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.
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.
