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stumpjumper
03-01-2006, 01:29 PM
i"m a new guy to this business, gonna retire next year at 55 and plan to start lawncare for other people this year. already have 2 trailors ,a pickup,a hustler 1742,2 cheap trimmers and a blower. i"v been visiting this site for about 6 weeks trying to fiquire out how to price. i don'have any overhead, but i want my prices to be in line with other operators in this area i.e. central oklahoma. any help from some in this area.

Precision Lawns
03-01-2006, 01:39 PM
You don't have ANY overhead? You don't have to pay for gas? Insurance? Telephone? I find it highly unlikely that you have a cost of doing business of $0.

stumpjumper
03-01-2006, 02:28 PM
i consider gas as a business expense. as for my telephone, i,m always gonna pay a phone bill whether i mow or not. and yes, everything else is paid for.i have been doing tractor work as a sideline for about 10 years and i had overhead when i still owed money on equipment.

daveintoledo
03-01-2006, 02:38 PM
you need to do some research on the cost of doing business, you have the same expenses everyone else has... what about your liability insurance you have to have, you have to factor in the cost of your equipment, paid for or not, and the replacement cost of the equipment, the homeowners equipment you have wont last the season , that will have to be replaced, and then figuring in the lifespan of the new commercial equipment and its replacement cost...depreciation on vehicles....advertising, licensing, on and on...the price of gas is overhead, a business expense is overhead.... the telephone.... doesnt matter if you already have it, ALL business costs must be figured in order to charge the proper amount....

stumpjumper
03-01-2006, 02:49 PM
i pay insurance on everything already,i carry personal liability already because im a land owner.i know every penny i cleared on tractor work and my farm and ranch operation. do you have any advice on pricing or do just wnt to argue?

daveintoledo
03-01-2006, 02:59 PM
you must already know everthing there is to know, thats why you came here asking questions right, because you already know the answers........

point is ,until you figure your true overhead, you cant figure out what to charge....

i know what to charge, do you....
good luck:)

stumpjumper
03-01-2006, 03:02 PM
you boys play a little rough for us coutry folk. think i might otta get out of dodge

daveintoledo
03-01-2006, 03:10 PM
you will get lots of opinions here some good some bad, point is, you may not like all the answers you get, but they will be honest.... take them of leave them.... but dont leave and give up..... stay a while and check it all out..

:)

i try and charge aroung one dolar a minute, that may work in some areas of the county and not in others... it may be enough for some to make a profit and not for others....

All_Clear
03-01-2006, 03:49 PM
you boys play a little rough for us coutry folk. think i might otta get out of dodge


LoL yeah and he's the kinder and gentler dave :hammerhead:

Your asking a question that everyone new asks here and basicly will get the same answer, as they all do.

What i charge and what everyone else on this site ligit or not charge will be different, we all have different business expenses, personal bills ect...

Don't give up... As dave said $1 is a good starting point of you don't know your exact expenses.

Try doing a search for knowing your expenses, finding your hourly rate, things that fall in those catagories.



All_Clear

stumpjumper
03-01-2006, 04:01 PM
didn't mean to brag or be a know it all. been in the electrical business and know what you guys are up against with lowballers. i love making lawns look good and will need some income after i retire. appears to be some money in the business. appreciate your help.

daveintoledo
03-01-2006, 04:05 PM
LoL yeah and he's the kinder and gentler dave :hammerhead: r

hahhahh but i did try and give the answer to the question and was kind of told that he has NO OVERHEAD so he was different..... ther is no sjuch thing as NO OVERHEAD....that is what i was trying to get accross.....
thanks for helping to clear thatup all clear..... hey thats how you got the name...
:laugh:

daveintoledo
03-01-2006, 04:09 PM
didn't mean to brag or be a know it all. been in the electrical business and know what you guys are up against with lowballers. i love making lawns look good and will need some income after i retire. appears to be some money in the business. appreciate your help.

glad you stuck around, sorry if i came off harsh to you....there really is good info here, search the topic as all clear said,.... i had no idea what was really included in the cost of doing business until i read about 300 threads here from my search........

good luck....
:)

hackitdown
03-01-2006, 04:13 PM
You are on the right track by trying to stay in line with the other LCOs in your area. When I started, I asked friends what they were paying, I asked customers what they were paying the last guy, and I got quotes for my own lawn from competitors. I called LCOs that were just outside the area to see how they priced.

