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PROCUT1
02-22-2011, 03:59 PM
So you did a search and youre about to post a new thread.

"Big commercial job, what do I bid"

Youre going to post the info about the job, and sit back and wait for guys to give you a price to submit. You;re looking for "the going rate"

Then PROCUT1 is going to post a "sarcastic" response to your thread saying something like.....,"Send me your last years tax return, a years worth of bank statements, an equipment list, a balance sheet, and itemized bills, then I can help you"

"What a jerk, you think" Others will post....."He just wants to give you a hard time, and doesnt want to help"
Well.....Let me tell you something.....If you get a price on here, and you submit that price......Youre on the road to failure.

I know....Youre staring at this bid package right now....You want this job....The big boys that do the condo complexes have these new trucks, fleets of mowers......Theyre rolling in it.....You want to be them....

All you need to do is get your foot in the door right? Wrong

If only you knew what they were charging, you could just go a little less, and get the job....Once they see the quality you give them.....More jobs will follow...Wrong again

Ill be ok as long as them Brickman or Valley Crest lowballers dont bid....
Wrongamundo


Nobody but nobody online can give you a price for that job.
Only you can
If youre a solo guy working out of your house mowing $30 lawns with no real business overhead. You may be profiting $25 on that lawn.
How about if you had 10,000 in overhead expenses a month.
Could you still charge $25 on that lawn?
Suppose it costs you $35 in expense to cut that lawn.
How does me telling you "The going rate is $25" going to help you.

If youre asking for prices....Youre asking the wrong questions. Youre setting yourself up to fail. You will forever rely on "I heard thats a $15,000 property" to submit a bid, not knowing if youre making or losing money.

Here are acceptable questions to start asking.

- How do I measure a property to determine the acreage?
- How do I determine how much mulch is on a property
- I have a 61" ztr. What is the production rate for that machine?
- How many feet per day should a weedwhacking man cover?
- How long does it take to install mulch per yard? What is your technique?
- How long would it take your crew to mow this property? What is the makeup of your crew and equipment?
- How long does it take to edge these beds?

Questions along those lines, are questions as a newbie, you need to ask.
YOU CANT BID WITHOUT THOSE ANSWERS

Not one of them has a price attached.

NOW.....Here is where that info that I ask for comes into play.

You need to take each one of those jobs, and put a time on them.

3 guys 8 hours per week to mow
3 guys a 40 hour week to mulch
3 guys 24 hours to trim the bushes
Dont forget drive time to and from your place

Etc

You need to add up all the manhours to complete the job.
Lets say 1000 man hours for the season to round off numbers

First.

Add up what those employees cost you.
Their salary, matching taxes, processing, workers comp.
Now you have the number what each employee COSTS you per hour.
Lets say you pay your guys $10 per hour that works out to $15 per hour with taxes etc.

So you have 1000 man hours in labor including drive time.
It costs you $15 per man hour.

Your payroll expense....COST TO YOU....Will be $15,000 for the season.

Now. Figure out your materials. The guys on lawnsite told you how to measure.

You come up with 100 yards of mulch. You know your employee expenses already.

Lets say you pay $25 per yard of mulch delivery included
Your mulch expense will COST YOU $2,500

So now your bid is up to $17,500

Now you look and see what each machine and truck burns for fuel. You know how many mowing hours it will be now. You take that hourly number, multiply it by the mowing hours......then by a "high" pump price and that will give you your fuel......

Lets say its $4000 for the season

Now youre at $21,500

Now. You need to add up all of your bills. Shop rent, electric, insurance,
maintenance items, anything that you have to pay thats not a DIRECT cost of doing the job. Add those up for the year.

Now. Figure out how many available working days you have total for the year. Figure out how many hours per day you plan to work. Take into account average number of rain days.

Lets say you can work 150 days per year. 8 hours a day
Thats 1200 regular hours or 3600 man hours for your crew

Lets say your bills add up to $30,000 for the year
Take that number, divide it by 3600

Your overhead is $8 per man hour

Now to figure that into your bid.
You figured 1000 man hours to work this place.

Your overhead will be $8,000


Now your price is at $29,500

THIS IS THE PRICE BEFORE PROFIT.

You are covering employees, overhead, and fuel.

NOW you figure in profit. Which is a number that YOU decide YOU want to make. This is what should be left over when the contract is done, free and clear just sitting in your bank account.

Lets say 20% which is high. But possible, maybe.
$5900

So after the job is done. Everyone and everything is paid. At the end of the season you should have 6 grand sitting in the bank.

YOUR BID IS $ 35,400.00 For this job.

Now......You hear that the "going rate is $29,000"

What do you do?
Ill tell you what most would do......Bid it at $27,000......Just a little cheaper to get the job.....
Do you see the problem here? It costs you 29,500......You cant possibly do the job for 27,000.


So now what? You want the job.

You have to go back to those items and see where you can adjust.

Do you really want to take all the profit off the table? Work all season for nothing in the end?

Maybe you can start with reducing the profit somewhat. You have that option as the owner.

Next.....How can you get those man hours down? Can you figure out how to cut manhours out and get the job done?

If you can, that reduces your bottom line price of $29,500

Can you lower your overhead?
Shop prices for insurance, phones, etc.....Can you save any money there?
Can you locate the material any cheaper? Save some money there?

Its the 29,500 that you have to reduce.

NOW....POST YOUR INFO ON LAWN SITE..

"Guys....My overhead is x per hour.......I calculated x man hours for this job......x amount of fuel......x materials......"
"How can I reduce my expenses?

NOW THATS A QUESTION THAT WILL HELP YOU.

Guys will tell you how to get the job done faster, save money on materials, save man hours etc.......

STILL NOONE GAVE YOU A PRICE

Now you take their advice and apply it.

Maybe between all those you figured out how to save $6,000 in expenses........

Now your bottom line is $23,500 to break even.

You wanted to bid it at $27,000

That would give you $3,500 in profit
8%

Are you happy with 8%? I would be.....Brickman works on 3-4%
Youre clearing double

If you are.......You can bid it at $27,000 and youre making money.

IF YOU CANT GET YOUR BASE EXPENSES LOWER YOU CANT DO THE JOB NO MATTER WHAT THE GOING RATE IS. PLAIN AND SIMPLE.

Any questions?

JB1
02-22-2011, 04:19 PM
yeah yeah, that's all nice but just tell me how much to bid the damm job.

PROCUT1
02-22-2011, 04:24 PM
Now Lets say you want to buy another ztr for 10,000

You should have the above numbers for all of your jobs....So now you can take each of those numbers and figure them weekly or yearly....all your jobs added up.

Should you buy the mower?

Well

Remember, money for a new machine comes from one of two places.....Profit, and/or cost savings.

Profit you can do anything you want with.....Thats why we;re in business.
Buy whatever you want.
Take a bigger paycheck
Give your guys bonuses
Whatever you want.

You want another ztr

Well You know the production times.

Will that ZRT save you manhours?

You figure that machine will save you an hour a day on the crew
Thats 3 man hours a day or 15 man hours a week.

That machine will save you $225 a week
It will burn and depreciate, and require maintenance of lets say $125 a week.

So that machine will save you $100 a week
In 100 weeks it will have covered its cost

30 mowing weeks a year

In about 3 years, you will have saved enough time mowing that the machine will have paid for itself.

So do you buy it?

Well 3 years is about the lifespan of the machine. So to use cost savings as the reason, wont fly.

Just want the machine anyway? Well if you have enough profit saved, by all means buy it. Thats your option being the owner.
Just dont justify the machine as "saving you money" its not.

Now....Those numbers can change.

With that one hour per week of savings, you can add additional work.
If you maintain the machine and keep it in great condition, you may get more than 3 years out of it.
That 3 man hours a week in savings gets added to your "available total working hours" bringing down your $8 an hour overhead"

That changes your overhead numbers on ALL your jobs.

Lets say it saves you $1 per hour overhead.

