Pricing

Discussion in 'Landscape Architecture and Design' started by paul, Feb 1, 2001.

  1. paul

    paul Lawnsite Addict
    Posts: 1,625

    A lot of questions come up on this, so I though I'd start a thread on it.

    It's hard for some of us to give real pricing on jobs because we don't know what tools and equipment you have and what is avaible to you. You also have to understand that some of us are in to larger installs and have equipment and tools that most don't have, So it might seem that we are giving you prices that are too cheap or not do able for some jobs, same goes with job sites unless we have seen what you want to do (on plans or pictures) we can only give you general pricing.

    Some people here use books to set their pricing others like myself have been doing it for so long that prices are in our heads. One thing that I have noticed is over management or micro management of pricing, they spend too much time tring to get every cost right down to the penny and not seeing the whole picture, case in point;
    I was looking over a company that does patio installs, they wanted to know the exact amount of gravel for base prep, then they would order just that amount, well if the gravel was wet they would run short and have to send a truck out to pick more up. This cost them time and money because they are not producing while that truck was out getting gravel. If they had ordered just a ton more they would have saved money and made more money, than trying to control costs so tightly.

    Equipment(Iron)this is something that most look at as a large investment(it is) but think how much time it saves and how many people it replaces, Labor is used one time, you can never get it back, equipment is paid for once and used many times over. Think of it this way one laborer's weekly salary is worth a monthy payment,that peice of equipment can do the work of 3 to 10 men a day this = money in your pocket.

    As a landscaper labor is one of your largest costs learn to do things faster, cut steps down, don't handle material more than once! Train your people to understand the job Don't leave them in the dark so if your not there they don't know what to do. Guys sitting around cost you money, keep them busy, have material and equipment on the job, don't have them run around finding little things that are needed for completetion, have it there for them.
     
  2. steveair

    steveair LawnSite Bronze Member
    Posts: 1,073

    Hello,

    I think this a good point to make here, especially now that everyone is beginning to get back into the swing of things and starting to think about expanding into landscape construction.

    Pricing is a very difficult thing to discuss here. For one, geographic locations are so different that it is impossible to suggest what may or may not be a good price. Here in N. Jersey, prices can go from 'barely make a profit' to 'I can retire on this one'

    My main focuss is on residential, and in this market there can be SO much variances in prices that I don't even know where to start. One of the big things is current demand. I've had quite a few people say that they can't even find a contractor to do the work they want done. Therefore, they are willing to pay just about anything to get the job done.

    Yes, there are standard pricing schemes, books, formulas, etc, but these are so out dated these days. I think it was a big conspiracy against contractors to come up with this 'price per foot' or price 'per plant' idea, as that is the way things use to be thought of. Standardized pricing just does not exist in this business, however, it seems as if every contractor out there clings to the idea of coming up with a magic formula for every job.

    For instance, a smaller paver job, around 1000 sq ft, usually goes for around 10 sq ft. At least that is average. However, to say that you can't get more is selling yourself short. I've seen guys get as much as 20+ a sq foot, do bad work, and still leave the job with the customer happy as ever. Then again, guys hit the 5-6 sq ft range, make hardly a dime, do an excellent job, and leave the job with the customer yelling and screaming.

    To even discuss 'what a good price would be' just seems pointless these days. Focus should aimed at other things. Like, what does it cost you to have a truck drive to a site everyday, what is your overhead, what is your employee ACTUALLY costing YOU per hour, etc. etc, etc. Then, after determinging these things, and only after, should we be thinking about how much we should be making.

    There is A LOT of money in this world, and people are spending it. Why should you not make a good buck off of somebody who is going to go out at night and dump 500 dollars on dinner for two while you are questioning if you should charge that extra dollar per sq foot? People are going to spend the money one way or another, so why not on you.

    steveair
     
  3. Stonehenge

    Stonehenge LawnSite Bronze Member
    from Midwest
    Posts: 1,277

    The market you are in also plays a role.

