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View Full Version : How high of a fuel cost could you absorb before shutting down your business?


Merkava_4
03-07-2011, 10:59 PM
At some point, it would cost you more to drive your truck around than what you're earning for that day -- what price per gallon would that be?

kilgoja
03-07-2011, 11:03 PM
depends on what you drive and how far i guess lol...i seriously doubt it...if you drive 5 miles which is 1/4 gallon of gas or less for my truck and cut a yard for $50 then i don't see how you are losing money...make $50 and spend $1.25 on gas at $5 per gallon

Turf Dawg
03-07-2011, 11:07 PM
If my clients can still afford my services then I am not closing up shop no matter what the price of fuel is. I may have to adjust my rates and get leaner on driving but not shut down.

Merkava_4
03-07-2011, 11:14 PM
So far it sounds like you guys could absorb quite a bit of an increase in fuel costs no problem.

Scagmower48
03-07-2011, 11:18 PM
My profit margins are high enough where fuel could double in cost and I will still make enough money no problem. Net profits will deffinitly be down though.

CLS LLC
03-07-2011, 11:36 PM
I don't understand everyone who thinks higher gas prices are going to be the end of the world for grass cutting. The fact of the matter is fuel is a very minute expense. The major expenses in this industry are labor and equipment depreciation. Over all fuel should be no more than around 3% of your gross sales. If you are a large business with 10 trucks and crews who runs on very slim margins a 25% increase in fuel will hurt a little bit. But even a 100% increase shouldn't put you out of business by any means. But as a small 1 crew operation, you should barely feel the 25% increase we've recently seen.

If fuel doubles in price, add a fuel surcharge, just don't be ridiculous about it. If the cost of fuel doubled your expenses shouldn't change more than $1-2 per cut so don't charge your customer a $5 fuel surcharge.


I know most people are going to tell me how stupid I am, but it's just the facts. Also people need to stop whining about it. There is nothing you can do about it. You can't get by with out it so don't bother complaining.

Lawnut101
03-07-2011, 11:56 PM
I don't understand everyone who thinks higher gas prices are going to be the end of the world for grass cutting. The fact of the matter is fuel is a very minute expense. The major expenses in this industry are labor and equipment depreciation. Over all fuel should be no more than around 3% of your gross sales. If you are a large business with 10 trucks and crews who runs on very slim margins a 25% increase in fuel will hurt a little bit. But even a 100% increase shouldn't put you out of business by any means. But as a small 1 crew operation, you should barely feel the 25% increase we've recently seen.

If fuel doubles in price, add a fuel surcharge, just don't be ridiculous about it. If the cost of fuel doubled your expenses shouldn't change more than $1-2 per cut so don't charge your customer a $5 fuel surcharge.


I know most people are going to tell me how stupid I am, but it's just the facts. Also people need to stop whining about it. There is nothing you can do about it. You can't get by with out it so don't bother complaining.

I agree. You just need to adjust and be fair. If you would go out of business, I would think you aren't making enough in the first place.

american dream
03-08-2011, 12:15 AM
how bout raise your prices to cover the added gas expense,but i forgot this is the only industry that still works for 1985 wages!you know im rite.

ncknaklawns
03-08-2011, 12:18 AM
x3 You guys who think it matters are either cutting too few lawns or are not really tracking what you spend on expenses. I could pick up one or two more more lawn contracts and cover the increase. Now if your over extended with expenses the problem isn't the gas.

SkinnyVinny
03-08-2011, 12:45 AM
i swear if i see another gas price thread im going to flip out lol... how can you ask such a vague question? everyone's business is different, everyone has different expenses.. if your that worried about gas costs, go run your numbers to account for the raised prices and stop asking what everyone else is doing... jeeeeezzzz

Merkava_4
03-08-2011, 02:23 AM
how can you ask such a vague question?

Because I'm a very curious person. :D

Richard Martin
03-08-2011, 04:37 AM
If gas gets much higher than it is now you may start seeing some wholesale changes in the economy. Many, many businesses are already operating on razor thin margins and these fuel increases may be the straw that breaks the camel's back. A friend of mine runs a corner grill and he has seen his food prices increase by 40% in the last year and he can't even come close to passing all of that onto his customers. All of his vendors (delivery companies) are already tacking huge fuel surcharges onto his invoices and he said he doesn't know how much more he can take and stay in business.

