Higher price VS lower price per month

Discussion in 'Lawn Mowing' started by privatelawn, Jul 27, 2007.

  1. privatelawn

    privatelawn LawnSite Senior Member
    Posts: 301

    Everyday I see threads about how can some lco's charge $70 per month and stay in business, everyone says in a few months they will go out of business because they dont know there true expenses or whatever.

    It sure gets me to thinking... One day I tell myself im going to raise my prices, the next I tell myself stick with the original business plan which is maybe working unless I really dont know my business expenses...

    Help me out here, where am I adding up wrong, why will my lower prices take me out of business?

    First of all im setup as a C-corp/insured and am running my business myself with 1 helper, no workmans comp yet and in florida we can have 3 employes without workmans comp, plan is to get workmans comp soon and everthing else thats needed for when I hire real employes.

    Business plan = $100k per month in pretty much just mowing ( at the moment im doing about $10k per month but with little advertising and havent been in business for a year yet)

    For now im at just residentials and will use my calculations based on that even though plan is to be about 50%/50%

    Ok now for the high price vs low price side of the story
    High price around here = $90 per month per home
    Low price = $70 per month

    I figure at high price id be able to do 3 lawns per hour with a 2 man crew for 2 reasons, higher price= a better job, higher price = more windshield time

    Low price id be able to do 5 an hour with a 2 man crew for the same 2 reasons as above lower price= a good job just not always perfect, lower price = less windshield time

    @$90 per month crews will do 120 lawns per week, gross = $10800 per month
    @$70 per month crews will do 200 lawns per week, gross = $14000 per month
    So right here it tells me that my $70 per month price will make me more then the $90 per month in gross, as for net, dont know all the numbers yet

    @$70 I would need 7 crews to gross $98k a month
    @$90 I would need 9 crews to gross $97k a month

    Please give me your opinions, not trying to be a lowballer, bigger companys around are lower priced then solos, sure solos may do a better job but plan is a big company not solo.
     
  2. Albery's Lawn & Tractor

    Albery's Lawn & Tractor LawnSite Bronze Member
    Posts: 1,674

    You'll gross more by working cheaper but you'll net less which is what really matters. Your gonna have to be mowing more yards at a cheaper rate, which means you'll be using the equipment more= more fuel, more repairs, more reg maint., etc. Gross doesn't mean a thing other then bragging rights, its all about NET!!!!
     
  3. privatelawn

    privatelawn LawnSite Senior Member
    Posts: 301

    Ok so 1 crew at $90 gross $10800 per month
    While 1 crew at $70 gross $14000 per month

    Now netting less doesnt seem possible using those figures.
    I didnt want to put all the factors in like extra gas etc because I think in the end there about the same with either price. For example id waste more gas on the equipment because id do more lawns but I would also have less drive time between clients = less gas in the truck.

    Equipment comes with warranty, $7k z turns after 3 years can pretty much be thrown away and new ones bought, Echo hand gear cost so little that it can also be thrown away after a year of use with little effect on the gross

     
  4. Dunn's

    Dunn's LawnSite Bronze Member
    Posts: 1,534

    Those sound like unrealistic goals. I mean 200 lawn per week, come on, you could only maintain that for a week two at max.
     
  5. privatelawn

    privatelawn LawnSite Senior Member
    Posts: 301

    For example 1 crew has
    1 echo edger = $250
    1 echo trimmer = $250
    1 stihl blower = $500
    1 ztr = $7000
    1 open trailer = $1400

    say after every 1 year you throw the edger, blower, trimmer
    after 3 years you throw away the ztr and trailer

    in those 3 years that equipment expense is $11400 the gross in those 3 years is $500k, now im not sure I can consider equipment a big expense
     
  6. privatelawn

    privatelawn LawnSite Senior Member
    Posts: 301

    Why, does everyone just get tired after a week or 2? its not very unrealistic, I can do 4 an hour solo on the houses that are very close to each other, with time I will have more even closer...
     
  7. Vikings

    Vikings LawnSite Bronze Member
    from canada
    Posts: 1,657

    4 in hour solo? very few of my lawns are 15 mins incl. drive time.. I don't think any are. My average lawn is about 30 min solo, maybe a bit more. Mind you I don't have a Z but even my 36 is too big for some of these lawns and my route is TIGHT.

    I doubt a solo guy could average 15 min per yard as an average, all day, all week, all month. Not even all day.


    But in a sense that is how I run my snow removal. Last year I had 50 customers and I was cheap, So I would have 25 of them in a neighborhood of about 3000 houses and the rest in the next.. a couple were spread around. But I understand the value of a tight route. Too much crap for me though, I'm raising my prices and doing half that this year.. unless I can get me a plow.
     
  8. Albery's Lawn & Tractor

    Albery's Lawn & Tractor LawnSite Bronze Member
    Posts: 1,674

    It's nice to dream, but this is not realistic. Yes I know there is a warranty but you'll soon realize that a dealer will try to blame it on either neglect or abuse which is not under warranty. I see you haven't been in business long so you will soon learn.

    Now the main thing I was looking for was taxes, you mention nothing. Are you gonna pay because unlce sam usually gets about 1/3. 200 yards a week then you'll be changing blades nearly everyday assuming you do 40 yards. So thats about $35 give or take right there times 5 is $175 a week. These little things add up quickly.
     
  9. privatelawn

    privatelawn LawnSite Senior Member
    Posts: 301

    I have a 52" ztr, lots are 50x100, fits on 98% of my customers, I unload the ztr, cut all 4, then edge all 4 etc
     
  10. barcode148

    barcode148 LawnSite Member
    Posts: 86

    i hope you have more than 1 trimmer, edger, and blower on each rig. have fun if one of those breaks. i only cut 9 a day and when something breaks its a problem what happens when you have 35 to cut. also i hope you have either some type of backup mower on board its the same with that. i hope you dont take this the wrong way but you have to think of what that many yards a day entails. dont think of how to save money in the present think of how to save downtime and lost customers in the future.
     

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