Well.....Now that machine actually saves you an additional $120 a week

So now the machine is saving you 220 a week
Or 45 mowing weeks to pay itself off.

So in a year and a half in mowing, that machine will have paid for itself.

Now you have at least another year and a half that machine, minus maintenance and repairs is pulling in pure profit.

Does that make sense?

In a year and a half that machine paid for itself.

Now...You can keep running it at pure profit.
You can trade it in on a new one.

You can do whatever you want.

PROCUT1
02-22-2011, 04:42 PM
yeah yeah, that's all nice but just tell me how much to bid the damm job.

I hear the going rate is $23,000

JB1
02-22-2011, 04:49 PM
I hear the going rate is $23,000


thanks,that's all I needed to know.


edit: oh yeah that's good what you wrote, BUT they all want the easy way.

MMADDUX
02-22-2011, 07:58 PM
Good post!!! a lot of time goes in to figuring out your real cost to operate a biz.
A very much needed post. Thanks

TYCINC
02-22-2011, 11:18 PM
This is it. . Everything this man just posted is how you have to think/operate. The dumbasses thinking that if they make $100 a day theyre balling wont even read this or will and not get anything out of it. This biz is a giant numbers game- its alll about shuffling numbers crunching figures and being professional.

BLC24
02-23-2011, 12:36 AM
This is the best post on lawnsite, period.

Every competitive business is about crunching numbers and trying to be more efficient and produce better or at least equal quality service or goods.

Going forward, I second the notation that topics about pricing jobs should shift to subjects about production times, cost cutting measures, equipment life, more efficient methods of operation, and etc.

KS_Grasscutter
02-23-2011, 01:01 AM
Lawnsite needs a facebook-style "like" button.

This should be a mandatory post to read prior to being able to post on here.

OmegaRed
02-23-2011, 02:32 PM
great post!

organiclawncanada
02-23-2011, 04:29 PM
Couldn't have said it any better PROCUT1. That's all there is to say.

CSL&L
02-23-2011, 04:54 PM
good post for new people.

ELS LLC
02-23-2011, 06:13 PM
Excellent post. Know the breakdown of the cost to do business.

Tyler7692
02-24-2011, 10:24 AM
I'll bid $19,000! I should definately get the job.

Really though, although common sense, this is the best post on lawnsite.

All_Toro_4ME
02-24-2011, 10:48 AM
Excellent post as always Procut!!

South Florida Lawns
02-24-2011, 01:03 PM
And I thought this site was all kids. 1st thing to know before any bid is to know your cost. Great post Procut!

XLS
02-24-2011, 02:19 PM
That is how its done, my hats off to you . I also agree it should be a post all new members must read to join .

Az Gardener
02-24-2011, 05:25 PM
How do you do it Procut? I would love to have the time to put out a detailed post like that but I can barely find time to answer the simplest of questions lately. Right now I'm between bites on my lap top at a deli. Thanks for your time, they should put you on the payroll.

PROCUT1
02-24-2011, 06:03 PM
How do you do it Procut? I would love to have the time to put out a detailed post like that but I can barely find time to answer the simplest of questions lately. Right now I'm between bites on my lap top at a deli. Thanks for your time, they should put you on the payroll.

Well a couple ways...lol

I write more for myself than others. Its my therapy really. The work im doing is pretty repetitive so I catch a break and go off on my rants....Thats why my writing style is not "term paper" format. I think faster than I can type...ha

A lot of times I write to just clear up things in my own head and apply those things to my business.

Az Gardener
02-24-2011, 11:42 PM
I remember those days now that you mention it but it has been a few years since I had that kind of time but I actually remember typing the same post. Not breaking down how to calculate your costs. The one about writing for me and just sharing it with others.

fiveoboy01
02-25-2011, 04:00 AM
Excellent post.... One catch, and this comes with experience, at times it's tough to know(accurately enough anyhow) how long any job will take in man hours.

Material/fuel/overhead costs are easy because the numbers are in black and white, labor numbers not so much. I screw up the manhours at times and end up either profiting less than I thought or being lucky and breaking even. But I guess that's something that gets down to a science, the more you do it.

I realize that you can use mower productivity numbers, feet of trimming, etc... but in the end it can be tough to get a precise number.

I oftentimes will use this as an explanation to someone who asks why my prices are so "high" compared to someone else.... that $ isn't going in my pocket but is covering my costs which are higher than the guy down the street who runs junk equipment and spends more time fixing it than actually working on your property...

cwby_ram
02-25-2011, 04:25 AM
Wow, great read! Thanks for putting that up there, good reminder that I'll come back and reference.

PROCUT1
02-25-2011, 10:42 AM
Excellent post.... One catch, and this comes with experience, at times it's tough to know(accurately enough anyhow) how long any job will take in man hours.

Material/fuel/overhead costs are easy because the numbers are in black and white, labor numbers not so much. I screw up the manhours at times and end up either profiting less than I thought or being lucky and breaking even. But I guess that's something that gets down to a science, the more you do it.

I realize that you can use mower productivity numbers, feet of trimming, etc... but in the end it can be tough to get a precise number.

I oftentimes will use this as an explanation to someone who asks why my prices are so "high" compared to someone else.... that $ isn't going in my pocket but is covering my costs which are higher than the guy down the street who runs junk equipment and spends more time fixing it than actually working on your property...

Absolutely. Its not an exact science.

And my point overall is thats the type of questions that the newbies should be asking on here.

Not "How much do I charge" and then have guys come back with prices that vary from 10k to 100k.

But by all means, post an aerial pic of the property and get some opinions of "how long it should take"
Im all for helping like that......Giving tips and tricks to get it done faster....
Helping someone with their numbers AFTER they think they have it figured out.

But they need to do the work themselves first.

I come across as a jerk on the pricing threads because its my pet peeve.

The same guy that doesnt want to learn how to price, and just wants a price given to him, will be on here 2 years later complaining about lowballers ruining the industry.

Ill be happy to help anyone bid a property. Post on here what you were thinking of bidding, and HOW you came up with that number.....And myself, and many of the other experienced guys would surely help.

SDelPrete
02-26-2011, 08:13 AM
great post and thread..well done

weed wacker 2
02-27-2011, 10:05 AM
Proturf for President!

starry night
02-27-2011, 10:23 AM
ProCut: I hope you realize you just lost a big consulting fee by giving away that information. I remember (name??????) consultant from Colorado who gives a whole seminar on this subject of how to bid. He gets a good fee for putting on workshops.

The one thing he added was a percentage add-on for unforeseen problems on a given project. He was talking about larger projects not $30 mowings.

(Can anybody remember this guy's name?)

PR Fect
02-27-2011, 09:58 PM
Thanks for the "rant" ProCut. All I can say is that you are right on. If anyone reading this thinks, ya,ya that would be nice to know all those numbers but who really does that. The answer is those of us who get the jobs and make money when we get them. Every time. I have never done a job and not made money. Except when the invoice was not paid. Great post!

White Gardens
02-28-2011, 08:33 PM
I think I'll be saving this thread in a good place.

Awesome read ProCut.

What was the killer in your mowing biz though?

Mike's Lawn Care
02-28-2011, 09:15 PM
That is all true. When I first started I was the low bidder on most jobs and I soon learned that I was losing a lot of money. Now I track all of my expenses and have a accountant do most of the accounting work. It does cost a lot on the accounting fees, however I would be rather running the crews and bidding the jobs...... I just don't have the time for both....

ReddensLawnCare
02-28-2011, 11:04 PM
I just saved that on my desktop...they were things i have thought of in my head..but never really wrote out. Awesome post...i agree..it should be a must read. I will refer everyone to this thread

Scag413
03-01-2011, 11:44 PM
Thanks for the post, ProCut!

adbennett
03-02-2011, 01:31 AM
As one of these "newbies", I thank you. I've spent hours on the internet and hours talking to various people in the industry trying to find good advice on how to bid jobs and all I find is programs that cost over $100, and most other info is insufficient. Thanks a million. Now, time to apply it.

mbean408
07-17-2011, 09:01 PM
wow, im happy im reading this at 19 and BEFORE i bid my first account. i would always ignore people when they told me to figure out hourly rate, profit, employee, expeneses etc. but now i get it...

nepatsfan
07-17-2011, 09:22 PM
very well said!

