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daveyo
02-22-2009, 08:56 AM
On average what percentage profit do you expect to see per application. I've been getting into larger accounts, upwards of 80,000sq' plus lots, in NJ where everything is a stamp 5-15k this is significant. I was wondering on these bigger lots after obviously all expenses and overhead are calculated is there a % number I'm looking for. I know what I need to make but to be competitive I was wondering if there is a % profit to shoot for. I do have a number I took from landscaping jobs I bid but this seems low for larger lots, appreciate any input.

turf&tree
02-22-2009, 10:05 AM
I would think it would depend on what you need to make. We rely on our accountant for info like that. Bidding on larger projects is also trickey. We go up against Trugreen on both residential and commercial pricing. I have yet to see any rhyme or reason for their pricing. Way cheap on the commercial side, in fact I think they do them at cost. They also supply salt to the customer. We have gotten wise to there salt pricing and started buying it by the truckload, we can kick their butts on that. example we charge $ 3-6.00 per thousand on res and $2.25-3.50 on comm Never looked at a % but I know my boss is very happy. I would say a minimum of 25% profit after expenses. Do you know your expenses????

daveyo
02-22-2009, 10:16 AM
I would think it would depend on what you need to make. We rely on our accountant for info like that. Bidding on larger projects is also trickey. We go up against Trugreen on both residential and commercial pricing. I have yet to see any rhyme or reason for their pricing. Way cheap on the commercial side, in fact I think they do them at cost. They also supply salt to the customer. We have gotten wise to there salt pricing and started buying it by the truckload, we can kick their butts on that. example we charge $ 3-6.00 per thousand on res and $2.25-3.50 on comm Never looked at a % but I know my boss is very happy. I would say a minimum of 25% profit after expenses. Do you know your expenses????

Yes I know my expenses down to the penny, I mean I factor in everything plus the kitchen sink. I just made up a great excell worksheet that really gives me a superb view of everything on the fly. In other words I'm plugging in numbers and excell is spitting them right back in my face. Thats the thing, these larger lots I seem to be coming up with smaller profit margins, I can see this makes sense but again it doesn't. Why work these larger lots if its bringing me less profit? or shouldn't it be. That's why I was thinking of coming up with a percentage that makes sense. I also realize larger lots less traveling time, etc...I can charge less per/1000 on my profit end but do I want to do that?

Lawnmasters
02-22-2009, 10:53 AM
Your percentage profit on the larger jobs is usually less if you are giving a discount for the volume. I will charge a minimum of 50.00 for a stop, doesn't matter if it's 2K, but on the larger properties I charge less per K since I don't have to drive to four places to equal the same sq. ft. that I can do in that one stop. Also, it will depend on if you have any competition that will do it for less. Lots, and lots of variables. I basically look at what I have left after I account for everything, and can I live with it. Each area will be different, I am in a rural area with little to no competition, but still customers in my area have a cow when I quote 6.00 per K on a two acre place, they just won't spend the money. But on a 2K sq. ft. place lots of times we get 25. to 30. per K.
Good luck with your figures, hope you do well.

rcreech
02-22-2009, 11:28 AM
Yes I know my expenses down to the penny, I mean I factor in everything plus the kitchen sink. I just made up a great excell worksheet that really gives me a superb view of everything on the fly. In other words I'm plugging in numbers and excell is spitting them right back in my face. Thats the thing, these larger lots I seem to be coming up with smaller profit margins, I can see this makes sense but again it doesn't. Why work these larger lots if its bringing me less profit? or shouldn't it be. That's why I was thinking of coming up with a percentage that makes sense. I also realize larger lots less traveling time, etc...I can charge less per/1000 on my profit end but do I want to do that?

Would you be interested in sharing the spreadsheet?

I would like to see how you figure everything!

I KNOW my costs...but have never had a good way to figure in everything such as insurance, vehicles etc as they are not 100% lawn costs.

If you would be intersted in sharing I can PM you my e-mail address.

