Not long ago, I got to look at the Lawn Care business from the other side of the table. My neighbors next door hired a new mowing crew this spring, and they came door-knocking one evening to try and pick up a new account.
Although I wasn’t interested in his service, my initial reaction to the guy who came to the door was positive. This wasn’t a uniformed crew with a brand-wrapped vehicle and business cards, but they were riding in a new truck and running quality mowing equipment. And the guy was out hustling… promoting his business… taking advantage of being on-site to prospect new work… All of which is worthy of respect.
Then he gave me his price.
Under or Over?
I have a good idea what the job is worth. I understand the effort and I understand the market. And this guy quoted me double the fair market price from an average provider.
I hear lots of gripes about the ‘unprofessional hacks’ who underbid lawn care pros with $20 residential cuts, but I seldom hear industry people complain about competitors overcharging. Yet I actually think this guy’s approach is just as bad as the ‘lowballers’ for a couple of reasons.
1. He misses an opportunity to make easy money.
To service my lawn, an average provider would have to fit me into their route, drive to the site, do the work, and drive off to their next job. This guy and his crew would have just needed to cross a driveway and keep mowing… ALL his indirect costs are already covered, since he and his whole rig are already on-site.
A “normal” bid for my yard would have left him with extra efficiency and profitability because he’d already be there. But instead of bidding an average price or leveraging his cost advantage to bid aggressively, he went for the big score and walked away with nothing.
2. He might ‘turn off’ clients from hiring anyone.
A customer who knows nothing about the industry might just think “Well, that’s what it costs.”… So when they consider the economics of yard maintenance, their options might change. Buying a ZTR to do it themselves, hiring through some online service (you know the ones), or even buying one of those robotic mowers …might suddenly seem attractive.
The Other Stuff.
And of course the guy might’ve had legitimate reasons for bidding the way he did. Maybe he read me as a ‘no’ from the start and wasn’t really bidding to win. Maybe he’s gouging the neighbor and didn’t want to blow a good thing. Or maybe he’s just maxed out and will only accept more work at premium prices.
But for anyone trying to build a lawn care business, I think there’s a lesson hidden in there.
More than one path
As you strive to build your business, certain jobs will be more profitable than others, and logically, those jobs will become your focus. You might put your focus on winning high dollar jobs, or another successful strategy is to focus on winning more “regular” jobs you can do efficiently. As companies focus on their most-profitable work, we often see one of two approaches.
- Charge a premium and keep your prices high. (Make your money on Margin)
- Keep your costs low, do more work, and keep more of what you make. (Make your money on Volume)
One of these approaches might be your ‘go-to, but don’t ignore the other. A blend of high margin and high volume work will help you build both revenue and profitability, and having different kinds of clients lowers your risk if the market changes.
And just like you’ll never make a million dollars mowing yards for $20 apiece, your huge profit margin only matters if you can also build scale.