PDA

View Full Version : profit margin for fert/squirt


BLC1
05-20-2008, 10:00 PM
Whats a good net profit margin for someone just doing fert/squirt?

mngrassguy
05-21-2008, 02:53 AM
I like to see 25%

turf hokie
05-21-2008, 06:32 AM
I like to see 25%

I would too.

Ric
05-21-2008, 11:25 AM
Whats a good net profit margin for someone just doing fert/squirt?

BLC

Every market is different. Prices, overhead and volume will vary in each area. Inside pest control can run 95 to 97% gross and 85% net profit. Lawn & Ornamental can be a negative margin. I currently run about a 60% net margin in a very good market of postage stamp properties. My minimum puts me at $ 20.00 a thousand average price. I spare no expense to keep these properties a Healthy green. I also do some pasture management that is 10% margin. But I would like to think after all the years in this business I am a little sharper than the newbie. I know my market and I know my stuff.

Run your numbers and get your approximate cost as close as you can. Then look at the current Prices in your area and your market. Then make the business decision of what part of your market you will fit into best. I went after the big upscale houses like everyone else. But we have enough volume in my market to keep everyone happy. BTW I am in the bug capital of America and sandy soil that requires a lot more treatment than other parts of the country.

BLC1
05-21-2008, 11:23 PM
Do you think 20-25% net is high?

Ric, does that mean terminex is making loads of money?

Ric
05-22-2008, 11:09 AM
Do you think 20-25% net is high?

Ric, does that mean terminex is making loads of money?

BLC

IMHO Terminex being a structual pest control and termite has the ablity to make tons of money. A $ 100.00 of chemicals is more than is needed for a $ 2,500 termite job. Most non Lawn & Ornamental pest control has a huge profit margin. I know Terminex techs bring home $ 2,000 a week. BUT like all big corporations Terminex doesn't run real effective. National TV advertisement and office overhead is killing their profit.

50% profit margin is more like what I expect a L&O operation to net. I am slightly higher because I don't advertise and only take word of mouth customers at a slightly high price. My equipment is paid for and I keep my over head down as a one man band. But I am only going on my market. Florida has a somewhat closed entry and it isn't easy to get certified or licensed here. We are also the bug capital of America. Fire Ant control only, can be a stand alone business here.

BTW I had the big show with a nursery and 20 employees that Hurricane Charlie blew away. As a one man band doing only fert & squirt I have more money in my pocket to spend on Ric than I ever had as a Big Show. My numbers are way down as a one man band but my pocket actually has money in it.

DoetschOutdoor
05-22-2008, 12:25 PM
Terminex techs are paid $2000 a week or bring in that a week? That would seem awfully high but then again you clearly know your schit.

Was your nursery just wiped out by the storm? You decided not to rebuild and go on your own?

Ric
05-22-2008, 05:08 PM
Terminex techs are paid $2000 a week or bring in that a week? That would seem awfully high but then again you clearly know your schit.

Was your nursery just wiped out by the storm? You decided not to rebuild and go on your own?

DoetschOutdoor

Not all Terminex techs make that kind of money. But the girl I am referring to has been with them for many years and does a lot of restaurant work at night after hours when they are closed. I personally would not touch a restaurant pest control job for all the Tea in China.

Nursery stock takes years to build up. I am 67 years old and my children have no interest in the green industry. Does that answer your question? I now do Fert & Squirt part time to help my retirement income. It helps to keep me young. In many ways looking back, I wish I had just done Fert &Squirt all along. It is the one area of the green industry I really enjoy. Fact is I am always looking for nitch markets for chemical treatment and I am researching one right now that I might post about later when I have it all together. I just learned of a different application method that will blow your mind like it did mine.

Turfdoctor1
05-22-2008, 06:24 PM
maybe I am misinterpreting the question, but I don't see how you can survive on a 25% profit margin, as a single operator.

For example, let's say you manage 250 accounts, which you hit 6 times a year. That is a grand total of 1500 applications for the year. Let's say that your average price per application is $60, which is close to mine, that is gross income of $90,000. If you are making 25% profit, you are taking home $22,500.

Just to make 40K profit, with a 25% profit margin, you have to gross 160K. With those numbers, even if you average $75 per application you need 2100 applications for the year which is close to 400 customers. That is working way too hard for not nearly enough reason, if you ask me.