Thanks,
RC

Ric
02-22-2009, 11:43 AM
OK Here are my Numbers for Standard size Homeowners property.

First I have a minimum and no trip charge. My Minimum is 5K but I do a lot of 3 K postage stamps. Given a 5K fine yard my chemical cost is about 25% and over head is an other 8%. As a one man band I walk with 2/3 margin.

Structural or straight insect spray in the yard is 2% or less chemical cost with the same 8% overhead and I walk with 90% margin.


Other kinds of work.

I do both some agriculture work and Aquatic work. My Margin average is only 25% because of the volume. Overhead goes down to 1% but Labor costs are a factor because I need help on these jobs. In fact one job I only make 10% margin on. However my profit per hour is about equal to my Residential accounts.

I might add that these percentages are from 2007 and not 2008. So far my fert costs have come back down this year. In 2008 I kept my quality or chemicals up and ate the margin. I feel my Margin is high enough I can afford to eat added expense without raising prices. With the Economy down, No way I will raise prices.


EXCEL SPREAD SHEET is an excellent way to keep Chemical cost. You can set up numbers programs so you only have to enter the current price per jug or bag and Excel tells you your cost per thousand.

RigglePLC
02-22-2009, 11:51 AM
Back when I worked for TruGreen we often did big commercial jobs for way below list price. And they were often undermeasured major, also. Each day we had to fill out a "Production Report" to show if we used too little or too much fert, for the day's square feet. The boss showed me how to fudge the numbers. Sometimes we used enough fert and weed killer for 100,000 sqft--when the real size was more like--way more.

You are doing it right, Daveyo. They should get a slight discount for time saved in driving and billing costs. Materials cost, plus overhead charge, plus $75 per hour for your time--would that work?

daveyo
02-22-2009, 02:10 PM
Yes thanks a million guys, very professional answers. I have no problem sharing the way to set up, even though it took me 7 hours and counting to set everything up :rolleyes:

How about this first, I know my expenses down to the penny, but is there anything I may have forgotten (cost wise). the top part is for my calculations but it gives you an idea of setup:
Cost Sq ft. coverage Cost App. Rate (lbs) Sq. feet Bag Size (lbs)
14.6 19,000 1.62 5.5 1000 50

lot size
Application Fee
Pickup/Delivery
Gas
Shrinkage
Lbs of Fert Needed
# of Bags Needed
Insurance
Cost for Fert
Shrinkage
Other Costs
Markup
Machine Cost
Weight Depreciation
Machine Depreciation
Grand Total
Profit

This is straight from my excell worksheet, I think this is my third app obviously I'm missing some pertinent info but this is my cost list.

daveyo
02-22-2009, 02:20 PM
OK Here are my Numbers for Standard size Homeowners property.

First I have a minimum and no trip charge. My Minimum is 5K but I do a lot of 3 K postage stamps. Given a 5K fine yard my chemical cost is about 25% and over head is an other 8%. As a one man band I walk with 2/3 margin.

Structural or straight insect spray in the yard is 2% or less chemical cost with the same 8% overhead and I walk with 90% margin.


Other kinds of work.

I do both some agriculture work and Aquatic work. My Margin average is only 25% because of the volume. Overhead goes down to 1% but Labor costs are a factor because I need help on these jobs. In fact one job I only make 10% margin on. However my profit per hour is about equal to my Residential accounts.

I might add that these percentages are from 2007 and not 2008. So far my fert costs have come back down this year. In 2008 I kept my quality or chemicals up and ate the margin. I feel my Margin is high enough I can afford to eat added expense without raising prices. With the Economy down, No way I will raise prices.


EXCEL SPREAD SHEET is an excellent way to keep Chemical cost. You can set up numbers programs so you only have to enter the current price per jug or bag and Excel tells you your cost per thousand.

