A challenging economy often breeds price war skirmishes, as new contractors try to crack your market by lobbing a volley of low prices at your customers. With your business customers trying to pinch pennies in every possible corner of operating budgets, they’re more apt to consider hiring the newcomer with the palatable price structure.
How are PROs responding to pressure from lowball contractors? Here’s what three established operators have to say.
Blue Bowl Sanitation owner Joseph El-Hage says one of the biggest issues facing the company is “competition coming in and cutting all the prices in half, thinking they’re going to make a lot of money.”
He’s feeling the pressure to drop prices, but says so far he’s been able to hold the line. “We’ve been around long enough that some of our customers will take our units even if we are more expensive. They’re familiar with our service, and they’re familiar with the service they get from the other guys. With us, they know what they’re getting,” and that comfort level is of enough value not to switch to another restroom vendor, he believes.
With other customers, the company has had to drop its prices to match the new competition. El-Hage says that his long-term customers are already on preferential pricing schedules, and so they don’t complain. “Some of those customers are already receiving 10-year-old prices,” he reports. “For a lot of people, it still comes down to the dollar, and they’ll re-check with other companies after our quote to see if they can get them to drop their prices lower. Some of them are just buying price right now.”
Mr. Outhouse’s customers include private weddings, park districts, and a bit of construction. Ed Clayton says there’s no price war there, but it’s competitive.
He says some customers request lower prices, and he tries to work with them to keep the business. The criteria he uses to decide whether he’ll drop the price is the customer’s potential to be a long-term asset to his company. “If it’s strictly a one-time deal, then no,” he says.
As far as negotiating price, Clayton says there’s a limit to how far he’ll drop. It’s not based on competition alone. It’s about the realities of business, and making a profit. “You kind of got it in your head what you have to stick with, and then you stick with it,” he says. “You’ve got to make money.”
“We’re not locked in a price war,” says Jacqueline Williams of Allstate Septic Systems. But there is pressure moving into Allstate’s territory.
Regular customers have been calling to say they’ve received flyers from competitors claiming equal products and services at reduced prices. She’ll visit them to see the flyers and familiarize herself with who’s making the claims. “We’re basically offering the same services and trying to hold the same prices we’ve had. We believe that if we provide consistent, stable, good service, our customers will stay with us or will come back to us if they do decide to go with someone else.” She’s not sure how these cut-rate companies are making a profit, but she thinks they’ll eventually be in trouble.
Meanwhile, she has to deal with the customer response to these flyers. “They call and ask me if I can match the price. We take these requests on an individual basis. If it’s been a long-term customer and a local business owner we do other business with and who’s been pretty committed to us over the years, we may consider a reasonable reduction. But we’re not making any across-the-board cuts.”
She says whatever price is agreed upon, it is locked in as long as they remain loyal customers who pay on time.
