Pricing and equipment costs

Q: I understand that price is important and it will often come down to cost as the deciding factor for being selected for a project, but why do customers always act like it won’t? Those that give me a budget to work within, or at least let you know what they are paying now, often get the most bang for the buck simply because you know what they are working with. However, customers often hold their cards very tightly when it comes to price and will almost never talk budget. Why is that?

My company is not a low-price company and, often, only gets a new commercial or HOA account if I come up with some alternative plan that saves the client money and, in turn, drives my price below my competition’s price. I hardly ever win if I bid the job exactly as the RFP requests, simply because my company charges for quality work. The one exception to this rule has been residential, which generally will pay more for quality work.

My question to HOA managers and property managers is, if it is about price, why not just say so? My question to landscape contractors is why do we continue to push the price down at the expense of quality? What do we gain from that, because I know it is not profit.

A: We need to do a better job of selling “value.” Some customers don’t appreciate that, so move on. Others do, but they need to be reassured, so you also need to build trust. In the sales process, we have to listen, listen and listen. Find out what are their pains and fears, and why they want to do the project. Ask the right questions and then listen, listen, listen.

Build a relationship and trust from the very beginning. Then, make the opportunity to talk about your company, and your passion for what you do. Share your concerns, your views on quality, your guarantees, etc. – not too much; just enough to make them aware and build trust.

Talk about price; find out their budget. Many clients fear that if they disclose the budget, you will just make the job as high as their budget. Talk about that; give them illustrations. You don’t shop for BMWs if you can only afford a VW. Doing so just wastes their time and the salesperson’s time.

Be super tactful, but get the old elephant out of the room. Explain your processes, and this will help them understand the value. But value is also about trust, so work on building the trust.

Start by confirming the appointment and then be on time. Do everything you say you are going to do. Give them testimonial letters from your other happy customers. Lastly, for all those who sell, study the sales process. Over the years, this has really helped me to sell small and million-dollar jobs.
 

Ed Laflamme, The Harvest Group

Q: I am trying to do a more accurate/more comprehensive job of calculating equipment cost, primarily for pricing but also for determining lifespan and timing of replacement. I am interested in calculating to the level of cost per hour for a given piece of equipment.

Is there a formula or worksheet available to plug in the variables for a given piece of equipment? We are a small residential landscape company: 80 percent design/build and 20 percent maintenance, including some commercial snow removal. We have the usual fleet of trucks, trailers, small construction equipment and small power equipment.

A: The following analysis report shows the cost of hourly operation of equipment listed on the asset list of a landscape contractor. It does not include operator expenses (wages/benefit costs), fuel, major repairs, insurance or other non-billable costs of operation.

Non-billable operation of loaders and trucks could be added in by increasing the hours per year of use. PM estimates are averages over useful life.
 

Rick Cuddihe, LaFayette Property Maintenance

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