Am I lowballing?

Discussion in 'Business Operations' started by BetterLawns&Gardens, Apr 22, 2013.

  1. gcbailey

    gcbailey LawnSite Silver Member
    from WV
    Messages: 2,758

    it's easy for someone who doesn't do this full time to be able to low ball and not give a care. I can't count the number of single season customers we've lost over the years due to the home owners previous "mow on the side guy" being desperate for money and undercutting us by $10-$15. The way I see it is, let them have it.

    If we charge $35 for a 40 minute yard and they want to do it for $20. Fine. I guarantee the other guys won't put in near the effort or quality of work that we did. It comes down to people want something for nothing and they care more about saving a $$$ than the quality of the work.

    We made a decision a few years back to start targeting upper-mid level housing and above and people who value quality over a cheap cut. We've never looked back.
  2. 32vld

    32vld LawnSite Gold Member
    Messages: 3,983

    Yes you low balled.

    Do you have a minimum price?

    It should be $30 for a 1/4 or less. Then raise your price so that you are $60 for 1 acre.

    Try to find out what the others charge in your area.

    Learn your costs to operate.

    Foreman salary, helper salary is just the start.

    Liability insurance, gas for truck and equipment, repairs and maintenance, purchasing new truck, trailer, equipment when the old one's wear out, buy additional one's so you can expand to a second truck/route, advertising, profit for you.

    If you are going to work for $10 hour there is no point to be a business owner.
  3. JimMarshall

    JimMarshall LawnSite Senior Member
    from NW PA
    Messages: 316

    We do a minimum of $30 to stop our truck. As others have said, you don't know what it costs to run a legit business.
  4. Armsden&Son

    Armsden&Son LawnSite Silver Member
    Messages: 2,358

    I heard the greatest quote on this site recently.... I apologize because I can't remember who said it... It's has Tony Bass written all over it but here it is.... "Do you want to create a job for yourself, or do you want to start a business?" Nobobdy can tell you what is good for you or what to do... But a lot of folks on this site have been in the game and know what it costs to run a biz... therefore they know what to charge...
  5. BetterLawns&Gardens

    BetterLawns&Gardens LawnSite Member
    Messages: 60

    Thank you to everyone who gave genuine advice. To everyone else I am still learning here. I am pretty sure there was a time when you didn't quite know what you were doing either. And if you are one of those shocking cases where you woke up one morning decided to open a business and knew exactly what to do and how to do it the right way, I highly congratulate you.

    To TuffTurfLawnCare, thank you for the advice on taking a class or getting a book. I rented 5 of them from the library and I plan to read each of them.

    Jrs.Landscaping, I have read quite a few threads on estimating. That is actually how I came up with the quoting system that I (was) using.

    Alldayrj I did add in a profit I marked up the number by 15% on the number that I came up with using the quote system that I was previously using.

    Problem: I wasn't adding in all actual costs. I was only figuring a few things like gas cost to drive there, employees wages, (which I know now was way too low!) and a few other things. This is why my numbers were coming out too small. Also I was not accounting for growth, and replacement of equipment.

    Another problem: Quoting was taking way too long! It would take me sometimes an hour to measure the yard space then calculate the actual square footage and figure out a number that way.

    Solution: (or at least I hope so) I am creating a spreadsheet with everything, separated by what the expense goes to, and how frequently I pay it. For instance Insurance, licenses, and tires... yearly... oil, spark plugs, belts, ect... monthly... gas, and employees wages, ect... weekly. Calculate those costs to determine total cost per year to run business full time 40 hours a week. Divide that by how many hours run, and raise it by 20% to get my cut, and I have my cost per hour.

    Quoting: Now when I get called to a property I will do a quick walk around. Guesstimate if it will take a half hour or full hour, and based on my number I will know how much to charge the person.

    I have a good idea on how long it will take to mow yards based on the yards that I have been doing. (Most of the yards here are approximately the same size. My time is with one person and I will keep that with one person in mind, although when I do get big enough to hire employees the time will be faster but I will keep it at one person times to accommodate expenses that were not figured or raises of things and so on.

    Can anyone point out anything that I am missing here, or where I could be going wrong. Helpful advice is always greatly appreciated!
  6. TuffTurfLawnCare

    TuffTurfLawnCare LawnSite Senior Member
    Messages: 667

    You can get idea of the property size on while your on the phone with customer. when a customer calls me, and I'm near a computer, I am looking up the property on Google street view and Bing maps and have an approx size of the lot from zillow. Before I even show up, I know what the house looks like, the yard looks like and how bad the hills are.
  7. JimMarshall

    JimMarshall LawnSite Senior Member
    from NW PA
    Messages: 316

    You will eventually get to the point that you will be able to drive up to a yard, and know what you need out of it just by looking. No measuring, etc.

    Just for some advice so you don't have to figure out on your own..... Whatever you are figuring on paying your employees, add 50%, give or take a little. That will be your actual cost in employing them. IE If you are paying Jane Doe $10.00/hour, it is actually going to cost you around $15.00/ hour once you figure in the employer portion of your payroll taxes, workers comp, unemployment insurance, and the bookkeeping time associated with these.
  8. 205mx

    205mx LawnSite Silver Member
    Messages: 2,393

    Personally I think you are overly complicating things when it comes to a simple mowing service
    Posted via Mobile Device
  9. BetterLawns&Gardens

    BetterLawns&Gardens LawnSite Member
    Messages: 60

    TuffTurfLawnCare, I had seen where other people had posted using that method and some had said that it was ok to use but others had said that you can't account for large ditches and high hills, and other problems that don't show up on there... so that is why i hadn't decided to do that method. But wouldn't that have given me the square footage for the entire property? I obviously won't be mowing their home or driveway? But i guess that is when you just figure the lawn is no bigger than said sq ft and it won't actually take that long. better to over estimate than under huh?

    Jim Marshall Thank you for that!!! I had just started looking into the legalities of employees, and wondered how you could budget for those things also in reading the books that i picked up it said that if i have employees that I can't be a sole proprietor? is this true?

    205mx I have always been an over thinker, and always make things more complicated but in my mind I would rather go in knowing way more than what I need to than walking in looking like an idiot because I have no clue what I am doing.

    Thanks again everyone!
  10. White Gardens

    White Gardens LawnSite Fanatic
    Messages: 6,776

    You can have employees as a sole proprietor. Having an LLC or Corporation basically helps to protect personal assets from any claims against your business.

    If you own a home, or any other stock holdings, equity or investments, then you really need some sort of corporation set up.

    You need to have a minimum price and stick to it. We are at 35/yard and won't budge. Most guys are at 25-30/yard (legitimate) in our area.

    We also push for 45-65 bucks a week on residentials for full grounds maintenance which includes cleanups, hedge pruning, and weed control in the lawn and beds.

    I also had a customer as me if we had multiple houses on one street, if we would drop the price for everyone and I said no.

    Reason being is that you do 3 houses at 20 bucks a pop, then that is only 60 bucks for 3 houses. If you loose two of those houses, then you are stuck with one house on the block for 20 bucks a week.

    It's better to give existing customers 1-2 free mowings for referrals on the block rather than discount the entire block.


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