PDA

View Full Version : Am I charging too little???


nickm
05-05-2003, 11:33 PM
Tell me if I'm crazy, I only charge $15.00 for any size "level residential" lawn. I placed my ad in just one local paper, and I landed 45 new accounts. 24 of them are weekly and the rest are Bi-weekly. I placed my ad in some more papers and my phones won't stop ringing. I get calls from all types of people, some are young, some are old, and some are other companies pretending to need cuts, and I can tell that they are by the questions they ask. I did some research and found out that most other companies near me charge $25 or $30. a cut.

Am I not charging enough, or am I the only reasonable one out there.

WPLE
05-06-2003, 12:40 AM
How long does it normally take you to do these accounts on the average?? What kind of overhead do you have??

LawnLad
05-06-2003, 07:54 AM
You'll have plenty of people tell you are charging too little. The real question is can you cover your costs and make a profit charging $15.00 per cut for any size lawn.

I would wager that the answer is no. First off - you need to charge according to the size of the lawn. 3,000 sq ft is sure different than 10,000 or 20,000 of turf. A corner lot takes longer to service than a middle of the block lot due to trimming/edging.

How many lawns with travel time can you cut per hour? Per day? If you had to pay someone to do this work - determining all of your loaded labor costs, equipment, overhead and profit requirements - can you make money?

Are you currently tracking your time in and out on each property and how long you have to travel between jobs? If not - start today. Do this for two weeks. At the end of two weeks - you need to know:

How many total payroll hours did you work?
How many of these hours were spent travelling/loading/unloading, etc.
How many hours were spent doing the actual work, or billable hours?
How much total revenue will you invoice from your work?
Divide your revenue by your payroll hours for the two weeks and you will have an average of how much you are recovering per hour.

Once you have this number (if you don't have it already) then come back and we can answer the next question of are you charging enough.

By the way - it may not take you two weeks to find out the information you need. You can make the calculation at the end of each day if you want - and if you're recovering less than $60 to $80 per hour working by yourself - you might not be charging enough.

Also - keep this in mind - if you competition is charging $25.00 or $30.00 - you're leaving at least $7.50 to $10.00 on the table each time you cut. For the very reason your competition is getting more than $50% more than per cut means you too can charge more. Why work for less than you have to. Pricing is a game of what you can get for the services you can perform. It's nice to give the customer a break - but they also expect to pay you for your work, so don't cheat yourself because you want to be a nice guy. You need to be around in five years and if you cheat yourself out of money you'll cheat your customers in the long term because you won't be able to stay in business.

Green in Idaho
05-06-2003, 11:04 AM
Originally posted by LawnLad
You'll have plenty of people tell you are charging too little. The real question is can you cover your costs and make a profit charging $15.00 per cut for any size lawn.

I


Even IF you could make a profit at $15/cut why would you leave $10 per cut on the table (or the lawn in this case).

If the market rate is $25, charge $25 and the additional $10 is MORE profit that will allow you buy bigger, better, equipment. If you don't want to expand the biz, the extra $10/lawn will buy you more toys. Whatever....

Nickm, If you have any more calls, I would suggest you tell them you are full. And refer them to some other person (or some other phone number in your control like a cell phone) then when they call the second # you may be able to still get their biz, but at a market rate.

Don't sell yourself short.

Green Pastures
05-06-2003, 12:21 PM
Yes you are.

nickm
05-06-2003, 05:37 PM
Now I can see why I like site so much. I probably would have never thought of so many different factors in means of pricing. Thanks to you all for your info, I will definetly start keeping track of my times. My company is also tied into a realty co. and I don't have an overhead, except for small things like new trimmer line and 2 stroke oil. Everything I make is pure profit (but I have to take my girl out to eat once in awhile) that I get to put in pocket.
I think I am going to reevaulate my pricing. Thanks again!

nickm
05-06-2003, 05:41 PM
Another thing, In the beginning I did research pricing by getting info on my competitors, and alot of them were charging just about the same thing. I think it's the going rate here.

gogetter
05-06-2003, 06:13 PM
Originally posted by nickm
I don't have an overhead, except for small things like new trimmer line and 2 stroke oil. Everything I make is pure profit

What kind of equipment do you use that doesn't use any gas? How about the vehicle you're using, no gas in there either?

How about insurance? Taxes? Air filters, spark plugs, belts, blades, repairs?

How about the time you spend working that aren't "billable hours", such as time spend sharpening blades, cleaning filters, doing oil changes, running around giving estimates that you don't land.
You want to be paid for all that time too, don't you? You can't just think about the time your on the lawn.
Factor in travel time from lawn to lawn, time spent going to dealers/suppliers, etc.

Some other examples of where my money goes are: business cards, flyers, business phone line, cell phone, signs on truck & trailer, uniforms (soon), stamps, envelopes, ink cartridges for printer, and the list goes on and on.

