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Am I lowballing?

Discussion in 'Business Operations' started by BetterLawns&Gardens, Apr 22, 2013.

  1. BetterLawns&Gardens

    BetterLawns&Gardens LawnSite Member
    Posts: 60

    I am new to the lawn care business. This is only my second year, and I am obviously still learning. Right now it is just me doing the work on my own, and sometimes my husband helps. Next year I plan to purchase a separate truck and hire someone to help me. So because of that I do all my estimates as if I have two people out there doing the work and if I were paying them.

    I recently quoted a property and when i told the lady what the price was she about had a heart attack. I didn't quite understand why until after I cut and she paid. she told me that she had contacted 5 or 6 other companies and they quoted her between 40-50 my quote was 20. How do I react to that?

    I came up with the price using a system that I figured out based on internet research. Measuring the yard, figuring out the expense of cutting it, total business costs, time to cut the yard, and what i would pay employees. I figure when I do hire someone I would pay a driver (me) 10 per hour, and a helper min wage which is 8.50. Based on that i figured it would take me approximately 45 mins or so to cut by myself and with a helper it would take about 30 or so which i came up with 20 and that is about what i charge everyone with that same sized yard.

    I figure either I am planning to pay an employee way too low or my costs are way lower than theirs. The one company that she said was the most expensive I see signs around town everywhere so they are obviously getting people to pay these prices, however they seem to me to be ridiculously high.

    What do I do about this? Am I loosing way too much money charging these cheaper prices when everyone else is making double or more? Or do I keep them lower to get more yards and make more money in the long run because I have more work to do? Any advice is greatly appreciated.
  2. WPLC

    WPLC LawnSite Member
    from USA
    Posts: 157

    If it takes 45 minutes for you to mow, yes you are lowballing. What was square footage?
  3. Birchwood

    Birchwood LawnSite Member
    Posts: 218

    Do you only want to make $10 per hour, and you may not find good help for minimum wage.
  4. Vecchio Lawn Care

    Vecchio Lawn Care LawnSite Senior Member
    Posts: 905

    It is my second year also. I always try to make at least 45 a hour per mower running. I have never quoted a lawn for 20. Figure one man hour being 40-60. If you figure $10 a hour you won't be in business long.
  5. alldayrj

    alldayrj LawnSite Gold Member
    Posts: 3,770

    You priced it at your break even point, didn't add profit.

    The point of employees is for them to earn you profit. Not just to pay them.

    Use the big guys prices or beat them by 5 or 10% but don't beat everyone out of deserved $$$
    Posted via Mobile Device
  6. wbw

    wbw LawnSite Fanatic
    Posts: 5,471

    I don't mow grass. I clean pools. For cleaning we target $65 an hour. The truth is that is not enough. It is almost a loss leader. We charge $95 per hour for repairs plus equipment markup and do ok but we are looking to go to $110.

    I am not trying to be rude but you have no idea what it cost to run a business. It is expensive. Vehicles, equipment, insurance, office supplies, postage. Did I say insurance? Commercial auto, general liability, workers comp, unemployment not to mention health. A truck cost $30,000 and uses $100 a week in gas. Then you have employes tearing them up. Employees and strangers stealing from you etc etc.
    $10 and $8.50 per hour...?????
    Posted via Mobile Device
  7. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 16,992

    Better to stay solo, you wont loose as much money.
  8. Ben Harris

    Ben Harris LawnSite Member
    Posts: 52

    your going to have trouble paying a foremen/crew leader only $10.00, you need to be shooting for at least $60.00 per hour for company revenue and that is still probably not enough.
  9. Raymond S.

    Raymond S. LawnSite Senior Member
    Posts: 981

    It pains me to read things like this. It's not just you, it's large companies too. You're charging $20 for what might be 1/2 hour of work and large companies are charging $75 for 3 guys spending an hour on a property. It's unbelievable what people are willing to work for in this business. This isn't anything personal. Like others have said. You just don't know the true cost of doing business. To give you an idea, our minimum is $40/cut (1/2 acre bagged, trimmed, blow.) 2 man crew, $23.50/hr labor cost, equipment, fuel, insurance, taxes, etc...and I lose money mowing grass!!! If I could sell off all my equipment and maintenance accounts I would strictly do chemical applications. Once you cut a yard for $20 it will forever remain a $20 yard.
    Posted via Mobile Device
  10. larryinalabama

    larryinalabama LawnSite Fanatic
    Posts: 16,992

    Truth is its likley you could have got the yard for 35$, and you may be happier doing the gig by yourself. Sell yourself by landing a few at a decient price and make the yards look real nice.

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