Questions About Planting Trees and Shrubs

Discussion in 'Landscape Architecture and Design' started by JimLewis, Jan 1, 2007.

  1. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,841

    I'm seeing a lot of posts here lately about "how much do I charge for planting XXX of these shrubs or ZZZ of these trees?"

    Guys, I hate to tell you but experience is really going to be your better lesson here - not guys on Lawnsite from all over the country.

    Comparing what you should charge vs. what other people in totally different climates, with totally different pricing on materials, and totally different business expenses, totally different soil types, etc. isn't really going to help you. And in fact it could hurt you. Because you may just take their advice and find out that you aren't nearly as quick as they are at installing plants or trees. Or maybe your prices aren't the same, or your soil is much harder or rocky, or any number of things.

    Really, the best way to learn this stuff is from experience. Just estimate how long you think it's going to take you, even if it's a rough guess. And then multiply that by the hourly rate your business needs to make money. Then that's your labor rate. For materials, you should probably charge close to or slightly above full retail for plant materials. If you can buy them for 50% off retail at a wholesale supplier, than even better! Then you get to mark them up 100% and still sell them for a fair price. So you figure in your plant material costs (at retail prices) and any other costs you might incur (planting compost, plant fertilizer, microrhyzae, etc.) and that's your material costs.

    Now chances are at the end of the job you'll find that you've either over-estimated or under-estimated your labor. But that's the best lesson you could ever get. Because NOW you know EXACTLY how long it takes you to plant XXX number of plants or trees in your area. And that kind of information is 10x more relevant than what some guy in Oregon with nice soft soil does.

    I know some of the newer guys are thinking, "Yah. But I was just trying to get a ball-park from some other guys on lawnsite." But my argument is that there really isn't any ball-park. It could fluxuate so much from one area to the next. And also, you're asking guys who are probably twice as fast as planting tress and shrubs as you are going to be. So it's just a bad way to compare. I think learning through experience on something like this is just invaluable. I see way too many new people get caught up in some formula that they heard from some other landscaper - only to finally realized years down the road that this formula really doesn't work for them.
  2. tthomass

    tthomass LawnSite Gold Member
    from N. VA
    Posts: 3,497

    Good post Jim!

    Something I've got to dig up are some formulas I had in college business classes that enabled you to factor your real costs beyond material but operating costs (insurances, trucks, taxes etc). You plugged them in and then saw what exactly you had to overcome in order to be profitable.

    I think something that a lot of people (myself included) have trouble with is determining what "profit" should be. Do a $5,000 job and after all things factored you come to a total of $4,800. Now you have just made $200 "profit" but none of us could stay in business or grow anyway at that rate. Like I said, determing what the "profit" margin should be I think is the hidden issue that a lot of us have but just don't realize it.
  3. RedMax Man

    RedMax Man LawnSite Platinum Member
    Posts: 4,053

    Great Post! Lots of helpful info. Thanks Jim.
  4. Lawnworks

    Lawnworks LawnSite Fanatic
    from usa
    Posts: 5,407

    Hey Jim,
    How do you feel about 2.5 plant cost for landscape projects? It seems someone wrote that in a book and it should be the standard. I just think it is a way to price yourself out of work... due to the inconsistencies in plant material and some job sites seem to allow for increased efficiency. It almost seems like a way to avoid really analyzing the project and estimating man hours.
  5. RHayden

    RHayden LawnSite Member
    Posts: 123

    The 2.5 x material cost formula has been around for as long as I can remember. And it definitely is not a substitute for analyzing the project and deriving your BEP to begin the bidding process.

    Now- that being said- we do a lot of work that requires the bid to be submitted in a per unit price. A little over 60% of the time that price will work out to be between 2-2.5x the wholesale cost of the plant after all the numbers are gathered and translated to per unit amounts . Would I ever submit a bid based solely on this calculation? Absolutely not. I find this anomaly curious nonetheless.
  6. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,841

    Well, the first problem I have with that is the term "plant cost". Because that's different for everyone, now isn't it? Even within my own city there is a big difference in plant costs from one landscaper to another. Some nurseries are open to all Landscapers, others sell only to BIG buyers. That is, they only sell to landscapers who purchase over $xxxx.xx per order or $xxxxx.xx per month. And while the big guys can buy there, and get their plants at deep discounts, others are left to buy from the remaining wholesale nurseries who have no minimums. Then again, there are other (newer) landscapers around here who know of the usual wholesale nurseries but haven't yet found the ones further out who offer even better discounts. So if there are 4 of us bidding the same job, then the one who gets plants at the cheapest price is going to come out with the lowest bid - using this formula. And that might seem good to him, that he comes out the lowest. But he's actually losing out. Here's the example;

    Landscaper A gets the best deal on plants. He buys from the "minumum order" nurseries and he can get a 5-6' thuja occidentalis 'smargd' B&B at $10, wholesale. So he charges 2.5x the cost of the tree, which is $25 per tree, installed. The job involves planting 100 of them. So his total bid price is $2500.00

    He gets the job for two reasons. One, because the client thinks that sounds very affordable and two, because he's the only landscaper who bothered to return a call or return a bid (a common problem for consumers around here since there is more demand for landscapers than there is supply) And he nets $1500 from the job. It takes 30 man hours to pick up the trees and do that job. So he makes $50 per man hour. Not bad. And he thinks he's doing well. And he's always busy.