Kreios
07-19-2011, 04:33 AM
VERY WELL SAID!!! Now I wonder how many will do a search before they ask the question.
Posted via Mobile Device

Lagniappe
07-19-2011, 02:11 PM
Well put. That is where the rubber meets the road. Sometimes I wonder if it is a generational attitude. People freak out when there is not "an app for that", and the answer is not handed to them, and can't be googled.

GG's Lawn Care
07-19-2011, 03:05 PM
Great Post!!!

PROCUT1
07-24-2011, 08:01 PM
VERY WELL SAID!!! Now I wonder how many will do a search before they ask the question.
Posted via Mobile Device

36 replies in a year and half of them being me.......not many....

It requires less effort to just ask for a number and hand it in.
Posted via Mobile Device

Turf Logic
07-28-2011, 11:43 AM
Awesome post procut. Unfortunately It took me a long time to figure this out as well. The only thing I didnt like was the 8% profit margin. If we can't make at least a 30% profit of the gross total we do not touch it. Sometimes I wonder if we are not all better off to stay away from mowing.

PROCUT1
07-28-2011, 09:05 PM
I will add for anyone who has read some of my other threads. It took me a long time in business before I operated this way.

I used "the going rate" for years both residential and commercial.

It was many years into it that I applied this to my own business and to the customers that I already had. Thats when I realized how little I was making.

Learning how to do this was the precursor to my "How to fail" thread.

We took a couple of months and did a complete evaluation of the business from top to bottom. Including following the crews on their routes with a stop watch so we knew exactly how long each property took.

It was shocking to see accounts that I thought for sure were making us money, in reality they were costing money to do. And the opposite was true. Some of them little $25 jobs were throwing off 80% profit. While the $40,000 a year account was at 1.5% and thats only if it was done just as fast every week with no wasted time, and no breakdowns.

If I had done this from the start, i would have had a totally different operation

supercuts
07-29-2011, 06:19 PM
great post, i love all your posts/threads. i dont know why so many break your stones, your giving some of the most honest and straight advice on here. you made me rethink growing and downsized. my net is way up over last year and gross income is only slightly down. not only that, i stopped doing all the back breaking work and took a seat back on a mower. my body is much happier and I can lift my 5 year old again without my back going out.

thanks

Ditto the "Procut for pres"

Kelly's Landscaping
07-30-2011, 10:45 PM
You really have quite the cult following what you said was nothing new to me it was common sense. The guys that drool over your posts are clearly missing some of their business fundamentals if they feel every thing you say taught them some top secret formula for success you simply state what they should have already known. The area I have problems with is getting the large condos to ask for a bid in the first place after 9 years we still get very few calls like that.

A few years back I got nice opportunity it was for a condo of about 240 units we did the walk through. And listened to what the guy wanted basically he was your typical collage grad lib who thought he knew how to get info in a more easily understandable format wasn't true he had never done this and had no clue what was involved.

So we took our packet home to study it demanded edging every week (latter told us different he didn't know the difference) bagging the entire place all 5 acres of turf you get the idea. So I was to do a bid on fert as part of it and sent my partner to measure the lawn we were the only ones to do it says the people that lived there. And something interesting came out it was more then 7 acres of turf and why did I know that cause I don't care what the home owner or property owner says to me they are untruthful until proven other wise. That would of been a fun to learn I'm 10 bags of fert short every time we do and application after I miss quoted the job by over 2000 dollars a year.

But the real reason I prefer to measure all large jobs no matter if they want fertilizer or not is it grounds you in reality. It opens your eyes to the real size of the job and that is essential for bidding on anything out of your comfort zone. So on this job with fall and and spring clean ups and pruning and fert and mowing how did I do? Well I bid 47,000 dollars on the place the guy told me he wasn't going to use us which was a disappointment. He said they had 3 bids in the ball park mine and one for 48,000 and one for 49,500 they went with the highest of those 3. There was 2 guys that bid way low 20,000-30,000 they were thrown out as not having a clue what they were doing. And they had 2 high bids 70,000 -90,000 so this place was all over the board.

The reason I think I lost was not price it was they wanted a Thursday-Friday cut but insisted no weekends I could not promise that if I got bumped by rain so I wanted Tuesday. They wanted no fewer then 3 men I had no issues with that if I did Tuesday I would of hit the place with 2 two man crews. The thing I think hurt me the most was against my better instincts I didn't drive there in a dump truck but instead a smaller short bed 1500. I got the impression he assumed that that meant we didn't have the right equipment silly perhaps but this year I drive in a ram 4500 and the jaws drop.

Now I had another large one last year the people who called were trying to orchestrate a coup so they wanted the prices for a condo meeting. Well ran into a problem kind of hard to price a place when your told you can drive through but you can't walk around. This place had some very old very large shrubs and were talking days worth of trimming with a 3 man crew. So while I was able to price the lawn and the clean ups I left that trimming part blank and man did that guy flip. You had a walk through he screamed yes sir I did all of 45 mins I needed 3 more hours and you wouldn't let me have it. So best I can tell you is this is my price per hour.

Now I think the coup failed but it hurt to be willing to walk away from a account that was worth 30,000 a year but I did. Because it doesn't matter if you have the account the question is are you making any money on it and with out a way of verifying I was I could not commit to something that big.

Now Procut you seem to dislike the hourly rate formula and my thinking is cause most do not understand it so they just adopted what every one else picked. I do charge 60 and hour and never less then 50 and the reason cause my hourly expenses are nearly 40 an hour. My guy that makes 17.25 and hour add in time and half and your at 25 add in the gov F U charges and hes 30 an hour at time and half. Then there's all those little expenses you talked about rent trucks you name it and that adds up to 10 an hour. So when I saw your 1000 hour example I knew my bid wasn't going to be 27000 no it was going to be around 55,000 and if I got the job great but if not I am fine with not giving up a 1000 hours a year for 0 or worse yet a loss.

Also read your post how to fail on banks that was eye opening never have your credit line with the bank you have your checking account from that actually was great advice even if you gave it indirectly. And not over leveraging your self was also some good advice. So do you plan to have a more advanced lesson post so I too can one day tell you best post I ever read.

PROCUT1
07-30-2011, 11:35 PM
Kelly

I hope you dont take my posts the wrong way. I just like to write about the lightbulbs that went off in my head over the years. All these things that to some are common sense, many people will learn the hard way, as I did. Reading posts every day on here its so evident why the lawn business has "gone downhill"

It starts with the "what do I charge?"
They throw in a bid not having a clue where that number came from.
Then theyre on here whining about lowballers a couple years later.

That was me years ago. Before lawnsite.

Like I wrote about in my how to fail threads. This business looks sooo easy in the beginning. It seems fail-proof. You mow a lawn, pay your expenses, which are peanuts, and have way more cash left over than that 15 an hour you make at your day job. Just keep adding lawns, start another crew, keep expanding, and life will be good.
Thats what I thought.

Its so easy to make little mistakes along the way that go unnoticed. I made every single one of them.

I wanted the condo complexes like the big guys had.
I wanted the big trucks and enclosed trailers.

I ended up with all of that.

Every couple of years you had a guy that was just growing like crazy. Had a fleet of trucks, got all the condo complex work...he was bigtime.

Then a couple years later, someone else. And the first guy is still there, but doesnt seem to have as many trucks out there anymore.

A couple years later....You see a couple of used trucks with his name on them and they look like anyone else out there. Then you dont see him at all anymore.

I cant count on 2 hands the number of guys that followed that path. One year they are the king of the industry, and a few years later theyre driving an oil truck, or working for another contractor.