Nobody is "pure profit" after paying for oil and trimmer line.

nickm
05-06-2003, 09:24 PM
Your right gogetter, but like I said, My co. is tied to a realty co.. I don't pay for gas, I have a blade sharpener in my truck which I power off of the trucks engine, We own a small engine repair shop so I have access to filters, oil, plugs, or what ever else I need. This isn't my only business, I own 2 car washes, a mobile detailing business, and part owner of a property management co. that manages 237 houses with lawns and pools, not to mention that my fiancee is the owner/broker of the realty co. Everything I buy, or take from the shop is written off at tax time as business expenses. I like going out and cutting lawns or cleaning pools because it gets me out of the office or the house and keeps me from getting bored. I called the newspapers and changed my ads, and upped my price to $20 and cut for any size "level residential" lawn.

gogetter
05-06-2003, 11:02 PM
Originally posted by gogetter
How about insurance? Taxes?

Green in Idaho
05-06-2003, 11:43 PM
Well on second thought Nickm since you have no costs, and your actions leach off the other businesses, and you got plenty of money coming in from your other businesses I say

just do it all for free!
\

What the heck... what's a couple bucks to YOU?

nickm
05-07-2003, 12:50 AM
It's not about the money, I have full insurance from state farm. I have 8 f-150's, 8 12ft. trailers, 8 lesco 54in. z turners, 8 32in. walk behinds, 12 self propelled honda's, 12 stihl edgers, 12 stihl trimmers, 12 stihl blowers, 4 billygoats, and 12 gas powered hedge/tree trimmers. I don't mooch of any company, All of the businesses are tied into one, but the realty co. makes the most money by far, which takes care of the lawn co.'s expenses.

Mueller Landscape Inc
05-07-2003, 01:03 AM
Come on Nick. You have all that equipment and you're asking if you are charging enough??? Either you are playing games or you come from a wealthy family and have money to dabble with. Something doesn't add up. :)

gogetter
05-07-2003, 01:10 AM
Now he's just getting silly.
Thanks for wasting our time!

LawnLad
05-07-2003, 07:02 AM
Nickm - I'm surprised you say you don't have any overhead. What you really mean to say is that you are not attributing any overhead to the landscaping business since the realty company is covering it.

You do have overhead expenses, you're just not tracking them. THerefore you're Realty company is showing higher costs than it has in reality and your lawn mowing business looks like a gem. I would apportion part of the telephone, insurance, equipment costs, etc. to the lawn mowing business from the reality company. Your mowing business is a separate SBU (strategic business unit) that is a fully operating and fuctioning business. It should carry it's own weight.

Once you plug the numbers in for the equipment you're running you will see that you are most likely charging too little.

One more question - how does the realty company do job costing to see if it's more cost effective to do the maintenance work in house versus hiring an outside vendor to do the work? I think if this evaluation were made you'd already have the operating numbers for your 8 trucks and trailers and cadre of equipment.

WildMowMan
05-08-2003, 12:34 PM
One question for nickm......with all of the equipment and accounts that you have, how can you not factor in laborer payroll into your overhead? I'm sure you must pay somebody or bodies to cover your 200+ accounts.....a man/hour ratio must be factored into your overall pricing. I'm not trying to be snide, but I don't see how $15/account (even $20) could possibly cover all expenses..especially on acre+ lawns....In the mid-late spring your lawns will be unbearably tall. Time spent maintaining these properties are going to increase if not double until the summer burn-out..especially if you have fertilization contracts. Your laborers are getting paid by the hour ( i assume) not by the account. More time equals greater payroll plus OT in some cases (in your case, I don't know). Plus greater time spent on each property means you are going to be playing alot of catch-up in the upcoming month or so. In my neck of the woods..most contractors would even charge a double cut during thee months. Also what about workmans compensation for your labor (just in case).....just some food for thought....factor in everything, nickm, don't sell yourself too short...you may get all the contracts in the world by undercutting the competition but remember..in the long run your staff will want to get paid regardless of what your profit is. There is no such animal as "pure profit"!

gogetter
05-08-2003, 01:37 PM
Me thinks we're being trolled.

Frosty_03
05-08-2003, 11:57 PM
With all that equipment you must have 8 crews, what do you pay you're crews. I have seen lawn services like yours cut yards for 15-20 dollars and they do a fast job but they lack quality. I watched one just the other day come in and in 15 minutes, they had done a 25,000sqft yard, they had two crews and and by the time I finished my yard the knocked out three, but the quality was lacking, as a matter of fact one of the owners came up to me and asked what I would charge to do his lawn cause he was upset at the appearance of his yard, it looked like SH** he said. It was the 25,000 sqft yard I told him off the top of my head 80 bucks. You know what his next question was??? Would it look like the one I was doing and I told him but of course. He told me latter that he was only paying 23.50 you know what I told him???? He got his money's worth. So to answer your question your are charging way too low for you mowing unless it's like what I have express in this post. I like big high dollar LCO they bring me more business than they know. Good Luck and God Speed in all your endevors.:cool:

nickm
05-13-2003, 11:43 PM
Well, I gotta thank you guys. I really don't have 8 crews, I only have 3. I am really in need of help and I just wanted to see if you guys really knew something about this biz, or if you thought you knew something. I believe you guys do know what your talking about. I really am losing money and I need help trying to figure out how to change it. I raised my price from $15 to $20 and a few of my customers have accused my of the bait and switch. I never made them sign any contracts and they are not locked into my services. The co. does manage 240 homes but we only do 129 of their lawns and the rest are just pools. I am now charging 20 for a cut and 10 for the pools. All of our equipment is paid in full. We pay our guys 9.75 an hr., and gas last for 3 days. We make some money, but not as much as we should. I want to bid on some commercial jobs but I have no idea what to start at. Everyone and anyone here has a lawn co. and I want to be able to land these new account and make some money and at the same time, under bidding my competition. Again, I'm sorry for the lie, but I needed to make sure you guys weren't playing. Thanks

Let it Grow
05-14-2003, 01:11 AM
If you want honest answers then ask honest questions. You're never going to find out what you need to know by beating around the bush and telling lies. The people on this site want to help, and there are a whole lot of smart people here. Just be level with us!

tiedeman
05-14-2003, 01:14 AM
Originally posted by nickm
I raised my price from $15 to $20 and a few of my customers have accused my of the bait and switch.


Well, if you advertised the information and told them $15 and then a day later say $20 then yes I would consider that a bait and switch. It all goes back to your advertisment. You are kind of between and rock and a hard place right now. If I was you, I would tell the new customers calling that important information was left off of the add. Like $15 for 3,000 sq foot lawns, and $25 for 6,000..something like that.

nickm
05-14-2003, 08:46 PM
My new ad will say 20. and when people call, I'm going to tell them that it's 20 weekly and 25 bi-weekly. I think that should be ok

Let it Grow
05-14-2003, 09:47 PM
It seems to me like you would do much better to look at each lawn, then decide what your price will be. Maybe advertise free estimates. You wouldn't get as many customers, but they will be better customers. The way you are going you'll be doing huge lawns for $20 when others are charging way more. I don't see how anyone could make money mowing any lawn for $20.

mr.lawnzap
05-14-2003, 10:28 PM
youre definetely low man,come on you have three crews and all that equipment and pay them 9.75 an hour and can do that by charging 15 or 20 a lawn?!! your gonna screw around and run your parent company into the ground with prices like that, seriously are you bull........ us or what?

gogetter
05-14-2003, 10:46 PM
I don't buy any of it. Read his first posts in this thread, it doesn't jive.

It's all "I" and "my", not "we" and "our".
It's "truck" and not "trucks".

Like I said, I don't buy ANY of it.

Jimmy348
05-15-2003, 12:03 AM
Geez, that is a big bag of goodies for such a small crew or whatever he has.

Let it Grow
05-15-2003, 01:53 AM
This is what I mean Nickm. Just be straight with the people on this site. That's the only way we'll be able to help.

Frosty_03
05-15-2003, 08:41 AM
Hey dude like I said before we are here to help you just have to be straigth with us. You see how you got us thinking if you are legit, I bet your customers are wondering the samething. I would bet to venture that you are trying your best to do the right thing with your customers but it is too late cause now you see that you have way under bidded your accounts and now you wan to raise the price yes I would say you took advantage of the situation you have with all your assests and know that you found out that you lowballed you accounts you want to up the annie. I mean you even said in one of your post that you want to underbid your competition. With all your capital coming in I guess you can stand to loose some money. I know you can you can use it as a tax write off cause you for sure are not making no money. Another thing all that equipment just sitting around and you only have three crews!!!! Shame on you!! It sounds to me like you don't know how to run a company, but then that's what I gather just reading your post. Or you can be a some person that has nothing better to do than to try to get attention. In any which way it is we are here to help those that want to help themselves in this business. We share each others ideas and downfalls and everything under the sun that has to do with Lawn Care Services. So if you are just here to tell lies and Bull with us you are wasting your time. I hope that you are legit and do hope you can explain to your customers why you have to go up on your prices and hopefully you don't get a bad reputation as a BAIT AND SWITCH, becuase in my eyes that's what you have done and your kind give us a bad rap. I 'm glad to have people like you out there cause every time I make my deposit at my bank I thank God for his Blessing. I Hope that in your future endevors you have some good luck and one Lawn Professional to another BE HONEST MAN!!!!! GOD SPEED :cool: :blob2:

WildMowMan
05-15-2003, 10:10 AM
Originally posted by Let it Grow
The Institute for Incomplete Studies found that 3 out of 4 F***'n Hysterical!!!!
:D :D :laugh: :laugh:

the scaper
05-15-2003, 11:30 PM
nickm, i think you might have some issues a little more important than landscaping to be concerned about. :help:

Lawn Cops
05-18-2003, 06:10 AM
come on up here and I will sub to you all of the business that you can handle for 15 per yard or even 20. You will go broke and I will make a mint.