In general, try to charge the most you can get, without being outrageous. You will learn very fast how to size up and price a lawn. Remember, lawn size isn't everything...hills, obstacles, rough ground, quality of turf, tight quarters, lack of access, and rude customers all cost extra.

All_Clear
03-01-2006, 04:22 PM
stumpjumper here's something i copy and pasted right off this site into word for reference... I cant find the exact post i got it from (so credit is due to org. poster of this info) but it's here somewhere, I'm to lazy to search now lol

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

It's a big one....
*************
When a homeowner or property manager asks you for a price they don't care whether you use a 21" or a 48". That is the justification for sq ft pricing! But to get to a sq ft pricing I have to use an hourly rate. And an hourly rate is different for everyone based on their situation.

Just like T.E. said using a flat hourly rate doesn't make sense when you change equipment or gain efficiency.

If 10,000 s.f of turf is worth maybe $60 in ABC town. Mow in two hours with a 21" and you have $30/hr. Mow it in 60 minutes with a 48" and you have $60/hr. It's still 10,000 sq. feet and it's still worth $60!

But if you can get to the point of a price per square foot, THEN you can compare your rate to someone else. IF you know your time and cost to mow 10,000 square feet you can ask someone else their time and cost for the same coverage. Then you know if you are more/less efficient.

Instead of worrying about others hourly rate, try to determine yours. An example:
________________________

1) Your hourly wage rate ____. That is what you could be earning working for some other business doing the same thing. As an employee you get 40 hours work, but as an owner you usually work more than 40 but often bill for less than 40. If your annual salary could be $28,000 working for someone else and you have to earn that in 1,500 billable hours it is $19/hr (for example) + taxes = $22 bidding. Add a min. $2 for health insurance. And another $2 if you want a retirement benie.= $26/hr
That is for someone who could be earning $28,000 as an employee for someone else. If you would be working for someone else at $8 as an entry-level worker your bidding (billable) can be justifiably lower. Do you work as a technician operating a mower, or are you a manager of 10 people?

2) Your direct cost of operations. The costs “to do the job” on site- equipment, fuel, trimmer line, fertilizer, chemicals, etc. This is should be an exact dollar amount. Gas used in 1 hour, line, etc. = $2.00.

3) Your equipment cost. It is the cost divided by the useful life. Another measure is what would it cost you to rent that equipment per hour if you had to? This is the big difference for different people.
Example a $900 21" lasts 3 seasons for 4,500 hours = less than a buck an hour. But a $9,000 rider for 4 seasons (6,000) = 1.50. Plus all the other equipment on the trailer. Estimate $3/hr for a full trailer. Bidding for applications and installation this obviously sky-rockets.

4) Your indirect costs of operating. The cost of bringing your truck to the curb and related expenses related to that job (payment, insurance, fuel, dumping fee for waste & clippings, time to bid it, bill it monthly, customer service along the way). Truck + maintenace $3/hr.

5) Your overhead costs of operating. Those things you pay just to be in business and are not for any specific job: Licenses, cell phone, office electricty, renting garage space from your wife (parents)(self), storage space from your wife, advertising, etc.) Take the total of these for the whole year and divide by the # of hours you work. $10,500 / 1,500 hours for example. = $7/hr

6) Then you add your planned profit. If you could be making $28K as an employee you should be getting 'extra' for being in business of 10$-20% more ($2,800- $5,600). $4,500 /1,500 hours = $3 each hour for profit. Let's see how that totals up.