Of all the "big boys" I associated and competed with. Only a couple are still self employed, and theyre not nearly the size they were. Theyre back to sitting on mowers.
Ive been one stubborn bastard. If I followed gods plan...lol....I should have been out of business many times over the years. I just wont give up.

As far as bidding. It doesnt matter the system. I make fun of the "dollar a minute" because most dont have a clue where that comes from. They charge a dollar a minute because thats what they were told on lawnsite.

If you calculated your costs, and that formula shows that $60 an hour is your number, there is nothing wrong with that whatsoever. My point to others is, dont just go by what you hear.

When I was in the business, it cost me over 10,000 a month just to cover overhead.
The guy doing the same work as me, from his home garage, with 2 helpers, had a lot more flexibility in his pricing than I did.

He maybe could profit 25 off that $30 lawn.
I could have lost money cutting a lawn for $30.
Same lawn. Huge difference.

When I did the time tracking, after I realized the weak points in my business. It opened my eyes to my competitors too. When I knew what they were charging for a job, I could take 2 minutes and calculate that they were losing their butts on it.

I have friends who are property managers and now that Im not in the busines anymore and not even in the same state, they consult with me when they take bids. I help them choose the contractors.

When they send me the bids....Every single time....The bid spread is HUGE....

A property that I would have priced at $35,000 for the year will have bids from $9,000 to 125,000.

How in the hell can one property, that everyone bid on the same specs, that everyone is running similar equipment, and going to have similar expenses, have a spread of over 100,000?

How many of those guys have a real system of bidding or how many drive in circles around the place a bunch of times and pull a number out of their behinds?

My way is not the only way. Its the way that I found worked. Any system that takes all of that information into account will work too.

SoCalLandscapeMgmt
07-31-2011, 12:46 AM
The other biggie is knowing when to say no thank you and walk away. Earlier this year we bid a 65 acre shopping mall. We met with the management, spent an entire day walking every square inch of the property, measured everything and then went back and plugged it all into our estimating spreadsheet. We submitted a price that we felt was fair and would allow is to do first rate work. The next day I went back and forth with the PM over the price via e-mail. He said our price was way too high and wanted to negotiate it down to what was basically below our cost. At that point I simply told him thank you for the opportunity to bid your project but I don't think that this is going to work out. The sad thing is that here in So Cal there are literally 50 other guys would bend over backwards to let this PM name his price and then proceed to do the work at a loss just to say that they have the job.
Posted via Mobile Device

PROCUT1
07-31-2011, 11:22 AM
It does suck. I have that happen in sealcoating and when I drive by and see the property being done, even when I know its being done at a loss, I still get a little bummed.

What I run into a lot more is the disappearing property manager. You submit a bid, then try to follow up for the next month and can't get ahold of them. You don't get the opportunity to negotiate and the only way you find out you didn't get the job is when you see it being done.
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Turf Logic
07-31-2011, 02:30 PM
What I am curious is to see what most people are figuring they have in one employee with over head per hour. I work out of my dads shop for free, so we do not have to figure in rent or a mortgage into are overhead, and with our average maintenance employee making ten dollars per hour we still have twenty dollars per hour per man on a three man crew. This kills me seeing some of the companies the same size at us and some of the bigger guys with more overhead charging only twenty five dollars an hour per man. Seriously, whats the point? Im not asking for anyones cost per hour or what they are charging per hour, but I would love to see what most people are trying to make per hour per man on the ground.

PROCUT1
07-31-2011, 02:51 PM
Everyone can work for a different price depending on their overhead and such.

When I was in NY. My shop and office alone with utilities cost me $3000 a month.
Health insurance through the company for my family and one employee was $2000.
Commercial truck insurance was over 10,000 a year
Comp was like 25,000 a year

Thats not figuring in what I needed out of the business to pay my personal bills. Mortgage taxes utilities etc etc

Those couple expenses are $85000 a year before I cut the first lawn or bought a drop of gas or paid an employee, or bought a machine.

Thats a lot of $30 lawns.

Little easier for the guy working out of his garage, with a truck that his full time job covers the payment and insurance. Health insurance through his job or his wifes.

The business is a whole different ballgame when its a side job for extra cash, and i even put a lot of fulltimers in that category.

Guys would be in for a heck of a wakeup call if they had to survive on solely the lawn business if they had to operate it completely on its own two feet with no subsidies or crutches.

Turf Logic
07-31-2011, 03:48 PM
I agree completely. I know everyones overhead is going to vary. I really don't understand how some companies make money for the prices they charge. The one thing that you didn't total in was your personal salary. We are trying trying to make anywhere from $10 to $20 per hour per man on the ground for maintenance. Are rates are anywhere from $30 to $40 dollars per hour and we charge to and from the job site. We have trouble getting these rates and this is well below the national average.

supercuts
08-01-2011, 03:44 PM
Kelly

A property that I would have priced at $35,000 for the year will have bids from $9,000 to 125,000.

How in the hell can one property, that everyone bid on the same specs, that everyone is running similar equipment, and going to have similar expenses, have a spread of over 100,000?



can't knock a guy for throwing a huge bid. you never know, you might land a $35k job for $100k. I agree though, huge difference. We dont have large jobs like that. and I dont care because im not trying to impress anyone. Im trying to support my family and live comfortably. Ive had guys knocking me for going back to mostly mow and blow with less full service and choosing lower end lawns vs high end picky PITA customers. then they said they would rather make a bit less an hour and do the higher end work! now that im in my mid 30's my body will not keep up doing mulch and hedges all day everyday. and when we can blow out 4-5 lawns an hour with 2-3 men crew. you dont need to major in math to figure $/hr vs hedges at $25-$50/hr like most claim to get on here. let them laugh, we're booked up and keep up. and making "a little" less is often less then half of what we gross an hour. Luckily im at the point where my bids go up just because we dont want the work.

our overhead sucks. the cost of living in CT is high. We pay employees a fair amount and are now trying to set up IRA's for the guys as a bonous. Gas is 2nd highest in the country, our medical is $1800/month, gas is $2500/month, my shops are on the property and not even calculated out of the morgate.

prezek
08-02-2011, 11:26 AM
can't knock a guy for throwing a huge bid. you never know, you might land a $35k job for $100k. I agree though, huge difference. We dont have large jobs like that. and I dont care because im not trying to impress anyone. Im trying to support my family and live comfortably. Ive had guys knocking me for going back to mostly mow and blow with less full service and choosing lower end lawns vs high end picky PITA customers. then they said they would rather make a bit less an hour and do the higher end work! now that im in my mid 30's my body will not keep up doing mulch and hedges all day everyday. and when we can blow out 4-5 lawns an hour with 2-3 men crew. you dont need to major in math to figure $/hr vs hedges at $25-$50/hr like most claim to get on here. let them laugh, we're booked up and keep up. and making "a little" less is often less then half of what we gross an hour. Luckily im at the point where my bids go up just because we dont want the work.

our overhead sucks. the cost of living in CT is high. We pay employees a fair amount and are now trying to set up IRA's for the guys as a bonous. Gas is 2nd highest in the country, our medical is $1800/month, gas is $2500/month, my shops are on the property and not even calculated out of the morgate.

I feel like I could have written your post. Around here EVERYBODY is chasing commercial and high end residential. I have focused on the older neighborhoods. Word of mouth spreads fast. I can knock out 25-30 lawns a day on a tight route and make great money doing it. The high end neighborhoods for me have been the biggest PITA's. Cheap and expect something for nothing.

FinerCutslawnCare
09-05-2011, 05:00 PM
Could not have said it better myself procut. You hit the nail on the head.

douglee25
10-13-2011, 04:48 PM
So you did a search and youre about to post a new thread.

