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Discussion Starter · #1 ·
I posted this on Lawnsite in April 2002. I think it's relavant to the snow industry as well, since we see pricing questions all the time. Although it relates to landscaping, I believe it holds true for snow work as well.

This industry needs a "Rebirth of Ethics"
This was printed in "Greenspeak", a publication by Outdoors, Inc. - or Larry's Garden Center in Cleveland. Mike Colnar gave permission for this article to be reprinted.

"We need a rebirth of ethics in our industry"

Concerning profitability in the landscaping industry, an attitude has developed over the last decade that the lowest price is the best price, and, that a sale at any price is its own justification. For want of a better name, we shall call it the "no profit" attitude. The basis of this attitude is that only the lowest price is worthy of a buyer's consideration.

This attitude implies that a landscaper offering his services for sale at any price higher than the lowest price a customer can wheedle out of any and all other competitors (or make up out of his own imagination), is somehow taking advantage of, defrauding, cheating or otherwise ethically abusing his customers.

This "no profit" attitude is widespread, and appears to be shared by our customers, our suppliers, and sadly and inexcusably, by ourselves.

It allows our customers to regard themselves and their quest for the lowest price as being morally and ethically superior, and, to regard any landscaper who has a price higher than the lowest price as being morally and ethically inferior. You can sense this in their attitude and hear it in their voice. How often have you heard, "I'm shopping for a price and I'll buy where I get the best price."

Too many of us are taken in by this attitude. We are afraid to be regarded as "too high." Too many of us accept this erroneous implication.. We act as if we are guilty of some terrible crime.
This is an illogical, unethical attitude. As I will demonstrate, it is detrimental to the long-term interest of our customers, suppliers, employees, communities and ourselves.

This attitude was quickly seized upon and adopted by our customers, who developed and reinforced it , and, raised it to an art form in what they perceived as their own self interest. It was likewise reinforced and given credibility by truly desperate landscapers who shamelessly pandered their suppliers' wares like streetwalkers running an auction.

We sold price instead of features: price instead of product knowledge; price instead of the right plant for the job. If the customer recognized some of these deficiencies and hesitated to buy, other landscapers only reduced the price further in an endless down ward spiral, completely destroying the credibility we had built together through a lifetime of honest, ethical dealing.
Together we abandoned the ethical high ground of "value," and retreated into the ethical swamp of " a sale any price." It is there that we find ourselves today.

It is perhaps not surprising that our customers have adopted this attitude. Many of them make purchases infrequently and lack the detailed knowledge of our business that we landscapers possess.

Because of this, in many cases they also lack the experience and capability of making a valid comparison based on values other than price. They are not even aware, until too late, there are other values worth considering. No one takes the trouble to tell them.

It is easier to cut the price - to meet or beat the price that they tell you your competition gave them on a job that they tell you is exactly the same as yours.

This is our customer's perception. It is your job to show them the error of this perception - to re-establish your credibility and to make certain that we not only deal ethically with our customers, but to make certain they perceive the transaction as being ethical, and, in their own best interest.
Our customers are all different. But, they have one common denominator that they understand and have experience with. Money! They have to work hard for it . They never have enough of it. Everything costs too much!

Some are afraid of offending the customer or of being ridiculed for being "too high". They are afraid of being thought of as unethical or of being made to feel unethical.

Some actually feel that if they ask for the necessary profit, they are somehow taking advantage of their customer. They actually feel unethical. The most common reasons; however, are moral cowardice and ethical laziness. Given the current mindset in our industry, it takes considerably less intestinal fortitude and mental effort to quote a cheaper price, than to properly establish and defend the values involved in a higher price.

It is easier to go along with the customer in their blind quest for the lowest price, than it is to exercise the moral fibre and put forth the mental effort necessary to help them understand the greater value your job and facility represent to them.

It is unethical to sell your goods and services for less than they cost you, including the full cost of your overhead plus a decent return on investment. This applies just as surely on sales to customers from outside your area, as it does to those who are rightful customers.

Implicit in this attitude that price is the only value involved, is the thought that it is foolish to spend one penny more than you have to. Taken to its extreme, this attitude implies that the honest landscaper who is charging a little more money but giving a lot more value, is somehow cheating or exploiting his customers, when nothing could be further from the truth.

It is your responsibility and duty to challenge and to change this attitude whenever and wherever you encounter it.

