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a question for some of the more established lcos

Discussion in 'Lawn Mowing' started by ToG, Oct 3, 2003.

  1. ToG

    ToG LawnSite Member
    Posts: 54

    to begin, i am wrapping up my first season as a professional lco. i've worked for one lco in NC and a large landscape company in FL. i am knowledgeable of many aspects in this industry, you could use the phrase "jack of all trades, master of none", however i am very meticulous with my work and take pride in what i do.

    last winter when i forged the idea of setting up shop, i found this site and the only thing posted was grumbling about low-ballers. i have since found that the people who whine about such practices are ones who probably cannot compete at a professional level. i am by no means a lowballer, first year considered i feel i've done fairly well. before i continue let me provide an equipment list so all can know where i stand. everything was bought new, about half of which with profits from this years operation.

    1993 f-150
    5x8 carmate trailer
    2003 toro 44" t-bar wb
    21" 6.75hp piece of sh....eer joy to mow with craftsman pusher
    stihl br 420 backpack
    cub cadet string trimmer (this turned out to be great equip.)
    echo sr210 stick edger
    echo pas230 w/hedger attachment
    and of course all the misc. shovels, rakes, wheelbarrels,tarps, lopers, pruning snips .........
    (not to mention shirts, magnets, flyers, doorknob hangers...)

    anyway, my post is concerning pricing and the performance of employees (i have none). what i have noticed is many peoples replies to posts are "up your price!" or "is that it?". when i mow, i come close to $45 an hour, and that's fine for know. many people say $1 a minute or more. what i want to know is, is the customer truly getting a fair price from these people? is the work they are performing really worth every penny? i have one customer in a very nice part of town and most of the lots are 1/2 arce. i charge this customer $38/mow and it takes me around 40 mins before it's all said and done. the properties on either side are maintained by two of the largest lcos around. each crew is 2-man and the equipment is to be envied. throughout this season i have pulled up to this customers house and one or the other of the mentioned lco crews are already at work. i have and always can begin mowing and finish, load up and drive off before either of these established 2-man crews are even close to leaving. guess what else?, my stripes are straighter, i've no ruts or tear-ups, no missed weeds....i do equal if not better work than these crews. so, my question is, are prices high to compensate for poor employee performance or what. it takes two guys w/better, faster equipment 25% longer to mow an identical lot. i have seen this time and time again. does anyone have any real opinions on this other than blah, blah, 'those lcos are in need of...' , ' try and take their business', ....

    what i'm looking for is a true explaination of why the pricing is what it is today, and how you justify it. if it gets too high, customers can always buy the $150 yardman special and mow for themselves.
  2. KenH

    KenH LawnSite Bronze Member
    from CT
    Posts: 1,622

    A big mistake I see alot of people make is seeing the $45.00 per hour they are making and comparing it to the $9.00 they were making at McDonalds. When you are in business for yourself, you need to take into account ALL your expenses. If you are pulling in $45 per hour, you need to know how much per hour all the eqiupment you listed costs you to run, including gas and maintenance. Off of your $45 per hour, you need to subtract taxes (fed., state, SS, MCare) as well as insurances. (health, workmans comp, comm liability.) Now take into account all the time you spend working on your business not getting paid for, ie. estimates, paperwork, phone calls, equip. maint, drivetime, etc. After you get a good hold on all your expenses, you will see that $45.oo is not that much.

    How much do you think the OWNER of McDonalds is making per hour??? That is who you have to compare yourself to. Now if you are making $45 per hour AFTER all expenses, that is a different story.
  3. Runner

    Runner LawnSite Fanatic
    Posts: 13,496

    There is SUREly a coorelation between labor and and cost. When employees come into it, even though money can and is made off of them, there is also a margin there for "dead-time" cost. This is time that the employee(s) are on the clock, but billable work isn't actually being performed. (i.e. windshield time, store breaks, and even time on the job when an employee is just standing there waiting for another to finish, or is slow and wasting time and/or work and having to walk over things he's already been by. PROficiency is hard to come by in most hourly employees. Now, if these guys were with YOU on YOUR property, and you were able to observe them closely, you would probably not take long in picking up on the little things that add up to a whole lotta' time wasted.
    As far as some pricing goes, well, that's just a matter of individual cost. No, there AREN'T alot of lco's charging what they should, because a great number of them don't HAVE the expenses of a full time legit service. Many don't even pay their taxes on the money(s) earned, let alone pay insurances. It is just a "supplement". THESE are the ones that make the industry decieving to the general public. There are so many of them out there doing it, that it is the general perception of the public that 25 bucks is what the lawn is SUPPOSED to cost. Take for instance; you go to a muffler shop to have a new muffler and tailpipe put on. This shop has about 25 bucks wrapped up in product materials, but yet you are charged $130 for a little less than an hours work. Well, most people would say. "Well, they have this shop to pay for, they have the torches, welders, lifts, etc, I guess that's what it costs." Well, guess what? So do we. WE have a shop for our equipment and maintenance, WE have torches and welders (many of us), and we have things like $10,000 mowers, several thousands of dollars in smaller equipment (specialty saws, etc.), and WE bring the service to the CUSTOMER! They don't even have to leave the comfort of their living room to have these services performed. So, on that basis, our "dollar a minute", or however much we happen to charge (or whatever we can get), is REALLY not that "dollar a minute". And that is without all the "behind the scenes" operations that are performed, such as maintenance, blade sharpening, administrative work, estimate time, and customer relations. I hope this helps as sort of an "insight" on expenses, and always know, that there are more expenses than what show on the outside. ALWAYS BE PREPARED!
  4. WeatherMan

