Pricing

[RBJtree]

Around here, in Southeast Pennsylvania, if you don’t have an excellent history already, you’re stuck starting with the state fund, which starts you out at 36%. It’s not cheap, to say the least!

Here in southwestern PA my wc rate started at 26.96%. You guys must be more dangerous on that side of the state

 

[RBJtree]

If you go to pretty much any auto mechanics shop or a dealership service center, ect., the hourly labor rate is posted clearly. For us to do the same is fine and could only improve the industry by reducing the amount of wildly low or high numbers, bringing the focus more towards quality. What cannot be quantified is efficiency and work ethic, ect. One guys $75 dollars a man hour gets a tree done in 6 man hours and another guys $90 a man hour gets the same tree done in 4 man hours. Equipment used changes thing drastically. Sharing man hour rates or even crew rates is just a part of the equation that gets to the final price of a job. In my area, most of us have figured out where to be to compete with each other and stay profitable for the most part. There are always a few start ups and low ballers around. There are always people like myself who have a skill set more ideally suited to certain types of jobs and I can do those jobs for a little less than the next guy, but he can do something else for a little less than me because he has 17 cheap labor guys to carry logs out of a backyard where there is no machine access for example. My point, sharing labor rates doesn't even come close to violating anti-trust laws and barely effects competition.

 

[Fivepoints]

We often find out what the bid was after the fact from our competition and sometimes even on jobs we didn't get. We had one last week that we had bid a large willow oak that is about 15 ft from a house and 5 ft from the fence. We bid $5200 for the job. We were in the middle of the range of other bids except for one way low one. We found out from the Home Owner that the 'winning' bid was $2000. Those guys were there from 7:30 in the morning to 7 at night with a 5 man crew. They were a bit over half way done. We figured out they would have roughly 70 man hours in the job at ~$26 per man hour after dump fees and fuel. They also broke the neighbors driveway in two places, had someone get hurt to the point they apparently couldn't use their arm at the time, and dropped a large log on top of the chip box damaging it severely. Sometimes you just really don't want to 'win' the bid that bad.

As the the workman's comp, our state doesn't require it until you have 5 or more employees. There is one tree service in our area with it. They are known to be very high priced and pay their people absolutely pathetic wages. They have a terrible safety record. I know of 4 different major injury incidents. Their ground guys are $8-10. Climbers are $10-13. Their highest paid crew leader is $15. The WC rates in our area are 55 to 60% depending on who quotes it. If you pay your people decent, it prices you right out of the market. It's already bad enough around here with 90% spiking prunes and stacking brush on the curb. Sometimes you just simply have to price what the market will bear if you want to get some work regardless of what your operating expenses should be able to be. You have to figure out how to make it work with that set amount of income.

 

[allmark]

The key is to know your numbers. What does it cost you to operate for a week,a month? What do you want for a profit and future purchases. What does the client get for your service? Peace of mind,hassle free interaction, the job done right with no cost to fix things?These are worth extra money.

 

[climbhightree]

We often find out what the bid was after the fact from our competition and sometimes even on jobs we didn't get. We had one last week that we had bid a large willow oak that is about 15 ft from a house and 5 ft from the fence. We bid $5200 for the job. We were in the middle of the range of other bids except for one way low one. We found out from the Home Owner that the 'winning' bid was $2000. Those guys were there from 7:30 in the morning to 7 at night with a 5 man crew. They were a bit over half way done. We figured out they would have roughly 70 man hours in the job at ~$26 per man hour after dump fees and fuel. They also broke the neighbors driveway in two places, had someone get hurt to the point they apparently couldn't use their arm at the time, and dropped a large log on top of the chip box damaging it severely. Sometimes you just really don't want to 'win' the bid that bad.

As the the workman's comp, our state doesn't require it until you have 5 or more employees. There is one tree service in our area with it. They are known to be very high priced and pay their people absolutely pathetic wages. They have a terrible safety record. I know of 4 different major injury incidents. Their ground guys are $8-10. Climbers are $10-13. Their highest paid crew leader is $15. The WC rates in our area are 55 to 60% depending on who quotes it. If you pay your people decent, it prices you right out of the market. It's already bad enough around here with 90% spiking prunes and stacking brush on the curb. Sometimes you just simply have to price what the market will bear if you want to get some work regardless of what your operating expenses should be able to be. You have to figure out how to make it work with that set amount of income.

