Whats your formula?

Discussion in 'Business Operations' started by Chris Aurelio, Feb 25, 2002.

  1. UTM-PIKE

    UTM-PIKE LawnSite Member
    Posts: 65

    Now thats funny. Look at what you type before you hit ENTER and it will not look like that.

    Anyway,
    didnt mean to crack on you, it just pisses me off when when I see someone post something without looking at it.
    Sounds like you got a really good deal on the truck, and Im not downing that. I was just trying to advise you to keep your first year expenses low, until you build up a good client base, thats all. Im 19 too.
    Jereme
     
  2. Plowguy99

    Plowguy99 LawnSite Member
    from MI
    Posts: 23

    Chis- don't worry, I am pretty new at this too. I have loans for some equipment and I am still trying to figure out how to bid on lawns. Its hard because I know there are some bigger companies in my area who charge a ton, but there are also some people who I swear are working for damn near free. I got in the business 4 years ago but only did it for a year then I went to college. Unfortunatly I learned a few of the "hard knocks lessons" that leeslawncare it talking about.
    I am friends with a few people in my area who are also in this bussiness. It is nice to be able to ask someone in your area what they get for certain sized lawns.

    Best of luck to everyone who has the guts to go out on their own.
     
  3. PaulJ

    PaulJ LawnSite Bronze Member
    Posts: 1,776

    Interesting, all these posts and still no answer to Chris's question.

    First you need an idea on how long it takes you to mow a given size lawn. Mow your oun lawn or a friends just like it was a custumers and keep track of the time. Then get an accurate measurement of the turf area. Use a wheel or step it off but get a sqare footage of the lawn and and idea of the amount of trimming done. Now your have a starting point when you go to bid a lawn. square feet per hour. Remember to take into account difficulty, obsticles , trimmming amount, hills etc.. every yard is different. Time also depends on the equipment used.estemated)
    Next figure out how much you need to make each month to cover ALL your expences :loan payments, gas, repairs, insurance, wages (dodn't forget to pay yourself) etc..
    Now how many hours are you going to work a month 8per day 4per week or 12per day 6per week.how much of this time will actualy be spent mowing. take into account maintance time , drive time, sales time, paperwork time,.

    expences per month divided by mowing hours per month = price per hour.
    square feet for lawn divided by square feet per hour = hours for lawn
    hours for lawn times price per hour = price for lawn.

    Another thing to do is get an idea of what others in your area are charging.

    This isnt by all that scientific but its a start. Hope it helps. Good luck.
     
  4. LawnLad

    LawnLad LawnSite Senior Member
    Posts: 738

    Chris - you asked several questions in your post. Most importantly, you need to understand the cost of being in business. My recommendation would be to learn about business in general to give you a basis of understanding. It won't come over night, you'll learn like everyone else. Trial and error. The less error you have because you do your homework (like reading posts on this site and others) and making educated decisions, the fewer errors you'll make.

    Get in touch with someone who can sit with you in person to help you consider all these costs. Try www.score.org

    In the meantime, here is a thread on pricing - hope it helps.

    http://www.lawnsite.com/showthread.php?s=&threadid=25014
     
  5. OBRYANMAINT

    OBRYANMAINT LawnSite Senior Member
    Posts: 555

    Remember even if a piece is paid for with cash, you need to re-coup that cost with in operations......even though there is no payment you will still have maintenance on that item and eventually you may want to upgrade
     
  6. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Posts: 4,771

    Lawnlad is correct! I representative from S.C.O.R.E. or SBA will sit down and discuss your business goals and give you guidance for FREE! I personally have not done this, but I have attended free seminars. Read posts and buy books. The info is out there, but will not come to you.

    Good Luck!
    MATT
     
  7. LINKSCAPE

    LINKSCAPE LawnSite Member
    Posts: 13

    Here is an example of how I account for equipment costs: If a mower costs 6000, and I plan to use it for 3 years, I divide 6000 by 3. The mower costs 2000 per year. then divide 2000 by the number of weeks you work per season. do this with all your equipment and other costs-leaving some extra money for unexpected expenses. Figure out the weekly total of all expenses and it will give you a good idea of what your business costs to operate every week, before making any profit. this will help you decide what to charge people based on what you feel is fair for your labor.
    -Chris
     
  8. walker-talker

    walker-talker LawnSite Platinum Member
    from Midwest
    Posts: 4,771

    Heres how I would do it.
    Figure the life line of the equipment....say 10 years (better yet, how many hours)
    Figure how much money you will put into that equipment in 10 years, or XXXX amount of hours.

    Cost of oil, filters, spark plugs, blades, fuel consumption per hour, general maintenance, engine replacement and so on. Then you can calculate how much it cost you to operate that machine on a per hour basis. I think this will be one of my goals this year. This will take some extension research, but I think this would be the most professional way to do it.

    MATT
     
  9. wayne volz

    wayne volz LawnSite Member
    Posts: 49

    :D :angel:

    The best way to start is to start right. Use a cost recovery system that demonstrates how to do this. A book Bidding and Contrcats Your Key to Success is available through Profits Unlimited. They advertise in all the trade magazines. This book will show you exactly what you want and need to know. Not industry standards, but sheets to show you how to calculate your company's cost per hour of operation.

    Don't amke the mistake that we made in the early years by looking ans asking the competition what they are charging. Many times they have no idea why they charge what they charge either.

    Any questions, please feel free to call me email me at (wayneslawn1@aol.com)

    Thanks!
    Wayne
     
  10. B. Phagan

    B. Phagan LawnSite Member
    Posts: 95

    Chris and others,

    FORMULAS WILL KILL YOU! Too many times, companies work up some formula for landscaping, etc......2x cost of materials, charge what others charge or come in below what others charge and most use the old SWAG method. May as well go deer hunting with Ray Charles! Just about as risky.

    Try this:

    DIRECT JOB COSTS

    +

    overhead recovery

    +

    An acceptable profit to you

    =

    Your selling price!

    Anything less than the above may prove extremely costly. If you wish, check my website for estimating books on maintenance and landscape/hardscape, plus others. They have helped thousands in the profession.

    If you really want to pick up some knowledge, check my site under "events" for upcoming workshop locations in GA, NC, SC and VA.

    For those of you in GA, the Earth & Turf Expo has been cancelled so those classes will not be held. I will have a "sales jubilee" and money maker workshop in Marietta, however.

    E-mail me if you have any questions on the above.
     

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