Several commercial bid questions

Discussion in 'Lawn Mowing' started by Precision Lawns, Mar 2, 2005.

  1. Precision Lawns

    Precision Lawns LawnSite Senior Member
    Posts: 283

    This is our first season and we've already gotten 4 yearly residential contracts signed (not bad considering we've only passed out 500 flyers and it's only 40 degrees outside!) We're excited and plan on making our main focus expanding our residential client list, but we recently got invited to do at least one commercial bid and possibly a second. The first is an apartment complex and the second is for a homeowner's association. We're not really sure what either will entail yet (and we won't even know if the second one is open for bids until April, when they have a meeting to decide if they're going to fire their current LCO who they're not happy with). But I just have a couple questions before we go survey the properties and attempt to put together a bid.

    I keep seeing posts on here saying that for mowing, most people charge between $40-$70 per man per hour. That seems pretty steep to me for just labor, especially if you're adding in profit on top of that. So my first question is do those numbers include your overhead and profit, or are you charging those things on top of your labor cost. If it's on top (or even if it's not), what kind of %profit do you generally get? Do commercial properties really pay that?

    My second question has to do wtih the possible HOA bid. When bidding a HOA (this is a single-family home neighborhood), do you just add up what you would charge each individual lawn if it was a single residential customer, or do you discount it because you eliminate travel time? For example, if it is a neighborhood of 100 what would normally be $35 lawns, do you bid it at $3500/wk? Or do you cut it down to $30 or $25/lawn because you're eliminating travel/load/unload time and only charge $2500-$3000/wk?

    We're definitely not going to bid too low to cover our costs and still give us a decent profit, but we don't live in a really cheap area and I would still be surprised if we even were in the ballpark with some of the figures on here. We don't want to be lowballers, but our costs are pretty low and we want to be fair. We figure even if we don't get these commercial bids, putting them together and presenting them will be a good experience. We'd just like to be realistic when we're doing so.
     
  2. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Posts: 4,909

    plumber 40-65 hr
    electrician 50-75 hr
    auto mech 55-85 hr
    truck mech 65-95 hr
    carpenter 45-65 hr

    each with a toolbox....and some training...

    landscaper - "most happy to make more than a wal-mart wage"
    tens of thousands in equipment
    thousands for insurance
    thousands for payroll, benefits, comp, insurance
    office, shop, other exepenses ( ever bought a starter for a ztr? )
    GAS DIESEL

    Expenses dont even compare to the others on that list.....yet most work for far less than any one of the other " professionals" wage
     
  3. Precision Lawns

    Precision Lawns LawnSite Senior Member
    Posts: 283

    Good point. I guess the biggest obstacle in our case is that we're a partnership. So even if our labor is worth $50 each/hour (which I believe it is), is anyone really willing to pay $100/hr just for the labor? We knew going into this that with a partnership we would not bring home as much as if we went solo. After all, most customers won't care how our business is set up, they just want to pay a fair price. If you hired a plumber and two showed up, said that they were a partnership and said their time was worth $55/hr each, would you think that was fair, even if that was the industry standard? I doubt it. So should we use the industry standard for one person and split it two ways, because that's what would be fair in the customer's eyes, or should we each try to make what we believe we're worth individually because that's what's fair in our eyes? I don't know if either is right - maybe a compromise is best (say $30-35 each? Not cheap, but not way out of the ballpark either)? Opinions?
     
  4. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Posts: 4,909

    woah......not to sound harsh here but......

    CONSULT AN ACCOUNTANT NOW!!!!!! BEFORE YOU DO YOUR FIRST JOB

    Labor rates have nothing to do with how much money you and your partner draw from the business..........

    THE MOST IMPORTANT THING YOU COULD DO IS SIT WITH AN ACCOUNTANT FOR A LITTLE BIT AND GET A RUNDOWN ON

    BUSINESS MANAGEMENT 101

    This will save your ass bigtime.......... I wish i didnt work for years before i did it.....
     
