Problem

Discussion in 'Business Operations' started by agrostis palustris, Aug 8, 2002.

  1. agrostis palustris

    agrostis palustris Banned
    Posts: 117

    Hi. I would just like to voice a concern that I am having here. It is my opinion that when you price a job you price the job for what it is worth. If a customer asks you to do a job which is worth X dollars. But you do not have the right equipment to do the job and would need to rent the proper tools. I feel that you should still get X dollars. No rental on top of that just so you can make money. I am not sure if this sounds right or wrong here. But it is my opinion that if you get asked to do a job and you don't have the equipment for it that you should either not do the job, or do the job and eat the equipment costs. It is not the customer's problem if you don't have the equipment. I honestly feel that if you are doing the job, that if it takes you 2 minutes, or 2 milleniums that a job is still only worth what it's worth. Does anyone else feel the same as I do?
     
  2. Soupy

    Soupy LawnSite Gold Member
    Posts: 3,125

    All jobs should have the equiment cost factored in. Lets say you are going to perform a Core Aeration and everybody charges the same price per job. It's up to the business owner to deside if they want to shell out 2-3 grand for equipment or go rent it. But the cost is there.

    Here rental is $35 for 1/2 day (4 hours) and $65 for 24 hours. So it would take you 71 1/2 day rentals or 38 full day rentals to pay for a $2500 Aerator.

    Soupy
     
  3. Lawn-Scapes

    Lawn-Scapes LawnSite Silver Member
    Posts: 2,810

    No.

    You have to cover your equipment costs. You are in business to make money.. not eat the costs.

    A job is worth what a customer is willing to pay. It's up to the customer to shop around.
     
  4. bruces

    bruces LawnSite Senior Member
    Posts: 648

    I agree. But, from a customer standpoint, if I have the equipment and charge my price, but you have to rent the equipment and try to charge me your normal rate and have to inflate that rate to cover rental costs, as a customer I would go with the lower cost.

    In other words, if my cost of doing business is higher because I have to pay higher rental fees, I would expect that I might either have to accept lower profits or risk getting fewer jobs if I am pricing to recover rental costs.
     
  5. Randy Scott

    Randy Scott LawnSite Bronze Member
    Posts: 1,915

    Obviously every situation is different. You aren't going to go out and rent an aerator for $50, do one lawn for $90 and make good money. Between chasing for it and doing the actual work itself. If you can line up a days worth of aerating, you'll make out just fine. Same with most other work also. Some one time jobs will be hard to bury the cost, others won,t. Renting a plate compactor and installing a new paver sidewalk will be easy to bury the cost. As a business owner you need to know what will work for you. If running a business was that simplistic everyone would be doing it, and doing it successfully. Buying equipment and recovering the money over time is what it is all about. Taking chances and investing is what you have to do to get to the point that you want to reach.
     
  6. KLMlawn

    KLMlawn LawnSite Senior Member
    Posts: 443

    I agree with TSG, you are in the business to make money. Personally, I have added the full cost of a rental into the price of a job, plus my time and any other material costs for just one customer. Afterward, wound up lining up a few more jobs that I could utilize the machine I was renting for the same day. After the first job, the rest was gravy, and the first customer didn't mind the cost at all ... might have something to do with salemanship too and how you come across to the customer.
    But if that customer, or any other doesn't like the price that you give so that you can still make money and feel satified that you are fairly being compensated for your time and expertise, they always have the option to get another estimate.
     
  7. site

    site LawnSite Member
    Posts: 168

    If we need equipment to do a job right and we need to rent it we do. We also pass the cost on to the customer. In my experience daily rental costs are not far off from the actual daily cost of owning a piece of equipment- sure they are slightly more, but not outrageous. Nobody has all the tools they need all the time. If you did what would you do when one broke-Go rent one and finish the job. Increase profits by stretching your rentals...If you know you'll be aerating and renting one send a note to likely customers and sign up a bunch. That way you can rent the thing for a few days or a week. Also ask yourself- where else can I use this machine before I turn it back in at 2pm when it's not due till 5?
     
  8. thfireman

    thfireman LawnSite Senior Member
    Posts: 541

    Cover all your costs and then let the customer decide if he/she wants to pay it. If they go with someone else then you didnt get that job but you also didnt do the work for less than you are worth. If you use the policy of eating equipment cost then you will never be able to afford the equipment of your own. Set your profit goal and then work up a price that covers costs and still reaches your profit goal. If you charge they will pay!:p
     
  9. Tony Harrell

    Tony Harrell LawnSite Senior Member
    Posts: 739

    That's the difference between renting and ownership. The market will dictate the price range most of the time. Customers don't care who owns the equipment, they just want a job done. Even though they aren't used as much as other equipment, buy it if you can because you'll pay for it in short order and be getting depreciation from it. Ryan brochures about aerating and another one about seeding are available from the dealers at a nominal cost and you can stamp your name on the back.
     
  10. Mataman

    Mataman LawnSite Member
    Posts: 83

    Whaaa?:dizzy:
    Have you ever gone by a large construction site? or looked at the equipment road crews use? Should these guys not be doing what they're doing since 1/2 of the stuff they use is rental equipment? What about the new upstarts, would it be financially wise to buy a trencher/aerator/dethatcher/sod cutter/etc... for X amount of dollars when you know you'll only have a few jobs in your first year(s)?

    I also agree with the several comments about the customer shopping around. I'd be nuts to tell my customer my fee but then turn it around and tell them, "well,,, since I got to get a rental unit you'd probably be better off checking with somebody else."
     

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