Anybody Have This Problem

[HAWK]

New guys in town: Customer wants cheaper rates.

Three weeks ago a "regular" customer calls and asked me to make a repair. I did the work and sent a bill for $125 plus tax. I had 1 hour travel, 1/2 hour weld time with MIG, 1/2 hour set up and clean up time. Total hours [email protected]/HR. He paid the bill, in line on an hourly basis with all other work in the last 2 years, but said someone else could do it cheaper and asked me to drop my rates. I simply said "get the other guy to do your work". I suspect he will call me back after a few jobs, but could be wrong. We have a couple of new guys here in town trying to get started and are absolutely ruining the local market with their cheap rates.

[Welder99]

Hawk..
I hear what your talking about.i have had customers in the past say the same thing (HOW MUCH or i can get it done cheeper).i have seen in the last 20 yrs the new guy come to the area with a portable rig ready to set the world on fire from offering cheaper rates to down talking the other welding business.i like you have come the the same conclucion as you.(wait the time).either they cant offer all they said or they go out of buniness because they operated to cheap and couldnt pay there bills.from what i have seen sooooo many people have no idea of the time,money,skill level it takes to be a skilled welder let alone make a desent living.its like the ole tooth ake.they never go the the dentist and say(WHAT?,,,i can get it done cheeper down the street.)I feel that QUALITY speaks the loudest.from what i have read from your posting in here,you are very qualitifed.only a man that has spent time under the hood for a great amount of time can see that.you have a great amount of respect here. hope to hear more from you....
WElder99

[JWELD]

Hawk:
I experianced this in the Transmission and Newspaper business.

""""DON"T DO IT"""

This is typical in any competitive business. You just have to weather the storm so as to speak and they will burn themselves out.
Don't get in a "Price War". It will ruin your credibility.

What you may want to entertain are some different promotional ideas,
ex; some kind of a discounted contract rate to the customer, for your
regulars, and some type of addional bonus for your newbies. I was also an owner of a community newspaper.

ANYTIME you drop a price to a customer, you must "ALWAYS" give a good reason ex; you got a great deal on a load of steel and want to share the savings with him.

So don't make the big mistake you are discounting your rate to compete. It will blowup in your face,as the customer will think
you have been charging too much in the past.


Sorry, to been so word crazy, but I dealt with this for years and hope I can shed any light from my mistakes. It's a pet peeve.

God Bless

[HAWK]

Welder99,

Thanks for your input. I have seen this sort of thing before and it passed as this will too. I have another customer that I just bid some work for. Until these guys moved in I rarely had to bid small jobs. It's a given to bid the larger jobs: Typically $5K and up. But you know there is a problem when you have to quote the $500 jobs.

Here's one you will enjoy. I bid $3k to fabricate a quantity of stackable warehouse holding crates. I lost out to a rod burner with his newly acquired "skills". The guy did the work and I was invited out to see the product: Humpy 6013 beads with center cracks, incomplete coverage of weld area, tons of spatter, etc. I never said a bad word-only that I am glad you got what you wanted. About 60 days later I get a call to repair this "junk" for $5K this time. Most of the time you get what you pay for.

I remember the first job I priced was actually higher than anybody in town, but I got the work. Why? I was new to the business, but offered a 3 year gaurantee against defective materials and workmanship. I never got called back to warranty the work and have done many jobs since then. It has been too long ago to even remember when.

Many times the cheaper bids lose out because the customer feels the work will not be qaulity. And then sometimes they just have to learn the hard way. About a year ago I was asked to repair a crack in a canoe for a guy I go to church with. He did not like the price. It was a mobile job requring a couple hours of TIG work. Guess what? The canoe is still cracked because nobody else would even bid the work-they don't have the equipment or skill to do it!

[JTMcC]

There is always someone else that will do it cheaper. Our stance is that we never lower our rates. Those guys that take work by undercutting never last more than a year, in my experience. And we have seen dozens come and go.
They are always newcomers, that don't have a grip on the true cost of overhead, and it takes them several weeks/months to realize they are working too cheap, by then it's to late and you never see them again. I've watched dozens start up, then go away.
The only place these guys can hurt you is on low end work, and we avoid that.
I avoid those customer's that are price orientated and don't know or understand that we earn every penny I bill. They really are more trouble than they are worth.


JTMcC.

[HAWK]

JTMcC,

Big 10-4! to that!!!

[JWELD]

Case in point:

The last ten years I owned and operated a major Transmission franchise. Never do I remember cutting cost to compete with another shop. Let them have it as their profit margin is so small it alone will put them out of business.

