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Profit margin

Discussion in 'Pesticide & Herbicide Application' started by grassmasterswilson, Nov 24, 2012.

  1. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,468

    Anyone care to share their profit margin target? I'm trying to work on pricing for 2013.

    Right now I'm thinking of a 10% product markup and them 30-40% profit margin after all cost. I'd like 40 but 30 may be more realistic. I'm also adding in around 2/1000 for labor which I'm the one who does as the owner/operator.


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  2. phasthound

    phasthound LawnSite Platinum Member
    Posts: 4,560

  3. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Posts: 1,519

    with numbers like that, its no surprise you struggle to get a larger base of clients.
    We gleefully work for less than half you target margin and our labor portion is even less than $2/k.
     
  4. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,468

    In not struggling to get clients or don't think so. I'm growing my app side at a very good rate. I was just curious what profit margin solo owner/operators were happy with and what that number would be for owners with techs.
    Posted via Mobile Device
     
  5. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Posts: 1,519

    that was somewhat rude. Ill apologize.
    For an owner ran, tech performed company, 10-20% is going to be a reasonable number to shoot for. 10 good, 15 average, 20+ above average.
     
  6. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Posts: 7,961

    It is not rude. None of us know how others calculate cost, what price point the suppliers charge based on volume and quality of products used.
     
  7. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,011

    This is a tough question really!

    There are so many variables to take into account.

    Size of operation, employees, buying power, overhead, size of lawns etc.

    Also you have to take into account specialized services such as seeding, pest control, aeration etc which has much better margins then lawn applications.

    We find that growing our specialized services helps greatly and keeps us busy between our slower times such as dormant seeding in the winter.

    I think its also safe to say that the faster you grow the more you will find the margin decreases. Overhead can eat up margin very fast if one isn't careful!
     
  8. elbow300

    elbow300 LawnSite Member
    Posts: 51

    I run a medium sized lawn and landscape maintenance company that I started in 2006. We have experienced good growth over the 6 years. I started out with just me, my daily driver truck, a used 48 walk, a blower, and a trimmer. We have a total of 9 guys now, with one being a bookkeeper/ office manager, and one other estimator besides myself. If you are on the route everyday, I think the margins you can expect are significantly higher than if you are operating a company with routes run by crew foremen other than yourself. For one thing your being there means you dont have to pay another supervisor for that day's work. Also, you have much better quality control. This means greatly reduced instances of going back to fix things that are not exactly how the client requsted. Margins in our area are tight enough in the field that a return trip means a loss on the job or at least breaking even. Nobody wants to break even. We can do that on the couch. I think for an owner operator going out on the route every day, margins could be in the 40-55% range. If you are a diligent owner, with a sharp eye on efficiency, you can expect 20-30% not being directly involved with the completion of every project. Establishing good relationships with your suppliers can really impact your bottom line as well. Mark up on materials is a great place to increase margins, especially if you have the space to warehouse frequently used materials, cutting down on handling and delivery costs.
     
  9. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,011

    AGREE 100%

    Well said
     

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