Not sure what to say about all this. Curious as to how you found out from a potential customer what the winning bid price was, where your price fell, and all the other work details...on a job you lost. If information is from a friend of a friend etc, OK. If from you calling and asking, not OK (in my opinion). I feel that is is quite unethical to ask a lost bid those questions...just move on and try to get the next one.

Secondly, WC isn't just for the protection of the employee. It is also for the protection of the customer. It protects the homeowners from getting sued for medical coverage from an individual working on their property.

WC maybe expensive but it is a huge benefit to the employee (especially in this field).

 

[treebilly]

figure your hourly or day rate and charge accordingly. We have six crews and each one has a different hourly rate. Jobs are still bid for what they are worth though. My crew might get a 3k job done in 8 hours while the lowest crew might take two days. Boss still makes his percentage just takes longer while still paying out close to the same amount.

 

[Leroy]

If from you calling and asking, not OK (in my opinion). I feel that is is quite unethical to ask a lost bid those questions...

nah, there's nothing wrong with that, not your style I see that completely, I would not do it either I don't think, but not unethical.

 

[Fivepoints]

We were two doors down in the above scenario. The home owner of the lost bid came over to talk to us and volunteered all the information. I don't call lost bids asking for feedback. The only time I ask anything related is if I'm giving a bid and they tell me they already got a lower bid, I'll ask if I'm in the ballpark. Nothing more. If they tell me I'm way high, I know whoever bid it is usually way low or beer money tree service.

The workman comp is something I'm not happy about but cannot realistically afford it in our market with our rates. If we were all required to have it, things would be a bit different. Last quote I got for a three man crew was $48,000 in premium and it didn't cover me at all. We have a great safety record so that's not driving the rates up. Some days it makes me want to sell all my tree equipment and go do something else.

 

[RBJtree]

We often find out what the bid was after the fact from our competition and sometimes even on jobs we didn't get. We had one last week that we had bid a large willow oak that is about 15 ft from a house and 5 ft from the fence. We bid $5200 for the job. We were in the middle of the range of other bids except for one way low one. We found out from the Home Owner that the 'winning' bid was $2000. Those guys were there from 7:30 in the morning to 7 at night with a 5 man crew. They were a bit over half way done. We figured out they would have roughly 70 man hours in the job at ~$26 per man hour after dump fees and fuel. They also broke the neighbors driveway in two places, had someone get hurt to the point they apparently couldn't use their arm at the time, and dropped a large log on top of the chip box damaging it severely. Sometimes you just really don't want to 'win' the bid that bad.

As the the workman's comp, our state doesn't require it until you have 5 or more employees. There is one tree service in our area with it. They are known to be very high priced and pay their people absolutely pathetic wages. They have a terrible safety record. I know of 4 different major injury incidents. Their ground guys are $8-10. Climbers are $10-13. Their highest paid crew leader is $15. The WC rates in our area are 55 to 60% depending on who quotes it. If you pay your people decent, it prices you right out of the market. It's already bad enough around here with 90% spiking prunes and stacking brush on the curb. Sometimes you just simply have to price what the market will bear if you want to get some work regardless of what your operating expenses should be able to be. You have to figure out how to make it work with that set amount of income.

It sucks that your market is like that. Most of my competition to the best of my knowledge pays comp for landscaping and not tree service, or pays under the table or partially under the table. I don't want to chase cash or look over my shoulder for the irs to bust me. Landscape comp is about half of what tree comp is so they save a good bit, but they are putting themselves and thier employees at risk. I don't want to live that way or run a business that way. If I can't make it work the right way, I will close up shop and get a job with Davey making almost what I make now. Yeah, I don't make a huge amount of money, but I have the perks of owning my own show. Our state does require comp, but enforcement is lack luster. I don't think I would mind a little more or better regulation to level the field. Prices would go up, but MY expense would probably stay about the same. It is my goal to pay my workers top rate and compete with the packages offered by the big guys like Davey. It's a tough goal. I only have two employees right now. Me and my bussiness partner are opted out of comp so if one of us takes a serious injury we are pretty fucked. Its a tough market and a tough business. Good luck to us all.

 

[Birdyman88]

General liability is about 9% on the first $10,000 in gross receipts, then graduates down for successive amounts.
WC is 8% here. Insurance company charges $160 fee that's part of the policy cost. Minimum policy cost $1,250 through this insurer. I feel really fortunate after reading some of your WC quotes.