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YardPro
09-02-2006, 05:16 PM
i see a lot of people saying things on this site that leads be to beileve that they don't know thier cost of thier work.

If you are not one of them then this post is not for you.

First let me start by saying that lawncare/landscaping is exactly like any other business. You sell a product for a profit...Your product is a service.
In order for you to determine your price you need to knoe how much the service cost you to perform (what a store pays to stock an item). You then add your desired %profit and there you go... simple

Where we have a challenge is determining what our product cost US....here is a simple way to figure it out.

First you must add all your fixed expenses (truck payment, insurance, rent, utilities,owners salary, office employee's etc...).
This is your general overhead

Next you need to find out how many non billable hours you have per year. If you have been in business for a few years use an average for the past few years. if you are new guess, but look at it each week/month to see if you are close, and adjust as necessary. Multiply this times your average hourly wage.

these two numbers are necessary.

last thing is to add those two numbers together and divide them by the number of hours you BILL PER YEAR....

this is your per hour overhead.... bet t will be higher than you think....

Add this to your average wage figure and that is what you have to charge to break even....

then work profit from there....

Az Gardener
09-02-2006, 06:09 PM
Its a good start, and I don't claim to be an accountant, but you also have to figure in some equipment replacement costs and a whole slew of other things too. More than I have time to explain thats for sure.

Firefly Lighting
09-02-2006, 07:21 PM
My suggestion would be to bring in a green industry consultant, I did and it has made the last few years a lot greener.

YardPro
09-03-2006, 12:14 PM
Its a good start, and I don't claim to be an accountant, but you also have to figure in some equipment replacement costs and a whole slew of other things too. More than I have time to explain thats for sure.


i guess i should have elaborated more on the costs.. i was including that in my cost figure... After reading what i posted, i guess i should have added to the costs side for clarity sake...but as you said there is a lot of stuf to specify, and as with you i did not have the time to go into every detail.

i just wanted go get the basics out there for any here that think they are really making money charging $25-$30.00 PMH.

dylan
09-04-2006, 01:44 PM
Thank you for posting this topic. It should be required reading.

Way too many people base their prices on what "the last guy charged"
Chances are .... he no longer does it because he went out of business.

Hire an account or bookkeeper. It will change your life.

AAELI
09-04-2006, 04:17 PM
Thank you for posting this topic. It should be required reading.

Way too many people base their prices on what "the last guy charged"
Chances are .... he no longer does it because he went out of business.

Hire an account or bookkeeper. It will change your life.

Married one! It did change my life, business, home, sleep patterns, etc.:laugh: :laugh: :laugh:

Got the business going "by the numbers" and on the way to profitability.


Good post Yard Pro. It may change the way some of the new guys do business and help them become profitable. Or it may get some into another line of work.

rodfather
09-04-2006, 05:22 PM
I look are our numbers constantly...IMO ya have to.

YardPro
09-17-2006, 06:05 PM
rod,
you're absolutely right.
we do monthly P&L's and all our department heads (3) meet and go over the numbers. It is not an atmosphere of blame, just being focused on building the business. We look at what when right, and what went wrong...

With construction we do a per job p&L on any significant job.

rodfather
09-17-2006, 06:12 PM
we do monthly P&L's and all our department heads (3) meet and go over the numbers. It is not an atmosphere of blame, just being focused on building the business. We look at what when right, and what went wrong...

Smart business philosophy Steven...group involvement and brainstorming, pointing fingers does nothing IMO.

YardPro
09-17-2006, 06:22 PM
i agree 100%
finger pointing only makes people less forthcoming when they have bad news. It will also make them try and fudge numbers, etc....
good news can wait, but the bad news needs to get dealt with asap.

glad we're on a 1st name basis now. :)

Josh.S
09-18-2006, 07:57 PM
Next you need to find out how many non billable hours you have per year. If you have been in business for a few years use an average for the past few years. if you are new guess, but look at it each week/month to see if you are close, and adjust as necessary. Multiply this times your average hourly wage.


My average hourly wage? You guys pay yourself?? .. lol you must make alot more money than I do.. I just want to see some money in my bank account...

YardPro
09-19-2006, 11:31 AM
hopefully you are joking,
if you cannot pay yourself then you are not making money. you should ALWAYS pay yourself.

net profit for a business is always calculated AFTER all bills are paid, including YOUR SALARY.

i totally understand paying yourself less and reinvesting your money in the business, buy you should still pay yourself a set salary.
if you cannot afford to pay yourself then you will never be able to afford to expand the business and pay for more equipment.
the whole idea of building a business is to let the business pay for all it's acquisitions. You should not be buying the mower's etc.. the business should.

remember, if you cannot pay yourslf then your pricing structure is out of line. If you cannot pay yourself now, you will have even less money if you have to buy a truck, mower, etc...