The Green Industry's Resource Center

Thread Tools   Display Modes
Old 07-27-2011, 07:34 PM
lukemelo216 lukemelo216 is offline
LawnSite Bronze Member
Join Date: Oct 2008
Location: ...
Posts: 1,267
the way your figuring out your hourly rate is not right. You cant say 9$/hr for helpers then $32 for me and my dad. You need to add up your total costs as a whole, multiply it by 4 (weeks/month) then divide it by the number of hours your working (320, 8 guys 40/week) then thats your break even rate. Then multiply that by your profit, and come up with an hourly rate for one person. That hourly rate includes, projected wages for employess, insurance (gl, auto, wc), rent (shop, office: even if your running from home it should be taken into account), cell phones, landlines, repair budget, fuel budget, equipment, tools etc. So if your nut is $15/hr and you want to make 50% profit you would charge $22.50/hr. I would not put down a bid that says $150.00 per hour simply becasue management will see that and fall out of their chair. Even if you put down 8 guys working.

That brings me to my next point. If you have 8 guys working, you will be much more profitable and productive if you split things up. You run a crew of 3 and your dad runs a crew of 3. Seperate properties and all. Its been proven time and time again that the less people on a crew the more productive they are. If you have a really big job, then both crews can meet together and start, and get a jump on it then leave and head to the next job. Thats what I would do at least.

As far as price thats on you. Nut X Profit=bid. I play around with my profit margins usually. I try to gain anywhere from 30-50% profit on any job. On something like this probably in the range of like 35% or so just because of the volume.

I am not trying to sound discouraging, but it does sound like your in a little over your head personally, if your asking for help on this stuff. I know your getting advice but thats just my opinion. I would tread lightly though on it simply becasue it has been changed 3xs in the last 4 years. Lastly, most likely if you do get it from the sounds of it youll have it 1 maybe 2 years and then it will be gone to the next low bidder. First year your set to make 6 digits. Ill go on the generous side and say 150k for the year, you add in that 300k accoutn that puts you up to 500k (figure more work added too) you lose that account in a year or 2 and your down to 200k again thats a 60% loss in your business which could be the end for you.
Reply With Quote
Old 07-27-2011, 07:34 PM
vencops's Avatar
vencops vencops is offline
LawnSite Bronze Member
Join Date: Feb 2011
Location: NC
Posts: 1,537
Just remember, you're not arguing with me. You're arguing with simple math.

If you and your dad constitute 128MH's/wk (64X2)...and you bill that out at $38/MH, what does that number look like - beside your professed cost of labor of $127K (based on 32cuts/yr)? I'll give you a hint. You're in the hole for +/- $30K, and you haven't paid the 1st employee.

Can you not see why you should put down your shovel?
Reply With Quote
Old 07-27-2011, 07:35 PM
krrp1212 krrp1212 is offline
LawnSite Member
Join Date: Mar 2010
Location: Wetumpka AL
Posts: 37
[QUOTE=Efficiency;4109336]On track for a 6 digit year? Wow... not to be an jerk but you may have something to get excited about when you have your first 6 digit month.

Look, you come here looking for help to something you have already figured out. Why does it seem like everyone is dogging on you? Because you 'have it all figured out' but when we point out the flaws in your thinking you remind us you have it all figured out.

Try these for example: What is the exact percentage of your labor burden?
What is the gross margin on this bid? How do you arrive at the hour figures for each location? (based on guess or production data)

Look, I keep trying to drill my costs down lower each and every day. The lowest I can send my mowing crews out is $32 a man hour. Im about $15 a man hour lower than most local companies and a hair higher than the big regional and national companies.

If you are only doing $100k a year, I PROMISE you that you will not be able to underbid them (and make money doing so). Yes, it is great fun to grow your company but you have to walk before you can run. I would say you are in the process of crawling right now...[/QU
I see what your saying...and I am not gonna make a lowball bid just to get it...i just wanted some pointers...
Posted via Mobile Device
Reply With Quote
Old 07-27-2011, 07:42 PM
lukemelo216 lukemelo216 is offline
LawnSite Bronze Member
Join Date: Oct 2008
Location: ...
Posts: 1,267
Yes I do agree with effeciency. How did you develop those numbers for the bid itself?

