# How Do Deal With Competition With Crazy Low Rates?



## canbug (Dec 31, 2015)

I'm not in business to loss money. When I give a quote or estimate I hope to get a call back, if not, that's ok. I know it's different for a larger shop but this works for me.


Tim.


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## telsa (May 22, 2015)

Crazy? 

I call for a medic.

The crazier the better. The dope won't last long.


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## MTW (Aug 28, 2013)

Cricket said:


> How do you deal with competition with crazy low rates?



Ask the government to use every means possible to shut them down.


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## lighterup (Jun 14, 2013)

Cricket said:


> View attachment 131432
> 
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I don't do anything different. I quote my numbers. If the customer
comes off as offended and claims _others are way cheaper_ I
simply say _thanx for the invite to bid your job...best of luck and 
..bye._


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## CoolWill (Jan 5, 2019)

I send them pictures of their kids playing in the front yard.​


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## brian john (Mar 11, 2007)

I do not do anything different, nothing I can do, why worry about something I have no control over.


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## MTW (Aug 28, 2013)

This thread is.....:whistling2:


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## The_Modifier (Oct 24, 2009)

If you know YOUR numbers and what it cost to keep everything going properly licensed etc, what does it really matter?

We explain the difference between price shopping and value shopping to our clients. Customers (cheap price shoppers) are not our type of people that we prefer to deal with- they self filter themselves out- they tend to nit pick, watch over your shoulder and trip you up at the same time.

We leave them for the bottom feeders.

So should we really consider them "competition"?:wink:

Great article btw, I hope the newer contractors read it first BEFORE hanging a shingle.


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## Cow (Jan 16, 2008)

Who cares what other folks charge?


Seriously?


It doesn't affect us, even a little. 



The only folks that seem to charge crazy low prices are resi guys usually, because some of them don't seem to know anything else.


Commercial, industrial, and ag shops are all similarly priced in our area.


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## jelhill (Nov 11, 2018)

Down through the years I watch many, many of them go belly up. :thumbdown:


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## LARMGUY (Aug 22, 2010)




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## 99cents (Aug 20, 2012)

1) Deposit up front
2) Frequent progress payments - service change, rough-in, appliance connections, final
3) 80% paid before finishing starts
4) Payable on invoice (14 days for GC’s with a good history)

I have a job right now that is stalled at finishing because the customer ran out of money. I can wait. At 80% paid, finishing is kind of a break even thing.

Edit: This should have been posted in the “Getting Paid” thread.


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## Rfreddy (Jan 20, 2019)

99cents said:


> 1) Deposit up front
> 2) Frequent progress payments - service change, rough-in, appliance connections, final
> 3) 80% paid before finishing starts
> 4) Payable on invoice (14 days for GC’s with a good history)
> ...


I agree, get paid BEFORE the work starts and don't extend credit, ESPECIALLY to GCs!
If you need to complete, then learn to sell yourself and compete based on your level of service.
Competing based on price alone is a race to the bottom.
If you know your numbers, then you should know that there's little to no room in your costs to compete on price.


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## telsa (May 22, 2015)

Cow said:


> Who cares what other folks charge?
> 
> 
> Seriously?
> ...


That's what I run into.

They are so over their head they don't know it.

Some events are so weird that you wouldn't believe it.

:vs_laugh::vs_laugh::vs_laugh::vs_laugh:


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## The_Modifier (Oct 24, 2009)

telsa said:


> That's what I run into.
> 
> They are so over their head they don't know it.


And they seem to be surprised when they see the repair bill fo going with someone so cheap to begin with!:devil3::vs_laugh:


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## Switched (Dec 23, 2012)

I just wait for them to fold up shop and then go in and double my previous price to clean up the mess they just made.


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## HackWork (Oct 2, 2009)

Rfreddy said:


> I agree, get paid BEFORE the work starts


You mean a deposit? Cause it seems by this post and another that you might mean the full price, which I’d be interested in hearing about.


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## flyboy (Jun 13, 2011)

While I think it could be beneficial for the public to be educated on how to pick a value based, legitimate contractor, I also think because this thread's title includes the sensitive business topic(s) of "pricing" and "competing", that this thread could get sensitive enough that it might be better served to be discussed in the "Private Business Lounge". 

We can let it all hang out in the "Private Lounge" without worry of sending the wrong impression to the public.

JMHO


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## HackWork (Oct 2, 2009)

flyboy said:


> While I think it could be beneficial for the public to be educated on how to pick a value based, legitimate contractor, I also think because this thread's title includes the sensitive business topic(s) of "pricing" and "competing", that this thread could get sensitive enough that it might be better served to be discussed in the "Private Business Lounge".
> 
> We can let it all hang out in the "Private Lounge" without worry of sending the wrong impression to the public.
> 
> JMHO


The purpose of this thread isn't discussion, it's purely SEO for the forum.


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## SummitElectric1 (Aug 8, 2016)

The_Modifier said:


> And they seem to be surprised when they see the repair bill fo going with someone so cheap to begin with!:devil3::vs_laugh:


I tell prospective customers all the time that it is less expensive to do the job properly the first time than to hire the contractor with the cheapest estimate.

Yesterday I had an installation for an EV charging circuit. The homeowner had an unlicensed contractor finish their basement a few years ago with no permits or inspections. They, of course, did some things electrically that would not have passed inspection.

To make room for the 2-pole for the new circuit I had to move a couple of circuits from the main panel to the sub panel (which was installed during the basement disaster). It took longer (and cost the customer more) for me to repair some of the problems in the main panel and sub panel than it actually did to run the 6/3 from the mechanical room in the basement to the garage.

The customer also received a big quote to fix all of the other electrical issues that I observed resulting from their cheap basement project. The cheapest bid often ends up being the most expensive.


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## paulengr (Oct 8, 2017)

Not sure about residential but in industrial I've seen a trend several times. We get someone new in the area and they basically "shotgun" the bids. As in they bid like an EC...some are crazy high, some are crazy low with no rhyme or reason behind it, or sometimes they're all low. With the former we just let them have the low bids. With the latter we do what we can with pricing where we know they're competing and just hold on. It usually takes 6 months to a year nefore either their financial backers pull the plug or they're broke. Or they realize they're leaving money on the table, or they bleed so bad trying to get business that they eventually raise prices up to where everyone else is at. I realize that some of them do crap work and keep their prices low that way. In residential work where it's a lot of "one off" jobs it's hard to compete with that. But in industrial they don't get repeat business. I remember when I was a teenager working for a residential GC doing remodels and let's just say he didn't put his name on his truck or anywhere else. With just pure word of mouth he had more business than he could handle. His reputation was for quality work, just not fast work, and reasonably priced, not low priced. Works every time.


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## Southeast Power (Jan 18, 2009)

Same here.
Zero advertising, no marking on trucks and the bastards still call. I must be going broke. :biggrin:


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