Been Thinking

Discussion in 'Starting a Lawn Care Business' started by GSPHUNTER, Mar 18, 2008.

  1. GSPHUNTER

    GSPHUNTER LawnSite Senior Member
    Posts: 310

    I've been thinking about all the lowballer talk on this site. I really bought into the mentality to charge higher prices than what I would normally have charged.

    Here are some questions I'll throw out to people:

    1.) Once you have bought mowers, they are considered fixed costs. Fixed costs will not change with cutting more, and even worse if you are not working your fixed costs aren't making as much as they could. The only thing changing is variable costs such as fuel, blade sharpening, etc.., which are nominal in terms of running a mower an extra 5-10 hours per week during the season. Is it better to have assets sitting on a trailer making no money or working at a smaller profit margin when starting out?

    2.) If you are starting out, doesn't it make sense to charge less because you have less experience. Shouldn't it be the responisibility to the more senior companies to SELL their experience and not the new operation to try to BS people into believing they are experts.

    I might have some more to add the more I think about this, but this came in response to some recent bids I submitted with a PM company. Total amount of work was $33,000 on my bids. This was for 6 properties varying in size from .25 - 2 acre total lot size and included mulch, mowing, bed edging, spring cleanups, and bed maintenance. I could be over anaylyzing this, but I haven't heard back from them yet and I'm a littled bummed out. To me, this 33k would have more than doubled my gross from last year, as I am part time trying to go full time. I, by no means, want to be looked at as the go to guy for cheap service, but I think higher prices can also be charged with proven services.

    I guess basically the main question here is, for someone who is starting out without a full schedule, why would you choose to sit on the couch rather than making a slightly less than optimal profit margin?

    These were just some thoughts I had. Not looking to start an argument or anything just kind of thinking out loud.
     
  2. TomberLawn

    TomberLawn LawnSite Bronze Member
    Posts: 1,299

    Good thoughts, GSP. Fixed costs keep accruing, no matter how much or how little the assets are used. I've been comparing my pricing to some other companies around and mine are always a good bit lower, but I have very low overhead and I need the experience. I've cut yards that were too cheap, but I learned how to do them quickly and efficiently so it didn't take so long. That's worth a lot to a beginner.

    Sometimes I wonder if the guys giving help on bids are overinflating their prices. Like if somebody asks what to charge for an "average" 15k sq. ft. yard and somebody says $45, another guy might just want to look like a big shot and say he gets $60 for that size yard. It's hard to tell when somebody is telling the truth on the Internet.

    I have charged more on some things than I first thought, but part of that is from experience. I know what my time is worth and I'm getting better at figuring out how long a job will take and what my costs will be. The better I get and the faster I work, the more money I'll make anyway just from productivity.

    I'm just getting started with doing fertilizer. I bought a spreader this week. I'm not even going to ask what I should charge to put out fert because I really don't care what somebody else would charge. This will be my first fert job, so I'll learn if I charged enough or if I need to charge more next time. I know how much I have invested in tools and supplies, so I will definitely cover that. I don't want to overcharge and do a "bad" job, since this is my first.

    Good thoughts, GSP.
     
  3. Grubbworm

    Grubbworm LawnSite Member
    Posts: 20

    A complicated issue. Certainly something that cannot be answered in a few paragraphs here.
    I know it's pricey; but, I would suggest you purchase the book by James R. Huston entitled "How to Price Landscape & Irrigation Projects". It is well worth the $ and gives you the knowledge & confidence to really know your break-even points & when & what kind of business to turn down & for or what price to quote with confidence.
    You soon learn what price you have to have and if you don't get it, you don't look back wondering if you should have....
     
  4. IMAGE

    IMAGE LawnSite Bronze Member
    from midwest
    Posts: 1,134

    GPS- I know what your saying, basically you think you gave too high of a price and lost the job, and the price you gave was higher then you first thought it worth because you raised your price after everyone on here talked you into it. (or they made you not want to be a lowballer so bad that you overpriced yourself out of work.)

    I did that last fall with a large sidewalk snow blowing job- raised what I wanted for it because everyone said it was worth XXX per foot or whatever. Anyways I priced myself right out of it. Looking back I sure would of done that job for the $450 per time that the guy that did it got, because I did not have a full schedule and it would not of raised my costs any (maybe $25 variable cost per time tops). Instead I bid it at $700 and lost out on about $2000 bucks this winter.

    If you have the free time- fill your schedule if its gonna make you some money (even if its not 'what its worth to someone else'). If you dont have the time, bid higher.
     
  5. Lawn-Sharks

    Lawn-Sharks LawnSite Senior Member
    Posts: 912

    Its good to read threads like this...
     
  6. cgaengineer

    cgaengineer LawnSite Fanatic
    Posts: 15,782

    Very good question, I am interested in seeing the replies.
     
  7. ed2hess

    ed2hess LawnSite Fanatic
    Posts: 13,138

    I think the simple answer is...they make enough money at their full time job.
     
  8. bill8379

    bill8379 LawnSite Senior Member
    Posts: 778

    Make whatever you want when you're on your own but if you grow and have employees you'll have to adjust prices. I guess it's best to do it the right way from the start even though I never did that.

    If you work for cash, a lot of people will view you as a scrub right away and will never pay a decent amount of money. So if you build up a large, underground customer base, you might lose them all if you go legit and priced for profit after expenses incl. employees.
     
  9. Grits

    Grits LawnSite Silver Member
    from Florida
    Posts: 2,994

    I fully agree with you GSP. Starting out, you should get out there and pretty much take what you can get. You will pick up other jobs just by being out there working. Over time, you can begin to pick and choose and demand a higher price. But until then, 5% profit is better than 0% profit.
     
  10. luckydooley

    luckydooley LawnSite Senior Member
    Posts: 329

    I also agree GPS. I have priced several jobs stressing that you pay for quality, and with the mentality of not wanting to be the "lowballer". Well I I didnt get many. I have lowered my price and am now picking up jobs. I am still covering expenses and making a few bucks, but more importantly I am getting exposure, word of mouth, and at least covering costs. This is my full-time position I dont have another job or second income. I have four children and a stay-at-home wife to support. I cannot afford to sit on my @ss and wait to get a job for a premium price. The way I am looking at it is after my schedule is full, I will then begin dropping less profitable jobs for the more lucrative jobs that present themselves.
     

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