"Big commercial job, what do I bid"

Youre going to post the info about the job, and sit back and wait for guys to give you a price to submit. You;re looking for "the going rate"

Then PROCUT1 is going to post a "sarcastic" response to your thread saying something like.....,"Send me your last years tax return, a years worth of bank statements, an equipment list, a balance sheet, and itemized bills, then I can help you"

"What a jerk, you think" Others will post....."He just wants to give you a hard time, and doesnt want to help"
Well.....Let me tell you something.....If you get a price on here, and you submit that price......Youre on the road to failure.

I know....Youre staring at this bid package right now....You want this job....The big boys that do the condo complexes have these new trucks, fleets of mowers......Theyre rolling in it.....You want to be them....

All you need to do is get your foot in the door right? Wrong

If only you knew what they were charging, you could just go a little less, and get the job....Once they see the quality you give them.....More jobs will follow...Wrong again

Ill be ok as long as them Brickman or Valley Crest lowballers dont bid....
Wrongamundo


Nobody but nobody online can give you a price for that job.
Only you can
If youre a solo guy working out of your house mowing $30 lawns with no real business overhead. You may be profiting $25 on that lawn.
How about if you had 10,000 in overhead expenses a month.
Could you still charge $25 on that lawn?
Suppose it costs you $35 in expense to cut that lawn.
How does me telling you "The going rate is $25" going to help you.

If youre asking for prices....Youre asking the wrong questions. Youre setting yourself up to fail. You will forever rely on "I heard thats a $15,000 property" to submit a bid, not knowing if youre making or losing money.

Here are acceptable questions to start asking.

- How do I measure a property to determine the acreage?
- How do I determine how much mulch is on a property
- I have a 61" ztr. What is the production rate for that machine?
- How many feet per day should a weedwhacking man cover?
- How long does it take to install mulch per yard? What is your technique?
- How long would it take your crew to mow this property? What is the makeup of your crew and equipment?
- How long does it take to edge these beds?

Questions along those lines, are questions as a newbie, you need to ask.
YOU CANT BID WITHOUT THOSE ANSWERS

Not one of them has a price attached.

NOW.....Here is where that info that I ask for comes into play.

You need to take each one of those jobs, and put a time on them.

3 guys 8 hours per week to mow
3 guys a 40 hour week to mulch
3 guys 24 hours to trim the bushes
Dont forget drive time to and from your place

Etc

You need to add up all the manhours to complete the job.
Lets say 1000 man hours for the season to round off numbers

First.

Add up what those employees cost you.
Their salary, matching taxes, processing, workers comp.
Now you have the number what each employee COSTS you per hour.
Lets say you pay your guys $10 per hour that works out to $15 per hour with taxes etc.

So you have 1000 man hours in labor including drive time.
It costs you $15 per man hour.

Your payroll expense....COST TO YOU....Will be $15,000 for the season.

Now. Figure out your materials. The guys on lawnsite told you how to measure.

You come up with 100 yards of mulch. You know your employee expenses already.

Lets say you pay $25 per yard of mulch delivery included
Your mulch expense will COST YOU $2,500

So now your bid is up to $17,500

Now you look and see what each machine and truck burns for fuel. You know how many mowing hours it will be now. You take that hourly number, multiply it by the mowing hours......then by a "high" pump price and that will give you your fuel......

Lets say its $4000 for the season

Now youre at $21,500

Now. You need to add up all of your bills. Shop rent, electric, insurance,
maintenance items, anything that you have to pay thats not a DIRECT cost of doing the job. Add those up for the year.

Now. Figure out how many available working days you have total for the year. Figure out how many hours per day you plan to work. Take into account average number of rain days.

Lets say you can work 150 days per year. 8 hours a day
Thats 1200 regular hours or 3600 man hours for your crew

Lets say your bills add up to $30,000 for the year
Take that number, divide it by 3600

Your overhead is $8 per man hour

Now to figure that into your bid.
You figured 1000 man hours to work this place.

Your overhead will be $8,000


Now your price is at $29,500

THIS IS THE PRICE BEFORE PROFIT.

You are covering employees, overhead, and fuel.

NOW you figure in profit. Which is a number that YOU decide YOU want to make. This is what should be left over when the contract is done, free and clear just sitting in your bank account.

Lets say 20% which is high. But possible, maybe.
$5900

So after the job is done. Everyone and everything is paid. At the end of the season you should have 6 grand sitting in the bank.

YOUR BID IS $ 35,400.00 For this job.

Now......You hear that the "going rate is $29,000"

What do you do?
Ill tell you what most would do......Bid it at $27,000......Just a little cheaper to get the job.....
Do you see the problem here? It costs you 29,500......You cant possibly do the job for 27,000.


So now what? You want the job.

You have to go back to those items and see where you can adjust.

Do you really want to take all the profit off the table? Work all season for nothing in the end?

Maybe you can start with reducing the profit somewhat. You have that option as the owner.

Next.....How can you get those man hours down? Can you figure out how to cut manhours out and get the job done?

If you can, that reduces your bottom line price of $29,500

Can you lower your overhead?
Shop prices for insurance, phones, etc.....Can you save any money there?
Can you locate the material any cheaper? Save some money there?

Its the 29,500 that you have to reduce.

NOW....POST YOUR INFO ON LAWN SITE..

"Guys....My overhead is x per hour.......I calculated x man hours for this job......x amount of fuel......x materials......"
"How can I reduce my expenses?

NOW THATS A QUESTION THAT WILL HELP YOU.

Guys will tell you how to get the job done faster, save money on materials, save man hours etc.......

STILL NOONE GAVE YOU A PRICE

Now you take their advice and apply it.

Maybe between all those you figured out how to save $6,000 in expenses........

Now your bottom line is $23,500 to break even.

You wanted to bid it at $27,000

That would give you $3,500 in profit
8%

Are you happy with 8%? I would be.....Brickman works on 3-4%
Youre clearing doubleIf you are.......You can bid it at $27,000 and youre making money.

IF YOU CANT GET YOUR BASE EXPENSES LOWER YOU CANT DO THE JOB NO MATTER WHAT THE GOING RATE IS. PLAIN AND SIMPLE.

Any questions?

This thread caught my attention and I had to read. Good post, however your profit percentage I believe is incorrect.

If your profit was $3500 (revenue - cost = profit) and your costs were $23,500, profit/cost * 100 = profit percentage, no? That would give you a profit of 14.8% ~15%.

Like someone else mentioned in the thread, it's basic fundamentals that everyone SHOULD know, but doesn't know or doesn't know how to put it to good use. If you don't know your cost of doing business, how the heck do you know where you stand? When most people start out with a few lawns at a young age, this isn't an issue. Everything is mostly profit because your costs are basically just fuel and small repairs. Most probably walk to their jobs, so therefore, no truck costs, no truck fuel costs, no insurance, etc. This mentality continues when more and more equipment is purchased (trucks, riders, etc) and expenses ultimately go up. Because they don't know their true costs, they lose money, and eventually they fold up shop.

I used to be in this business full time. My business put me through college and I handed down the business to my brother where it put him through college as well. I recently am starting to get back in the business part time for supplemental income. The first thing I did was figure out what my true costs of doing business were before I even got my first job. I was amazed at what it costs to do business in this field when comparing it to what other landscapers bid certain jobs at. There is just no way some of these people are making any money whatsoever. Very enlightening. If you're one of those people who don't know their true cost of doing business, sit down for a few hours and figure it out. It may surprise you.

Doug

PROCUT1
10-14-2011, 07:38 PM
It surprised me when I learned. There can be a huge difference in what your gut tells you and what the numbers do.

I've watched it for years.

New guy starts up.
2 years later has every condo complex in town and a fleet of shiny equipment.
3-5 years later he is out in 1 truck with 2 guys mowing a residential route. Or back to driving an oil truck or whatever he used to do.

Seen it repeat many times.

Lived it myself.
Posted via Mobile Device

Green Scape
11-04-2011, 08:55 AM
Make this mandatory! Awesome points, great for a learning curve!