Yes, it is true that the solo op can absorb a lot of fuel prices. And the little companies with up to 10 or so can absorb them but not as well as the solo. It's an economy of scale thing in reverse. Generally the larger the company the thinner the margins.

One of my customers told me she could fill up their Excursion for about $90 last year. Now it costs her $130. Her husband runs a small aluminum gutter business. How much fuel price increase can they absorb before something (me) has to go just so they can afford to continue to live. This isn't just about us. It's about everybody.

Baytownlawncare
03-08-2011, 07:47 AM
I am really pushing a referral bonus to clients to get their neighbors to sign up. I figure if you can make one stop and cut 2 or 3 you are milking it. Most of my yards are within 5 miles of my home and I have established most of them on a big circle that comes back to the house. If someone far off calls (more than 10 miles), I just add 5 dollars to the estimate. I figure that cover it all. Truck gets decent milage and the mower hardly burns anything. I filled it up last week and it still has half a tank. Might have to gas it up today.

ncknaklawns
03-08-2011, 08:52 AM
It definitely seems like a lot when your there filling up all the time and its a $100-$125 or more. And I hear you when you say that it affects larger companies more. This is primarily because workers don't have a stake in the company, and the owner wants to make money. For owners who are not out there working the hard labor compare this. As a solo I do all the hard labor and make a profit. I come home and don't get paid a dime to, maintain the equipment, sharpen the blades, read all the tax laws and forms, do the taxes, do the banking. It is built into the contract price- but you as a non-operating owner are an extra expense I don't have as a solo-and I'm sure its an expensive one. But should you as an owner be paid more than your workers hourly rate? No, -not if they work hard and are paid like they own it-good workers are hard to find . I don't see how you owner/non- operators can run a business without good employees- if you find them pay them well. Its hard work, add incentives so they have a stake and can see the money they can make by becoming "like an owner" by pushing it to benefit all in the company. If you don't and they are smart enough they with open their own business.

mowerbrad
03-08-2011, 09:01 AM
I think a lot of people make out fuel prices to really be a bigger thing that what they really are. Yes, increasing fuel prices can cut into your profits and might even "hurt" your customers a little bit, but I don't think it will be the end to your business (at least for lawn care). Your truck and mowers will always burn the same amount of fuel, no matter if gas is $3/gal or $5/gal. So maybe there is a 25% increase in fuel costs, either pass it along to your customers or "eat it". Its very easy for you to tell your customers that if gas gets above $X.XX/gal you will have to tack on a $3 or $5 surcharge to their monthly bill to help cover fuel costs. A few bucks a month isn't going to lose you customers.

ncknaklawns
03-08-2011, 09:28 AM
Anybody using Fed Form 4136 or 8849? or state forms to get back the sales tax etc...

MOturkey
03-08-2011, 10:28 AM
The only ones who will have to park their equipment because of high gas prices are the ones who are lowballing their prices. That's going to bite a lot of them in the arse this summer, just like a couple of years ago.

torotorotoro
03-08-2011, 11:05 AM
i love a good high gas thread but this title is stupid. im not going any where. i am raising prices as we speak.

fireman9
03-08-2011, 11:22 AM
I'm not worried about raising prices, just gonna do a few more every day to cut down on my route, save some driving, and get a day off.

torotorotoro
03-08-2011, 11:40 AM
I'm not worried about raising prices, just gonna do a few more every day to cut down on my route, save some driving, and get a day off.

i dont know about your situation but with out a good pricing stratagy you could end up with the problem of THE MORE LAWNS YOU MOW THE MORE $$$ YOU WILL LOSE.

Baytownlawncare
03-08-2011, 11:49 AM
I guess we can fire all employees and revert to running a 100 dollar push mower, trimmer, and blower out of the trunk of 1974 gremlin and only get 10 yards a week mowed. My cheap little push mower will seriously mow about 3-4 yards on a quart of gas but is slow as all get out. Just thought I would be funny. I really don't think gas prices are really going to affect lawn companies until we hit 5 or 6 dollars and at that point start charging 2-3 dollars a client to cover costs

fireman9
03-08-2011, 11:54 AM
Almost all the work I've taken on in the past few years I've priced based on fuel being around the $4.00 mark. With the exception of some of my original customers whom are mostly retired on fixed incomes everything should be just fine. The oldies have been good to me and I can take care of them by absorbing the fuel price increases for their customer loyalty and refer-alls over the years.