This attitude tends to disregard or downplay differences in product, service, location, reputation, experience or any of numerous other items of real value to a customer. It disregards these differences and pretends to assume that all goods and services are created equal. It tries to ignore differences in specifications, quality, ease of use, convenience, dependability, availability, longevity, etc., all of which contribute to long-term satisfaction and value to the user.

Customers are not stupid. But, neither are they schooled in the complexities of the industry's historic pricing and discount structure, or, the shambles that some landscapers have made of it in the last decade. Perhaps they can be forgiven for the conclusions they have drawn and the attitudes they have developed. Perhaps they are no more to blame than ourselves.
Self-preservation is the first law of nature. No one will willingly act against his or her own perceived self-interest. Perception is the key. We need to challenge and change the erroneous perceptions that are damaging our industry. We need to change the way our customers, and possibly ourselves, perceive our role as a supplier of goods and services.

1. HOW OFTEN DOES THE CUSTOMER WHO IS ONLY COMPARING PRICE, END UP BUYING WHAT HE THOUGHT WAS EQUAL TO WHAT YOU WERE QUOTING, BUT IN FACT WAS NOT.

2. THINK OF THE VALUES OF TIMELINESS OF SERVICE, SATISFACTION, PEACE OF MIND, AND LONGEVITY.


3. POINT OUT THE WORTH OF DRAWINGS, LICENSES AND INSURANCES, AND THE THE AFTER SALE FOLLOW-UP.

4. MENTION YOUR INVESTMENTS IN EQUIPMENT, IN THE TRAINING OF YOUR STAFF, AND STRESS WHAT THIS MEANS NOW AND YEARS INTO THE FUTURE.


There is usually a greater cost attached to quality goods and services and therefore also a greater value attached to their ownership or use. The sum of all these considerations should be greater than the difference in price.

You do your customer a disservice when you idly let them buy the wrong goods from the wrond seller. You must strongly assert (sincerely, honestly, & convincingly) that your customer is probably depriving themselves of the real value purchase by blindly accepting the lowest bid. IT ACTUALLY IS UNETHICAL TO ENCOURAGE YOUR CUSTOMER TO SHOP PRICE ALONE AND DISREGARD ALL OTHER FORMS OF VALUE.

Your customer came to see you, seeking your help and advice to make a purchase. You owe him your best effort and your best advice. To meet or beat a price, just to land the work; is unprofessional and not good business... so say nothing of the fact you are promoting the unethical tactics of selling on price alone instead of selling yourself and your company. WHENEVR YOU SELL BELOW YOUR ESTABLISHED PRICE, YOU STEAL FROM YOURSELF. NOT JUST THE LOWER PROFITS FROM THIS JOB BUT YOUR NAME, PRESTIGE, AND YOUR BUSINESS OUTLOOK.

You then will enter the downward spiral which makes you buy on price alone: cheaper workers, cheaper materials, ... until you are the one forcing yourself out of business due to price. because there are only so many ways to cut your costs and profits before you end up cutting your business's throat.

IT IS YOUR DUTY TO MAKE A PROFIT...not on this job or that job; but on your investment in time, equipment, training, money, etc. for now and your retirement. If all you wanted to do was maintain your present lifestyle, then all you want to do collect a wage..not run a business.

YOU MUST SELL VALUE NOT PRICE! YOU MUST ESTABLISH THAT VALUE NOT PRICE IS THE TRUEST WAY FOR A CUSTOMER TO GET HIS MONEY'S WORTH. ONLY IF CONDUCT YOUR BUSINESS IN AN ETHICAL MANNER CAN YOU EXPECT OTHERS TO DO SO. ONCE YOU ARE DOING YOUR BIDDING IN AN ETHICAL MANNER ( NOT BY PRICE ) CNA YOU THEN DEMAND OTHERS DO THE SAME.
 

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AMEN!!! I agree with that 110%!

