The landscaping industry is highly competitive. There are over 600,000 landscaping services providers in the US,and none has a market share greater than 5% [1]. Because of the low barrier to entry, established landscaping services often compete with inexperienced services providers over maintenance sites and projects. While the services offered are generally the same, the work completed can be significantly different. This disparity results in what we call the “pricing snowball.”
Like in other industries, the price of services rendered is tied directly to the costs, experience, and quality of the services. The costs include time on site, employees, equipment, supplies, and materials, while experience simply denotes a given company’s ability to take on a specialized job. The quality of service can often be invisible until the job is completed.
Two companies offering the exact same service for the exact same price may complete a project entirely differently. Every landscaping company has its own unique way of operating, and each will have its own strategies for large projects.
Including as much detail as possible in the scope of work for a project when accepting a bid can help reduce the difference in quality between landscaping companies.
This difference can be attributed to a concept called “underbidding”. When a client needs work done, multiple landscape services providers offer an estimate, and from those bids, the client selects the best service provider for them. Similar to Jeopardy, bidding a dollar more than the highest price can result in a prize, in the landscape industry, bidding a few dollars less than the other providers on a project can result in new business. In some cases, the client may ask a new landscaping company to beat their current provider’s price. This is where quality of service comes into play:
Company A bids $1,000 on a given maintenance site and are given the site for a year. Company A is seasoned, so they take care of all bushes, leaves, weeds, and edging issues throughout the year. When that year is up and new bids are submitted, the client finds that less experienced Company B is willing to do the same maintenance site for $900. The site still looks great by the end of the year, but leaves were only blown a few times, and some of the bushes were missed and look unruly. Company B offers to take care of these items, but for a separate project cost. The client, ready to move on, manages to find inexperienced Company C, who can do their site for $750. Company C visits less frequently, and weeds become more common on the site. The major areas look fine, but the rest of the site is in need of some work. Company C also offers to take care of these issues at a project cost. The client agrees. By the end of the year, the client has spent enough on projects to justify switching back to Company A.
The bidding system is part of what makes the landscaping industry so unique, but the pricing snowball is a serious drawback.
Where a $3 light bulb will work the same when bought from any store, a $150 tree trim can mean a comprehensive pruning to one provider or just a few large branches lopped off to another.
This disparity between price and quality often remains unacknowledged. A client may come to expect the services rendered by Company A for the cost of Company C. Company A may even match the bid provided by Company C to avoid losing the client, but be unable to provide the same high-quality service at that cost.
The danger of underbidding lies in when the client comes to expect the same level of service for a lower price, regardless of standard industry prices. The current labor shortage, for example, has caused price hikes across landscaping sectors in the US. However, these price hikes have not prevented underbidding on sites. Despite increasing costs to complete a given project, a client may pay out less each year.
Landscape management companies have grown in popularity within the industry in recent years, due largely to a growing disparity between clients and vendors in the landscaping sector. Although management companies are associated with higher costs, the system of checks and balances is much more consistent. An account manager will visit the sites on a given contract and ensure that the work done is justified to the cost paid by the client. Additionally, interfacing with multiple crews and multiple vendors gives an account manager a more standardized perspective on pricing, which allows them to provide a current and thoughtful bid. The main benefit of usinga landscape management company is time saved, especially in the case of multi-site landscape maintenance. Rather than struggling to hold multiple companies accountable for their landscaping needs, this allows a client to go directly to their account manager with any issues.
Again, the real issue with “underbidding” is that the price continues to drop year after year. The client expects the same, if not better quality, which is unsustainable in the long term. Providing the client with a competitive price based on a clearly defined goal is top priority for ManageMowed. We avoid bidding blindly, we bid apples to apples when it comes to what other companies are bidding on. This approach keeps us competitive, but certainly not the cheapest option, as years of undercutting may need to be set right with a bid that best reflects the current pricing snowball.
- James Jakobsen
James Jakobsen co-founded ManageMowed, a leading commercial landscape management company, along with former classmate Peter Roberts after graduating from high school in 1999. Since the brand began franchising in 2019, ManageMowed has grown to 19 locations across eight states, bringing positive leadership and professionalism to its segment of the Green Industry.
[1] "Landscape Industry Statistics | NALP." https://www.landscapeprofessionals.org/LP/About/Industry-Statistics/LP/Media/landscape-industry-statistics.aspx. Accessed 1 Nov. 2021.
