Annual markup to a HOA contract......

Discussion in 'Lawn Mowing' started by Green Pastures, Jun 16, 2008.

  1. Green Pastures

    Green Pastures LawnSite Silver Member
    Posts: 2,457

    I'm bidding a Home Owners Association grounds maintenance package.

    I have the numbers down, I know the square footage, I know what my costs are, I know what my first year's bid is going to be......

    However the "Board" wants the contract written so that I give them my price for the next three years NOW.

    I have no idea what gas and diesel prices are going to be at the end of the month let alone in 09', 10' and 11'.

    Sure the easy solution is just to clause in a "fuel surcharge" if fuel should increase past a certain percentage however the "board" also does not want the contract written that way. They want a price for each year in a contract firmly quoted.

    My first years price is going to be $2500 a month for 12 consecutive months. How much would you mark up for the second year? And the third?

  2. bohiaa

    bohiaa LawnSite Fanatic
    Posts: 5,220

    There's Just NO way to perdect the future.....

    and I suppose they want a " way out " if there is a drout
  3. fool32696

    fool32696 LawnSite Senior Member
    Posts: 991

    I'd account for about 4% inflation and guess figure on paying $6 a gallon next year and $8 a gallon the year after that to be safe.
  4. 2stroke

    2stroke LawnSite Senior Member
    Posts: 260

    I HAVE HEARD 7% was the # to go by.
  5. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    I don't get Hoa's, they ask me to submit bids and I do...
    But by the time they present me with the 'requirements' it seems as good as over.
    You might as well bestow down upon me the privilege of allowing me to work on thine beautiful yard...

    Now way I do things, I submit my bid on my terms and have a nice day.
    Take it or leave it.
    Needless to say, I have never gotten an Hoa bid.
    But that's how I play it, I look at these bids like I was playing the lottery, and maybe one day I win.
    Because here again, my bid fills their 'have to get three bids' requirement,
    my bid is one of those three, whether they approve is another story
    but I have done my job.

    Now, if you really want this account...
    You probably want to talk to someone with experience in that area, and unless you really trust someone at the association that might not be the place to ask, but someone in our line of work or related who has been down this road more than a few times...

    Good luck
  6. Green Pastures

    Green Pastures LawnSite Silver Member
    Posts: 2,457

    hmmm just thinking out loud here...bear with me...

    $2500 x 7% = $175

    $175 / 40 (cuts) = $4.38

    Wow a whole $4.38 per cut more and gas will have increased by 50%.

    $4.38 more for 2 guys on 60" mowers for two hours and one guy on string trimmer and a blower for a hour.

    $4.38 does not even get me a gallon of diesel fuel.

    $4.38 will not run ONE 60" mower for an hour.

    $4.38 will not pay an employee for an hour.

    God help us.
  7. rmdm94

    rmdm94 LawnSite Member
    from 34240
    Posts: 27

    in the first message you wrote 2500.00 per month so........
    2500.00 x 7% =175.00 per month more = 2675.00 per month
    175.00 x 12 =2100.00 divided by 40 cuts =52.50 per cut more for the 2nd year
    56.17 per cut for the 3rd year= 2731.17 per month
    I would do it for that!!!
  8. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    It's an entire grounds maintenance package...
    thou :p
  9. Tharrell

    Tharrell LawnSite Silver Member
    Posts: 2,964

    The total cost of the years indicated is what they'll use to decide which bid to accept. I'm in the process of doing the same thing with the city. They want to know the percentage of increase if any for 5 years. Tony
  10. Happy Frog

    Happy Frog LawnSite Bronze Member
    Posts: 1,224

    Use your increase calculation as usual (+ 7% per year) and include a fuel adjustment clause based on actual fuel cost (@ 2.0 gal. per hour and per ZTR and 1.0 Gal. per hour on blower + trimmer).
    Let say gas will cost $2.00 more per gal. in two years. That is $18.00 more per cut, or $60.00 more per month.
    I don't see an issue here... Raise your price by $205.00 per month the first year and $235.00 the second year... Let them know that your quote includes a 50% fuel cost increase and that you will charge them less if fuel doesn't increase as much. :drinkup:

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