Quick question on percent markup for profit.

Discussion in 'Landscape Architecture and Design' started by j9sheldon, Dec 20, 2004.

  1. j9sheldon

    j9sheldon LawnSite Member
    Posts: 74

    just curious what you all would mark up % wise for profit. job comes out to $1239.2. This would cover myself, 2 workers, and all material needed.

    thanks in advance.
     
  2. out4now

    out4now LawnSite Bronze Member
    from AZ
    Posts: 1,796

    How much you want to make? There was a great(but long thread) with Mudstopper a while back that got into this.
     
  3. muddstopper

    muddstopper LawnSite Silver Member
    Posts: 2,342

    This could make another long thread. You need to figure in all cost not just the ones listed. ex. two laborers. wages plus benifits. You realize you will be paying not only their wages but also part of their SS taxes, workers comp, medicare, unemplyyment insurance. You then have yourself where you will be paying the full amount of benefits. Now of course you have your truck, trailer and and what ever equipment you use. Fuel, depreciation, maintenance cost, ect. And then there is insurance, license fees. Then how about the cost of having your invoices printed, advertising, cell phone and/or regular business phone, Office/shop space rent or mortgage. Electricity, gas or heating fuel. Lets see, what have I left out. Probably a lot. After you have figured all this into your cost then you can decide how much profit you need to make and then you can do the markup on the job. Its easy to price a profit on just Cost of goods Sold but often times one leaves the overhead out of the equation and actually ends up with a loss. Someone here that is more qualified than me needs to start a post on figuring your true cost and the proper way to do it.
     
  4. Ecobjs

    Ecobjs LawnSite Member
    Posts: 55

    I agree with Muddstopper, tons of things must be figured out to know what running a business actually cost you. But assuming all that has been done, to answer your question, after all overhead cost, employee cost, job materials cost etc. etc. etc., we want different %s of profit depending on the job. For instances, less than a 10% profit is simply not worth doing the work. We seek 20-25% on most landscape jobs, but work that could have "issues" (e.g. new work to us, not sure about how to quote, if we believe the client might be difficult, etc) then we will factor in a larger profit just in case for a buffer. However, if we are trying to gain market share in an area we might accept a job for as little as 10-15% profit. We have of couse made larger and smaller profit margins (e.g. didn't quote the job correct, everything went perfect, took us less time, etc.), but in the end we try and be consistent.
    Hope that answers you question.
     
  5. j9sheldon

    j9sheldon LawnSite Member
    Posts: 74

    To Muddstopper and Ecobjs,

    thank you for your reply and knowledge. I am just starting out part-time and didn't realize all that is involved.
     

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