HBFOXJr
11-04-2011, 12:08 PM
There have been tons of posts over the years, but I don't think many have gotten the attention of this thread. I've weighed in with similar advice and then the thread goes quiet. I think no one likes to hear the bad news/truth about our cost of doing business vs selling price.

Good for you ProCut in getting people's attention.

Torchwood
11-04-2011, 04:29 PM
lots of good info here

PROCUT1
11-15-2011, 05:46 PM
There have been tons of posts over the years, but I don't think many have gotten the attention of this thread. I've weighed in with similar advice and then the thread goes quiet. I think no one likes to hear the bad news/truth about our cost of doing business vs selling price.

Good for you ProCut in getting people's attention.

A thread like this always gets little attention.

Its so much easier to ask "how much do i charge" than to sit down and take the time it takes to figure out all this stuff.

Had i followed my own advice from the start before i let it get ahead of me I would be sitting on piles of money right now instead of still digging out of past mistakes

Lefet
11-15-2011, 07:33 PM
Another good thread I'll have to add to my "subscribed" list.
Thanks Procut1.

Glenn Lawn Care
11-16-2011, 10:51 AM
Sub'd.... Great post!!

LindblomRJ
11-16-2011, 11:52 AM
Great post. This needs to be a read first sticky thread. Excellent stuff here.

phillie
11-17-2011, 12:24 AM
Great thread! If you read the original post and its new, you should take business classes. I think its in 101 but could be business 102. haha

JContracting
11-17-2011, 02:55 AM
This should be the first read when one signs up for the site and they actually have to read the entire thing. Quiz at the end. That's the biggest problem in this industry, idiots that don't know their costs.

LindblomRJ
11-21-2011, 02:26 AM
Great thread! If you read the original post and its new, you should take business classes. I think its in 101 but could be business 102. haha

When people ask about college courses they should take to mow or landscape my first answer is always study business.

HBFOXJr
11-21-2011, 07:15 AM
This should be the first read when one signs up for the site and they actually have to read the entire thing. Quiz at the end. That's the biggest problem in this industry, idiots that don't know their costs.

This is speculation on my part, but I feel people read these post and once informed go in to denial. There is a ton of fear about raising prices and/or using the numbers they find for their company.

There is too much emphasis put on the going rate and what people will pay. That is relevant, but should never determine what you charge. What people will pay or can afford to pay has nothing to do with our cost of doing business.

So perhaps, some consumers really can't afford what we do at the price we need. This business is not necessarily viable in every neighborhood across the country. The only reason there are so many of us greenies out there, is too many subsidize the clients desire with their own sweat and money.

As a viable business owner, the client needs to provide for us via our services, not the other way around.

douglee25
11-21-2011, 08:53 AM
This is speculation on my part, but I feel people read these post and once informed go in to denial. There is a ton of fear about raising prices and/or using the numbers they find for their company.

There is too much emphasis put on the going rate and what people will pay. That is relevant, but should never determine what you charge. What people will pay or can afford to pay has nothing to do with our cost of doing business.

So perhaps, some consumers really can't afford what we do at the price we need. This business is not necessarily viable in every neighborhood across the country. The only reason there are so many of us greenies out there, is too many subsidize the clients desire with their own sweat and money.

As a viable business owner, the client needs to provide for us via our services, not the other way around.

I sort of agree with this, but here's my counter point....

Although we (the business owner) determine what our costs are to do business, that does not mean we drive the market. Supply and demand drives the market. So even if it costs you $60/hour to do business, it doesn't mean you're going to stay in business if the local market doesn't support it. At that point, the business owner needs to make a decision to either fold or figure out a way to do business cheaper to survive.

Doug

HBFOXJr
11-21-2011, 09:29 AM
I sort of agree with this, but here's my counter point....

Although we (the business owner) determine what our costs are to do business, that does not mean we drive the market. Supply and demand drives the market. So even if it costs you $60/hour to do business, it doesn't mean you're going to stay in business if the local market doesn't support it. At that point, the business owner needs to make a decision to either fold or figure out a way to do business cheaper to survive.

Doug

That was my point about our business not being viable in every neighborhood. Just because some one wants to pay or can only afford to pay a certain amount of money, doesn't mean we business owners are obligated to work for that price.

It's like drugs and sex. Just say NO! :)

THIESSENS TLC
11-21-2011, 11:33 AM
Very good! Definitely an eye opener!

HBFOXJr
11-21-2011, 12:13 PM
Very good! Definitely an eye opener!

Are you a QXpress user?

THIESSENS TLC
11-21-2011, 12:16 PM
Are you a QXpress user?

Huh? QXpress user? pls explain!

HBFOXJr
11-21-2011, 12:19 PM
Huh? QXpress user? pls explain!

Software - I must have you confused with some one else. Never mind.

PROCUT1
11-22-2011, 12:02 AM
Since it got brought up. I used qxpress and thought it was a great program.
Posted via Mobile Device

GMLC
11-22-2011, 05:20 PM
Great post, don't know why it took me this long to find it(busy year I guess). It does worry me that so many have just opened there eyes to this! How have they been bidding up to this point!!??

HBFOXJr
11-22-2011, 05:27 PM
Since it got brought up. I used qxpress and thought it was a great program.
Posted via Mobile Device

I've loved it for scheduling and managing the work. I've hated it for managing pre pays, renewals, marketing, emailing and pretty much every thing administrative related.

PROCUT1
11-22-2011, 09:26 PM
Great post, don't know why it took me this long to find it(busy year I guess). It does worry me that so many have just opened there eyes to this! How have they been bidding up to this point!!??

They bid "the going rate"

They go "just a little less than last years guy"

They ask the customer what they are paying now and drop it $5

They post on here asking for other peoples prices

They bid "what they heard its going for"

They bid " a dollar a minute"

Thanksman
12-09-2011, 05:31 PM
excellent...ty

cpllawncare
12-09-2011, 06:06 PM
They bid "the going rate"

They go "just a little less than last years guy"

They ask the customer what they are paying now and drop it $5

They post on here asking for other peoples prices

They bid "what they heard its going for"

They bid " a dollar a minute"

:hammerhead: yep I've done all of the above! how embarrassing is that?

mattfromNY
12-09-2011, 08:11 PM
That was my point about our business not being viable in every neighborhood. Just because some one wants to pay or can only afford to pay a certain amount of money, doesn't mean we business owners are obligated to work for that price.

It's like drugs and sex. Just say NO! :)

Really? Who says NO to sex?

PROCUT1
12-09-2011, 10:40 PM
Really? Who says NO to sex?

Yeah....coulda just left it at drugs.....haha.....after that, the point lost some merit...lol
Posted via Mobile Device

betterlawnsandlandscaping
12-09-2011, 10:40 PM
I think I read this post when you wrote it. Great post!!!

PROCUT1
12-10-2011, 12:13 AM
I havent updated my location but im somewhere in TN also.

*dim*
12-10-2011, 02:31 AM
try this speadsheet

http://api.ning.com/files/hzHalJRlCSfg4cFOvzDteYbYBqlwFq27-Iq*7KRt77Y*Dg4yiy5jY4tX57B-*weeYY79nHYVyRwrc5BcOyGGmzynVRquTYBw/CopyofHourlyRateChargeoutsheet2.xls

figures are in pounds, but ignore that and assume they are USD .... this can be used as a guideline ....

GrassLife
01-10-2012, 10:09 PM
Good job PROCUT1. This is a profession, not a hobby.

McCord L & I
01-14-2012, 06:56 PM
Bump........Subscribed!

wswebster42
01-15-2012, 05:48 PM
I havent updated my location but im somewhere in TN also.

Im in TN also. Round the middle area.