  5. Precision Lawns

    Precision Lawns LawnSite Senior Member
    Posts: 283

    Already consulted an accountant. We can charge whatever we want and will each be taxed based on 1/2 of what the business nets, no matter what we take home. So if the business nets $100,000, we will each be taxed on $50,000, even if we each only took home $25,000. With a partnership, the business itself doesn't pay taxes, it's done through the partners. But that still doesn't answer the question of what the labor is worth in the first place.
     
  6. PROCUT1

    PROCUT1 LawnSite Platinum Member
    from TN
    Posts: 4,909

    that still dosent say that you have any clue about running a business.........

    I dont know everything.....but i surround myself with people who do

    From your earlier post you show that you dont exactly know the basics needed to be successful.....Nothing wrong with that....I didnt know either......but now you need to consult someone who does........then the answer of "what to charge" will stare you right in the face.............It means nothing to charge what everyone else does..........How do you know they're doing it right........... Prices that I charge would make some companies rich and bankrupt others if they matched them...........
     
  7. Precision Lawns

    Precision Lawns LawnSite Senior Member
    Posts: 283

    I don't know if you're understanding my quesiton. I know my costs. That has nothing to do with my question. I was wondering if those of you who were listing rates at $50-$70 per man per hour had included your costs in that figure. For us, we could include cost in that (we have pretty low operating costs) AND still get paid well AND make about 30% profit. But if the industry adds cost on top of that and it's accepted, we don't want to sell ourselves short. After all, why should we be OK making $35 an hour for our labor if everyone else is making $50? That's all my question was. There's not even a question of us not knowing what it takes to run our business. My question was solely about what our labor is worth.
     
  8. Precision Lawns

    Precision Lawns LawnSite Senior Member
    Posts: 283

    I need to amend what I just said. My FIRST question was solely about labor. My second question about the HOA is still unanswered. We could still make a profit even if we lower our regular prices $5-10 per property, but we're not going to if no one else does. We want to be competitive, but we also want to be smart. That's why we're trying to do the research on this site to try and learn what those who have been doing this for years and years do. Thanks for your input.
     
  9. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    I'd say when "charging what ever you want" ... the consideration should be based on all cost (direct-indirect-overhead ..... this includes a fair salary to the owners) + a fair "profit" for the business ...... this can only be answered with ones own numbers ..... not a THING to do with "I charge $45 -50-75 or what ever per hour" if that is the cost you must recover to stay in business than THATS IT

    To be competitive one must lower the cost as much as possible to stay in the market area .... say your hourly cost was $28 per hour ..... per employee ...so if you have 3 employees your cost is $84 .... SAY you charge $35 per hour .... per employee or make a profit of $7 per hour .... per employee or based on a full time employee of 2000 hours that guy made you $14000 x 3 = $42K just running it from behind the scene

    This is all play .... as I said numbers only truely related to ones own conditions ....but the concept it universal

    As far as the HOA ... in my experience ..... (I do a 127 home HOA) the winning price will be approx .... 35-50% LESS than what individual prices would be .... so if the norm would be $3500 per week the winning bid will be charging $1750 - $2450 per week
     
  10. grassdoctor

    grassdoctor LawnSite Member
    Posts: 36


    You guys need help! If you have two people on the job you should be able to get it done in half the time!!!!! With your method of compensation you would be making 25 dollars an hour per person!! Which is fine if you want to work for next to nothing. You could maybe charge that for weedwhacking or somthing but if you are running mowers no way!!!! You will be working for nothing and less then nothing when your mower breaks.!!! Please take into consideraton all the things that go along with a business paperwork (which you definatly dont get paid for), Insurance, Gas, Maintenance, Taxes, and all the other endless ****.

    Fyi: Trust me you wont belive me till after you go through with it but .... PARTNERSHIPS SUCK!!!! It will ruin freindships and create crooks. It may work if your lucky but if you dont wanna take the chance at loosing this guy as your freind dont be his partner. Instead start two seperate businesses and work togeather. Its a much better Idea
     

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