HOURLY that is:

$26 Wage
$ 2 direct expenses
$ 3 equipment used
$ 3 truck & indirects
$ 7 for overhead
$ 3 for profit
___________
$44 per hour.

________________

With the equipment in this example, the owner can mow 10,000 sq feet in an hour so the rate is $4.40 per 1,000 square feet. If they equipment was faster and takes only 40 minutes = $2.90/1k.
_______________


Owner gets compensation of $29 for each hour worked. = $43,500. But working a real 60 hours a week for 42 weeks and easy street for 2 months. = $17/hr.

Going the other direction>>>
If an owner has a full schedule to achieve 1,500 hours of billable hours in the year:

$66,000 Gross
$ 3,000 fuel, trimmer line, and direct expenses
$ 4,500 equipment
$ 4,500 truck, ins, & maint
$10,500 overhead exp
$28,500 wages
$ 4,500 S.E. taxes PAID
$ 3,000 insurance PAID
$ 3,000 IRA contribution
$ 4,500 profit
___________


These are NOT exact figures. It is only an EXAMPLE of a process one can use to get to their hourly rate and then to a budget based on projected billable hours.

The budget can then be used as a balance against the hourly. Does it seem reasonable to spend $4,500 on a truck for one year? $375/mo average. or $400/ for 9 months and $300 for 3 months of winter. Looks good here, but how about for YOUR situation.

Does 1,500 billable hours seem reasonable for YOU? If not divide the annual amounts by whatever you can work to determine your hourly.

Notice there is A LOT of room for fluctuating in the wage and equipment expense. Based on the cost of you equipment ($5,000 or $50,000) the HOURLY rate can change dramatically. That is the difference between guys not accounting for their equipment or overhead and coming in with a low bid but they think they are doin great 'cause they put in $20/hr for themselves and figure that is a good rate.

How does one go from $30 up to $60 and justify it? Either more expensive equipment, hirer rate for their wage, more overhead, OR less hours to bill. This example has $66,000 of expenses. IF an operator has only 1,000 hours for work to recover that, the rate has to go up! Or if you start off charging $55 and can get it, you only have to work 1,200 hours instead of 1,500 to make the same cash! Of course if one can bill for more than 1,500 hours then the fixed costs like a truck payment can be spread out over more hours in order to either lower the rate or make more profit.

If your market rate is higher than your cost based rate, GREAT that’s money in your pocket. Charge as much as you can! But also know the minimum you have to charge to make money and use it when you need to be “competitive.”

**************************************
My POINT is a person has to go through their costs, their wage requirement, and their expected budget to come up with the numbers. Using someone else's rate is the same as throwing dice.

And someone who just pulls $60 out of their butt without having some numbers to back it up ought to be in politics! And someone accusing someone else of paying themself $15/hr as too low needs to evaluate the market for a wage for a person chasing a mower.



Pay yourself a wage, pay expenses, recover equipment capital casts, get a return on your investment, and make a profit.

Pricing is simply adding the components together and being sure to include ALL components.


For those quoting $60/hr, I’ll guess its based on charging $30 for a 30minute mow or something like $44/hr with a $10 base = $32 for a 30 minute mow. $60/hr for a small job may be common, but try bidding $60/hr for a 32 hour job and see where you place with other bidders. And then figure your close rate. Win some, lose lots???

The bigger the job the more your hap-hazard bidding will affect you.

~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~

This helped me sum up alot of questions i had at first....

Hope this helps. Knowing your hourly rate to do business will get you top dollar!

