Any mathematicians? Universal and simple estimating multipliers

Discussion in 'Lawn Mowing' started by BrendonTW, Jan 7, 2011.

  1. TScapes

    TScapes LawnSite Senior Member
    Posts: 453

    First off... I find that this statement is half true and half opinionated.

    Let me back up a little, there are tons of people on this site that think you should not worry about the square footage of the turf, beds, or anything of the sorts. They also laugh when you mention the idea of tracking linear feet of beds (soft lines) and sidewalks-drives (hardlines). Those are probably the same people that can claim to drive up to a property and spit out a price from their front seat. Not bashing that philosophy, I just operate from a different school of thought. Having been trained by the big dawgs and used their formulas and seen how they account for everything they do... I like that mode of thinking. Every property I walk onto for a potential sale, I measure everything and sometimes take pictures. It allows me to see on paper and visually what I am actually bidding on and gives me a hard number to base my costs on. Every size mower takes a different time to cut a yard. (ie: patterns, obsticles, etc) Every operator of that machine has a different time for each yard. Heat, time of day, outside influences all effect their time. However, if you can develop an average "time" for each of those size mowers, it gives you a measuring tool at your disposal in which to bid with favorable accuracy. When you factor in your drive time, load and unload time, fuel costs, etc. all into that same bid sheet.... whoalla.... you have a bidding tool that will show you your costs for that "individual" property. That is what it is... a TOOL. Adjusting numbers or what not to get the job/sale is your call, but in my experience it is my best tool that I carry.

    All the big guys do this.... Brickman, TGLC, Valley Crest, US Lawns, ECI and so on. They must use it for some reason.
     
  2. Chilehead

    Chilehead LawnSite Bronze Member
    Male, from Stockbridge, GA
    Posts: 1,897

    They can use it for whatever reason they want. Look, the "big guys" deal mainly with commercial properties. I don't. Why? Because higher profit margin will make for a financially stronger company than one with a low margin and high volume. Let's say Brickman does 70 million in gross revenue, but only clears 5% margin. That's $3.5M. A solo guy like me grosses $70000.00 revenue, but clears 40% margin. On any given day, the $28K I have will proportionately outweigh Brickman 8:1. Opinions have nothing to do with it. Very seldom do I see LCOs using walk behind mowers because if the bottom line is all that matters, a 60" Z will be much more productive. But then again, my niche is high-end residential. I have far fewer clients than most other solo guys, but my clients have the attitude, "Treat the yard like your own, and just bill us." That my friend, is who you want to work for because that is where the real money is made in maintenance.:weightlifter:
     
  3. TScapes

    TScapes LawnSite Senior Member
    Posts: 453

    I agree that those companies deal with commercial properties more than residential. However, some of those contracts are $5k per month, some are $10k plus per month. I doubt that your highend residentials are that per month. And as for Brickman, I can personally state from hands on experience that if a Branch Mgr cleared only 5% he would be long gone!! And your arguement of the ztr.... I just can't agree there. If you have an average lawn at 10k sq ft, and you use your 61 or 60 inch and I use my 48 or 52 wb... and we do everything else the same, what's to say that we don't finish the same time? Perhaps I walk faster, maybe you are slower at weedeating.... who knows. But 2mins difference does not equal out as making more money on that job. Simple math will show you that the cost of your ztr out weighs the cost of my wb, not only in MSRP, but gas consumption, maintenance, depreciation, abuse to the turf due to compaction.... the list goes on.

    Those bidding processes of tracking numbers can be applied to commercial properties, as well as residentials.
     
  4. lukemelo216

    lukemelo216 LawnSite Bronze Member
    from ...
    Posts: 1,267

    i completely agree with the op on this subject. When I get to a property, everything and i mean everything is measured out, ztr mowing, wb mowing, push mowing, string trimming feet, string trimming obsticals, hard edge, soft edge, bed sqft. Also make note of the obsticals in the property or hills and things of that nature.

    Then I developed production ratios for each piece of equipment or any task we do for maintenance. I had various people perform the task and take the average time from each. I did this, by measuring the site we were working at prior, then giving each guy a stop watch and when they started that task they started the watch until the finished. Then we had our production numbers. To keep these in line with the addition of equipment and changing of employees, we run every quarter a week long production ratio test. And we keep a yearly spreadsheet for each time we run the tests and then when we rebid the following year or any new properties, we usually just take the average of those three runs or how many ever we have.

    We do the same with our hourly rate, each quarter we re-evaluate the cost of doing business due to the addition of equipment or employees things like that.

    When we have these rates, we just use our measurements againsts the rates, and we usually just round up to the nearest tenth of an hour. So if our 52" ztr is doing 45k per hour and we have a 35k property thats .77 hours we just round that to .8 hours like somone else said, sometimes you run into a problem here or there which will take slightly longer. And we just do that for everything then. If it comes up that it will take 3.4 man hours to do the property we just multiply that by our cost of business hourly rate so if its 40/hour to break even we need to charge a minimum of 136$ just to cover our costs. Then we have a sliding price scale from 20%-60% on profit margins. We basically feel out the customer and go from there with how we want to charge. Usually contracts that we are subcontracted on or for government work were in the 20-25% range. Most accounts we have though fall under 40-50% markup, so anywhere from 190-205 for that account, which is still 55-60/hour which i feel is very good.