We run tests durng the season periodically with timers and such to determine that actualy production of our team. I will go out and have them start mowing and I time them, and I know the distances of stuff so I can gauge it. Do that a few times to determine the rate we can work at. And you have to do it at an average property. Not a small tight one, and not large open becasue that throws off your numbers. And we do this for everything! Every different size ztr, wb, push, trimmer, edger, etc.

We know our numbers. We know our operations costs, and we know how to bid. When you have those things down then you will succeed.

Like I said before you cant figure out your total hourly rate by just adding each guys hourly rate together, and 20$ in there for fuel like you did. Thats a set up for failure.

You need to figure out your true hourly rate, as i described in my preceeding post. Then bid.
Reply With Quote
Old 07-27-2011, 10:13 PM
GrassGuerilla GrassGuerilla is offline
LawnSite Bronze Member
Join Date: Aug 2008
Location: St. Louis Missouri
Posts: 1,437
I fail to see how you have estimated production without knowing what equipment your crew will be using. Not to mention how well your crew can really produce with it. I've screwed up bids with known variables and a proven track record.

I hope to hear from you next year, with a big fat margin. But it sounds dangerously thin. As a solo 100k annual profit sounds like a four maybe five man operation. There are far more knowledgeable people on here, hope they can help you.
Posted via Mobile Device
Reply With Quote
Old 07-27-2011, 10:30 PM
topsites topsites is offline
LawnSite Fanatic
Join Date: Mar 2005
Location: Richmond Virginia
Posts: 21,659
Sometimes, when things go this way...
Step outside, clean yourself off, regather your bearings, come back inside and start all over fresh?

Last edited by topsites; 07-27-2011 at 10:34 PM.
Reply With Quote
Old 07-28-2011, 05:50 PM
Glenn Lawn Care's Avatar
Glenn Lawn Care Glenn Lawn Care is offline
LawnSite Silver Member
Join Date: May 2008
Location: Inver Grove Heights, MN
Posts: 2,651
Originally Posted by krrp1212 View Post
Im 20 years old and am on pace for a 6digit gross year...i think ive goT IT...just asking for thoughts...just because I want to expand my business and not scared to try it...glenn...
Posted via Mobile Device
There is nothing wrong with expanding a business over a period of time... but blowing up in one day like what your trying really isnt a good business decision. What if you can not commint to everything you said and then you are s.o.l. I.M.O. Sounds like you are money hungry and thats a bad thing when putting a bid together that large. Good Luck Guy!
'02 Ford F-250 5.4l8' unimount
Western Salt Spreader
Billy Goat

Minnesota certified pesticide applicator

Brotherhood 2000 plus fifteen
"The real lawn care Jesus"
Reply With Quote
Old 07-28-2011, 09:55 PM
PROCUT1's Avatar
PROCUT1 PROCUT1 is offline
LawnSite Platinum Member
Join Date: Dec 2003
Location: TN
Posts: 4,909
Start with this thread. Pardon the personal plug.

Then try your question again
Reply With Quote
Old 07-29-2011, 02:07 AM
ndols2 ndols2 is offline
LawnSite Member
Join Date: May 2010
Location: minneapolis mn
Posts: 88
if this company has changed hands 3 times in 4years. its a sure bet they will drop you too. there is no loyalty with places like this, as you can see. when it comes to pricing, sure it seems low to me.( I charge more per man hr) put if you think you can profit, I say go for it. I would just not count on a re-sign next year, so don't buy more then you can pay for if they don't. I stay away from apartments, and some HOA's because they seem to have such turn over. they tend to complain about every thing, and what to go for the cheapest bid they can find.

2000 Ram 2500 5 speed
1996 f350 dump
2010 52'' Exmark Vantage
2005 48'' Scag walk behind
12' trailer
Protero bagger
echo trimmers and blowers
Western 8.5 MVP
Reply With Quote

apartment , bid , big , mower

Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off

Forum Jump

Layout Style:

Powered by vBulletin® Version 3.8.6
Copyright ©2000 - 2016, Jelsoft Enterprises Ltd.
Copyright ©1998 - 2012, LawnSite.comô - Grand View Media
All times are GMT -4. The time now is 07:57 PM.

Page generated in 0.10139 seconds with 8 queries