I try to keep my product costs ~25% with overhead, etc., another 25% = profit margin ~ 50%. This is much less for large lawns, and much higher for small ones.

tlg
05-22-2008, 08:03 PM
Profit margin is kinda tricky. I could show you accounts where the margin is as high as 80% and some at around 20 to 25%. Let's face it a small property at our minimum charge can really make some money while large properties may not make you has much. It's all time and materials. I can tell you that a whole lot of 5k lawns can make you some big money. Lawns under 5k really make money. The bottom line is do a cost analysis of what you need to make and set your prices accordingly. Big jobs are fine, but a tech that can service say 30 accounts at a minimum charge makes you more money than one large account with the same square footage.

mngrassguy
05-23-2008, 03:25 AM
Net profit is what's remaining after paying expenses including labor and my HUGE salary. lol

I figure labor runs me 50%, 25% for product costs and overhead.

Ric
05-23-2008, 11:13 AM
Net profit is what's remaining after paying expenses including labor and my HUGE salary. lol

I figure labor runs me 50%, 25% for product costs and overhead.

MN

I believe we are talking actual margin, not taxable income. As small businessmen we have a lot of ways to legally reduce taxes. Fact is with out loop holes we couldn't be self employed.

americanlawn
05-23-2008, 07:26 PM
25% product expense, 35% salary expense, 30% overhead, 8% wife spending money, profit BEFORE taxes = 2%.:laugh:

Ric
05-24-2008, 10:43 AM
Net profit is what's remaining after paying expenses including labor and my HUGE salary. lol

I figure labor runs me 50%, 25% for product costs and overhead.

MN

If the 50% labor cost is paid to employees and not yourself it is time to put in an application to a Burger King management program. Burger College will teach you how to flip burgers professionally and with a much better margin.

Mscotrid
05-24-2008, 10:54 AM
If your just doing fert and squirt on 250 customers depending on property size you are probably selling plasma to pay your bills. Nobody ever said this business was easy and I know you didn't say this eithter but there is a minimum a guy needs to do to make ends meat. Personally one man can handle between 500-600 customer 3-4 million sq ft easily if he works smart. I think we all know guys that are hard workers but make questionable decision, than wonder why the not making money. With all the new application equipment out there, Perma green, Lesco HPS, Z-Spray just to name a few you can do some serious sq ft damage in a day. Route yourself tight avoid wasting time and get busy your profit will be there at the end of the day.

Ric
05-24-2008, 01:12 PM
If your just doing fert and squirt on 250 customers depending on property size you are probably selling plasma to pay your bills. Nobody ever said this business was easy and I know you didn't say this eithter but there is a minimum a guy needs to do to make ends meat. Personally one man can handle between 500-600 customer 3-4 million sq ft easily if he works smart. I think we all know guys that are hard workers but make questionable decision, than wonder why the not making money. With all the new application equipment out there, Perma green, Lesco HPS, Z-Spray just to name a few you can do some serious sq ft damage in a day. Route yourself tight avoid wasting time and get busy your profit will be there at the end of the day.

Mscotrid

I am doing OK with just a little over 100 accounts. (of course I am part time or semi-retired) I don't think the volume of a company really matters. Bigger is not Always Better. I had this discussion just yesterday with a tree guy I network with. I have been there and done the big show. I find I have a much higher margin and less stress as a small guy. Margin is more about a business plan that targets the more profitable accounts. In my case postage stamp fine yards in high end neighborhoods and networking with mowing companies. But I tried Low Ball Fire Ant Kill and fell flat on my face. While Fire Ant insecticide was only 5% of my Low Ball price, the amount of advertisement to build and keep a route was too costly. Yet there are many making it in the Fire Ant Control only end of the business and I still do some Fire Ant Control.

Back to the 100+ accounts. I am not the highest price guy in town, but I am up there. My market allows me to sell a 8 treatment on the lawn and 6 treatments on the ornamental per year. But WHAT I REALLY SELL IS RESULTS NOT TREATMENTS. Perceived value is the key to selling anything. Salesmanship is a must. You must sell your supplier and your employee etc if you are going to make it in any position in any business.

