Hourly rate for large accounts?

Discussion in 'Lawn Mowing' started by Albery's Lawn & Tractor, Feb 5, 2008.

  1. Albery's Lawn & Tractor

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

    I have a bid that is due tomorrow for a appartment complex here in town. While walking the property today with their maint guy he told me the current company (biggest LCO in town but usually the highest price too) sends out 8 guys and they finish in 5 hours. There is no way it should take 5 hours, I know for a fact me and just one helper would be looking at 8-10 tops to start with. The current company employees are milking the clock badly IMO.

    But it got me thinking about something. I usually bid at $80 per hour for 2 guys but my largest account only takes 4 hours. So my question do you guys lower your hourly rate slightly since you will be on just one property all day long? Say from $80 down to $70 or $65 even. I know my operating costs and even at $65 I can still make a decent profit for one days work. $80 an hour would be great but i don't want greed to cost me a decent account. Any advice?
     
  2. gmlcinc

    gmlcinc LawnSite Member
    Posts: 87

    I was going to ask the same exact question. I'm getting ready to bid on a few apartment complexes and wondered if the hourly rate should decrease due to the size of the job. The jobs I'm looking at range from 15-20 acres in total size.
     
  3. Green Pastures

    Green Pastures LawnSite Silver Member
    Posts: 2,457

    I do not decrease my hourly rate for larger jobs.

    My payroll is the same, insurance is the same, gas prices dont go down just because I stay in one place most of the day......
     
  4. jcthorne

    jcthorne LawnSite Member
    Posts: 208

    Be very careful. Just because you think you can do a job with 2 guys in 8-10 hours doesn't mean you can. This guy who is the biggest in town got that way because he probably knows what he is doing.

    I just find it hard to believe that you can go from 40 man hours to 16 man hours and still have the same quality of work. Even if they are milking the clock.....your logic still doesn't add up.
     
  5. barefeetny

    barefeetny LawnSite Senior Member
    Posts: 533

    My payroll is the same, insurance is the same, gas prices dont go down just because I stay in one place most of the day......

    vs a bunch of jobs in one day....

    payroll and insurance may be the same

    you waste 0 hours driving and loading and the main truck isn't running...

    the extra time running your mowers /tools isn't making up the diffrence

    say your crew can handle 15 jobs in 1 day and you are getting paid to load and unload... if the jobs are 5 miles apart it would be for me

    5x 15@ 60 miles an hour= 1.25 hours

    for me 1 hour and 1/4 hours is worth 75 dollars

    10 miles to the gallon 7.5 gallons

    7.5 gallons at 3.20 = 24 dollars

    knock 100 dollars off the total bill and i have still made the same money as if i ran around all day


    plus it is standard practice to give a discount for mass quantity

    buy 1-5 hats for 2.99
    5-10 hats for 2.79 each
    10-20 hats 2.50 each

    Just my .02

    Nate
     
  6. topsites

    topsites LawnSite Fanatic
    Posts: 21,653

    Yeah right on because I've been in this very situation, too...
    The lessons learned I recall the most are:

    - Never compromise your price to land the job, everybody pays the same or it's not fair.
    > If you want to give a price break, do so after the work is done.
    - If my foresight doesn't see the time involved, I know hindsight will.

    Yes sir I know all about this "it shouldn't take nowhere NEAR that long!!" :laugh:
     
  7. Albery's Lawn & Tractor

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

    The current LCO hires mostly 18-24 year olds who only care about the pay check. This also isn't a place where top quality is important its about price. I walked the property today and I know for a fact it shouldn't be taking them that long. With 2 guys it breaks down to 4 hours mowing, 4 hours trimming, 1 1/4 hours edging (only have to edge every other visit), and about 3/4 blowing off. The maint guys at the complex also spray round up around some of the buildings and the ac units in the summer. I'm not trying to justify lowering my price, I really just want the feedback as if I am suppose to cause of the size thats all.
     
  8. echo8287

    echo8287 LawnSite Member
    from Ga
    Posts: 112

    I never lower my rate because I'm good,fast, and knowledgeable about what I do. Don't penalize me for that. If I didn't deserve what I charge, I would just charge less. I know what I'm worth, so "show me the money". David
     
  9. deason

    deason LawnSite Member
    Posts: 236

    Do you lower your rate? That depends on the way you look at it.......

    By being on that job for 8 hrs, your operating costs are substantially reduced. Labor, fuel, wear / tare on your vehicle/trailer and other fixed costs that you normally would have while going from account to account are not there. You dont have time involved traveling, loading / unloading etc. This means that every hour you are on that job your profit per hour goes up.

    Now while I dont know what your profit margin is, I can tell you that you can REDUCE your hourly rate COSTS to some extent. This would make you more competitive with your bid.
     
  10. TheYardButler

    TheYardButler LawnSite Member
    Posts: 6

    It is a standard economic practice to reduce the price you charge for large, more intensive contracts. This is reflected across every industry (circuit city pays less for a tv than you do b/c they buy more)

    There is absolutely nothing wrong with lowering your price b/c you are reducing your costs at the same time. The biggest concern would be looking at the project and underbidding too far and being in a situation where you are not making as much money and either you are eating costs, or your performance is suffering. I find it hard that it would go from 40 man hours to 16 man hours. This is where I would excercise some caution. He has already told you they spend 40 hours and it should be fairly easy to determine what there bid could be, reduce your bid to 32 hours, charge your lower rate and then you are able to give a competitive price without putting yourself in a bind.

    The Yard Butler
    www.callyardbutler.com
     

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