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View Full Version : Charging to Much? To little? Where am I at.


green jeans 509
01-24-2012, 12:07 AM
Ok I dont know it all so go easy im still learning. One of the yards as example takes me 45 min to mow 27k sqft of grass using the walker 48 and takes about 10-15 min to trim and blow stuff off so a hour to be exact. I make 60 before even sales tax is taken out which I am charging this year instead of me paying it. I personally want to make $30 ph before tax hits for myself and I really want my business to make about $30 ph but that would put this yard in the $90 range which wouldn't happen. I need some input as to what a good profit margin is and what this pricing would be from you guys, is my $60 to LOW, just right to high? I dont know do I charge for just the equip I use or all my overhead??????:hammerhead:

Walker mower 9.20 ph pay off 2 yrs
stand behind 5.35 ph pay off 1 year
push mower .89 ph pay off 1 year
trimmer .40 pay off 1 year
blower .49 pay off 1 year
vehicle maintenance .36 ph
equip maint. .40 ph
vehicle ins .88 ph
vehicle lisencing .17ph
biz ins. and bond 1.25 ph
biz license .07 ph
marketing 4.46 ph
vehicle and equip gas 4.46 ph
phone and comm 1.50 ph

total 29.88

self pay 30 ph
self ins 4.46 ph

total 64.35

green jeans 509
01-24-2012, 08:28 PM
Usaully people always say something on here. Ok so I put a bid in today for 3.8 acres of grass but its spread out through a 40 acre shopping center. so lots of walking and push mowing about 1 acre of push mowing islands. $568 I figure 2 guys 5.5 hours any thoughts? My overhead is above

TMlawncare
01-25-2012, 05:25 PM
Your $60 sounds about right for the job. Your are getting it done in an hour so you are grossing $60/hr. Thats actually better then the national average of $43/hr averaged throughout the day. Your numbers you are putting on your equipment and such are way off. You can't judge your profit margin by a bunch of arbittary numbers. Here is an example: marketing $4.46 per hour. Based on what? There is no way it can be that high. I could go through most of your list and do the same thing. Just a bunch of random numbers.

gmlm
01-25-2012, 06:23 PM
i agree with TM figuring your costs per hour has too many variables. i figure total monthly overhead, including pay roll for the employees (excluding myself), daily fuel cost. then divide by 5 days in a week. then that is the nut you have to crack each day. over that is your pay/business profit. and why is advertising up to 4.46 per hour, thats 175.00 per week on a 40 hour week. that is very high!

gmlm
01-25-2012, 06:24 PM
green jeans....is that a monthly cost, or a per trip cost.

cpllawncare
01-25-2012, 09:25 PM
Looks like your $60/hr is right about perfect, but I agree, you need to refigure your cost.

green jeans 509
01-25-2012, 10:01 PM
This is exactly the feedback I wanted. Ok so for the marketing expense part in the past I have spent maybe 1k a year advertising. I need to make more money and update my equipment I do high end residential and I want to look like I deserve to be there. So spend more money a 5k budget what can you do with that advertise in 3 weekly papers, buy 150 yardsigns, 5k door hangers, direct mail post cards, and as I saw flood flood flood the areas you want. I personally feel now (not 3 weeks ago) now that $60 is a good number but as I started breaking stuff down maybe I need a little more. Any walker mower owners unless I dont know what im talking about which I might not knows walkers are expensive to fix and maintain but Im not sure my customers would want it any other way and now I think they should pay a $7 dollar difference compared to something cheaper and possibly faster. If they want the walker should I charge em for the walker?

I want your opinion please if I should change the way I charge cost what should I do, what do you do?

cpllawncare
01-26-2012, 08:05 AM
I wouldn't charge more just because of a type of mower, there was a great post on here awhile back about figuring cost and the type of questions you should be asking yourself, I'll see if I can find it.

