Thursday, August 16, 2012

Price cutting, then and now

As we work on Landscape Management's 50th anniversary issue, coming out next month, I'd like to share with you this editorial from the September 1963 issue of our predecessor, Weeds and Turf. If nothing else, it will restore your belief in the phrase, "the more things change, the more they stay the same."
It is certainly a sad reality that a few weed, turf and tree jobs are taken at absurdly low prices. Sometimes these low bids actually result from deliberate price slashing; sometimes the contractor has simply not used a pricing basis which covers all costs and profits.

Whatever the reason for price cutting, the end effect on the industry is unsettling. Prices are soft, profits inconstant, quality of work inconsistent.

"The only thing worse than a man who cuts prices is the man who meets them," one reader wrote us recently. This is a telling comment, and perhaps spells out the real ethical questions. Since price-cutters exist in any business and crop up from time to time regardless of what is done to stop them, whether or not to meet reduced prices is a decision reputable companies are often forced to make. 

Click on the image above to read the whole column, titled "Don't buy business!" While you're at it, check out some of the letters to the editor on the left-hand page. My favorite is the one from Charlie P. Johnson of Miami's Charlie P. Johnson Spray Co. who says, "We derive constant satisfaction from your magazine, and use it over and over in our everyday business."

In fact, I can see that taking shape as LM's new tagline: "Providing the Green Industry with constant satisfaction in everyday business for more than 50 years." What do you think?! --Marisa Palmieri

2 comments:

HY1755 said...

I agree there appears to be some conscience effort by certain contractors to lower gross profit margins below that of their overhead. However, I also believe there are a majority of contractors who don't know their true costs or fully understand the scope and requirements of the jobs they bid. This is a result of poor communication between sales, estimating, contract specifications, and production. In today's environment there are many more factors than just taking into consideration the time to dig a trench or plant a tree!

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