    For example, Steveair mentions $10/sqft for 1,000 sqft project. A price like that may not fly in my market, using the brick styles most popular here. But that's because everything is cheaper here than it is in a big city. I worked in Detroit 10 years ago, and some prices for things in WI today are cheaper than they were 10 years ago there.


    The best advice for pricing is to know your costs. Once you know your costs, you can determine what you want your margin to be, and then you'll have your price.

     
  4. kutnkru

    kutnkru LawnSite Silver Member
    Posts: 2,662

    Not to get off the beaten path, but our outfit has actually started ordering products with the friends we have who are also in the business to keep our materials cost down to a minimum.

    We have an outfit here locally who does over 5+M a year and they bid cheaper than most can buy materials for before calculating labor or equipment costs.

    Obviously this approach wont work if bidding on the same job, but when 2 or 3 of us have patios or driveways going to be installed, it helps to get the discounted rates for products.

    We have come to the conclusion that we are not out to cut each others throats, and that if we are going to survive by making a profit, we have to pool together sometimes to accomplish this.

    Just trying to maintain a fair market value.
    Kris
     
  5. SCL

    SCL LawnSite Senior Member
    Posts: 543

    I started hardscaping three years ago, consider myself a fairly quick learner, and have done a fair share of my business in pavers and retaining walls. What have I learned? That I still don't have a magic formula for pricing, either by the ft or job. There are variations in the price of pavers according to what your customer wants, there are variations in retaining walls according to what they want. What I've found with walls is that they can vary anywhere from $14 to $30 a ft. I am leaning to bidding by the job though this takes more time to prep a bid. I've had a lazy strek of bidding by the foot and keep losing that thing behind me.Point is there is no substitute for experience and I can only hope that I get anywhere near as good at this as Paul and Stone and I'm NOT being sarcastic.
     
  6. Scraper

    Scraper LawnSite Bronze Member
    Posts: 1,656

    Paul: This is a great post. It is so true that there are too many variables to set costs. Maybe some of the guys from the lawn forum will see this.

    Kris: You wouldn't be referring to NS, would you? ;)
     
  7. kutnkru

    kutnkru LawnSite Silver Member
    Posts: 2,662

    unfortunately I was.
     
  8. CHC

    CHC LawnSite Member
    Posts: 65

    For more years than I like to remember, we did our best to calculate costs, overhead, etc., so that we could submit reasonable bids and still make a profit. Actually, we thought we were doing fairly well, However, we still found that we had to wait 'til the end of the year for any extra$ to start showing up. We went to one of Charlie Vanderkooi's seminars on estimating recently. A real eye opener! Perhaps not the "be all end all" answer to the problem, but it certainly gotten some different thinking going here. I guess the more knowledge, the sharper the edge might be appropriate.
     
  9. paul

    paul Lawnsite Addict
    Posts: 1,625

    CHC you say extra$ do you mean profit above your base salary or money you know you made? Profits are not seen until the end of the year, how can they be? You should know at what point your fixed costs are covered during the year. Varibles like work comp, labor(non-job site), taxes, weather related delays, equipment break downs, are harder to pin down. We have 15 years of data to look back on but you still need a fudge factor. Books arn't going to give you this only your knowlage and experiance will give you hints on this.

     
  10. CHC

    CHC LawnSite Member
    Posts: 65

    Paul;
    Sorry, I didn't make myself very clear on that one. There are days when I get my wish for a perpetually positve cash flow mixed up with my " gee, we're making money" enthusiasm quotient. The point to the seminar was, as you indicated, to budget/plan the recovery point of the company's overhead; then work like mad the rest of the year to maximize the company profits. Granted, experience and knowledge all help in doing the budgeting. Company history can be used to help with the planning, but this year's overhead will be something that is now, not something that was in the past. Honestly, we are still working with the concept; not as something gospel shiny new, but as a refinement to the system we were already using. Mainly, it has given us a more concrete way to pin down equipment costs,and allocate labor costs to the right areas. So far, the contract figures that we have run through the system have been enlightening - some good, some bad. For the company that doesn't have a large admin staff, or affordable, and green industry knowledgable accounting aid; it might be an interesting starting point. I'll let you know how it works out as we get into it a bit more.
     

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