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Mulch delivery a loss leader?

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Steiner

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Discussion starter · #1 ·
Guys help me with this one:

I have been doing the numbers on mulch deliveries lately as I do a few to our regular customers during the season but I just can't understand how that much profit can be generated.

I make good money purchasing mulch and reselling and installing it at a customers property,but most of that profit is generated by installation labor and up-sell of pruning, edging, plantings etc. I just can't see how the sale of the bulk product can generate cash, if its only a delivery, even if a typical delivery only takes about 1 hour locally.

My thinking: Mulch depending on quality and type goes for about 30-35 dollars retail per yard here, and can be bought in bulk by about 80 yards at a time from a local supplier. What I can't get to pencil out is that after you hire a driver, pay insurance, taxes, WC, plus get a used small to medium sized dump truck I just can't see much more than 30-60 dollars being made on a load of mulch after delivery fees and other associate costs are factored in.

My math (costs) for an average delivery of 4 yards brown mulch saying I sell about 200 yards per year:

48.00 (12.00x4) yard wholesale
15.00 my driver wage per hour
5.00 driver WC, Taxes, Fees
40.00 Truck costs taxes, insurance, tags, fees, fuel per hour
20.00 Skid to load, fuel, maintenance and upkeep per hour
3.00 Land occupied: Taxes, insurance, mortgage, phone,

131.00 total cost for about 155 dollars of gross sale?

So 24 dollars profit for a 1 hour load of mulch?

So in a season I would generate 1200-2000 of profit for the mulch delivery portion of the business? Ouch.



So my questions are as follows:

1. About how much are you paying wholesale for 1 yard of brown or black mulch delivered in an 80 yard truck? My guess would be an average of 12 per yard.
2. Does the sale of mulch generate a size-able income for your small to medium sized contracting business (not supplier) or do you simply use it to get your foot in the door?
3. How much profit do you calculate from each yard of mulch sent out on average?
4. At what point does sheer volume come into play? At what point does it become profitable? 100 yards a year? 200 yards a year? 1000?

-chris
 
#2 ·
It is just a loss leader for us. I have never taken the time to really break it down. It just keeps my guys busy in the spring until mowing and landscaping take off.

Making a case for using the loss leader tactic.

Last season we were hired to do 20cuyds of mulch in a "high end" neighborhood. we hit it off with the homeowner and did a small $1500 fix on a drainage issue the lawn had. Then later in the season we fixed a retaining wall- and now it looks like we will have her mow/fert business this year. The lady also referred us to 2 other people.

If only it worked this way all the time
 
#3 ·
I get painted black mulch at $9yd. Usually have 10-12 loads a year. I sell it for $35yd and charge a flat rate of $50 to deliver. I will only deliver a full load on my truck (10yds). So that's $40 for a yard ,delivered. I usually try to double my money, so this is about 4.4 x my initial investment. Must be profitable because I always have the next load paid for before I even order it. Usuallyhave 10-15yds in the bin when the new load arrives.
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#4 ·
Are you charging extra for delivery? Many companies around here charge a minimum of $25 for a delivery in town (won't take more than 30 minutes) and up to $75 for a longer run. If you added $25 to your fee, you now just profited $50 for an hour of easy work. If your cost to deliver that were $135 or so, then you are netting out at 37% +/-. That is pretty good.
 
#5 ·
You can look at it a from another angle. It keeps a man busy in early spring before lawn work pics up. It makes a truck you already use more productive. It puts you into contact with more possible customers.
 
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#6 ·
not making profit is all about pricing.

and unfortunately you will have to deliver a ton of mulch to make out decent to really pay for the tools to do so, that is where your tools should be very multipurpose so they dont rely on mulch delivery to make money with them.

you wont get rich i am sure on it, as will none of us but it is money in the pot!!!
 
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#7 ·
I am much smaller than some of you guys but we I get 100 cubic ft scoops for 20 dollars brown or black. I can fit 5 on my 16 ft tailor 1 in the bed of truck. charge 85 labor per scoop plus cost of the mulch to lay it. Don't have skid steer all wheeel barrels and shovels. We do usually 250 scoops per season which for us is a good profit and mulch company is very close by. We only do mulch in the spring. It becomes to much of a hassle with after we start cutting. We do about 85 a week. Mulch jobs don't always fit in the schedule.
 
#8 ·
O.P your numbers are showing such low numbers because it appears your not actually charging anything to bring it out . When we do a delivery it cost $50/$35 $50.00 per delivery plus$35.00 an hour for the drivers cost. if out of the crews coverage. The way your numbers look your paying a driver out of the profit you would be making if it got picked up .
 
#9 ·
Well i pay 9 an hour for an employee to work for me. No we don;t have dump trucks moving but a single truck and trailer will go pick it up. I work in Louisville and it really only takes a half hour to pick up mulch and be back at the job. From others in my area i talk to 85 for one scoop to pick it up and lay it is high. Most will only pay 50 max so that 85 yes is go pick it up and lay it per scoop. And if I do only put my numbers as 50 dollars labor per yard that gives me the 35 to play with going to pick up the mulch. If that makes sense to you sorry. I know moving dump trucks profits can dwindle because of gas.
 
#10 ·
There is money to be made in the mulch business. By mulch business I mean just selling and delivering. I worked for a company for four years as their driver. Delivering mulch, sand, gravel, top soil, rail road ties ect. during the busy season, they would turn in 160,000 dollars a month (thats the top number before bills were paid). But only having 6 employees, thats not bad money. What they should have done was had us install the mulch as well. They sold salt and fire wood in the winter months, but should have plowed snow. IM heading into my second year or lawn care and Im thinking about starting a delivery service as well. I know what kind of money can be made.
 
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