TMlawncare
01-27-2012, 01:30 AM
This is exactly the feedback I wanted. Ok so for the marketing expense part in the past I have spent maybe 1k a year advertising. I need to make more money and update my equipment I do high end residential and I want to look like I deserve to be there. So spend more money a 5k budget what can you do with that advertise in 3 weekly papers, buy 150 yardsigns, 5k door hangers, direct mail post cards, and as I saw flood flood flood the areas you want. I personally feel now (not 3 weeks ago) now that $60 is a good number but as I started breaking stuff down maybe I need a little more. Any walker mower owners unless I dont know what im talking about which I might not knows walkers are expensive to fix and maintain but Im not sure my customers would want it any other way and now I think they should pay a $7 dollar difference compared to something cheaper and possibly faster. If they want the walker should I charge em for the walker?

I want your opinion please if I should change the way I charge cost what should I do, what do you do?

The walker mower does not cost you over $10hr to operate. The only way it is possible that the cost could be that high is if you are going to give it away after one season. I have a 1996 walker model D 48" ghs. It cost me over 10k back then. It now has 3800hrs on it and goes out every week. Repairs last year $150. How much does it cost me per hour? This is how I figure my cost. I put all my expenses into Quickbooks. All of my income goes in Quickbooks. If I gross 10000 and my expenses are 6000, I know 60% of everyjob I take will be swallowed up in expenses. I then use this as an average when I am budgeting costs. Every month I pay into a replacement fund for equipment as well. I usually try to stick around $600 each month in there during the season.

green jeans 509
01-27-2012, 01:06 PM
I appreciate the input. I took over a lawn business I used to work at when I was a kid, the guy who ran it at one point owned 3 walkers it was the most impressive setup there was in my town at that time there wasnt even a single company in town that had walkers. When I took over 2 yrs ago all of his walkers were dead except for the one that he kept running from using parts from the other 2. This guy was pretty big 120 accounts mostly $40-50 accounts back in 1990's but he never managed profit and loss or put money into his eqipment and in the end when I took over I got 7 accounts, since then I bought a walker that blew a motor after 4 months and now im looking at replacing the catching system from chute to catcher that is about 2k, plus new hydros at 650 each. I bought a used mower and i'm guessing the owner before didn't treat it all to well or the employee's either way in the last 2 yrs i'll have spent about 5 k on it. I am sick of having to support my business with my wages I want it to support itself and I feel at 9.2 ph that pays the mower off in 2 yrs (if it were brand new) and gives me money to keep it going, and save money for a new walker.

MarkintheGarden
01-27-2012, 07:13 PM
Green jeans, it is good that you are doing your homework. Keep at it till you get more accurate numbers. As others stated, you are overestimating some of your costs.

A thing I do, and have suggested to others, if there is something that you do not have that will help your production, add that also, that way you are charging for something that you do not have, but if you do not, you will never have it unless you go in debt or reach into your own pocket.

Also, you should add profit to the equation, and consider the profit as long term savings for the business.

We can crunch the numbers for success but we have to sell it and 60 an hour can be hard to sell. I am guessing that you are a seasoned veteran in this trade, so you are worth the 60. But if you are trying to bring in new business, the higher the rate, the slower it comes in.

I do not know your market, but I think you are spending too much on advertisement. I spend very little and always have. I get my clientele through salesmanship, using online tools and door to door flyers. I have made good friends and developed good customer loyalty. So, I invest more time than money.

I am guessing that your salary is a figure that you want rather than need. If you can pay yourself that way, I hope you are doing it wisely; health ins., 401k, SEP plan, etc.

One thing I learned about paying myself, is it is crucial to know how much you need to pay yourself and do that, rather than try to pay yourself what you want. The less you pay yourself, the more assured you can be that you will get it, and not end up as you say; "support your business with your wage".

I use different rates from 40. to 60. It is a tricky balance of using lower prices to get a customer, and also trying to increase rates over time. It works, if you tell customers that you are giving them a bargain so you can prove your services.

I told one customer that I would mow his lawn for $75.00 and let him know afterward how much the regular rate would be. When I was done, I calculated that at 75 it worked out to 50.00 per man hour. (I only wanted 45)
but what I did was tell him that the going rate would be $85. making man hours 55. I was able to say, "you got ten bucks off the first cut", and get more than I wanted.

It is not hard to make money in this business if you do good work. It is hard to make good money.