I'm not cheap, but I am good.

"If you can't afford to do it right, can you aford to do it over"

[cope]

HAwk, hold your ground. One day you will be called upon to re work one of these bozo's projects and it will more than make up for what work you lost. Once you lower your rates you will never be able to raise them again.

[arcdawg]

hawk, just wait till the UNDOCUMENTED WORKERS learn how to weld...... then everyone will be out of business... sad to say it has happened in my area,

dont ever think for a minute that your skills cannot be replaced, two weeks after leaving my job my boss hired some u.d. to replace me !!

brian

[HAWK]

arcdawg,

My neighbor said the same thing today about the UDWs. Off the subject, but still important: How much is gas running now? I filled up my 2500 Chevy with the Duramax diesel and it was $50. Three months ago that was $35.00. You still have it listed at $2/gallon. Is that number still good?

[timw]

There are always things to consider in this situation. I always try to keep a customer happy, BUT, I won't give away the farm. Sometimes it's a fine line in between. My invoices always spell out the charges, as yours did. If it's an estimate, I will state "per estimate". I have repeat customers that I will waive the charge on small items knowing I will make it up later and other customers I go long knowing that they will want more than they are willing to pay for. If I get their work OK if they go elseware they are doing me a favor. Public Relations will always be tricky, I make sure I can justify my charges.
I had a situation where I stopped by to pick up a check from a customer for several invoices that I had faxed to them. He wasn't in but his wife was, she imeadiately went on the attack telling me " You are welding too much stuff!!, before we started using you (customer of 6 months) we didn't need all this welding". I explained that each job was done only after my phone rang first! I ask her to have her husband call me and backed away. He called and apologized and said he understood all charges and was happy with them. I then came up with a "repair authorization signature form" with my word processor and ended that discussion. I only used the form for about 1 month after that and they waived the use of it because it slowed down the repair turn time. There are plenty of ways to fry a fish without burning it!

[Wheels]

Hawk

In my 30+ years of trucking I have seen the same situation over and over. Some hot shot has all the answers and angles figured out in no time. He sits down and tells me how much I make , not considering how much time is spent on repairs etc etc etc etc. Then he cuts rates , gets his butt in a sling and asks for my help! This situation is the same as yours in the fact that as soon as you buy a truck you are a trucker and as soon as you have a welder you are a weldor. Not exactly the case by a long shot . Enough ranting , but it helps to vent off a little steem
It seems the only choice we have is to keep our focus and our work quality up,but it seems there is always someone looking to cash in on your gravy train.

[HAWK]

timw,

I agree that sometimes you have to give a little and make it up later. I do that a lot with my regular customers. I have a few customers that only pay $50/HR because I weld for them at least 2-3 times/week. I really don't have a problem with customers refusing to pay for services rendered.

The problem is the new guys in town who are willing to take the jobs at half the going rate ($35-$40/HR). My rates are very reasonable at $62.50/HR. Most guys are at $70-$80/HR. I think I need to crank my rates up to $75 dollar/HR. It won't make a bit of difference to those that will go the $35/HR new guy route and my really good customers will understand the increase. The ones I loose will just be good riddance and a few less thorns in my side.

[arcdawg]

hawk, its right around 1.85 to 1.95 a gallon

we have sunoco up here and i used to get there ultra 94 oct no those s.o.b.s have dropped the 94 oct and a re advertizing ultra 93 oct for around 1.98

we have 2 area shops one that is all mexicalies and the other will only employ mexicalies !!!!

and i have started to see more and more I/I with a gas drive in the back of the pick up driving down us REAL WELDERS HOURLY WAGE !!!!

now our scumbag mayor is building a building to SHELTER these mexicalies from the elements

burns me up! these I/I dont pay in and they get all the benifits !!!!

prety screwd up if you ask me !

rant over,

(and i have no problem with anyone who comes to america to become a citizen and pays into the system .......NOT ABUSE IT !!!)

brian

[timw]

HAWK you are lucky you aren't in the Jacksonville area. With years of ship yards coming and going and the Navy guys retiring, there are too many welders. I've switched from transportation to construction repair with welding as a side line. I have been at $35. an hour for 3 years and went up to $40. first of the year. I'm a Honda Engine Dealer, Stone Equipment and just became a Multiquip Dealer. The national chain people are about $75. but that prices them out of the repair business for the little guy.
I'm not getting rich but I'm not punching a clock for someone else either. You just have to keep an eye on your bottom line and stay competitive. Let the shooting stars burn themselves out.