Ric those are some good numbers I was in that same ballpark with the 2/3 margin. Honestly my larger properties were looking dismal but I am going to play with the numbers and minus out some percentages of expenses I wouldn't incur on the larger lots. Oh and by the way I'm not raising my prices this year but I am not lowering them by any means.

turf&tree
02-22-2009, 04:08 PM
Sounds like your on the right track Daveyo. Consider what everyone is saying about larger properties. No drivetime to a bunch of small jobs, one job to fill out paperwork on, most of the time wide open spaces instead of broken up little postage stamps, hopefully less handwork. Your price will probably be lower and therefor the profit margin a little lower, but you should still be able to make good money. It seems to me a variable would also be equipment type and size. I have been in the industry since 1973 and remember what equipment I used back than. WOW what a difference today. I used a piece of equipment back in the 80's called a Meter Miser for liquid weed apps. I think it would do 460 sq ft per fill. We also did mostly bentgrass lawns cut with reel mowers back then and people didn't mind paying big $$$$$ for quality turf care. Bigger Badder Better machinery = production. But you probably already know this.
Jim

daveyo
02-22-2009, 04:32 PM
Sounds like your on the right track Daveyo. Consider what everyone is saying about larger properties. No drivetime to a bunch of small jobs, one job to fill out paperwork on, most of the time wide open spaces instead of broken up little postage stamps, hopefully less handwork. Your price will probably be lower and therefor the profit margin a little lower, but you should still be able to make good money. It seems to me a variable would also be equipment type and size. I have been in the industry since 1973 and remember what equipment I used back than. WOW what a difference today. I used a piece of equipment back in the 80's called a Meter Miser for liquid weed apps. I think it would do 460 sq ft per fill. We also did mostly bentgrass lawns cut with reel mowers back then and people didn't mind paying big $$$$$ for quality turf care. Bigger Badder Better machinery = production. But you probably already know this.
Jim

A meter miser and reel mower God bless you guys working your tails off with that set up. But thanks for the input greatly appreciated.

mngrassguy
02-22-2009, 06:15 PM
I use quickbooks to track income/expenses. I started a thread to explain how. I can elaborate there if anyone has questions.

http://www.lawnsite.com/showthread.php?p=2791618#post2791618

ted putnam
02-22-2009, 06:36 PM
OK Here are my Numbers for Standard size Homeowners property.

First I have a minimum and no trip charge. My Minimum is 5K but I do a lot of 3 K postage stamps. Given a 5K fine yard my chemical cost is about 25% and over head is an other 8%. As a one man band I walk with 2/3 margin.

Structural or straight insect spray in the yard is 2% or less chemical cost with the same 8% overhead and I walk with 90% margin.


Other kinds of work.

I do both some agriculture work and Aquatic work. My Margin average is only 25% because of the volume. Overhead goes down to 1% but Labor costs are a factor because I need help on these jobs. In fact one job I only make 10% margin on. However my profit per hour is about equal to my Residential accounts.

I might add that these percentages are from 2007 and not 2008. So far my fert costs have come back down this year. In 2008 I kept my quality or chemicals up and ate the margin. I feel my Margin is high enough I can afford to eat added expense without raising prices. With the Economy down, No way I will raise prices.


EXCEL SPREAD SHEET is an excellent way to keep Chemical cost. You can set up numbers programs so you only have to enter the current price per jug or bag and Excel tells you your cost per thousand.

I work it the same way you do Ric except I have a 3k minimum. I try to keep chemical cost in the 22-25% range. at times it goes below or above that figure but that's what I strive for. I don't use a spreadsheet but I believe it would be an excellent thing for me to start doing. 2/3 is about what I have before I pay my labor and that varies but is very manageable.

