracting. Most of them are selling commodities and were/are burdened with inventories. They need to discount as they have very little to differentiate themselves other than minor logo differences and maybe proximity to the Food Court.

You are selling a service based on your (or your crews) skills. These skills are not commodities, though homeowners and weak-minded contractors continue to try and label them as such.

I personally price jobs so that everyone wins. The customer gets a quality service at a competitive price and I get paid what I am worth.
This tactic doesn't land me every job as I'm not the right solution for price-fixated customers BUT I make good money on the jobs I get.

FWIW, I have raised my prices for each of the past 4 years (after being afraid to ask more due to intense competition) and have increased my gross sales, market share and net profit each year. Labor prices are going up another 10% in 2009 with material mark-up staying @ 30% (oh, the humanity!!!)

Your biggest fear should be not earning enough to keep your business alive. If you're losing money having 100% market share is a false summit.
There are some great threads on here re: sales. Read up, I know I've learned a lot in the short time I've been on CT.

I would also meet with your suppliers to negotiate the best possible pricing. You can pass those savings along to customers and keep prices tight or, like me, toss it into the safe.

gcajnr21

I disagree.. Most wealthy people who got wealthy the hard way didnt do it by going with the highest quality most expensive things. You dont get wealthy by spending money, at some point you have to start saving and being smart with your money.

Everybody is looking for a good deal! so catch there eye with a good coupon like example: 10% off your Estimate, but only if you accept bid within 30 days. Get my point?

I think its okay to offer deal breaker coupons as long as your image and product is reflecting quality at an affordable price!

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Troy McNeely

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lawndart

You can continue to play the game like everyone else or you can tell people (advertising), about what makes your company different from the rest. That is quality my friend.

rbsremodeling

How Long have you Been in Business??

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orson

I'm not missing your point at all. I don't try to compete on price. I have also only booked 1 job between July and the present.

Count your blessings.

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lawndart

3-1/2 years now. Why do you ask?

rbsremodeling

Very few contractor have the ability, knowledge, portfolio or skill set to command top pricing for their work.

Usually when contractors hit somewhere between the 5-10 year mark, that they are able to or realize their worth and have enough "experience" to command top dollar.


I think some of the younger contractors may have a chance at experiencing earlier success because of the net, technology, business savvy etc.

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Dale S.

"You are selling a service based on your (or your crews) skills. These skills are not commodities, though homeowners and weak-minded contractors continue to try and label them as such."

Dan-O, I think you have hit the nail directly on the head. It is sooo easy to be in the mindset of a commodity. Thanks for your comments, I am gradually learning.

dale

gcajnr21

You can continue to tell people about how awesome your company is and how your the World Champ of everything, but i bet the majority of customers wanting services done really dont care about you! Customers want to know how you can solve THEIR problem!

Thanks

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ProWallGuy

I would humbly submit to do that you need to clean up your website. It reads like a broken record.

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Mr. Mike

You are painting all our customers with one broad paint brush here, I close 90% of the estimates that I close on a one call close (Want to make clear I don't close no 90% though of Leeds,lol.) An impulse buyer finds a coupon calls me and I go over and close them before they called anyone else and some that do will cancel that other guy. I think you are selling yourself short by not taking advantage of offering discounts, even if they are on a marked up number.

I disagree on the marketing and running the business part unless that is sales.

I think it is 100% a salesperson problem. Most of us started doing what we do simply because that's what we did and went out on our own.


I think I agree.

Any feedback on my million dollar site would be great.

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lawndart

Thanks for pointing it out, I was aware of how bad it is, thats why the site is in the process of being updated by a professional.