# Unbelievable Price Competition



## MEL (Apr 7, 2007)

What do you do when your competitors have cut there prices so low that they can’t make a profit?

Most of the competitors in the roofing business have cut there prices to the point that there is only $300 - $600 left over after the have paid for labor & materials. I’m talking about companies that have been around for a long time and they used to have prices that were about the same as mine.

The type of jobs I’m talking about are shingle tear off jobs that I would charge anywhere from $7,000 to $12,000 for, these guys are coming in thousands of dollars less than me.

If their cost of labor and materials is $5100 they are charging $5500. I think they are desperate for cash and will do anything to get it. 

The problem here in Detroit is that there is not enough work to go around. I have to come up with a way to sell jobs at the right price and hope that I can stay in business until these guys have gone away or raised their prices back up to where they should be.

What suggestions do you have if any?


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## rbsremodeling (Nov 12, 2007)

They get a better discount on materials and reduced their employee wages to compensate


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## SelfContract (Dec 6, 2007)

They also reduce overhead costs, increase work efficiency, work effectiveness, use part-time employees to avoid employee benefits/health-insurance, and control time/travel hour/cost abuses.:whistling


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## Framer53 (Feb 23, 2008)

MEL said:


> What do you do when your competitors have cut there prices so low that they can’t make a profit?
> 
> Most of the competitors in the roofing business have cut there prices to the point that there is only $300 - $600 left over after the have paid for labor & materials. I’m talking about companies that have been around for a long time and they used to have prices that were about the same as mine.
> 
> ...


 
Here is my suggestion. I was faced with a simular situation back in the early 90's. My solution, move.
Believe me when I tell you, the whole of the US is not in the shape MI is in..
I know, hard to do. Have you looked at other parts of the state or states near you?


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## W-Tinc (Feb 15, 2008)

+1 framer53. 

By the halfway point in op post I was thinking of posting one word..Move :laughing:

If its at all possible it could make life much easier. Otoh I read this is a wonderful time to buy real estate in Detroit, maybe you could turn lemons into lemonade and build a retirement income at the same time.


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## 480sparky (Feb 1, 2009)

Why not try 'selling'?

The bottom-feeders will always be there. Not always the same ones, but they're like drug dealers. Take one away, and there's plenty more where he came from to take his place.

Joe Sixpack may be in business for a year or two until he goes belly-up with his low-price service, but Timmy Twelvepack will simply hang out his shingle.

Pun intended.





W-Tinc said:


> .....maybe you could turn lemons into lemonade and ..........


Forget lemonade.

Make some roast duck with a lemon sauce. It has a better profit margin.


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## Mike Finley (Apr 28, 2004)

MEL said:


> What do you do when your competitors have cut there prices so low that they can’t make a profit?
> 
> Most of the competitors in the roofing business have cut there prices to the point that there is only $300 - $600 left over after the have paid for labor & materials. I’m talking about companies that have been around for a long time and they used to have prices that were about the same as mine.
> 
> ...


I'd lay odds there is all kinds of crap going on behind closed doors. All kinds of stuff from using illegals to 1099 employees to operating without WC and insurance, suppliers not being paid... etc... etc... etc...


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## spdtrx (Sep 10, 2009)

480sparky said:


> Why not try 'selling'?
> 
> 
> Joe Sixpack may be in business for a year or two until he goes belly-up with his low-price service, but Timmy Twelvepack will simply hang out his shingle.
> ...


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## Wilson518 (Aug 1, 2009)

Reducing the material cost is always a good way to get a better profits.contact with me.I can give your suggestion.


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## NNY (Aug 29, 2009)

I would not want to be an employee of any of those companies because I don't think they will be around long . I am losing a fair amount of work because of price these days . I am sticking to my guns though . It's making me examine the little things that I could normally overlook . In the long run it will pay off .


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## Winchester (Jun 29, 2008)

I recently just had someone outbid me by $4,000 on a $10,000 deck job.

I feel I came close to selling it anyway, but in the end I lost. I can't believe they could stay in business like that.


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## SelfContract (Dec 6, 2007)

Winchester said:


> I recently just had someone outbid me by $4,000 on a $10,000 deck job.
> 
> I feel I came close to selling it anyway, but in the end I lost. *I can't believe they could stay in business like that*.


 
By doing that.. they also know that... someday... someone else... will also try to cut their throats off them instead of... themselves.. LOL :laughing: 

*What goes around.. comes around!!* :notworthy (Karma iz a Bee!) :w00t:


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## Mike Finley (Apr 28, 2004)

10 minutes ago:

Hi this is XXXX, do you do free estimates? I am getting bids from a bunch of people for a bathroom in my house I need updated so I can sell the house. How much do you think it will cost to update a 5x7 bathroom?

Me - So you are trying to find the cheapest price possible, getting this done as low as possible is the most important thing?

Well of course, why wouldn't I?

Me - So quality of the renovation, reputation of the company doing the work are really irrelevant?

Well, no...

Me - But it's really about the best price right?

