Question:
Every industry has fools whose prime method of getting business is cutting established prices in an area. If you happen to be one of these individuals, pay close attention to this thread because you may learn something. This is something that will never go away, so it’s my thought that this thread could be very helpful to the guy getting clobbered by a price cutter. (Short term, because price cutters often put themselves out of business.)
Answers:
The best way to deal with price cutters is to do your best to make sure he gets plenty of jobs from people who want work done as cheap as possible. For the customer who goes down the list in the Yellow Pages hunting the cheapest price and the contractor who likes to do the work cheaper than everyone else, here is my favorite tactic, which is pricey, but worth every penny! Bomb the phone book with advertising. I run a large ad under my oldest business name, then I run numerous other ads with other business names I own. That way the customer going through the book would have to call more companies to get a shot at the lowball price. Also, anyone who will make that many calls is searching for the absolute cheapest anyway, which is the call I don’t want to start with. And this is exactly the job I want the price cutter to get! I do all I can to keep the person who likes to work cheap busy doing all the cheap work he cares to do.
Like you said there will always be those guys. I do the best job I can and educate the customer. This usually ensures that they will book with me when I call them for their next service. If they want to go with the lowball guy, that’s their loss. This has happened to me in the portable restroom business. The customers who care about service will come back. The ones who are price-oriented, I don’t want anyway.
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Most of the cheapest pumpers have gone bankrupt in my area, sometimes a month or two before their bookkeeper told them to. I can usually tell by the wreckers towing their equipment away.
If I get a request for a price to pump, I take a little time to talk to customers and make sure they understand that the cost of a replacement septic system will add up to thousands of dollars more in the long run. I tell them I cannot compete price-wise with a pumper who may be disposing his septage in a manner that is not quite legal.
I cannot compete with a pumper on price if he shows up and dumps all the septage he can into your system before he starts pumping, or a pumper who does not completely clean the tank. I do not always get the job, but I often get a call the next time they want to pump after seeing the cheap guy in action – sometimes a day or two after it was partially pumped.
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I am dealing with one of these guys at the moment. He gets his friends or relatives to call me for prices (I always ask the person’s name if they are calling wanting a price. Most of the competitors’ callers hesitate first, then give their full names) for different areas I work in. Then, in the next few weeks, my work drops off to the point where my truck is sitting idle, so I call the real potential customers back to ask if they have had their tanks pumped and, lo and behold, this guy has done the work, mostly for cash payments at quite a bit cheaper than my price.
I am new in this game and am priced (was priced) the same as everyone else when I started. Now I have this to deal with. I figure if they think they can starve me out of work, I might go away. What I really need to do is offer the customer something that the others don’t so they think they are getting a good deal. Anyone got any ideas?
I may start offering a reasonable discount if their neighbors get their tanks pumped at the same time. What are your thoughts on having a competition, say over three months, with customers’ names going into a drawing to win their money back? Any ideas how to beat the price cutter would be appreciated.