All_Clear

stumpjumper
03-01-2006, 05:50 PM
sorry if i got a little redneck there boys,it runs in the family.great info all clear. i'm startin to get a handle on your methods. even if i could do the job cheaper i'm gonna stay in the ballpark with the established operators. i've worked jobs for nothin and didnt like the pay scale. gonna talk to the local equipment dealers and see if i can get an ideal of whats normal in my area. appreciate the help. maybe i can do it for someone else one day.

barefootlawns
03-01-2006, 05:59 PM
OK first don't let them get you down. This is a really cool site and alot of help full tips on it. Really no one can tell what to charge because everyone has different expenses to calculate in. A single man operation can charge less to mow than a big company because of overhead. What you don't want to do is be a low baller cause they suck. I am in OKC and if you have any questions PM me and i will try o answer them. I wont get out of the truck for less than $30.00 and they go up from there.

befnme
03-01-2006, 08:22 PM
if you buy 1 quart of oil for you mower then you have overhead.or even:
1 mower blade .
1 pint of 2 cycle oil.
1 air filter
1 year general liability ins.
1 year commercial auto ins.
1 spool of trimmer line .


before you say " i would have had to buy that stuff any way " wait a sec.
i know you would have to buy it for home use but you are going to use more of all that stuff and it will wear out quicker and faster .

Natures Image
03-01-2006, 08:30 PM
usally as far as mowing goes $1 a min is a good starting point lets say it takes you an hour to mow a place trim and blow walks ext. you charge $60 a cut this sometimes works out well sometimes it doesnt...just a good starting point as far as man hour rates depends on the area you work in could be as low as lets say 20 per man per hour up to 125 in some cases:usflag:

stumpjumper
03-01-2006, 10:59 PM
i have been duly chastized. my operating expence column in my ledger has been changed to overhead. thanks for the advice fellows, it has given me a starting point. tried to pm you barefootlawns,dont have the priviledge yet.

barefootlawns
03-01-2006, 11:02 PM
you can email me @ barefootlawncare@hotmail.com or jlake3165@yahoo.com

K.Carothers
03-01-2006, 11:27 PM
glad you stuck around, sorry if i came off harsh to you....there really is good info here, search the topic as all clear said,.... i had no idea what was really included in the cost of doing business until i read about 300 threads here from my search........

good luck....
:)

So why give the guy sh*t? You should of answered his question with constructive criticism not the bs.

kc

KC Hartman
03-02-2006, 12:57 AM
Thanks for that post All Clear! That was very informative. Gave me a better idea of how and why to bid jobs. Best post I have seen yet! Yes, I realize the credit goes to another, but you having it on hand has made it valuable to me.

Thanks again!

daveintoledo
03-02-2006, 10:56 AM
So why give the guy sh*t? You should of answered his question with constructive criticism not the bs.

kc

you need to do some research on the cost of doing business, you have the same expenses everyone else has... what about your liability insurance you have to have, you have to factor in the cost of your equipment, paid for or not, and the replacement cost of the equipment, the homeowners equipment you have wont last the season , that will have to be replaced, and then figuring in the lifespan of the new commercial equipment and its replacement cost...depreciation on vehicles....advertising, licensing, on and on...the price of gas is overhead, a business expense is overhead.... the telephone.... doesnt matter if you already have it, ALL business costs must be figured in order to charge the proper amount...."

dont you think so, dont you think this is answering his question with no bs included.....:)

K.Carothers
03-02-2006, 11:02 AM
you need to do some research on the cost of doing business, you have the same expenses everyone else has... what about your liability insurance you have to have, you have to factor in the cost of your equipment, paid for or not, and the replacement cost of the equipment, the homeowners equipment you have wont last the season , that will have to be replaced, and then figuring in the lifespan of the new commercial equipment and its replacement cost...depreciation on vehicles....advertising, licensing, on and on...the price of gas is overhead, a business expense is overhead.... the telephone.... doesnt matter if you already have it, ALL business costs must be figured in order to charge the proper amount...."

dont you think so, dont you think this is answering his question with no bs included.....:)

I agree 100% with you. Everyone knew that this man didn't have a clue about what you posted above. My bad if I came off ass a smart a@@ myself.

kc

firefightergw
03-02-2006, 11:11 AM
Stuntjumper. I admit, I haven't read the whole thread but maybe this will help. Last year was my first year. Your first year in my opinion is a learning experience. My average price for a cut, weed-eat, edge, and blow last year was $29.86. My lowest price cut was $15 a week but it took me 10 minutes and it was right across the street from two of my commercial accounts so there was no additional drive-time, etc. My highest price cut was a very large home in an exclusive neighborhood that I charged $80 a week.