Mscotrid
05-24-2008, 10:28 PM
Ric, I'd say were cut from the same rug. I don't consider 3-4 million sq ft a big company but one a a single individual can manage himself. Like you I ran a lawn service that sent out 25 lawn trucks and 3 T&S trucks a day. With the added services it accounted for long days, not much family time and a 55 gallon drum of stress. Would I ever do it again NO, but a 1 man show knowing the work is getting completed correctly and building a loyal customer base is very satisfying.

vegomatic40
05-25-2008, 07:05 AM
With fert. and fuel prices going through the roof, this years actual net-margin could be as little as 8-12%. This includes a anticipatory across the board price increase. I tried to avoid it, but it looks like increasing total sales/production volume is the only way to stay afloat in todays business climate. The days of 25-30% net margins may be gone at least in the forseeable future. A bit of encouraging news though, I've been hearing more and more about the investors becoming nervous about speculating on fuel/crude oil/energy futures. Wall Street journal says that speculation alone has been driving up the price by as much as 60%! That bubble may burst before mid-year resulting in much lower pump prices by July (some have estimated as low as $2.25/gal.). We can only hope.

rcreech
05-25-2008, 07:31 AM
With fert. and fuel prices going through the roof, this years actual net-margin could be as little as 8-12%. This includes a anticipatory across the board price increase. I tried to avoid it, but it looks like increasing total sales/production volume is the only way to stay afloat in todays business climate. The days of 25-30% net margins may be gone at least in the forseeable future. A bit of encouraging news though, I've been hearing more and more about the investors becoming nervous about speculating on fuel/crude oil/energy futures. Wall Street journal says that speculation alone has been driving up the price by as much as 60%! That bubble may burst before mid-year resulting in much lower pump prices by July (some have estimated as low as $2.25/gal.). We can only hope.

I hope you are right! I heard on the news (of course everything they say is always true :laugh:) that gas could be as high as $6.00 by Janury 09. If that is the case I bet we will all be looking for a job! :cry:

Ric
05-25-2008, 11:41 AM
I hope you are right! I heard on the news (of course everything they say is always true :laugh:) that gas could be as high as $6.00 by Janury 09. If that is the case I bet we will all be looking for a job! :cry:

rcreech

I knew there was a logical reason I just spend $ 1,000.00 to rebuild my 50 MPG motorcycle. Now I need to find a trailer with a spray tank to pull with it.

Russ
05-25-2008, 12:00 PM
There is a Arabic joke (and there aren't many), that goes like this. "What is a good price for a barrel of oil? Answer $100.00, $100.00 $10.00, $100.00." I think the guys in the commodities market have already heard it.

LawnTamer
05-25-2008, 06:05 PM
I think Ric has the right plan. I've toyed with various sizes, occasionally growing much bigger and occasionally either cutting out, or just letting attrition take my numbers down. I was never really big, but I had 5 employees, was doing 600+ lawns, a maintenance truck and lots of odd jobs. I spent most of my time running around fixing employee messes. I still have a maintenance truck, but the more I think about it, and the more I have to deal with employee problems, the more I think I would be better off as a one man show. Just take the most lucrative accounts, people who have smaller lawns and are interested in shrub care and disease control as well as fertilization and weed control. I have some clients with 3k lawns who spend over $400/yr on fertilizer and spraying. I could easily handle 400-500 of these by my self, no mowing, no employees, no price shoppers, just people who want healthy turf and ornamentals.

LIBERTYLANDSCAPING
05-25-2008, 10:02 PM
I think Ric has the right plan. I've toyed with various sizes, occasionally growing much bigger and occasionally either cutting out, or just letting attrition take my numbers down. I was never really big, but I had 5 employees, was doing 600+ lawns, a maintenance truck and lots of odd jobs. I spent most of my time running around fixing employee messes. I still have a maintenance truck, but the more I think about it, and the more I have to deal with employee problems, the more I think I would be better off as a one man show. Just take the most lucrative accounts, people who have smaller lawns and are interested in shrub care and disease control as well as fertilization and weed control. I have some clients with 3k lawns who spend over $400/yr on fertilizer and spraying. I could easily handle 400-500 of these by my self, no mowing, no employees, no price shoppers, just people who want healthy turf and ornamentals.