Well, of course.

Me - I don't think we can help you.



Some people are very funny they have no idea what they are really even trying to do. They are so focused on cheap that until you actually point it out to them they have no idea what they are doing. And even then they still are in denial.

This is very typical of the buyer in the market right now.

Let me add that this type of customer when pressed and questioned will be in total denial about being a price shopper, they will know that they should be interested in everything but the price, but will give themselves away over and over again as they keep coming back to price. They will even beg you to come out to give them an estimate by denying over and over again they are not just concerned with price, but it's guaranteed after you submit your estimate the only thing they will be looking at for consideration is the dollar amount and nothing more.


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## CookeCarpentry (Feb 26, 2009)

Mike Finley said:


> 10 minutes ago:
> 
> Hi this is XXXX, do you do free estimates? I am getting bids from a bunch of people for a bathroom in my house I need updated so I can sell the house. How much do you think it will cost to update a 5x7 bathroom?
> 
> ...


 
Good prequalification strategy.


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## MEL (Apr 7, 2007)

rbsremodeling said:


> They get a better discount on materials and reduced their employee wages to compensate


The reason I brought this up is the companies I am referring to have been in business around 20 years, they are licensed and insured, they have good records with the BBB and in the past their pricing was what you would expect from a legitimate company.

I’ve seen companies do this before. They think they can lower prices and make it up on volume. They close a lot of deals and make it difficult for competitors to get jobs at a decent price. The problem is that there are several large companies doing this and who knows how long it will take for it to catch up with them.

Their cost for labor and materials is about the same as mine. I know because one of their installers recently called me looking for work. He said he had not had any work in 10 days.


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## Leo G (May 12, 2005)

Right now companies are in survival mode. It is not about profit, it is about staying in business until this recession passes. All you need is enough to pay the bills, everything else doesn't matter. If you don't survive, nothing matters.


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## custrel (Jun 30, 2009)

Mike Finley said:


> 10 minutes ago:
> 
> Me - But it's really about the best price right?
> 
> ...


No kidding Sherlock. We're in a recession.

People who don't get competing bids are fools - especially in an economy where they don't know if they will still have their jobs three months from now.

There is more competition out there than ever. People are willing to do whatever they have to do to put food on the table. That drives prices down. The contractors who figure that out and adapt are going to survive, the ones who just sit around bitching about low-ball hacks and craig's listers will fail.


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## custrel (Jun 30, 2009)

MEL said:


> What do you do when your competitors have cut there prices so low that they can’t make a profit?
> 
> If their cost of labor and materials is $5100 they are charging $5500. I think they are desperate for cash and will do anything to get it.
> 
> ...


You adapt or fail. 

1- You need to find out where you can cut costs, like every other business out there, and then cut them again until your overhead is bare bones.

2- You might need to start taking on projects you normally wouldn't or go well outside your normal work area. Hell, here in Washington we've got contractors from HI, CA, ID, and NV bidding for stuff. It's like a school of piranhas fighting over a steak.

I'm bidding jobs three and four hours out that I would have never bid a year ago.

3- You might need to ask your guys to take a temporary pay cut. It sucks, but work for slightly less pay is better than now work at all.

4- You will have to take a personal pay cut. Hell, you might have to get a second job, send your wife to work, kids to work, dog... whatever.

5- You might put more energy into selling one or two really big jobs that could keep you afloat for the next six months while your competitors slash each other's throats fighting over the smaller stuff.

Like another poster already said, for a lot of people, it's survival mode. Adapt or fail.


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## Mike Finley (Apr 28, 2004)

custrel said:


> No kidding Sherlock. We're in a recession.
> 
> People who don't get competing bids are fools - especially in an economy where they don't know if they will still have their jobs three months from now.
> 
> There is more competition out there than ever. People are willing to do whatever they have to do to put food on the table. That drives prices down. The contractors who figure that out and adapt are going to survive, the ones who just sit around bitching about low-ball hacks and craig's listers will fail.


You're f&&king hilarious. You're the typical contractor who has dug a hole for himself so deep that he can't see above the dirt now and keeps digging as low class customers keep walking up to his hole and kicking dirt into it and keeps saying thank you sir can you kick some more dirt into my hole? :no: You'll find the bottom sooner or later.:laughing:

A recession does not mean the end of the world, doomsday scenario for everyone. 91% of people still have jobs. 98% of peoples houses are not in foreclosure. 

Perception is reality. Obviously your preception is you must take the scraps. 

You sound more and more like a guy with the business acumen of a handyman with every post you make. 

Are you sure you aren't a handyman? That would really explain a lot.


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## Mike Finley (Apr 28, 2004)

custrel said:


> You adapt or fail.
> 
> 1- You need to find out where you can cut costs, like every other business out there, and then cut them again until your overhead is bare bones.
> 
> ...


Here's the opposite strategy -

MAYBE YOU SHOULD LEARN HOW TO RUN A BUSINESS OR GET OUT OF THIS ONE.

Make your guys take a pay cut?


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