View Full Version : price of doing business
01-06-2000, 11:49 AM
i'd like to do a survey of everyone and see what is your going per hour rate for labor and equipment and what area you are in. Does everyone charge the same no matter what eqip. is used or does each piece of equip. have it's own rate? including or not including an operator? Thanks to all<p>----------<br>Stephen<br>
01-06-2000, 01:03 PM
steven--my response to your question will probably be much different than what the larger operators with lots of crews will give you. I am a small operation and can't afford to work by the hour. If I did, I'd have to ask $30 to $75 a man hour because that is what I can easily make pricing by the job, not by the hour. that includes mowing and other rough work. I'd rather just do lawn care but it has it's ups and downs and is week by week for me. I get lots of offers for weedeating banks, cutting brush, cleaning gutters, etc., and I never turn down a job. however, I price it by the job. I price jobs as high as I think the market will bear. too high? you wont get the job. too low? you beat yourself up over being dumb enough to lowball. if the job requires anything extra like hauling to the dump and paying a fee, my price doesn't include the dump fee.<p>lately, I've had a lot of luck asking the customer what they want to pay for the job and were they happy with the price they paid for the same job before. often they'll say they paid the same or more than I was gonna ask.. at that point you just price the job the same and explain that you don't want them to pay more than they are used to paying.<p>this philosophy has worked for me and there is still room for you to take a lowball job when you don't have anything on the schedule. people that need work done appreciate you for being reasonable, timely and dependable. they'll give your name out all over the place if they feel good about you! good luck<p>Geo
01-07-2000, 07:28 AM
I think the bottom line of everybody's pricing is "by the hour." Whether you price by the job, by the hour, by the square foot, or whatever method you price by, it all leads back to how much money you made per man hour worked. This amount has to be enough to cover all expenses and leave a profit margin. How much you charge per hour is determined by the competition level in your area and how much they charge and it also has to do with how efficient your company is. You need to match your equipment with the job. If you can mow 45000 sq.ft/hr and I can mow 135,000 sq. ft/hr, I will be more efficient and make more money per hour. example: We both bid on a job that has no trees and is 135,000 sq. feet. I bid $35 and make $35/hr. You bid $35 and make $11.67/hr. This amount won't even come close to my expenses per hour and I don't think it will cover anybody's expenses. I charge differently for each piece of equipment because each piece of equipment has different production rates. The trick is matching up the right equipment for the job so you can give a competitive bid and also make money. In my area, northern Minnesota the most the market will allow is about $35-$40 per hour for a 60" Lazer. This is the most efficient piece of equipment that I own. Next I will provide an example of how I figure expenses for this machine and how I guarantee that I make a profit. First, I figure the machine has 2000 hours in it and I determine that it has no salvage value. I believe this to be conservative but it is my personal preference. The machine costs $8000 to replace so I have an equipment cost of $4/hr. It sucks down 1 gallon of gas/hr at $1. Labor = $10/hr. Payroll taxes = $3/hr. I continue this way through all of the expenses and divide each amount into 2000 machine hours. For this machinemy expenses are roughly $25. Any thing over this amount and I know that I will make a profit. I do this for each machine. After you know the expense of each machine you need to find its production rate per hour so you can give a competitive bid. This might seem tedious but once you know this stuff, giving a bid is easy and it eliminates all of the guesswork involved. I hope this helps. Sorry for rambling so long. <p>Bryan..Heartland Lawn Care<br>email@example.com<p>----------<br>Bryan..Heartland Lawn Care<br>firstname.lastname@example.org
01-07-2000, 12:49 PM
You know this is the most painful part of the commercial lawn service business. That we may never be paid what we are worth. What Doctors base their pay on is there previous education to be able to diagnose you. There office expenses. There insurance. When I look at a job. In a perfect lawn service world. We would base our price not on that one job. But what time and money it takes to be an efficient, dependable, day after day, week after week, year after year, lawn service company. I don't think anyone in this business(owner operators) just jumps on their mower every day and cuts grass and then quits. There are so many other things you have to do every week and sometimes every day to keep things operating. So many other expenses. Most anybody can do a half**s job cutting grass. But not everyone can do a great job consistently. What doctors spend on there education we over the years we will spend on equipment and other expenses. I price lawns by the Job and then just do them as fast as I can. To get my internal hourly rate. Its the low ballers around here that keep us from reaching our potential. Some companies even name their businesses "price breakers" Go figure. We are controlled by the market somewhat. But I wont lower my prices much at all to get a job. I just rather park it. Than work for monkey change. Our luck is that there are many people out there that has an idea what it takes to run a business.<br>Charles<br>
There are a couple of well known industry experts that have written volumes on this subject. Jim Huston, Charles VanderKooi and Kevin Kehoe. Whether you are new to the industry or have been around for a while it would be worth the investment to read their books or attend one of their seminars.
Charles, You mentioned "price breakers". I went into your profile and saw you are in SC. I am in the upstate and there is a "price breakers" here. Could this be the same guy? I don't know him but I do know he works dirt cheap and I have always wondered how he survives. As for me, probably 50% of the people tell me my price is too high. When only 49% say I am too high I will probably go up!
01-16-2000, 01:43 PM
HI Tim, I am in the upstate too. Could be the same guy. He has signs everywhere. Up in trees,and on poles. Must be a 1000 of them scattered all over the city and county. I wish i had that much energy. Haha.<br>Charles
Charles, Absolutely the same guy. By the way what is your primary business? Mine is aeration/turf management?
01-17-2000, 01:28 PM
Tim, I do a little bit of everything. Grass cutting is the main thing I do. Light landscaping etc.<br>Charles
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