Ditto! Huge profit's just aren't in reg. lawn Fert & squirt. Ornamentals, disease, & perimeter pest control is where the real margins are. Too many guys running around with a Permagreen on the back of their truck, charging enough for beer money & have no idea what their true cost's are. Customers are willing to pay more for someone who know's their way around lawn AND their landscape plants & are the ones that will be there everytime, not just some flunkie Summer help.:dizzy:

Ric
05-26-2008, 09:24 AM
Ditto! Huge profit's just aren't in reg. lawn Fert & squirt. Ornamentals, disease, & perimeter pest control is where the real margins are. Too many guys running around with a Permagreen on the back of their truck, charging enough for beer money & have no idea what their true cost's are. Customers are willing to pay more for someone who know's their way around lawn AND their landscape plants & are the ones that will be there everytime, not just some flunkie Summer help.:dizzy:

Liberty

Anything that has an advantage one way has a Dis-advantage in an other. States with no prequalification for certification testing and weak tests also have Low margin pricing. Last thing I want to see is Florida lower the already hard Certification standards. I hear people complain all the time that Florida won't let them Low Ball our pesticide market by Certifying everyone like other states.

As the Green People become more popular maybe other states will start to close the industry by requiring more qualification to get Certified.

LawnTamer
05-26-2008, 11:03 AM
Liberty

Anything that has an advantage one way has a Dis-advantage in an other. States with no prequalification for certification testing and weak tests also have Low margin pricing. Last thing I want to see is Florida lower the already hard Certification standards. I hear people complain all the time that Florida won't let them Low Ball our pesticide market by Certifying everyone like other states.

As the Green People become more popular maybe other states will start to close the industry by requiring more qualification to get Certified.

It is very easy to get licensed in Utah. If you can read, you can get licensed. There is a general test which basically covers IPM, labeling and PPE, then a T&O test which is fairly basic. Read the books, check the chapter review questions and take a test. I wish it was a little harder. The other thing somewhat hurting our industry is that the Home Depot crowd is getting access to the same chemicals as the pros. Luckily they typically can't figure out what their problem is, or how to apply it properly:laugh::laugh: But if they knew what they were doing, they could treat about anything I can.

Ric
05-26-2008, 11:21 AM
It is very easy to get licensed in Utah. If you can read, you can get licensed. There is a general test which basically covers IPM, labeling and PPE, then a T&O test which is fairly basic. Read the books, check the chapter review questions and take a test. I wish it was a little harder. The other thing somewhat hurting our industry is that the Home Depot crowd is getting access to the same chemicals as the pros. Luckily they typically can't figure out what their problem is, or how to apply it properly:laugh::laugh: But if they knew what they were doing, they could treat about anything I can.

LawnTamer


Hello, and you think all the idiots running around with L&O pesticide licenses Can?????? How many of these Idiots don't even know how to read a fertilizer label on the bag??

LawnTamer
05-26-2008, 11:38 AM
LawnTamer


Hello, and you think all the idiots running around with L&O pesticide licenses Can?????? How many of these Idiots don't even know how to read a fertilizer label on the bag??

When I first got licensed, I was one of those idiots. I worked for another LCO and I just did what they told me to do. I could read and regurgitate a few simple answers so I got licensed, but I couldn't have told you what the 3 numbers on a fertilizer bag indicated. I knew the first was N. :laugh::laugh:

When I struck out on my own, it took me several yrs to really learn the business, still learning today.

Ric
05-26-2008, 12:07 PM
When I first got licensed, I was one of those idiots. I worked for another LCO and I just did what they told me to do. I could read and regurgitate a few simple answers so I got licensed, but I couldn't have told you what the 3 numbers on a fertilizer bag indicated. I knew the first was N. :laugh::laugh:

When I struck out on my own, it took me several yrs to really learn the business, still learning today.

LawnTamer

At least you worked for pesticide company and got some training before striking out on your own. As long as States hold the bar low, we will never be recognized as a real profession. When I meet people and they ask me what I do, I say Bug Guy not Fert & Squirt Lawn Boy which is what I really am. Some how people respect Bug Guys more than a Fert & Squirt Lawn Boys here in Florida because we re the Bug Capital of America. I might be just a Fert & Squirt Lawn Boy but I would like to think I am a Darn Good Fert & Squirt Lawn Boy.

LIBERTYLANDSCAPING
05-26-2008, 04:23 PM
I agree with you Ric! I wish the tests were alot harder & covered more material. My rep. for my local fert & squirt supply called me the other day & wondered if I knew how much Speedzone to put in a Permagreen;) I asked him why he wanted to know, he said he had a customer of his that had no idea how much to put in. Worst part-The customer holds a 3b license.:hammerhead: I told him to figure it out on his own!