Duekster
06-11-2012, 10:46 AM
The other biggie is knowing when to say no thank you and walk away. Earlier this year we bid a 65 acre shopping mall. We met with the management, spent an entire day walking every square inch of the property, measured everything and then went back and plugged it all into our estimating spreadsheet. We submitted a price that we felt was fair and would allow is to do first rate work. The next day I went back and forth with the PM over the price via e-mail. He said our price was way too high and wanted to negotiate it down to what was basically below our cost. At that point I simply told him thank you for the opportunity to bid your project but I don't think that this is going to work out. The sad thing is that here in So Cal there are literally 50 other guys would bend over backwards to let this PM name his price and then proceed to do the work at a loss just to say that they have the job.Posted via Mobile Device

This is why people like me get excited to see post like Procuts. Even if the fools go broke, there are 20 more like them next season. It is just too darn easy to get in the business.

Nothing against solos but they mistake creating a job for themselves as being the same thing as having a business.

It is fine to leverage your own labor, working 60 hours a week like a dog, having your wife do the books, using your garage as a shop and all to get started. It just does not translate to having several employees or more, several maintenance truck rigs and such.

PR Fect
06-11-2012, 01:35 PM
Nothing against solos but they mistake creating a job for themselves as being the same thing as having a business.

It is fine to leverage your own labor, working 60 hours a week like a dog, having your wife do the books, using your garage as a shop and all to get started. It just does not translate to having several employees or more, several maintenance truck rigs and such.

Do be fooled that just because you have employees and a "reel" shop that you are a professional. Pro-cuts post is about knowing your costs, and knowing the business. You can be very professional and be one of the best in the business without lots of employees and big buildings to house them in. I have also seen large companies that do not have a clue what they should be doing on someones lawn. They don't last long on one job site, but they are out there, and are not going anywhere.

32vld
06-11-2012, 01:52 PM
More good lessons from procut.

Duekster
06-11-2012, 02:03 PM
Do be fooled that just because you have employees and a "reel" shop that you are a professional. Pro-cuts post is about knowing your costs, and knowing the business. You can be very professional and be one of the best in the business without lots of employees and big buildings to house them in. I have also seen large companies that do not have a clue what they should be doing on someones lawn. They don't last long on one job site, but they are out there, and are not going anywhere.

I appreciate your comment sir. I appreciate Procuts post too. He simplified things very well. You should look at my post and the one I quoted.

One of the best things I did early on was listened to Charles Vander Kooi seminar. I bought a few of his books. I even read them too. I referenced them time and again.
Besides his seminiar his book goes into great detail far beyond what Procut mentions. Not saying Procuts post are off because they are not, they are spot on! In reality however they are baby food designed to get beginners to take notice.

http://www.vanderkooi.com/

JContracting
06-12-2012, 01:45 AM
That should be everyone's goal to own a business, not work for their business. Getting out of the field is one of the most important things that needs to be done if you want to have a serious money making operation. Take notes from Eagle Landscape's thread.
Posted via Mobile Device

Jbh0724
06-22-2012, 11:08 PM
great post!

I didn't read all of the pages on this post. I learned a ton on the first page. Great post. You have laid out this extremely important information in easy to understand terms. Thank you for taking the time to do so.
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green connect
07-04-2012, 04:49 PM
A little late getting to it, but great post and wonderful thread!

Subseven
08-06-2012, 05:25 PM
Good thread. Once people do enough...they can pretty much look at a job, figure out some numbers, and have a price in 5 minutes.

ReddensLawnCare
08-06-2012, 05:46 PM
Good thread. Once people do enough...they can pretty much look at a job, figure out some numbers, and have a price in 5 minutes.

If you come up with a price for any commercial over an acre you don't know what you are doing. Can you do it? You might get lucky but I would never bid a commercial without walking the property over
Posted via Mobile Device

wz2p7j
10-14-2012, 09:24 PM
Procut - good post but you've made the classic mistake of including overhead considerations to evaluate individual accounts. They just don't mix.

Chris

kawakx125
10-14-2012, 09:56 PM
it's simple, everyones costs are different therefore nobody else but you can bid a job. factor in that prices vary by region and you REALLY can't come on here asking how much to bid for a job. Great post, without knowing your bottom dollar costs to OPERATE, excluding profit, then you can't even begin to work on reducing costs.

PROCUT1
10-17-2012, 03:44 PM
Procut - good post but you've made the classic mistake of including overhead considerations to evaluate individual accounts. They just don't mix.

Chris

The mistake would be NOT including that.

RiggitanoLandscape
10-18-2012, 10:19 PM
Just do what everybody else does. Find out what the cheapest company charges then beat them by $10.00 and then to save money put one Man with one ZTR on the job and pray that it all works out in the end.

Chilehead
10-18-2012, 11:04 PM
Procut, you list some very valid points. My approach is very simple: I know my costs, and I know how much profit margin I want to make. I ALWAYS bid based on what my goal for profit margin is. My closing rate as of late has been down, but almost always due to price. Guess what? I don't care. If I only close one out of five, but at a high margin (yes, you would drop your jaw if you knew how high and would likely call me a liar), I win. Most of my clients are ultra high-end who have given me the whole "Treat my property like your own and bill me for whatever it costs" speech. Alot of companies make their money with volume. I make mine with fat margins.....it's just good business! Yeah, baby!

PROCUT1
10-20-2012, 10:24 AM
Good approach. There is money to be made with specializing, picking and choosing, and volume. As long as you know what youre getting into.

I do a mix of everything. I do some low margin volume work. But i plan and treat it accordingly. I do high end work and charge accordingly for that.

But in each case the numbers have to work and for them to work you have to know them.

I may have a $350 minimum for line striping. But in the wintertime, to keep a crew working, lets say I have a chain of quick and easy gas stations. 120 of them. Can I figure out a way to do them for $225 a piece? or just stick to my guns?

Those are the things i do in my office.

Now. If I set up an efficient crew. Pay them by the job. Supply them with the most time saving efficient equipment. Use the box truck instead of dragging the 28foot striping trailer, and have them in and out of each one in 30 minutes and set up for them to do 5 a night......

Versus. Dragging a 28 foot trailer, from our yard, to the job, to stripe one gas station, pulling it with a big diesel.

see?

gcbailey
10-20-2012, 11:02 AM
so I guess carrying around a fishbowl with figures ranging from $20 - $35k and picking at random won't cut it anymore.... :rolleyes: Seems like that's what I see around here for commercial bids.

dtart88
10-24-2012, 11:32 AM
i understand all the price stuff but when do commercial contracts run out what time of the year do you bid them this year has been my first year and i have done alot of residential but im ready to try some commercial

gcbailey
10-24-2012, 02:48 PM
i understand all the price stuff but when do commercial contracts run out what time of the year do you bid them this year has been my first year and i have done alot of residential but im ready to try some commercial

around here most stuff starts going out for bid around February. Start calling around to your potential suitors now or sending "professional" letters stating what you can do for them.

Oh ya.... know what size commercial accounts you can honestly handle to begin with.

GardnerLawn
10-26-2012, 10:50 AM
awesome thread thanks

Giestimator
10-27-2012, 06:48 PM
The biggest thing with doing any bid is knowing what it actaully costar for you to do the work.. Then you figure your price. Ay other way you have too much of a chance to loose money..

Mike
Www.greenindustryestimator.com

vtscaper
01-13-2013, 09:24 PM
So you did a search and youre about to post a new thread.

"Big commercial job, what do I bid"

Youre going to post the info about the job, and sit back and wait for guys to give you a price to submit. You;re looking for "the going rate"

Then PROCUT1 is going to post a "sarcastic" response to your thread saying something like.....,"Send me your last years tax return, a years worth of bank statements, an equipment list, a balance sheet, and itemized bills, then I can help you"

"What a jerk, you think" Others will post....."He just wants to give you a hard time, and doesnt want to help"
Well.....Let me tell you something.....If you get a price on here, and you submit that price......Youre on the road to failure.

I know....Youre staring at this bid package right now....You want this job....The big boys that do the condo complexes have these new trucks, fleets of mowers......Theyre rolling in it.....You want to be them....

