Price is not always right

September 1, 2010 -  By

Online forums like Yelp.com and YellowPages.com give customers the ability to write reviews about small business services and ask each other questions about things like price.

Recently on About.com, I came across a customer named “Cindy.” Her landscape had become too big for her to handle, so she contacted landscapers for maintenance quotes. She got a price of $36 an hour for a two-man crew plus $20 per hour for additional help. The work involved maintenance, weeding, mulching, small planting, watering and fertilizing. “If they worked five full days (40 hours), it would cost me $1,440. Does that sound reasonable?” she asks cyberspace.

The first response: “I’m not shocked at the $1,400-plus price. It’s a big commitment of resources for a small business like that to have two people working 40 hours for one client. And it’s just not labor you have to figure in, but costs for such things as transportation, equipment and insurance.”

Not a bad understanding of business costs. However, the next part is what Cindy ends up listening to: “A more cost-effective way for you to get the job done would be to try to locate what is, admittedly, something of an endangered species: Namely, a neighborhood kid who wants to earn a few bucks. Of course, you’d have to take a supervisory role when it came to matters such as planting and fertilizing, but it sure would save you money.”

“Sounds like a good idea,” Cindy says.

And the landscape professional loses the sale.

Just like that your work, experience, systems, degrees, licenses, etc. are reduced to work a high school student can do for less than half the price.

In today’s economy, price drives decisions over property pride, quality and brand. Contractors who once had the edge with the value-driven clients they built relationships with are now battling bids as much as 50% lower than theirs.

It’s been a consistent complaint from contractors, and we knew we had to cover it — no matter how uncomfortable the topic. As a result, we found some contractors who were able to pick themselves up, dust themselves off and find profit-driven strategies. Their stories begin on page 18.

You never know when a willingness to engage with possibly uncomfortable topics might have an upside. Thinking about the landscaper who bid Cindy’s job … Since 84% of consumers say customer reviews influence their purchasing decisions, per Opinion Research, paying attention to and being active in these forums can provide free marketing, drive referrals and increase business. Maybe if that contractor would have responded, restating the benefits of hassle-free service over managing the teenager next door, Cindy would have chosen differently.

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