    WeatherMan LawnSite Senior Member
    Posts: 693

    I Agree with Ken I try to base all my estimates on $65.00 an Hour.
    And if you beat one of my crews with a 44" on a half acre I would Fire Them. With out a thought
  5. Runner

    Runner LawnSite Fanatic
    Posts: 13,496

    Not to get off the subject, or anything, but Ken replied right at the same time I did, and said basically everything I was saying in ALOT less words!lol:D
  6. WeatherMan

    WeatherMan LawnSite Senior Member
    Posts: 693

  7. ElephantNest

    ElephantNest LawnSite Bronze Member
    from La.
    Posts: 1,878

    I make about $45.00/hour after expenses. I charge $60.00/hour if I'm using tools that require gas. Sometimes less depending on drive time, ease of work, etc. If I'm trimming shrubs by hand, planting gardens, etc., then I come a little closer to the $45.00 before expenses.
    I am worth every penny.
    The work I do speaks for itself. If homeowners wanted to mow their own yard, they would be mowing it. Yes, they can go buy a $150.00 mower, then they get to worry about it when it breaks down, how do they mow it then? They also need a trimmer, blower, etc. Then they need to make sure they always have gas/oil. Then maintenence, repairs, yada yada. We do ALL of that for them. They worry about nothing.
    Don't forget, when you're off the clock, you're cleaning, repairing, maintaining, calling, getting gas, buying needed items, doing paper work, paying bills, making schedules, etc. All of that is what the customer gets also. Not just his grass chopped down and spit out. What I'm trying to say is, they are paying for your services, and it takes money for you to provide services to them. Who better to help you pay than your customers?

    Now, if my customers all had equipment on-site, ready to go when I got there, I could work for $15- 20.00/hour or so. Maybe less. Just use their stuff each time, let them maintain it all. We are not just cutting grass, we are providing a service, which, obviously, they do not want to perform themselves.

    Just my $.02 worth.

  8. KenH

    KenH LawnSite Bronze Member
    from CT
    Posts: 1,622

    I guess that brings some validity to what both of us has to say!!;) :p ;)
  9. GeorgiaGrassMan

    GeorgiaGrassMan LawnSite Member
    Posts: 147

    I agree with Ken also. One other thing to add to the equation is depreciation of equipment - not just the operating costs. What I'm talking about is true depreciation - not tax depreciation. In other words, if you paid $3500 for your mower and you figure you will use it for 1500 hours and then sell it for maybe $800.00, how much would you have to save from each hour of operation to buy a new one to replace it? The same thing with all your 2 cycle stuff.

    Different things work for different people, but what I have found that works for me is use a helper. In my case, I have a fairly large 15 1/2 year old son who fits the bill perfectly, but if it weren't for him, I would hire a helper. Here's my reasoning. I find it very hard to make $60.00/hour working by myself, but I seem to have no problem making $75.00/hour with a helper. Now if the total cost of the helper (wages, WC, FICA, etc.) is $15.00, then I have my $60.00. This was our first year in business and we should be able to become more productive. When that happens, we will move closer to $80.00 per hour and I can pay my helper more. One thing we are going to do next year is to add a 2nd big mower so that when the helper is done with edging and weedeating, he can help mow. This will work better on some accounts than others, but where it works, it should work well. We have already been doing this using a 21" as the second mower.

    By the reasoning that I have seen some on here use, we are only making $37.50-40.00 per hour, but my bank account doesn't see it that way. It sees me grossing $60.00 or so and the helper getting $15.00. Works for me, but it only works if you and your helper are productive working together.

    One other observation I have about this arrangement is that you need to do more core maintenance (mowing, edging, weedeating, blowing) than other stuff like hedge trimming, aerating, etc. IF - and this is a big IF - that kind of work competes with your core stuff. Why? Well in our case at least, we can't seem to make nearly as much doing the other stuff. If we had a full load of core maintenance, I would only do hedge trimming and that sort of thing in the off season or the in season only if I needed to do it to keep the customer. Winter is the best time to trim ornamentals in this part of the country anyway.
  10. lawnman_scott

    lawnman_scott LawnSite Fanatic
    Posts: 7,547

    We have a 3 man crew in summer, 2 guys work about 70 hours, and one about 40, approximatly 30 weeks. 2man crew in winter, approximatly 50 hours each, about 20 weeks.

    summer [(2x70)+(1x40)]x30=5400 hours
    winter (2x50)x20= 2000 hours
    Total hours for the year 7400
    $444,000 would equal my gross pay?????
    I think its safe to say, that you will earn what the market will bear.

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