“Challenge” pricing……
There are a couple of national management companies that are really affecting the marketplace with their practice of trying to force snow contractors to do work at pricing which is way below what should be charged. They have given customers (Home Depot, some Wal Marts, Target, etc.) an unrealistic expectation about what type of service they can expect for cheap numbers. Their method is to go to the multi state retailers telling them they (the management company) can save them 10%, 15% and sometimes 20-25% of their Spend for snow – then they send out severely depressed pricing to snow contractors “challenging” them to do the work at margins that will not sustain service levels customers have come to expect/demand. This is not good for our industry and certainly not good for the customers.
Maybe it works for grass cutting, or power washing because there are always fly-by-night grass cutters who can do the work on the cheap because they have no overhead. Snow contractors have much higher costs (once equipment is figured into the mix) and must demand higher margins to survive.
Forcing pricing structures below sustainable levels does not help anybody. The customers service quality MUST take a hit once the unsuspecting snow contractor figures out he/she cannot make a viable profit doing the work. The snow contractor is forced to find ways to short-cut the service in order to attempt to achieve viable profits.
It is rare you find a viable snow contractor doing more than one or two sites for these companies. Usually, they are doing sites were the management company has fouled up and sent along viable pricing. Sometimes, you hear that the mgmt company is forced to agree to viable (higher) pricing than they “advertised”. Then, a few months later, they come back to the snow contractor and cry about their customer not paying them – thus forcing the snow contractor to take less to get it off their books.
I surely do hope these margin cutters go out of business. THAT would be good for the industry.