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Mark-up on subcontracted spray work

Discussion in 'Pesticide & Herbicide Application' started by Watkinslawnservice, Jul 15, 2006.

  1. Watkinslawnservice

    Watkinslawnservice LawnSite Senior Member
    Posts: 378

    I have tried doing a search on this but I cant seem to find a very good answer. What is the going mark-up rate for subcontracted spray work? There was one thread where someone suggested a mark-up of 15% on amounts under $200.00.

    If this sounds about right are you talking a straight 15% of the amount, IE if subs rate is $50 then the mark-up is $7.50 and my price would be $57.50?

    I spent 13 years in the retail grocery business and we figured mark-ups differently. I am not sure I could explain it here but it is called GPM or gross profit margin. Do any of you use this to figure your mark-ups? Using this method my price would be $58.83, which seems like splitting hairs but as you raise the dollar amounts and profit margins the difference can be significant.

    For example if the price was $100 at a 50% regular mark-up, my price would be $150.00 but $100.00 at a 50% GPM is actually $200.

    So anyway, I am mostly curious what others who are hirings subs are marking it up.

  2. GreenUtah

    GreenUtah LawnSite Senior Member
    from SLC, UT
    Posts: 866

    well, like in the grocery biz, you have to keep the market in which you do business in mind. As it is common for some food items to have margins lower than 2% and others with 80%, so goes markup on products or services in your own market. I'd say if you were already generating a statement for other services and collecting on that, your cost to add a single line and make the phone call to the sub is very low, even if only covered by a 10-15% markup on items under $200. That may be a better margin on relation to actual cost to provide that service than anything else you do. Then again, if you can find quality at a discount (through bulk or what have you), you shouldn't necessarily be kept from making maximum profits for handling the deal and having the expertise to put it together. so back we are again to what the market will bear. bottom line, there will be no set formula that will work in all cases.
  3. bam

    bam LawnSite Senior Member
    from .
    Posts: 261

    we mark up subs by 20%. turf apps, insect sprays, arbor care, etc.
  4. Runner

    Runner LawnSite Fanatic
    Posts: 13,496

    markup on SUB work for pesticide application? It can't be legally done in Michigan. All pesticide work MUST be billed directly from company doing the application, and the property pwner/manager, themselves. No other landscape, lawn, or any other company can be involved. Now, if the lawn care (chemical) company and the service provider want to make some sort of a commission agreement between them, that is different. But the serviceprovider itself is NOT allowed to put itself out to the public that it can provide any type or sort of pesticide service in any way, shape, or form.
  5. Watkinslawnservice

    Watkinslawnservice LawnSite Senior Member
    Posts: 378

    I never thought of that. I better look into it a little further. Anyone know about minnesota law off-hand?

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