Price Gouging. Where to draw the line?

[rfwoodvt]

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The topic of avoidance could be related to the thread on "Dead End Bids." Which is basically qualifying the customer.

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I would pretty much agree with you there Jamin but for the most part if I'm highballing a job it is because that particular customer somehow got through my qualification process.

Sometimes they are really decent on the phone but in person they, or the job, begin to look like a nightmare that I want no part of.

Sometimes too it looks like a decent job but with added hassle or idiot factors that I'd rather not deal with but if the price were right I could suffer through it.

Kinda like "I'd like a price if you do it all and one if I were to help." and we reply, "add 30% if to our bid if you want to help"

In the past when I have had a job my gut said to stay away from I would highball it. I am now getting better at referring the customer to another provider telling them that that provider will be better able to help them with this particular project. I would rather be known as the guy who referred them than the guy who was trying to "gouge" them.

(almost have my sneakers clean...)

 

[zebhaney]

Read some Nero Wolfe novels and you'll see an expert in collecting exactly the right fee for every job.

 

[Jamin_Mayer]

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1) What is fair?

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It bothers me that a Geek Squad guy will charge $75/ man hour and we sometimes have a difficult time selling jobs at this rate. The general population has no idea of the risks in high angle work. So, would it be fair to say that $75-$100/man hour is fair for our industry?


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2) If I make a lot of money doing tree work am I a gouger?

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No. But, as we've mentioned above, it may depend on how you made lots of money doing tree work. If it was honest work and fair pricing, and owning a large portion of the market (in your area) then that should be acceptable.

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3) What is the risk we are taking worth?

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I don't know that exact number in dollar amount simply because our lives are priceless. However, it seems like our markets sort of determine what we can price. Therefore, would it be fair to say we are worth $75-$100 dollars per hour? -- It seems weird typing that...


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When I compare the profits I make doing PHC work they are obscene compared to general tree work. Why isn't this gouging?

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No. Because for some odd reason the market doesn't care.

Maybe because the PHC title has real "Medical Health Care" undertones. And as we know, personal medical health care is flat out expensive. So, maybe people invest in PHC because they just suck it up and take it.

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In my opinion the work we do requires more skill and definitely has more risk than the "median" job in the US.

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The market for this work is created by us... I hope this thread results in some re-evaluation of what we charge.


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In general, yes. "We" have created this market. Only because there are a lot of illegal, incompetent, ignorant, and cut throat operations amongst the legit, professional, knowledgable, and honest operations.

Good questions Eric.

 

[Jamin_Mayer]

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The topic of avoidance could be related to the thread on "Dead End Bids." Which is basically qualifying the customer.

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I would pretty much agree with you there Jamin but for the most part if I'm highballing a job it is because that particular customer somehow got through my qualification process.

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Gotcha.

 

[Alatamaha]

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Read some Nero Wolfe novels and you'll see an expert in collecting exactly the right fee for every job.

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Indeed.

"I am indifferent to what you call it, blackmail or brigandage, but it would be childish for you to suppose I would perform so great a service for you as a benefaction. My spring of philanthropy is not so torrential." NW

Alatamaha

 

[AW4130]

I have various ways for determining price for "bid" jobs. But basically I know almost exactly what it costs our company per man hour to operate. My stated rates are typically 50% higher or more than cost. Is that gouging? I don't think so. And the smaller the job the higher my rates.

Emergency work gets billed at time and a half.

Gouging?

No way, we drop everything and go. Could I charge less? Sure, but why would I. What markup do you think there is on your cup of coffee? Tank of fuel?

I think a lot of us love our work so much that we don't charge enough.

One thing I know for sure is that the prices we charge should be higher given the risks involved.

Perfectly stated.

 

[djm]

Jamin- if you are not fully funding your retirement, dont have health insurance for you and your employees and have some retirement vehicle for your employees you are not charging enough. Period. If you dont have some cash at the end of the year as a cushion you are not charging enough. Period. The problem with tree care as a business is us. We dont understand how money and business works. We undercharge with no thought to creating a sustainable business for ourselves and more importantly our employees. Its the the employees that need looking after. When we create sustainable businesses that create jobs that pay livable wages then tree work will be regarded as a profession not as a job you get because you didnt go to college. Most of the businesses on this forum are small owner operators. Jamin- forget your competitors. Charge what you need to to create a sustainable business and lifestyle you want. Create your market. Pricing is dynamic. It depends on workflow and market. We are regularly told we are more money than other co's on a weekly basis. But i have one of the most educated well trained, equiped companies in my area. The people i lose to are driving 20 year old trucks, dont wear chaps, dont offer health and retirement. Its because i invest in people. And that takes money. Good luck.

 

[Jeff]

We have laughed ourselves silly at some of the outrageously high bids from the large national companies. "Who the heck is gonna pay that price?????"
We have cried horribly when they actually won those jobs.