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Old 11-24-2012, 01:57 PM
grassmasterswilson grassmasterswilson is offline
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Profit margin

Anyone care to share their profit margin target? I'm trying to work on pricing for 2013.

Right now I'm thinking of a 10% product markup and them 30-40% profit margin after all cost. I'd like 40 but 30 may be more realistic. I'm also adding in around 2/1000 for labor which I'm the one who does as the owner/operator.


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Old 11-24-2012, 05:40 PM
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phasthound phasthound is online now
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I recommend reading this book.
http://www.lawdog.com/the-essential-...nd-profitable/
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Old 11-24-2012, 10:01 PM
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Efficiency Efficiency is offline
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with numbers like that, its no surprise you struggle to get a larger base of clients.
We gleefully work for less than half you target margin and our labor portion is even less than $2/k.
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Old 11-24-2012, 10:33 PM
grassmasterswilson grassmasterswilson is offline
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Originally Posted by Efficiency View Post
with numbers like that, its no surprise you struggle to get a larger base of clients.
We gleefully work for less than half you target margin and our labor portion is even less than $2/k.
In not struggling to get clients or don't think so. I'm growing my app side at a very good rate. I was just curious what profit margin solo owner/operators were happy with and what that number would be for owners with techs.
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Old 11-25-2012, 08:27 AM
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Efficiency Efficiency is offline
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that was somewhat rude. Ill apologize.
For an owner ran, tech performed company, 10-20% is going to be a reasonable number to shoot for. 10 good, 15 average, 20+ above average.
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Old 11-25-2012, 10:40 AM
Duekster Duekster is offline
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Quote:
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that was somewhat rude. Ill apologize.
For an owner ran, tech performed company, 10-20% is going to be a reasonable number to shoot for. 10 good, 15 average, 20+ above average.
It is not rude. None of us know how others calculate cost, what price point the suppliers charge based on volume and quality of products used.
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Old 11-25-2012, 02:24 PM
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rcreech rcreech is offline
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This is a tough question really!

There are so many variables to take into account.

Size of operation, employees, buying power, overhead, size of lawns etc.

Also you have to take into account specialized services such as seeding, pest control, aeration etc which has much better margins then lawn applications.

We find that growing our specialized services helps greatly and keeps us busy between our slower times such as dormant seeding in the winter.

I think its also safe to say that the faster you grow the more you will find the margin decreases. Overhead can eat up margin very fast if one isn't careful!
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Old 11-25-2012, 03:42 PM
elbow300 elbow300 is offline
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I run a medium sized lawn and landscape maintenance company that I started in 2006. We have experienced good growth over the 6 years. I started out with just me, my daily driver truck, a used 48 walk, a blower, and a trimmer. We have a total of 9 guys now, with one being a bookkeeper/ office manager, and one other estimator besides myself. If you are on the route everyday, I think the margins you can expect are significantly higher than if you are operating a company with routes run by crew foremen other than yourself. For one thing your being there means you dont have to pay another supervisor for that day's work. Also, you have much better quality control. This means greatly reduced instances of going back to fix things that are not exactly how the client requsted. Margins in our area are tight enough in the field that a return trip means a loss on the job or at least breaking even. Nobody wants to break even. We can do that on the couch. I think for an owner operator going out on the route every day, margins could be in the 40-55% range. If you are a diligent owner, with a sharp eye on efficiency, you can expect 20-30% not being directly involved with the completion of every project. Establishing good relationships with your suppliers can really impact your bottom line as well. Mark up on materials is a great place to increase margins, especially if you have the space to warehouse frequently used materials, cutting down on handling and delivery costs.
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Old 11-25-2012, 04:53 PM
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Quote:
Originally Posted by elbow300 View Post
I run a medium sized lawn and landscape maintenance company that I started in 2006. We have experienced good growth over the 6 years. I started out with just me, my daily driver truck, a used 48 walk, a blower, and a trimmer. We have a total of 9 guys now, with one being a bookkeeper/ office manager, and one other estimator besides myself. If you are on the route everyday, I think the margins you can expect are significantly higher than if you are operating a company with routes run by crew foremen other than yourself. For one thing your being there means you dont have to pay another supervisor for that day's work. Also, you have much better quality control. This means greatly reduced instances of going back to fix things that are not exactly how the client requsted. Margins in our area are tight enough in the field that a return trip means a loss on the job or at least breaking even. Nobody wants to break even. We can do that on the couch. I think for an owner operator going out on the route every day, margins could be in the 40-55% range. If you are a diligent owner, with a sharp eye on efficiency, you can expect 20-30% not being directly involved with the completion of every project. Establishing good relationships with your suppliers can really impact your bottom line as well. Mark up on materials is a great place to increase margins, especially if you have the space to warehouse frequently used materials, cutting down on handling and delivery costs.
AGREE 100%

Well said
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