Am I charging too little???

Discussion in 'Starting a Lawn Care Business' started by nickm, May 5, 2003.

  1. nickm

    nickm LawnSite Member
    Messages: 13

    Tell me if I'm crazy, I only charge $15.00 for any size "level residential" lawn. I placed my ad in just one local paper, and I landed 45 new accounts. 24 of them are weekly and the rest are Bi-weekly. I placed my ad in some more papers and my phones won't stop ringing. I get calls from all types of people, some are young, some are old, and some are other companies pretending to need cuts, and I can tell that they are by the questions they ask. I did some research and found out that most other companies near me charge $25 or $30. a cut.

    Am I not charging enough, or am I the only reasonable one out there.
  2. WPLE

    WPLE LawnSite Member
    Messages: 157

    How long does it normally take you to do these accounts on the average?? What kind of overhead do you have??
  3. LawnLad

    LawnLad LawnSite Senior Member
    Messages: 738

    You'll have plenty of people tell you are charging too little. The real question is can you cover your costs and make a profit charging $15.00 per cut for any size lawn.

    I would wager that the answer is no. First off - you need to charge according to the size of the lawn. 3,000 sq ft is sure different than 10,000 or 20,000 of turf. A corner lot takes longer to service than a middle of the block lot due to trimming/edging.

    How many lawns with travel time can you cut per hour? Per day? If you had to pay someone to do this work - determining all of your loaded labor costs, equipment, overhead and profit requirements - can you make money?

    Are you currently tracking your time in and out on each property and how long you have to travel between jobs? If not - start today. Do this for two weeks. At the end of two weeks - you need to know:

    How many total payroll hours did you work?
    How many of these hours were spent travelling/loading/unloading, etc.
    How many hours were spent doing the actual work, or billable hours?
    How much total revenue will you invoice from your work?
    Divide your revenue by your payroll hours for the two weeks and you will have an average of how much you are recovering per hour.

    Once you have this number (if you don't have it already) then come back and we can answer the next question of are you charging enough.

    By the way - it may not take you two weeks to find out the information you need. You can make the calculation at the end of each day if you want - and if you're recovering less than $60 to $80 per hour working by yourself - you might not be charging enough.

    Also - keep this in mind - if you competition is charging $25.00 or $30.00 - you're leaving at least $7.50 to $10.00 on the table each time you cut. For the very reason your competition is getting more than $50% more than per cut means you too can charge more. Why work for less than you have to. Pricing is a game of what you can get for the services you can perform. It's nice to give the customer a break - but they also expect to pay you for your work, so don't cheat yourself because you want to be a nice guy. You need to be around in five years and if you cheat yourself out of money you'll cheat your customers in the long term because you won't be able to stay in business.
  4. Green in Idaho

    Green in Idaho LawnSite Senior Member
    from Idaho
    Messages: 833

    Even IF you could make a profit at $15/cut why would you leave $10 per cut on the table (or the lawn in this case).

    If the market rate is $25, charge $25 and the additional $10 is MORE profit that will allow you buy bigger, better, equipment. If you don't want to expand the biz, the extra $10/lawn will buy you more toys. Whatever....

    Nickm, If you have any more calls, I would suggest you tell them you are full. And refer them to some other person (or some other phone number in your control like a cell phone) then when they call the second # you may be able to still get their biz, but at a market rate.

    Don't sell yourself short.
  5. Green Pastures

    Green Pastures LawnSite Silver Member
    Messages: 2,457

    Yes you are.
  6. nickm

    nickm LawnSite Member
    Messages: 13

    Now I can see why I like site so much. I probably would have never thought of so many different factors in means of pricing. Thanks to you all for your info, I will definetly start keeping track of my times. My company is also tied into a realty co. and I don't have an overhead, except for small things like new trimmer line and 2 stroke oil. Everything I make is pure profit (but I have to take my girl out to eat once in awhile) that I get to put in pocket.
    I think I am going to reevaulate my pricing. Thanks again!
  7. nickm

    nickm LawnSite Member
    Messages: 13

    Another thing, In the beginning I did research pricing by getting info on my competitors, and alot of them were charging just about the same thing. I think it's the going rate here.
  8. gogetter

    gogetter Banned
    Messages: 3,256

    What kind of equipment do you use that doesn't use any gas? How about the vehicle you're using, no gas in there either?

    How about insurance? Taxes? Air filters, spark plugs, belts, blades, repairs?

    How about the time you spend working that aren't "billable hours", such as time spend sharpening blades, cleaning filters, doing oil changes, running around giving estimates that you don't land.
    You want to be paid for all that time too, don't you? You can't just think about the time your on the lawn.
    Factor in travel time from lawn to lawn, time spent going to dealers/suppliers, etc.

    Some other examples of where my money goes are: business cards, flyers, business phone line, cell phone, signs on truck & trailer, uniforms (soon), stamps, envelopes, ink cartridges for printer, and the list goes on and on.

    Nobody is "pure profit" after paying for oil and trimmer line.
  9. nickm

    nickm LawnSite Member
    Messages: 13

    Your right gogetter, but like I said, My co. is tied to a realty co.. I don't pay for gas, I have a blade sharpener in my truck which I power off of the trucks engine, We own a small engine repair shop so I have access to filters, oil, plugs, or what ever else I need. This isn't my only business, I own 2 car washes, a mobile detailing business, and part owner of a property management co. that manages 237 houses with lawns and pools, not to mention that my fiancee is the owner/broker of the realty co. Everything I buy, or take from the shop is written off at tax time as business expenses. I like going out and cutting lawns or cleaning pools because it gets me out of the office or the house and keeps me from getting bored. I called the newspapers and changed my ads, and upped my price to $20 and cut for any size "level residential" lawn.
  10. gogetter

    gogetter Banned
    Messages: 3,256


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