% profit per application

Discussion in 'Pesticide & Herbicide Application' started by daveyo, Feb 22, 2009.

  1. daveyo

    daveyo LawnSite Senior Member
    from N.J.
    Posts: 907

    On average what percentage profit do you expect to see per application. I've been getting into larger accounts, upwards of 80,000sq' plus lots, in NJ where everything is a stamp 5-15k this is significant. I was wondering on these bigger lots after obviously all expenses and overhead are calculated is there a % number I'm looking for. I know what I need to make but to be competitive I was wondering if there is a % profit to shoot for. I do have a number I took from landscaping jobs I bid but this seems low for larger lots, appreciate any input.
     
  2. turf&tree

    turf&tree LawnSite Member
    Posts: 112

    I would think it would depend on what you need to make. We rely on our accountant for info like that. Bidding on larger projects is also trickey. We go up against Trugreen on both residential and commercial pricing. I have yet to see any rhyme or reason for their pricing. Way cheap on the commercial side, in fact I think they do them at cost. They also supply salt to the customer. We have gotten wise to there salt pricing and started buying it by the truckload, we can kick their butts on that. example we charge $ 3-6.00 per thousand on res and $2.25-3.50 on comm Never looked at a % but I know my boss is very happy. I would say a minimum of 25% profit after expenses. Do you know your expenses????
     
  3. daveyo

    daveyo LawnSite Senior Member
    from N.J.
    Posts: 907

    Yes I know my expenses down to the penny, I mean I factor in everything plus the kitchen sink. I just made up a great excell worksheet that really gives me a superb view of everything on the fly. In other words I'm plugging in numbers and excell is spitting them right back in my face. Thats the thing, these larger lots I seem to be coming up with smaller profit margins, I can see this makes sense but again it doesn't. Why work these larger lots if its bringing me less profit? or shouldn't it be. That's why I was thinking of coming up with a percentage that makes sense. I also realize larger lots less traveling time, etc...I can charge less per/1000 on my profit end but do I want to do that?
     
  4. Lawnmasters

    Lawnmasters LawnSite Member
    Posts: 180

    Your percentage profit on the larger jobs is usually less if you are giving a discount for the volume. I will charge a minimum of 50.00 for a stop, doesn't matter if it's 2K, but on the larger properties I charge less per K since I don't have to drive to four places to equal the same sq. ft. that I can do in that one stop. Also, it will depend on if you have any competition that will do it for less. Lots, and lots of variables. I basically look at what I have left after I account for everything, and can I live with it. Each area will be different, I am in a rural area with little to no competition, but still customers in my area have a cow when I quote 6.00 per K on a two acre place, they just won't spend the money. But on a 2K sq. ft. place lots of times we get 25. to 30. per K.
    Good luck with your figures, hope you do well.
     
  5. rcreech

    rcreech Sponsor
    Male, from OHIO
    Posts: 6,045

    Would you be interested in sharing the spreadsheet?

    I would like to see how you figure everything!

    I KNOW my costs...but have never had a good way to figure in everything such as insurance, vehicles etc as they are not 100% lawn costs.

    If you would be intersted in sharing I can PM you my e-mail address.

    Thanks,
    RC
     
  6. Ric

    Ric LawnSite Fanatic
    Posts: 11,946

    OK Here are my Numbers for Standard size Homeowners property.

    First I have a minimum and no trip charge. My Minimum is 5K but I do a lot of 3 K postage stamps. Given a 5K fine yard my chemical cost is about 25% and over head is an other 8%. As a one man band I walk with 2/3 margin.

    Structural or straight insect spray in the yard is 2% or less chemical cost with the same 8% overhead and I walk with 90% margin.


    Other kinds of work.

    I do both some agriculture work and Aquatic work. My Margin average is only 25% because of the volume. Overhead goes down to 1% but Labor costs are a factor because I need help on these jobs. In fact one job I only make 10% margin on. However my profit per hour is about equal to my Residential accounts.

    I might add that these percentages are from 2007 and not 2008. So far my fert costs have come back down this year. In 2008 I kept my quality or chemicals up and ate the margin. I feel my Margin is high enough I can afford to eat added expense without raising prices. With the Economy down, No way I will raise prices.


    EXCEL SPREAD SHEET is an excellent way to keep Chemical cost. You can set up numbers programs so you only have to enter the current price per jug or bag and Excel tells you your cost per thousand.
     
  7. RigglePLC

    RigglePLC LawnSite Fanatic
    Posts: 11,919

    Back when I worked for TruGreen we often did big commercial jobs for way below list price. And they were often undermeasured major, also. Each day we had to fill out a "Production Report" to show if we used too little or too much fert, for the day's square feet. The boss showed me how to fudge the numbers. Sometimes we used enough fert and weed killer for 100,000 sqft--when the real size was more like--way more.

    You are doing it right, Daveyo. They should get a slight discount for time saved in driving and billing costs. Materials cost, plus overhead charge, plus $75 per hour for your time--would that work?
     
  8. daveyo

    daveyo LawnSite Senior Member
    from N.J.
    Posts: 907

    Yes thanks a million guys, very professional answers. I have no problem sharing the way to set up, even though it took me 7 hours and counting to set everything up :rolleyes:

    How about this first, I know my expenses down to the penny, but is there anything I may have forgotten (cost wise). the top part is for my calculations but it gives you an idea of setup:
    Cost Sq ft. coverage Cost App. Rate (lbs) Sq. feet Bag Size (lbs)
    14.6 19,000 1.62 5.5 1000 50

    lot size
    Application Fee
    Pickup/Delivery
    Gas
    Shrinkage
    Lbs of Fert Needed
    # of Bags Needed
    Insurance
    Cost for Fert
    Shrinkage
    Other Costs
    Markup
    Machine Cost
    Weight Depreciation
    Machine Depreciation
    Grand Total
    Profit

    This is straight from my excell worksheet, I think this is my third app obviously I'm missing some pertinent info but this is my cost list.
     
  9. daveyo

    daveyo LawnSite Senior Member
    from N.J.
    Posts: 907

    Ric those are some good numbers I was in that same ballpark with the 2/3 margin. Honestly my larger properties were looking dismal but I am going to play with the numbers and minus out some percentages of expenses I wouldn't incur on the larger lots. Oh and by the way I'm not raising my prices this year but I am not lowering them by any means.
     
  10. turf&tree

    turf&tree LawnSite Member
    Posts: 112

    Sounds like your on the right track Daveyo. Consider what everyone is saying about larger properties. No drivetime to a bunch of small jobs, one job to fill out paperwork on, most of the time wide open spaces instead of broken up little postage stamps, hopefully less handwork. Your price will probably be lower and therefor the profit margin a little lower, but you should still be able to make good money. It seems to me a variable would also be equipment type and size. I have been in the industry since 1973 and remember what equipment I used back than. WOW what a difference today. I used a piece of equipment back in the 80's called a Meter Miser for liquid weed apps. I think it would do 460 sq ft per fill. We also did mostly bentgrass lawns cut with reel mowers back then and people didn't mind paying big $$$$$ for quality turf care. Bigger Badder Better machinery = production. But you probably already know this.
    Jim
     

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