Turfdoctor1
02-22-2009, 08:07 PM
Yes thanks a million guys, very professional answers. I have no problem sharing the way to set up, even though it took me 7 hours and counting to set everything up :rolleyes:

How about this first, I know my expenses down to the penny, but is there anything I may have forgotten (cost wise). the top part is for my calculations but it gives you an idea of setup:
Cost Sq ft. coverage Cost App. Rate (lbs) Sq. feet Bag Size (lbs)
14.6 19,000 1.62 5.5 1000 50

lot size
Application Fee
Pickup/Delivery
Gas
Shrinkage
Lbs of Fert Needed
# of Bags Needed
Insurance
Cost for Fert
Shrinkage
Other Costs
Markup
Machine Cost
Weight Depreciation
Machine Depreciation
Grand Total
Profit

This is straight from my excell worksheet, I think this is my third app obviously I'm missing some pertinent info but this is my cost list.

This is a nice thread. There was a similar one back a couple of months ago that addressed the "price per K" vs "price per stop" issue for non-product costs.

That thread convinced me that I need to look at my product costs on a per square foot basis, but my non-product costs on a per customer basis. This is the only way that I can compete for the bigger properties. If I calculate all of my costs on a square footage basis, it comes out very high for the big properties.

The problem with calculating your non-product costs on a per customer basis is that my customer numbers are always fluctuating (hopefully continually rising).

mngrassguy
02-22-2009, 11:07 PM
I don't see the biggest expense, labor.

Windshield time?

Overhead-phone, rent, taxes, electric, ect

If your doing 100% apps then all overhead goes to apps. What if 80% of your business is apps? Does anyone have a good way of figuring that?

daveyo
02-23-2009, 07:49 AM
I don't see the biggest expense, labor.

Windshield time?

Overhead-phone, rent, taxes, electric, ect

If your doing 100% apps then all overhead goes to apps. What if 80% of your business is apps? Does anyone have a good way of figuring that?

I think that would depend on how many customers you have, the more customers or even sq' you have the less overhead becomes. You can distribute your costs over a wider range which decreases your overhead per customer equaling greater profit per app. Of course the overhead, drive time etc.. is there but shows up as a lesser percentage.

If 80% is apps then I figure it the same way, and whatever it costs me to run the other 20% gets tagged to it. If I do installs on the 20% of my business then whatever overhead, materials and costs have to go to that part of the business.

Ric
02-23-2009, 08:25 AM
Let me add

1st My overhead numbers are based on the fact my equipment has been written off a long time ago but I only work part time. Therefore over head is spread over fewer accounts which brings it higher. But I no longer depreciate equipment. I only account for heavier maintenance cost due to the age of equipment which brings my overhead cost lower.

Yes I have had a few customers ask for a better price for the same service. No way I am lowering my price. Interesting enough to my joy, I had two customers in the same neighborhood go with the cheaper guy. They are both next door to existing accounts. I serviced these accounts last week. Both yard already are showing a big noticable differences now that I am not caring for them.

daveyo
02-23-2009, 06:37 PM
Let me add

1st My overhead numbers are based on the fact my equipment has been written off a long time ago but I only work part time. Therefore over head is spread over fewer accounts which brings it higher. But I no longer depreciate equipment. I only account for heavier maintenance cost due to the age of equipment which brings my overhead cost lower.

Yes I have had a few customers ask for a better price for the same service. No way I am lowering my price. Interesting enough to my joy, I had two customers in the same neighborhood go with the cheaper guy. They are both next door to existing accounts. I serviced these accounts last week. Both yard already are showing a big noticable differences now that I am not caring for them.

Good point Ric, that is certainly another way to calculate your sheets. Also good for you on sticking to your price, my step father taught me something over twenty years ago that has stuck with me. Never sacrifice quality for price, it'll only bite you harder later. That holds true for everything from tv's, stereo equipment and service I provide. I'm sorry I will not lower my price for the same applications, you can go on a 4 step but don't expect the same as our better programs. It's very important to remember our name is on every job!!

rcreech
02-23-2009, 06:40 PM
Daveyo,

Thanks for e-mailing.

Have not really got a good chance to look at it yet...but will hopefully get to this evening!

Thanks,
RC

daveyo
02-23-2009, 07:15 PM
No problem any questions feel free to email me, I think I left one or two calculations.