How do I put my competition out of business?

Question

I run a lawn service. One of 6 in my area. I intend to advertise deep discounts in the coming weeks. You think it will help increase my revenue?

Answer 1

You are one mean business man... Hehe. I don't want to be your competitor. Kidding aside. It is not very advisable to do a deep discounts. it maybe effective for a short time but more likely your competition will also lower there prices. anyway, can you handle many new customer if you are swamp with them since you are offering a low price?... gluck!

Answer 2

Lower prices don't always bring in the money. For one you will be spending money on the price change, flyers, ad's, etc, then you'll work harder for less money. So who won here? Your competition. Cause now, your customers will expect this new price from you, and when you go back up, they will be upset and call the competition.

Sometimes being the highest priced in a market can read as "we are the best" to a customer. My company is like that. Most run around chopping their prices, in turn making less money, in turn buying cheaper products to use, in turn having a less quality job. My customers know I refuse to take 1 short cut, and they are willing to pay for that level of service. And I can tell you, I work less and make more than those guys running around trying to uncut me. Can't undercut quality.

I would raise my prices a few dollars, then take that increase early (out of pocket) and go get new uniform shirts with company logo embroided on. I would also spend some and get the truck lettered up. Not just name, phone, etc, but do like these larger companies do, get a miral of a lawn, mowers, a house, etc as an entire truck wrap. This will instantly say " professional " to any customer you deal with, same w/ the uniforms.

Spend some and get new biz cards, redesigned, higher quality, same results. Image speaks a lot without saying anything.

Plus think about it.... you are coming home in your BMW and have to mow the yard, something you just don't want to do. You pass 2 guys.... one guy is in a nice pick up, basic letters on tailgate, and is mowing away in a tshirt. Then he passes another truck that is dressed up, see's a guy in uniform riding a mower and thinks....wow, this company has their stuff together. And writes the number down. The first guy he either ignored, snickered or thought it was just some local.

I myself am a 1 man company, but due to truck, uniform, web site, and biz card, people think I am a huge organization. I get asked all the times where the headquarters is located. Headquarters? Its my extra bedroom at home HAHAHAHAHA.

Answer 3

I would take a "Needs Assessment" to see if there is enough business to go around for all six of the lawn services.

Then I would approach each one of them to see if they would want to form some sort of a partnership to put the other four out of business. Taking care to partner with the one that could do lawns out of your area but could share in the advertising expense.

Deep discounts may de-value your service. If you are a great lawn service, then charge what you are worth. Instead of a deep discount consider a contract where every 3rd cutting is free or something like that.

Even offer a free mow for every neighbor they refer to you.

Answer 4

No! It will only put YOU out of business. Let's assume that your competitors are not about to start an Anti-Trust case for predatory pricing. If you operate below your average cost, at a loss, produce an artificially high quantity that is neither the market equilibrium or the monopolist equalibrium (marginal revenue=0; optimal profit maximizing price and quantity).

Assume that now, you and everyone else charge $60 for doing a lawn. The market demand around your area is denoted by the function Q=100-P. This means that you will end up producing 40 lawn-service-jobs (That's $2400 total revenue "60x40"). However, you can take the Marginal Revenue and set it equal to zero in this case. The optimal quantity would be 50, and the optimal price would be 50 (That's $2500 total revenue "50x50"). You're charging less money, doing only 10 more jobs, and making more money!

Now, in reality, you have some costs. In reality, your competitors will change market conditions for your, and market conditions will not be the same as I've stated above. However, you should keep in mind that maybe you are operating at this $50 mark already! If you lower your price any more, you'll lower your total revenue, AND because you'll need to take more jobs, you'll increase your total costs, and lower your profits! Lower prices DON'T mean killing the competition in a perfect market. They will lead to putting YOU out of business.

You can try the following instead:

Instead of cutting your price and having the competition follow; you can try to add more services and overinflate the value of these services to your customers.

Example: Lawn costs $x to cut, you charge $y to do the job.
Now, you add FREE monthly fertilizer and pest control treatment every month with a 6-month contract! You profits will now look like: P=Y-(X+Z). Where (z) are the actual costs of the extra services. However, your customers don't know how much these other extras really cost, so they feel as if they are getting alot more!

Why will this work? Well? What was your goal? To knock out the competition by having less customers hire them, and more customers hire you! This is just what you want, without giving away your strategy.

You will lock customers into a 6-month lawn contract. It's not long enough for them to feel locked in and reject, but not short enough to have no effect on the competition. Your customers will have no need for more lawn services from competitors; PLUS, your competitors will most likely make the mistake of cutting their own prices!

This will be really funny. Because you would have locked in customers for 6-months, and no matter how low they bring their prices, your customers are already locked into a contract with you! This reduction in asking price will only lead to a lower revenue for your competitors during this period. After 6-months, your competition will suffer from net losses, maybe enough to have to close down. This is all without you having to cut prices, and without having to play dirty.

Your best market strategy in this situation; (right now); is to run a promotion! You will advertize to do the lawn jobs at COST for the first month. This is known as BAIT. Consumers see the $10 or $20 first month offer, and psychologically, they want it. But let's say that the next 6 months (contract), will be for 5-10% less than your regular price. More than just enough to keep your operating. There is no point in taking less revenue than you can during this time, you'll only be hurting yourself! The damage to your competitors is done through the lock-in contract time, since they will lower prices and take a hit; AND you will build customer loyalty during this time with the customers you have contracts with.

All-in-all, this aggressive business strategy should clear out most of the competition around your area. Don't forget, there will always be competition! Little Tim might want to earn some extra money, and will do 2-3 lawns every month for spare change. Expect to be significantly underpriced by this kid.. lol.. But for Business competitors, this is your best bet to knock out the competition.

I hope that helps. Best of Luck with your business strategy!

Answer 5

If you are going to have 'deep discounts' then you may be running yourself into a trap simply because you don't know your competition's operating costs... they may be able to offer lower prices and you may start an unnecessary price war and run yourself out of business. Look for other avenues, look for the competition's weaknesses and see if you can build on those. try to give yourself a competitive advantage, maybe carry out a small survey of existing and potential customers about what they would like, maintain exceptional customer service...Marketing research is vital before making certain important decisions. take your time and tackle it strategically. good luck i hope this info helps

Answer 6

Possibly, but is will cut your profits and you will not be making as much money. If you close down one or more of your competitors, others will rise to take their place. The industry you are in is very competitive but, it is also fairly inexpensive to start a lawn business.
Better then discounting would be to go to NEW customers and ask them to try your service. You should also consider buying the book Guerilla Marketing by Jay Conrad Levinson

Answer 7

What happens if your competition also cuts their prices? Price wars almost never work out the way you think. Try to beat the competition on service, not price.

Answer 8

offering a lower price may actually hurt your business sometimes.. Maybe offer a free week or two if they sign with you. Focus on why your business is different. Equipment, past experiences, etc..

just my 2 cents....

good luck

Answer 9

yes i was about to say that cutting ur cost will put u ahead of others..everyone is looking for a bargain all the time..i always am! great deals and sales and specials are eye catchers...do a great job and u make a loyal customer!

Answer 10

as long as you have a good attitude and low prices, and you do a very good job. you have a good chance in putting you competition out of business.

Good Luck