Profits on Materials???

Discussion in 'Lawn Mowing' started by afftandem, Jun 15, 2005.

  1. afftandem

    afftandem LawnSite Member
    Posts: 196

    1st yr mowing commercially.. mowed past 2 yrs with 21" mowers, so just learing the buisness...

    for those of you doin mulch/stones/fertilizing/etc.... when your pricing it out for the customer.. is their profit made from your materials/seperate from the man hrs?? or just an added part on what you paid EXACTLY for the materials? or just a small raise for having to retrieve the materials (possible storage, if you stock) but which really isnt profit...???

    i.e. when I take my car in and have the brakes done, the man hrs are there and the cost of the brakes (which they have made profit the same as autozone wouldve if they had sold me the brake pads)

    also could ya guy check my sentar/stander post and give some suggestions?
     
  2. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,842

    Well, I'll teach you what it has taken me a long time to learn.

    First of all, I always operate under the concept that I won't sell anything to anyone for too much more than they can get it themselves. So if that means the average-Joe customer can get a yard of mulch for $25, then I usually sell it to them for $25. Maybe $30. I may not mark the product itself up at all, because I don't want to sell stuff to people for more than is reasonable. And I think the "retail price" on any given item is what's reasonable. That doesn't mean I don't figure my pickup and delivery time into my labor - on the contrary - I do! But for the product itself, I try not to ever mark it up to much higher than retail price. Two reasons for this policy; 1) The customer will never feel "ripped off" and 2) I can sleep at night knowing the customer paid me the same as they would have paid anyone.

    Now, that being said, there are lots of ways to make money marking up product. But you gotta realize some products have a huge discount to LCOs and Landscapers and other products to not have much of a discount for LCOs or landscapers. So you make more on some products than you do others.

    For instance;

    Average price for barkdust (bark mulch) around here is around $25 per yard or $140 for i unit (7.5 yards). But I know some places where I can buy it (just as good quality) for $17 per yard and $115 per unit. So I save money by using those places and charging the customer the first prices I mentioned. But even with this, there is only a small mark-up. Money in mulching is made mostly via labor.

    On the other hand, I get most irrigation materials for 50% off retail list price. Like a Rainbird controller costs me around $65.00. But list is $130.00. So that's what I sell it for. No irrigation store around here will sell it to an Average-Joe-Homeowner for less than $130 anyway. So I am just charging what they'd pay anyway. But because of my loyalty and purchasing volume to rainbird and my supplier, they give me a higher discount and allow me to make more money on the markup.

    Plant materials are similar. Most plants and trees I get at my wholesale supplier for about 50% off retail. I even have a few wholesale nurseries who sell to me for about 65% off retail prices. So a tree that costs me $80 I can easily sell for $160 and still be selling it for what the homeowner would have paid had he gone and picked it up himself.

    Fertilizer there is a decent mark-up on too. Maybe 25%-50% depending on where and what kind I get.

    Rock (flagstone, wall rock, gravel) products I get anywhere from 10%-25% off retail prices. So I can't mark those up too much.

    Anyway, you get my drift. Some suppliers offer big discounts to LCOs and Landscape professionals. Others offer almost nothing. So be smart and find and use the ones who offer the biggest discounts. But charge your customer full retail price. The more of these places you find (who offer big discounts to Landscape pros) the more markup you'll be able to make.
     
  3. AWJ Services

    AWJ Services LawnSite Platinum Member
    from Ga
    Posts: 4,276

    In Georgia if you mark the Materials up there has too be paid additional sales tax on the material profit paid which leads too have a Sales Tax ID number.
    Some choose too run there buisness without one and if so you need to make sure that the material profit does not show up itemized on your invoice.
     
  4. Markf

    Markf LawnSite Senior Member
    Posts: 407

    I agree with Jim. We have no mark up on the mulch that is spread. We have it delivered by the mulch manufacturer. Most people only call the local nursery which charges $30/cy delivery not included. The manufacturer charges $29 with delivery. Therefore our spread price includes the material and our labor. We list the delivery as a separate line item. However, another client has us installing a mulch filled play area for her children. Here, if she chooses the 6x6 timbers I will double the price because I have to pick them up and stake them after rounding the corners with a router. If she chooses plan B (and I hope she does) all I have to do is install plastic device that is made for this type of application. I will mark it up, but not as much (I still have to pick it up) and then charge our standard mulch rate to fill it.
    Mark
     
  5. Remsen1

    Remsen1 LawnSite Bronze Member
    Posts: 1,020

    I don't mark-up per say, but I do not give customers a seperate line item for the material alone. I charge for "value added" and I describe what they are paying for. A line item in my bill would look something like this.

    Mulch/ 1 cu. yard. Material, Pick-up, delivery, installation. $65
    Perenials/ (2) 2-Gal. Hydrangea. Plants, soil, pick-up, delivery, site prep, intallation. $150
     
  6. drmiller100

    drmiller100 LawnSite Senior Member
    Posts: 562

    i charge what the value of the final result is to the homeowner.

    "wow! that will look really good! What a neat idea you have!"

    "to do this right, you are going to be around xyz dollars for the whole job finished......."
     
  7. bobbygedd

    bobbygedd LawnSite Fanatic
    from NJ
    Posts: 10,178

    this is how you do it. just for example: i had a stone job the other day. i needed 2.25 ton of stone for the job. i don't sell 1/4 tons, so, i charged the customer for 3 ton. ok, now, i PURCHASED 3 ton. client #1 paid for 3 ton. i have 3/4 of a ton left over. i have 2 small landscape jobs lined up, that i need stone for, to use as a "highlighter". each one of these clients were charged for a full ton of stone. the 3/4 of a ton, will be enough for both jobs. the final result= i purchased 3 ton of stone, but was able to sell it as 5 ton. purchase price was $50 per ton = $150. i sold it for $160 a ton, and sold it as 5 ton. $800 was my take, on the 3 ton. :drinkup:
     
  8. Remsen1

    Remsen1 LawnSite Bronze Member
    Posts: 1,020

    Yes, I've done this as well, with success and it is pretty easy cause a customer doesn't know what a ton looks like, or a yard of mulch or 5 yards of mulch. When it comes to things that they can eyeball however, 2 plants for example, then you have to show them what they are getting; planning, pickup, delivery, extra materials, labor, cleanup etc. cause otherwise they won't understand why they were charged $75 for a $25 plant.
     

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