Pressedun
03-08-2011, 12:00 PM
It's not just that the gas prices will go up, it's that everything else will too. Shipping costs will be higher, manufacturing costs will be higher and that means higher prices for everything you buy. I don't understand why people just think it's only the gas prices going up, think about everything else that it affects. Your cost of living increases while taking in the same amount of money...

krackerjack9
03-08-2011, 12:20 PM
Just add a fuel charge around here everyone pays it and expects it.. we just had one customer 55 miles away but it takes a good 2.5hrs to get to location due to roads and all the gates to get to it. we added a $300.00 fuel charge per truck that day we had 48 delieveries to that ranch. We might be going out there again next month and my guess is fuel charge will be close to $500.

Merkava_4
03-08-2011, 03:35 PM
i love a good high gas thread but this title is stupid. im not going any where. i am raising prices as we speak.

You don't like the thread title? What thread title would you have used? ;)

torotorotoro
03-08-2011, 03:50 PM
You don't like the thread title? What thread title would you have used? ;)

"how much are you going to raise prices this year". its not like we are going out of buisness if gas prices go up.

ed2hess
03-08-2011, 07:58 PM
. But should you as an owner be paid more than your workers hourly rate? No, -not if they work hard and are paid like they own it-good workers are hard to find ..

What in the world are you saying......there would be no companies in the US if the owners didn't make a LOT more than the workers:hammerhead:

Merkava_4
03-08-2011, 10:28 PM
"how much are you going to raise prices this year". its not like we are going out of buisness if gas prices go up.

Can you handle $20/Gallon?

sweetz
03-08-2011, 11:17 PM
It's not just that the gas prices will go up, it's that everything else will too. Shipping costs will be higher, manufacturing costs will be higher and that means higher prices for everything you buy. I don't understand why people just think it's only the gas prices going up, think about everything else that it affects. Your cost of living increases while taking in the same amount of money...

Thank you! :dizzy::dizzy::dizzy: All you have to do is watch the news or read the papers people. Gee, the fruit market by me has raised a lot of their prices by 30%, because of GAS. Look at all of the other costs that have increased lately.:hammerhead:

Kelly's Landscaping
03-09-2011, 09:47 AM
I would say after 7 per gallon we would consider the option of shutting down there is defiantly a breaking point. Perhaps 8 but pretty sure by 10 its death I spent $12900 on fuel last year if that number doubles or triples I do not know how we absorb that. And for that matter pass it on to customers that just lost their jobs and now have to spend 10,000 a year for oil for their houses. Obviously there is a breaking point but then there is also time does this happen this year or slowly of 25 years. Lot can happen in 25 years 1986 my first job 3.80 cents an hour bagging groceries today they pay close to 3 times that here. So as long as the inflation is slow its not that bad but if were talking 1 to 2 seasons were screwed.

AOD
03-09-2011, 10:10 AM
With my wife's taxicab company, she spends approx. 32% of gross earnings on fuel. She says she'll weather it out up until about 40% of gross earnings, at which point she would have no choice but to close or raise prices. The same is probably true with mowing. If gas goes high and stays that way, I'd see smaller outfits trying to do more with less, use smaller trucks like Rangers and lighter weight trailers. If I had the money I'd get a Sprinter van, 20-25 MPG, pulls like a semi and lots of inside room to lock up equipment.

MOturkey
03-09-2011, 10:16 AM
There are two types of people, those who always think in terms of gloom and doom, and, well, those who don't. One of my best friends is that way. He'll get excited about doing something, then just as soon as any obstacle presents itself, he goes all negative and is ready to throw in the towel.

To the best of my knowledge, I've not lost a single customer because of the economy or inflation. Some have asked me to trim their costs to the bone, but they don't cancel service altogether. Do what you have to do to maintain a reasonable profit margin, worrying about things you can control, rather than dwelling on those you can't.

krackerjack9
03-09-2011, 10:18 AM
We just got a truck load a fuel the other day it was 27851.22 for 8000gallons. Right now were using about 11800 gallons per month out of this plant. The trucks on average get about 3.8 to 4.4 mpg. Some jobs were adding $100 fuel charge for 50miles or less others that are just a pain to get to due to roads and speed limit on the ranches is 15mph they get a $300 fuel charge.

Clark Griswold
03-09-2011, 11:42 AM
If I had the money I'd get a Sprinter van, 20-25 MPG, pulls like a semi and lots of inside room to lock up equipment.