    Landscaper B doesn't use formulas. He bids the trees off of the retail price, materials, plus labor method. So retail price at a fine retail nursery in this area for that tree is $25.00. And Landscaper B can get those trees from one of his suppliers at $12.50 per tree. So he bids the job like this;

    100 Thuja occ. 'smargd' @ $25 = 2500.00
    5 yards planting compost mix @ $25 = $125.00
    Plant Fertilizer = $25.00
    30 man hours at $50 = $1500

    Total Job: $4150.00

    And Landscape B submits his proposal. The customer says, "Wow. $4150? That's a tad higher than I expected. I wonder if those prices on those trees are accurate. Lemme find out...Hi, Retail nursery? How much for a thuja occ......$25? No kidding. Ok. Thanks.....Well, I guess that bid is about right then." And since he hasn't been able to get any other Landscapers to return his call and the bid seems to be in order, he hires landscaper B.

    Landscaper B gets the job, and he gets $1250 just from the mark-up on the trees. He gets another $25 in planting compost mark-up. And he still gets his $1500 for labor. So he ends up netting $2775.00. In effect, he makes $92.50 per hour.

    Landscaper A did nothing wrong, as far as the university classes will tell you. He got a good job, and made some decent dough. But he's got another problem. At those prices, he's landing so many jobs that he's too busy to handle all the calls coming in. He's always making money but never seems to have money to expand or hire office help or hire additional estimators or grow. So he finds himself constantly too busy and yet not making enough money to change any of it.

    Furthermore, he (and other landscapers just like him) are the reason that Landscaper B is free to give higher bids, pay for office staff to cover the phones when he's away, pay for more estimators, more marketing, etc. Because all these other guys who are giving cheaper bids are getting so busy with jobs that soon they are too busy to return anyone's phone calls. And so Landscaper B, at his much higher profit margin, is EASILY able to handle additional calls, give more bids, accommodate more jobs, and handle more growth.

    At least that's the way it is in my area. I'm not screwing anyone over by bidding jobs this way. I sell the plants to them at the same prices they'd buy them at themselves. But since I am taking full advantage of my cards, I end up profiting more per job than most people would. The customer ends up happy with our work, I end up happy with the money we're making, and everyone's happy.

    And that's just the FIRST problem I have with these formulas. Hehe. But I've already written enough.....
  7. JimLewis

    JimLewis LawnSite Fanatic
    Posts: 6,841

    A little story behind that last story;

    I used to be Landscaper A, thinking I was making plenty of money on each job but always way more busy than I could handle. I could never return most of the calls we got. And yet despite being constantly busy, I could never afford to expand. And it didn't make sense to me for a long time. Why was I constantly busy and seemingly making good money and yet still unable to afford to grow? At that time, I also sometimes got to see bids from other landscapers in my area (who usually were bidding much higher than I was). And I would say to myself or even the customer sometimes, "Wow! That's a ripoff! I can do it for much less than that!" But eventually I came to realize why other, more successful, companies charged those kinds of prices.

    Over time I've evolved more toward Landscaper B. And yah, our bids are going to be higher than some of the others. But the thing is most of the time the customer isn't even able to get another bid. So as long as ours seems reasonable, we'll often get the job. And secondly, I still win lots of jobs where we are the highest bid anyway. But that's for a whole other reason - I give the customer a lot of other reasons to chose our company other than price. And often, it works. So we end up being a LOT more profitable on jobs than a lot of other landscapers in the area. And it has afforded us to be able to do a lot of things we couldn't afford to do in the past.
  8. MarkintheGarden

    MarkintheGarden LawnSite Bronze Member
    Posts: 1,072

    Jim, thanks for the post. As always you have good sound business advice. I have been a Landscaper A type for long enough to say that you are correct about pricing your work. It is landscaper B for me here on out.
  9. Duekster

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

    It is good advice. Using a magic formula to bid is going to lead you in to trouble.

    Plants need to be sold at Retail prices. You are a professional and should get a discount from your supplier, if not; find another supplier.

    If I am going to garantee the plants then you have to basically charge twice for the plant material and be willing to eat some labor. You will not lose many plants if you plant the correctly.

    Then you need to know your production rates and labor cost including Burden and OH plus profit.

    I don't charge alot of mark up on rentals and subs. I just make sure I get enough to cover my expenses ( interested ) plus about 10%.

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