    This method is used both on commercial and residential lawns. The only times the numbers begin to get a little tricky is when were doing wide open areas, multiacres, parks, fields things like that. Ive decided this year, im going to track times for those seperate this year and develop mowing times strictly for those types of accounts and have them seperate. Because when your doing those bigger accounts, your able to do more land quicker since there arent a million turns. Just make sure when your getting your numbers for everything, you do it on different properties of varying degree of difficulty as well as size to make the numbers accurate.
     
  5. Agape

    Agape LawnSite Bronze Member
    Posts: 1,645

    What a headache, I just eye ball it......
    I know by looking how long mowing will take and edging, how fast we can hoe from point A to point B, I'm not worried about $5 plus or minus.

    I have a general price for the "average" account and if it looks like I can do it for that price, I do it.
    If it's larger, I figure out how much larger and charge more.
    Some times the lawn is regular size but the bed areas are huge, I charge regular for our basic lawn plan, but for the plan that includes weeding would be more than regular price. etc...
     
  6. lukemelo216

    lukemelo216 LawnSite Bronze Member
    from ...
    Posts: 1,267

    And that way works for you, some people like to just have more of an exact idea with what their cost is on it, and how long it should take. This method is more useful when you start having other people selling for you. I dont know what your aspirations are for your company, but eventually I dont want to be working in the field and only selling part time. I would rather just run my business meet with potential prospects, meet with my current clients etc. I wouldnt want to run my business just by having people eyeball it because there depiction is going to be completely different then mine. Thats why now i have implemented this system and a lot of other systems for that matter into my business that at this time probably arent doing me very much benefit but eventually as i grow more, they will. And its easier to have a working system and make that transition easier then trying to implement something then. I would rather just have someone measure a property, plug in some numbers, do a little addition and multiplication and add on a markup.

    The second reason i did this, is so that then i could help to give more of a "true bid" as i like to call it. Yes we could turn in the same bid, but with this it helps you lower a cost here or there and somethimes im priced a lot higher, but with this formula, i know exactly where i need to be. Sometimes that 5 or 10$ price difference does make a difference.
     
  7. Chilehead

    Chilehead LawnSite Bronze Member
    Male, from Stockbridge, GA
    Posts: 1,897

    Thank you. This is why I have a formula. With it, I know what I have to charge in order to maintain my desired profit margin despite setbacks like when clients want to chat, or if I get a flat tire. The maintenance end of the business has frequently been labeled a "loss leader". I first heard this term about 7 years ago and asked to myself, "What systems do I have to put in place in order to turn this loss leader into a profit machine?" Clearly, I solved that problem for myself. My business growth over the last 8 years has been slow but a steady 8-10% per year. If I was to charge less for services I'm sure I would close more sales, but then again I don't want to make my money on sheer volume. I want to make it on a relatively high profit margin compared to what my competitors are making. I make no bones about it when I go out to perform an estimate: I'm not going to be the cheapest, nor even near it. But that's okay.....my formula for high profit margin takes precedence over a low price. It's my choice and it works.
     
  8. oldclawn

    oldclawn LawnSite Senior Member
    Posts: 280

    Yes, but while you're spending tons of time crunching those numbers those with the "experienced eye" are WORKING--making money! If 4 solo's will estimate a job in the 40 to 45 range and your crunched numbers come up to 55.00 YOU lose because YOu don't get the job. The customer does not care about your computations. The customer has one computation to deal with and that revolves around exactly how much the check will be each month. Most solo guys with several years experience have a good system right in their head, no battery or pencil/paper required, and it must work pretty good because there's a lot of guys that are solo or have a helper or 2 that make really decent investable money!
     
  9. TScapes

    TScapes LawnSite Senior Member
    Posts: 453

    Wait a minute... earlier you were arguing or stating your case against the OP's asking about ideas for his "number crunching". Now all of a sudden you agree with Lukemelo? Either way, you can see how there is a separation here. Those that use some sort of information gathering and number crunching, and those that just eyeball it. It'll always be that way. I'm sure that there are flaws with both sides, but I guess I like the number side... it doesn't lie. If you measure everything, nothing is left out... especially if you perform a field audit for 3-4 weeks every other year for each property. If you eyeball it, you might miss something... you never know.

    FYI- if you ever attend a MALTA meeting in Atlanta, and you were to take a poll.... over 70% of those in attendance will probably adhear to that same practice (Numbers).
     
  10. Agape

    Agape LawnSite Bronze Member
    Posts: 1,645

    I don't necessarily think you "loose" because you don't get a job in which your profit margins are low, It sounds like a good way to do it if you are large enough to have an estimator go out and bid the property.
    I'm just not there yet.
     

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