That MPG is BS and that's empty weight on a flat oval track, no stop & go, no wind, no hills, no warm up's!

XLS
03-09-2011, 07:01 PM
In all honesty i cant wait untill the fuel hits 10 a gallon for fuel .....and some of you same guys will still be saying now what ill tell you what ...... technology....... we havent made a price increase in 12 years of business and dont plan to this year neither. at 5.00 a gallon we will restructure again using technology of the time .
considering that is some time away we dont know what will be avalible . but i assure you our ford focus cars are getting 40 mpg doing estimates and with 5 people in the car my wifes will get 38 mpg .......so if it get $10.00 a gallon dont think we wont use them to do service calls on irrigation. you can also do all the bed cleanups , and shrub and tree trimming in areas with sity pick up or we would use a bagster and leave them for the regular maintenance crews to pick up . we will always have options . for mowing when it hits 5.50 we will be converting all of our mowers and trucks to propane, where we will only be paying more durring the fall .

Pressedun
03-09-2011, 07:13 PM
Thank you! :dizzy::dizzy::dizzy: All you have to do is watch the news or read the papers people. Gee, the fruit market by me has raised a lot of their prices by 30%, because of GAS. Look at all of the other costs that have increased lately.:hammerhead:

Thanks for agreeing with me, people don't think of the trickle down effect, it may no happen right away but it will happen in a few weeks or months. You will see these raised gas prices in everything you buy at some point.
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torotorotoro
03-09-2011, 07:18 PM
Thanks for agreeing with me, people don't think of the trickle down effect, it may no happen right away but it will happen in a few weeks or months. You will see these raised gas prices in everything you buy at some point.
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especially fertilizer

Pressedun
03-09-2011, 07:20 PM
especially fertilizer

Fertilizer, mowers, mower parts, oil, you name it man!
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RECESSION PROOF MOWING
03-09-2011, 07:53 PM
At some point, it would cost you more to drive your truck around than what you're earning for that day -- what price per gallon would that be?

I can make money off a $25 lawn if I had to pay $5 per gallon...it's just "how much margin to you want to make" that's the question. I've got cheap labor so high gas won't push me out. My subdivisions are priced well as are my churches and residentials. But if you're asking if high gas prices are a kick in the nuts, that answer is "yes"! Gasloline at the pump would have to be $10 per gallon where I'd radically change up my business plan across the board. But if gas is that high...there would be riots and so much calamity that mowing yards would be the least of my worries.

GarPA
03-10-2011, 06:51 AM
I don't understand everyone who thinks higher gas prices are going to be the end of the world for grass cutting. The fact of the matter is fuel is a very minute expense. The major expenses in this industry are labor and equipment depreciation. Over all fuel should be no more than around 3% of your gross sales. If you are a large business with 10 trucks and crews who runs on very slim margins a 25% increase in fuel will hurt a little bit. But even a 100% increase shouldn't put you out of business by any means. But as a small 1 crew operation, you should barely feel the 25% increase we've recently seen.

If fuel doubles in price, add a fuel surcharge, just don't be ridiculous about it. If the cost of fuel doubled your expenses shouldn't change more than $1-2 per cut so don't charge your customer a $5 fuel surcharge.


I know most people are going to tell me how stupid I am, but it's just the facts. Also people need to stop whining about it. There is nothing you can do about it. You can't get by with out it so don't bother complaining.

You are right on the money. Even if it goes to $5 a gallon its not the end of the landscapebusinessworld as we know it...as you say add a dollar or two per service call and drive as efficiently as possible. If $4 a gallon gas is jeopardizing the survival of your business, you have more serious issues that will likely take you down before gas prices will....

GrassesGuy
03-10-2011, 09:11 AM
Oh my God the worlds coming to an end. Get real. We got reserves to last a few months. The government will not let this happen as there would be mass chaos. We will take what we don't have it's called war and it's happen before and it will happen again.:hammerhead::hammerhead::hammerhead:

yardguy28
03-10-2011, 09:15 AM
If my clients can still afford my services then I am not closing up shop no matter what the price of fuel is. I may have to adjust my rates and get leaner on driving but not shut down.

yeah i don't see why you would have to shut down if clients are still paying your prices.

sure you'll have to raise prices to match your cost of living and cost of doing business.

if you do that and clients are still willing to pay then there is no amount gas could go up that would shut you down.