All you need to do is get your foot in the door right? Wrong

If only you knew what they were charging, you could just go a little less, and get the job....Once they see the quality you give them.....More jobs will follow...Wrong again

Ill be ok as long as them Brickman or Valley Crest lowballers dont bid....
Wrongamundo


Nobody but nobody online can give you a price for that job.
Only you can
If youre a solo guy working out of your house mowing $30 lawns with no real business overhead. You may be profiting $25 on that lawn.
How about if you had 10,000 in overhead expenses a month.
Could you still charge $25 on that lawn?
Suppose it costs you $35 in expense to cut that lawn.
How does me telling you "The going rate is $25" going to help you.

If youre asking for prices....Youre asking the wrong questions. Youre setting yourself up to fail. You will forever rely on "I heard thats a $15,000 property" to submit a bid, not knowing if youre making or losing money.

Here are acceptable questions to start asking.

- How do I measure a property to determine the acreage?
- How do I determine how much mulch is on a property
- I have a 61" ztr. What is the production rate for that machine?
- How many feet per day should a weedwhacking man cover?
- How long does it take to install mulch per yard? What is your technique?
- How long would it take your crew to mow this property? What is the makeup of your crew and equipment?
- How long does it take to edge these beds?

Questions along those lines, are questions as a newbie, you need to ask.
YOU CANT BID WITHOUT THOSE ANSWERS

Not one of them has a price attached.

NOW.....Here is where that info that I ask for comes into play.

You need to take each one of those jobs, and put a time on them.

3 guys 8 hours per week to mow
3 guys a 40 hour week to mulch
3 guys 24 hours to trim the bushes
Dont forget drive time to and from your place

Etc

You need to add up all the manhours to complete the job.
Lets say 1000 man hours for the season to round off numbers

First.

Add up what those employees cost you.
Their salary, matching taxes, processing, workers comp.
Now you have the number what each employee COSTS you per hour.
Lets say you pay your guys $10 per hour that works out to $15 per hour with taxes etc.

So you have 1000 man hours in labor including drive time.
It costs you $15 per man hour.

Your payroll expense....COST TO YOU....Will be $15,000 for the season.

Now. Figure out your materials. The guys on lawnsite told you how to measure.

You come up with 100 yards of mulch. You know your employee expenses already.

Lets say you pay $25 per yard of mulch delivery included
Your mulch expense will COST YOU $2,500

So now your bid is up to $17,500

Now you look and see what each machine and truck burns for fuel. You know how many mowing hours it will be now. You take that hourly number, multiply it by the mowing hours......then by a "high" pump price and that will give you your fuel......

Lets say its $4000 for the season

Now youre at $21,500

Now. You need to add up all of your bills. Shop rent, electric, insurance,
maintenance items, anything that you have to pay thats not a DIRECT cost of doing the job. Add those up for the year.

Now. Figure out how many available working days you have total for the year. Figure out how many hours per day you plan to work. Take into account average number of rain days.

Lets say you can work 150 days per year. 8 hours a day
Thats 1200 regular hours or 3600 man hours for your crew

Lets say your bills add up to $30,000 for the year
Take that number, divide it by 3600

Your overhead is $8 per man hour

Now to figure that into your bid.
You figured 1000 man hours to work this place.

Your overhead will be $8,000


Now your price is at $29,500

THIS IS THE PRICE BEFORE PROFIT.

You are covering employees, overhead, and fuel.

NOW you figure in profit. Which is a number that YOU decide YOU want to make. This is what should be left over when the contract is done, free and clear just sitting in your bank account.

Lets say 20% which is high. But possible, maybe.
$5900

So after the job is done. Everyone and everything is paid. At the end of the season you should have 6 grand sitting in the bank.

YOUR BID IS $ 35,400.00 For this job.

Now......You hear that the "going rate is $29,000"

What do you do?
Ill tell you what most would do......Bid it at $27,000......Just a little cheaper to get the job.....
Do you see the problem here? It costs you 29,500......You cant possibly do the job for 27,000.


So now what? You want the job.

You have to go back to those items and see where you can adjust.

Do you really want to take all the profit off the table? Work all season for nothing in the end?

Maybe you can start with reducing the profit somewhat. You have that option as the owner.

Next.....How can you get those man hours down? Can you figure out how to cut manhours out and get the job done?

If you can, that reduces your bottom line price of $29,500

Can you lower your overhead?
Shop prices for insurance, phones, etc.....Can you save any money there?
Can you locate the material any cheaper? Save some money there?

Its the 29,500 that you have to reduce.

NOW....POST YOUR INFO ON LAWN SITE..

"Guys....My overhead is x per hour.......I calculated x man hours for this job......x amount of fuel......x materials......"
"How can I reduce my expenses?

NOW THATS A QUESTION THAT WILL HELP YOU.

Guys will tell you how to get the job done faster, save money on materials, save man hours etc.......

STILL NOONE GAVE YOU A PRICE

Now you take their advice and apply it.

Maybe between all those you figured out how to save $6,000 in expenses........

Now your bottom line is $23,500 to break even.

You wanted to bid it at $27,000

That would give you $3,500 in profit
8%

Are you happy with 8%? I would be.....Brickman works on 3-4%
Youre clearing double

If you are.......You can bid it at $27,000 and youre making money.

IF YOU CANT GET YOUR BASE EXPENSES LOWER YOU CANT DO THE JOB NO MATTER WHAT THE GOING RATE IS. PLAIN AND SIMPLE.

Any questions?

great post

C&C Landscaping
06-14-2013, 07:44 AM
I like - Thanks

SlaytonFarms
06-14-2013, 03:01 PM
Great Thread..

Needs a bump/sticky

Stars & Stripes Landscaping
07-02-2013, 05:52 PM
After doing some searching this is fantastic information to have while trying to start a business plan for 2014, thank you very much for this information ProCut!

sapper1975
08-05-2013, 11:33 PM
I could use some opinions or critique on my first commercial bid. I have only done residential business for a year and a half. Buddy of mine convinced me to expand to commercial accounts. The account has 15 acres with very little obstacles. Trimming would consist of 561 feet (used measuring wheel). Has 2 flower beds that are a combined 500 sq. ft. I can get mulch for $22 cu. yd. And has 18 bushes to trim. Mulch has to be done once a year, bushes 3-4 times. Also has 11 acres that need bush hogged. My plan is to use a 4 man crew when the flower bed need done and 2 man for the mowing/trim. My price break down is this:

Bush Hogging will take roughly 3 hours with 15 ft batwing price $500 ($125 per hour)
Mowing should take 3.5-4 hours with 2 machines running price= $420 ($56 per hour)
Trimming with 2 units working will take 4 hours price= $180 ($45 per hour)
Trim Bushes with a crew of 2 will take 3 hours price= $108 ($36 per hour)
Mulching with a crew of 4 will take about 5 hours (mulch will cost $3670) price= $4320 first time pricing this service, am I close? My total bid for the job is $24,752. Breaks down to 1x charge of $5528, 3x charge of $1208, and 26x charge of $600. This sounds high to me, but like I said it is my first commercial bid. Any suggestions would be greatly appreciated.

GreenGuysLC
08-06-2013, 12:50 AM
I have no idea of what the property consist of or its layout, but a few things stand out.... 2 trimmers takes 4 hrs to go 561ft ?? Trimming 18 bushes with two guys will take 3 hrs? And the biggie... Mulching 500 sq ft will cost HOW MUCH??? Or was that suppose to be 5000?? if it is 500 ... you don't need 4 men... and better not take 5 hrs. I don't know what mowers you run, but you need to follow procuts model and understand how much acreage your mower can cover in an hr. And finally .. your breakdown .... "Breaks down to 1x charge of $5528, 3x charge of $1208, and 26x charge of $600." completely lost me... Sorry I cant be more help.... but your numbers aren't adding up and I think your estimating may be off.... hard to say.

Chineau
08-06-2013, 10:06 PM
If you we're doing it with scissors maybe 4 hours!