IRRIGATION: Drown Low-Ball Competitors

It seems nowadays that anyone with a shovel and a truck can start an irrigation company, and some fly-by-night operations make it difficult for established irrigation contractors to sell residential irrigation systems profitably. But reputation can outweigh price, so contractors can stay competitive without drastically cutting profit margins.

Even though inexperienced installers often underbid them, contractors such as Martin Thomas, owner of Dayton, Ohio-based Hyrdoscapes, can still account for profit when pricing residential installations and remain successful. These companies are fighting back by selling clients on services and innovative irrigation technology.

CREDIBILITY RULES. One advantage that experienced irrigation contractors have over less-knowledgeable installers is confidence in their work. Thomas offers his customers a three-year warranty on every system. The company also makes return visits after installations to ensure that the system is running properly and to answer any questions or concerns that a client may have.

After an installation, a Hydroscapes technician will typically make one to three return trips to a property at no charge, Thomas says. The follow-up trips may include educating the customer on how to manage the system as the weather changes. These post-installation checkups and warranties have proven to be major selling points for the company, Thomas explains, sharing that 95 percent of his business is generated by referrals.

Clarkesville, Ga.-based B&B Landscaping & Irrigation also depends on referrals for new business, says Owner Gary Batho, adding that 99 percent of his work comes via word of mouth.

SYSTEM UPSELLS. Advertising can also come in the form of high-tech system components that inexperienced contractors may not know about. Water conservation efforts have given way to new products that can save homeowners money in the long run. Contractors can use the new systems as an upsell by educating potential clients about the benefits. Alamo, Calif-based R&R Water Management now installs an automated controller that is about 20 percent more costly than traditional controllers but can result in significant long-term water savings for the system's user, says company President Roger Waters.

Waters says customers do not need much convincing on the controller's benefits after he shows them on paper how much money they could save. With information provided by the city's water department, Waters can determine how much that homeowner is paying. Using a calculation sheet provided by the controller's manufacturer, Waters can then show how much water the property owner should be using. The calculations are performed in an Excel spreadsheet where Waters can input the square footage of plant material that's being irrigated, the average rainfall for the area, the price of water and water usage.

Controller manufacturer HydroPoint Data Systems, Petaluma, Calif., provides such a calculation formula for contractors. The calculation sheets can do the selling for the contractor by showing homeowners how they can cut their future irrigation costs, says HydroPoint Chief Executive Officer Chris Spain. By thoroughly explaining how these systems work, contractors can encourage prospective clients to look past the upfront costs and realize the long-term benefits. "It's an opportunity to leverage a solution to increase services but decrease costs," Spain says. "It represents a transformation in the selling process from trying to convince somebody to spend more for a host of compelling reasons to a much more compelling reason, which is saving money."

Controllers are the No. 1 selling point for BYB Landscaping & Irrigation. That's because homeowners typically want worry-free watering. "When I go out and sell an irrigation system, one of the most important factors is that I neither I nor the homeowner have time to actually go out and water sufficiently," Batho explains. "The most important selling factor is telling them that they don't have to worry about it at all, and the clock takes care of everything."

For newly built hoses where Batho may be doing other landscape construction work, he will explain to customers that he cannot guarantee their new lawn will be properly maintained without an irrigation system and a clock. Clients who want new irrigation systems for their existing lawns that are already poorly irrigated have already sold themselves on the system, Batho says.

CASHING IN. Brochures and other marketing tools can help seal the deal, but if contractors don't account for all their costs, their efforts may result in minimal returns. Batho determines his costs by first measuring the property. He then figures out the amount of pressure available, which will determine what size mainline to use, how many zones and valves are needed, what size zone line is required, the number of heads to install per zone, wire length and other necessary components.

After he knows all the materials involved and other variables, Batho is able to begin pricing the job. He comes up with a base price that includes materials and labor and then adds 10 percent to the materials costs and 10 percent to his labor cost. If the job is on a hilly site, Batho says he may add another 10 percent to the labor.

He will then lay out each zone by posting flags where the heads will be located. At that point, he can begin trenching and assembling the system. The typical residential job takes B&B Landscaping three days to finish. The first day is spent excavating, trenching and boring. The second day is spent installing all pipes, valves and wires, and the third day involves covering up the excavated areas and testing and adjusting the system.

Batho says he knows how long each step should take by tracking his employees' time. He requires that his employees fill out a daily log sheet where the must write how much time they spent doing each task. The sheet includes a list of about 25 different job functions where is workers write what time they started and what time they ended each task, Batho says. The spreadsheet also contains a section where his workers can write in any tasks not already listed.

Thomas tracks his costs though a computerized spreadsheet, Thomas says he can input all expenses, which include labor and materials. This spreadsheet will then calculate those costs. Thomas also brings a handheld computer to jobsites where he can input and compute a rough on-site estimate. Data from the handheld computer can then be transferred to the company's desktop computer. The system allows Thomas to provide immediate estimates for price-shoppers.

Thomas prices jobs by factoring in labor and materials plus overhead, travel time, restocking time and profit. He marks up materials about 35 percent, Thomas says. The company sometimes estimates jobs by adding labor and materials at cost and then adding a figure based on historical data to recoup overhead and then add profit to it. "When I bid both ways, it gives me a comparison to work off of because some jobs are more labor intensive than others, and some of them are less labor intensive," Thomas says. "Sometimes the numbers don't' bring the final selling prices up to where it needs to be, so I compare the two formats and decide which one is the best or combine the two and average it out.."

There are several pricing methods but in the end, the law of average usually plays out, Waters says. R&R Water Management's residential installation prices are calculated per valve. The typical charge is $750 to $800 per valve, Waters says. "Over the years, it's become a pretty good rule of thumb," he explains.

Mike DiGiorgio, operations manager, East Coast Irrigation, Tewksbury, Mass., determines his prices by "pacing off" a yard and counting how many heads will be required. He typically chargest $100 per head, plus plumbing. Pricing per head allows him to stay consistent with most contractors in his area. "Around here, most guys price by the head," he says. "And if I price by the head, everybody is in the same comparison."