Countering the cheapo

When the new guy opens up shop and is pricing jobs to keep his lights on without any thought of crashing the market or businesses expenses he is yet to pay for or business growth what is your counter. It seem like there is nothing you can do except let him think he is making all of this money doing your $300.00 job for $160.00 except laugh when he goes broke and then be annoyed with all of the customers that say well the last guy. How do you deal with newbs that think the secret is to come in and undercut and they will get rich. The annoying thing is it works for them short term, they start getting all of these jobs which trains them to keep doing it until they go broke, realize they need to triple prices and lose a ton of customers or realize down the road at there prices they need to work 85 hours a week.

I make a conscious effort to not care about anyone else’s business model. There is plenty of work to go around and they rarely take any meaningful business from me. Why should I waste a second thought on them or their business?

Not trying to be disrespectful, it’s just my approach.

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I am not saying to focus or worry about them I am saying when the customer looks at you and says wow this is what they are charging what is your reply.

"I can’t speak for any other company, but our cost of doing business is probably much higher than a company that is charging that little.

The little things add up for us, you know, like insurance, workers comp, paying our taxes.

I know the margins, and I can tell you that something doesn’t add up"

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If they are willing to engage in areal conversation with you about a low baller, then suggest for them to consider their own line of work - do they drop their prices every time someone new comes up and under cuts their business model? I would wager to guess they do not. What made them price their “Widget Company” the way it is? Was it because they picked an ambiguous dollar that sounded good at the time, or because that was the dollar it would take to stay in business, upgrade equipment, pay taxes, buy insurance, maintain the service vehicle, and keep up with the latest and most efficient tools to get the job done right? If Johnny Shopper can’t see that going with Billy Undercut is only going to show him a new green face each time, then there is nothing more you can do but wish them best of luck and whistle off to your next worthy customer.

“Ya …In every service industry you can always find someone To do it cheaper if you look hard enough ,I try to keep my prices competitor with the better companies out there. unfortunately I can’t compete with the lower end companies.”

And, is beating those start up companies really your goal?

“expand the top, while dissolving the bottom.” If you’ve been in the game a while, you should be chasing bigger fish than storefronts for $20-40. The new start up with a low overhead can do those jobs and turn some profit.

I’ve been thinking about this thread for some reason. Once someone says to you I have a guy at half your price. It’s a fore gone conclusion . Why try to justify your price. Just say to him , that’s awesome I hope he works out , if for some reason he doesn’t give us a call we will be here.
That’s pretty much all you say. You’ve pritty much explained what’s goin to happen with the guy who prices like that.

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I always come back at them and ask, “well than why did you bring me out here if you already have someone at a price you like? It’s a little rude”. Then I see what they say. It’s always one of the following: 1. Well they won’t answer the phone/our calls anymore 2. They won’t return our calls 3. Their phones disconnected 4. They’re booked 4 months out and/or they are dodging us.

I then let them know that all of these problems make sense given the pricing they gave you. So if you want someone to be consistent, that’s us. If you don’t mind wasting 20 people’s time by not telling us what you want to pay over the phone based upon the amount of work you KNOW you have, have at, but I won’t have our company be a party to that. Let me know if you change your mind down the road. Thank you and good luck with the search.

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