I told you that to tell you that I didn't think I had any overhead either except for gas but when I crunched the numbers at the end of the year, I noticed that deducting depreciation 20% of purchase price and insurance, advertising and everything, my average cost per cut was $7.89. This year, I will be adding a crew and if my numbers are right, my cost will just be under $15 a cut. If you want anymore info on how I arrived at $7.89 or how I priced my services, feel free to PM me.

stumpjumper
03-02-2006, 03:47 PM
i don't have pm priviledges yet, but would love to see how you fiquired your costs. from what i've found out in the last few days it looks like pricing around here is going to be pretty much the same as your area.

All_Clear
03-02-2006, 05:25 PM
Thanks for that post All Clear! That was very informative. Gave me a better idea of how and why to bid jobs. Best post I have seen yet! Yes, I realize the credit goes to another, but you having it on hand has made it valuable to me.

Thanks again!

Well as i said credit is due else where but when i read that post, it all made sense to me also... Thats why i saved it, it helped me and i passed it on to help someone else. Thats what makes this a great site!

Glad i could help even if in a small way.

All_Clear

stumpjumper
03-02-2006, 10:53 PM
if you find the time firefightergw, email me at granniesshort@yahoo.com i'd like to know how you do business. thanks. by the way my wife came up with the email address.

Fvstringpicker
03-03-2006, 12:38 AM
Not to keep an argurment going but overhead is defined in different ways. What some call overhead (their truck) is direct cost to someone else. S.J. when you initially said that certain cost were already present, in an accounting sense, you where saying that you had no incremental cost i.e. the cost were already there no matter what decision you made. That's an important concept when bidding a job.

stumpjumper
03-03-2006, 10:41 AM
looking back i opened this can of worms by the overhead statement.i should have just asked for pricing info for this area. i still believe that to include the total depreciation costs of equipment that will be used a small percentive of time on lawncare would skew the numbers. of course i'll closely track all expenses and depreciation of equipment dedicated 100 percent to mowing, how else would know whether you were making a profit. i use a simple formula; how much i collected minus how much i spent=profit. guess i'll find out at the end of the year. thanks

wantstolearn
03-04-2006, 12:21 AM
I just wanted to say that the posted quote from all clear should be immediately turned into a sticky atop this (and maybe a few other) forum rooms!

Of all the Excellent advice I have read on these forums that definately was the most helpful.

Just my 2 cents

All_Clear
03-04-2006, 12:35 AM
As i said before credit goes else where... I found the org post finally i got this info from...

http://www.lawnsite.com/showthread.php?t=48376&highlight=hap-hazard+bidding

The credit goes to "Green In Idaho" post #18 within that thread.

His info was so clearly stated i copied it to my pc right away.

So Thank you "Green In Idaho" for this valuable info!


All_Clear

Landlover lawns
03-11-2006, 09:20 AM
Price depends on the quality of work and what the customer wants. I f you do it quick and dirty you can charge less but there goes customer satifaction. I like the dollar an hour theory to start.

wildduck1520
03-11-2006, 09:36 AM
I take it you have the 17/42 mini-fastrak? Am thinking about buying one and just want to know what you think of yours? How many hours, what type of cut? Any problems,etc.etc. Would really appreciate your input.

Thanx, mike:confused:

ArkansasLawns
03-11-2006, 10:04 AM
Just to get a feel for the market in your area why don't you get somebody to bid on your lawn or some relatives lawn. Talk about a can-o-worms. I know that some of these folks on this site will have a heyday about saying that but... It will give you a point of reference. I know that I have bid yards for people who were just shopping around.

