Can Clients Really Afford Us???

Discussion in 'Lawn Mowing' started by kutnkru, Nov 4, 2003.

  1. kutnkru

    kutnkru LawnSite Silver Member
    Posts: 2,662

    Read an article in the Wall Street Journal and found this to be quite interesting as to whether or not clients should hire us.

    What Is Your “Real” Time Wage?
    1. Your two-week take-home pay, after taxes …......................... $1123.00
    2. Hours you typically work in two weeks ………............................. 80 hrs
    3. Divide 1 by 2: this is your real time (hourly) wage …................ $14.04
    4. Cost to you to hire someone else …......................................... $600.00
    5. Time you would save, in hours, by hiring someone else …........ 22.5 hrs [45 mins wk]
    6. Costs of doing this job yourself (ie. buying supplies) …............ $400 [homeowner mower/handhelds/fuels]
    7. Multiply 3 by 5 …....................................................................... $315.90
    8. Add 6 and 7; this is the total cost of doing the task yourself … $716.00

    Outcome:
    If 8 is less than 4, there is a strong financial case for doing the job yourself.
    If 8 is more than 4, there is a strong financial case for hiring the job out.



    If you figure this equation based on the bare bones minimum of $20/cut for 30 weeks ,,, using $18/hr (+/- $1100 NET pay period) as the wage (almost $38k annually) probably close to what many here make after everything is said and done ,,, we ALMOST couldn’t afford to hire ourselves out for less than we charge - LOL!!!
     
  2. Scraper

    Scraper LawnSite Bronze Member
    Posts: 1,656

    I am pretty sure the clients I work for make more than enough to afford my prices. A couple I am still trying to find the money tree in their yard...I know it has to be there somewhere. LOL
     
  3. jlewis

    jlewis LawnSite Member
    Posts: 140

    I started doing this with truck repairs. I bill myself out for an average of $35 / hr for home improvement. I can change front brakes in 20 minutes and Performance Friction Pads have a lifetime warranty thru Autozone. It pays me to do this task. Oil and filter 10 minutes plus $8 in parts, it pays. Replace the heater core - he!! no. Had the dealer do it. It takes a while to realize that you can actually "make" money by subing out certain work. I will no longer mud and tape drywall because of how long it takes me versus the cash I can have it done for.
     
  4. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,842

    Your question is a little off. You ask "can they afford it" and then break down what it would cost for them to do it themselves. Whether or not they could afford to do it themselves doesn't really have anything to do with whether they can afford it or not.

    I understand your logic. I've often wondered the same thing. But rather than asking "can they afford it?" (which is really more of a question as to how they budget their expendable money) probably the more appropriate question you're getting at is, "Does it make sense for the client to hire out as opposed to doing it themselves?" And there are several ways of looking at that.

    From a financial standpoint, probably not all of our clients should be hiring out. They'd probably keep more money just to do it themselves. Using your equations above, it wouldn't make sense for everyone to hire us.

    But hiring out for stuff like this is really more of a luxury, IMO. Sure, most people could do it themselves. But the issue is more; do they really want to spend their free time doing it? Some of them are already working too much anyway. Some of them would just rather spend that couple of hours each week it would take them to do it (with their inferior skills and tools) and spend that time with their family or friends. Others maybe just don't enjoy doing yard work and had always dreamed of having someone else do it.

    So for whatever reason, people choose to hire us to do it for them. It may not make the most perfect sense financially. But neither does dining out for 2-3 times what it costs to eat the same meal at home. Neither does hiring a cleaners to press your cotton shirts when you could just wash and press them yourself. Neither does having Jiffy Lube change your oil for $34.95 when you could do it for $15 in parts. But there are all sorts of reasons why people do such things. They are all just luxuries. And if we can afford the luxuries, who's to say there's anything wrong with that?

    Finally, I'd wager that a pretty high percentage of my clients definitely would pass your equations above. They make some pretty serious dough per hour, most of them.
     
  5. Geofferson_Davis

    Geofferson_Davis LawnSite Member
    from z7 NC
    Posts: 11

    Don't forget to include the cost of damage due to inexperience / ineptitude in this line (i.e. parking a skid-steer loader in the living room, digging up a power line, crushing a drain line, damaging rented equipment, injuring a back).

    That's how I justify hiring professionals. The ceiling on the potential cost is capped. For example, the tree service guys broke a $15K chipper on a $1200 job in my yard. I'm glad I hadn't done that with *rented* equipment.

    Anyway, apologies for posting where I shouldn't, but I couldn't resist sharing my rationalization as a client.
     
  6. kutnkru

    kutnkru LawnSite Silver Member
    Posts: 2,662

    I agree whole-heartedly that our services are a luxury and a commodoty that can be done without rather than a necessity.

    The article gave some figures for how much you should make to "justify" the expense of enjoying your free time.

    Laundry:................ 12.000
    Lawn Care: ........... 47.000
    House Painting: .... 59.000
    Gutter Cleaning: ... 98.000
    Auto Detailing: ..... 140.000

    I agree that a combined house-hold should pass with flying colours. I just found it ironic and comical how many who are the primary care provider under their own roofs probably couldnt truthfully afford to hire themselves.

    Yet again, as mentioned ,,, its also based on how you financially structure your homes $$$. Just like smokers (not that I care who smokes and who doesnt) ,,, many will gripe about how they're struggling to make ends meet yet they ALWAYS scrimp their pennies to get that $5/day pack of cancerous insulation sticks. Im sure the $2k a year they waste that money on could have paid for quite a nice family get away - LOL!!!
     
  7. GarPA

    GarPA LawnSite Silver Member
    from PA
    Posts: 2,585

    intersting thread Kut...maybe this was mentioned since I read thru the threads real quick...I have had more than one customer tell me they are watching their expenses but that they will never again do their own lawn maintenance. They say, that our fees are more than worth it considering how much of their "free time" they dont have to devote to being a yard slave twice a week when the grass is going nuts. Land/lawn work takes an enormous amount of time to do adequately....and most of them can't make it look like WE make it look. Its hard to put a dollar figure on what these intangibles are worth .
     
  8. qualitylandscaping

    qualitylandscaping LawnSite Bronze Member
    Posts: 1,581

    That is not very accurate.. For one season yes, but in the long run its cheaper to do it themselves (you only have to buy that mower, trimmer, and blower once every five years if you take care of it)... But we don't need to let them know that:p
     
  9. A1 Grass

    A1 Grass LawnSite Senior Member
    Posts: 330

    I guess the "trick" is only to have clients that can afford you.
     
  10. Jroctx

    Jroctx LawnSite Member
    from Austin
    Posts: 73

    To quote one of our clients in her Texas accent, "My brother told me I had nothing to prove in trying to do my own yard. He said if I don't treat myself to anything else, hire myself a yard man."

    For many it is just another luxury bill, just like cable, dsl and cell phones! Then there are those, such as my lawyer clients who bill out at $250 an hour. Working many 12 or more hours a day. When they are not working the wife and kids and the golf course share that time.
     

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