Did you know there are rules for working the streets?
There are very few things we are good at doing. We may well list a long litany of our areas of expertise, but we must always remember that true expertise is knowing more and more about less and less.
And so it came to pass that on a recent assignment, I discovered the arborist across from me had a much lower number than I did. Strange indeed as I fancy myself particularly good at comparable pricing. But here I was baffled as to how someone else could have developed such a lowball number.
In deposition, my advisory had all the right answers. And included in one of her responses was a quote from the Guide for Plant Appraisal, 10th Edition. You know, the part about how to find the largest commonly available tree in the marketplace. And she had her comparables with her in the deposition.
I did what could only be done in a matter of this sort and called the nursery with the incredibly low price. And there it was, the answer to that which had me so puzzled. Indeed, the low comparable price quoted was true. But why?
The answer revealed that the trees needed to be stepped-up to the next sized container. The grower, not wanting to make that investment, decided to fire-sale them at his cost to grow them and then move on to another species to grow.
Perfectly understandable. Nothing wrong here. Move along. But wait. What was not explained in the 10th Edition is that there are rules to comparable pricing. Yep. Rules of engagement in the marketplace, so to speak.
And one of those rules is that all relevant facts must be known before a comparable price can be proffered. While it is perfectly acceptable to stop growing a particular species in exchange for a different species and drop the cost of the species being liquidated, it’s not okay to use that liquidated price as a comparable. Simple, if you know the rule.
And now you do. One rule down, and others to learn.