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Covering cost in western New York

Discussion in 'Starting a Lawn Care Business' started by J-Charles, Mar 25, 2020.

  1. J-Charles

    J-Charles LawnSite Member
    Messages: 18

    Hi this year I’m trying to turn a PT lawn care business legit and full time. Unfortunate for me I have a bunch of low ball customers I have to shed or convert, is there a minimum hourly rate that covers the cost of a owner operator with full insurance and paying self employment tax? I am thinking $30 breaks even. I am sorry if this inappropriate I am trying to do the right thing - thanks
     
  2. falzoneslawncare

    falzoneslawncare LawnSite Member
    Messages: 95

    im assuming you are sole proprietorship with a DBA on file with a min of 1 mil ins.
    i started my LC there as well, at the time i lived in marion but grew up in rochester (i know the city like the back of my hand) and there is no money to be made there, get an ad in the webster penny saver and head to the east side, depending on where in the city you are its just a short drive to make $50 and up per property. good luck
     
    J-Charles, Jeff@diyokc and hort101 like this.
  3. Jeff@diyokc

    Jeff@diyokc LawnSite Member
    Messages: 215

    This is a common dilemma and an oft posted comment on here! It is difficult to turn people that are used to paying a bottom barrel price to accept an increase to a sustainable wage for you!! They just find another operation that will do it for the same or less! You’ll see this comment on here a lot” a race to the bottom”.

    @falzoneslawncare is correct, you may have to move your operation to an area that is willing to pay for good service!
     
    J-Charles likes this.
  4. Jeff@diyokc

    Jeff@diyokc LawnSite Member
    Messages: 215

    Or market your service to a better paying customer!

    what I have seen over the years on lawnsite is this scenario played out over and over! In the startup/part time phase, you grab what you can to get started, then as you progress in ability or desire, you shed these folks and get better paying ones! It’s kind of a right of passage in a sense!
     
  5. Mac-s Lawn & Snow

    Mac-s Lawn & Snow LawnSite Senior Member
    Messages: 459

    With the economy and everything else being what it is, I'm thinking finding new customers this year is going to be tough no matter where you are in the country.. I need to add 16 to 20 customers to my route this year and now I'm doubting thats gonna happen. I think you need to hang on to every customer you got with some small price increases. One of the first things you need to figure out in your pricing is a gate fee-your minimum price to show up and cut a lawn. This is probably a good starting point to explain to your customers their price increase. Send a cover letter with contracts explaining you have to raise your minimum charge to $35 and cannot cut their lawn for $25 anymore with your new expenses. Going PT to FT this year is going tough so don't get yourself in debt by buying a big ZTR and you might need some other source of income.
     
    hort101 likes this.
  6. Brucey

    Brucey LawnSite Member
    Messages: 145

    13% self employment tax.
    ~ 8% sales tax, if you've been doing cash jobs before now you have to take that into account, even if you keep prices the same the customer is going to have to bear an 8% increase just on the sales tax.

    Insurance costs would vary based on what you are covering. 1 million commercial auto coverage and same for general liability would be minimums. Recommend contacting an insurance broker to get the best deal there, many of the commercial companies don't allow you to buy online etc.
     
    Jeff@diyokc likes this.
  7. TPendagast

    TPendagast LawnSite Fanatic
    Male
    Messages: 17,214

    So the way to do this is simply charge what you should charge
    There is no “starting out rate”
    In your area you’re liking at $65-70/hr being average with some services at $85

    so I’d say you’re $70/hr
    New guys think high rates means slow growth
    And it does
    But once you’ve established with your low rates there’s a near insurmountable obstacle to convert to proper rates and it sinks most businesses that try

    “I’m small so I don’t have any overhead” is bs
    Don’t fall into the trap
     
  8. Mark Stark

    Mark Stark LawnSite Fanatic
    Messages: 8,029

    Not all the money is on the East side. We're based in Webster but we do lots of work in Greece as well. There's plenty of money to made in the Rochester area. Don't worry about "low ballers". They don't matter.
     
    Jeff@diyokc, hort101 and J-Charles like this.
  9. OP
    OP
    J-Charles

    J-Charles LawnSite Member
    Messages: 18

    I guess I m trying to say out of )50
    I agree with what you are saying and I am trying to avoid that trap. I want to build it with legit customers and drop the low ballers. I have already dropped some by raising my rates. I see how it can be a trap. As they think I am being selfish.

    I priced a 0.81 acre lawn with a vinly fence in back yard and row of large pine and large stone garden in the front and a corner lot, house worth $450K-at $56 and I thought I was low. He said he is getting it cut for $40. $40 is a loss even at cash I would think. $56 I thought I would just be covering my legit cost. I walked away and said yep that is a good price. They were a price only customer.
     
  10. OP
    OP
    J-Charles

    J-Charles LawnSite Member
    Messages: 18


    Please note I have a full time job on a rotation schedule so I am trying to build this slow with legit customers. I am thinking anything below $40 an hour is losing money when fully legit when paying a laborer rate and a manager rate. Owner operator you drop the manager rate to win but then do the work for free and I am trying to avoid that, especially when it means I would have three jobs.
     

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