I am a small company- just starting out full time, and the one thing I have to fight constantly is quality of work vs price. I am constatnly bombarded with "I can get it done for less, or this much$$" I try to stay calm and reasonable and discuss the quality of work being provided, and that has won me some accounts- but not enough. I am sticking to my guns however and will not lower my price to provide the service- especially if it will end up costing me $$- it seems that there are too many in my market place that are willing to do so. There is more than enough work to go around, with more coming in each year- I'm not greedy, I just want a fair price for services provided. I am looking at moving more towards commercial accounts vs residential- I am finding that they are easier to deal with and also easier to sell on quality. I am lucky enough to have enough commercial establishments in my area to have a halfway decent chance of getting a good protion of them since they can all see my work on a daily basis and see how it looks compared to theirs. I am hoping that my quality will work in my favor come spring time when I start to submit my bids. I also plan on submitting my bids a little early this year to give them something to think about for the upcoming season. I am and will continue to fight the "lowballers" whether it be in the snowplowing season or the lawn season- I have already seen the difference in services provided to the other merchants in the area- some still have snow in their lots because there was no touch up done after hours, and some were not hit at all during the last bout of snow we had!! I am considering dropping off my card to them and letting them know that I am available and service several local accounts around them so I can get to them quicker and they can see my work just by looking across/down the street- last year I got several accoutns at the end of the season due to mismanagement of the snow and ice- as well as some lawn work from the same thing(most commercials in my area want tone company to cover all the seasons)

Let us all continue to fight the poor quality/low price issue that is becoming more prevalent in all the markets.

Bill
 

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I Agree. If everyone stuck their guns and priced themselves by what they need to make plus what profit they would like to make rather that just on how much lower they could go than the other guy the industry would be much beter off. also it would be nice if there was some federal standard set requireing insurance to be carried for plowing thus giving a fair playing field. most states require auto insurance so therefore it wouldnt be to far off base to require it for plowing. regulations like that would knock out Johnny lowballer from plowing for $5 so he can go get a beer and let the true snow professionals who are doing this as a business and provideing quality service and trying to succead to thrive... my costs and quality of service dictates my price... i wish everyone elses would too...
 

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You can thank the n.a.f.t.a.free trade agreement.
Agricultyre falls into their by-laws by letting in illigal immigrants to work for beans and or rice.
That kills the quality and the rates .
 

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You could have a special CDL lic for snowplowing . But I really am not a fan of big government . YOu know the fees they collect will be outragous and they can make the hoops to jump thru ridiculous . Next we would be collecting special snowplowing tax to help subsidize those who cant afford plowing . I dont know , How about a taxi type medallion where they limit the amount of plow trucks and we charge whatever rates they set . Just something to think about . Usually lowballers cant keep customers anyway . I am always picking up new people who have horror stories .
 

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Discussion Starter · #6 ·
I'm a free market kind of guy. I hate to see government impose any more restrictions on anything. Asking government to solve our industry problems I don't believe is the answer. When you ask someone else to care for your problems you release control of your life and put it into the hands of someon else. That entity can turn on you very quickly. Ask how the steel producers are feeling right now after Bush lifted steel tarrifs, or atleast is considering it.

I believe the best remedy is for each of us to act locally in the best interest for all. Federal (which will never happen) or State laws would be too cumbersome for entire states dealing with different demographics, geography and snow fall.

In our more urban/surburban neighborhoods I'd like to see plow permits for each city. The permit process should require proof of AGL, CGL and WC insurance. I'd rather their not be a bond, but if need be fine. From there I'd like to see the cities enforce the plowing licenses. But they don't. Each city has different reqiurements and different methods of enforcing if they do at all. For some cities we go to the police station, others we goto the building department. One city doesn't bother with insurance. They want current vehicle registration and the names and social security numbers of the operators. I believe, but I'm not sure that they are checking the tax records to make sure they get their cut!

I think lobbying on a local level would be most effective. It means getting involved with your local governments, council people, etc. and advocating a change/update in laws. I think it's necessary to do this on a local level because what's good for me here isn't necessarily good for the guy 100 miles to the south of me.

The next thing each of us can do is to reach out the the next guy out there and try to educate them. Invite them for a cup of coffee. Get to know your competition. It's not that the industry should try to price fix or anything of the sort. But I do think it's important to try and educate others about what is happening to our industry and how each of "us" might be contributing to it if we're not careful.

I know the easiest thing to do when walking into a customer's office for a cold call is to try and compare their current service on a price point basis. If the customer is satisfied with their provider and they are paying a reasonable price I'd suggest walking away. I wouldn't necessarily go in lowballing just to get the job. This really sets the perception up in the customers mind that they can always find a cheaper service. It is true that they can, but ultimately they'll pay for choosing the cheapest service. Maybe not today, but eventually they will. Some customers don't care to see it and you'll rarely convince them otherwise. That is why there will always be a market for the lowballers.

People buy from people. There are a bunch of different buying attitudes out there, one for each person. Finding the people who you are willing to work with or vice versa is the key.
 
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