My first year in operation I really had no clue what I was doing. I sometimes feel that I still don't know. Ha! My wife likes to point that out too. Anyway, the best thing I did was get three bids on my own yard. Got them from the phone book so I thought they might have a clue on what to charge.

stumpjumper
03-13-2006, 05:45 PM
my minifastrak has less than 30hrs. on it. no problems with the mower,but its to early to comment on quality. the cut looks great, much cleaner looking than my deere. could'nt believe the speed you can cut after using a tractor type for years. tore a few ruts at first, had to back off a little on turns.

Landscape25
03-13-2006, 08:56 PM
How do you figure depreciation on equipment? I bought a hedge trimmer last year and a shredder/vac this year and would like to know how it fits into future overheads. Neither will be used all the time. Would it be safe to add a fifth of the cost of each into each future years overhead until they need to be replaced or something else bought instead? That seems like it would make sense.

stumpjumper
03-13-2006, 10:04 PM
landscape you'd have to talk to someone other than me on hedge trimmers and shredders, never owned either one. don't think one method would work for everyone on other equipment. my neighbor has been through 5 or 6mowers since i bought my 85 model j.d. most everything on its been replaced over the years but still does the job. maybe someone experienced with lawn equipment can help you.

wheebil
03-13-2006, 10:12 PM
i"m a new guy to this business, gonna retire next year at 55 and plan to start lawncare for other people this year. already have 2 trailors ,a pickup,a hustler 1742,2 cheap trimmers and a blower. i"v been visiting this site for about 6 weeks trying to fiquire out how to price. i don'have any overhead, but i want my prices to be in line with other operators in this area i.e. central oklahoma. any help from some in this area.
Stumpjumper, I wont unload my equipment on a 1/4 acre residential lot (suburbs of Pittsburgh) for less than $30 dollars. That includes trim and blow. Bag it? add $5.00, bag and haul it? add $5.00 more. 1/2 acre, $40.00 - $45.00. Full acre at least $60.00. Hope this gives you some idea of where to start.

Rcgm
03-13-2006, 10:15 PM
WOW this post reminds me of a post that I saw on here way back in the beginning days about a guy that was doing FREE grass cuts for people that have lost people in the war or on 9 11 .Anyone remeber that post and everyone starting giving this guy a hard time for helping people out.

Landscape25
03-13-2006, 10:23 PM
That is about the extent of my gas powered equipment. I am a little equipment challenged, I have come to realize. I mostly hand prune. I don't offer lawn maintenance, I couldn't even afford a mower if I wanted to offer lawn maintenance so it works out well :rolleyes:. Next an edger for beds, maybe the Echo PAS 260, did some searching on it and think that is the one I spoke with the dealer about, apparently it gets hot though. All these things will need to be replaced some day and the hand edging with pruners can not go on. I tell you what though, one of my current maintenance customers gave me their hedge trimming that the lawn guys were doing, not as well as they should have been, I couldn't have offered it if I hadn't bought a hedge trimmer. This is my idea of expanding :) .

CAG
03-13-2006, 10:37 PM
retire and start a landscape buz ..your going to be working harder than you ever have before.. nice retirement plan..lol...j/k..best of luck!!!

stumpjumper
03-13-2006, 10:50 PM
cag

i spent my first 18 yrs. on a dairy farm,NO DAYS OFF, ever. does the idea of someone going for something more p.o. you?

ed2hess
03-13-2006, 11:01 PM
cag

i spent my first 18 yrs. on a dairy farm,NO DAYS OFF, ever. does the idea of someone going for something more p.o. you?
I also spent my first 18 years on a farm working hard and I retired in 2000 and started working full time in our lawn business. Mowing grass don't seem like a big deal compared to putting up hay. To stay in shape I have had to use WB and do a lot of trimming.

CAG
03-13-2006, 11:54 PM
lol> laughing out loud---- j/k>just kidding