Lawn Care Forum banner

desired %profit on commercial vs residential

6K views 33 replies 15 participants last post by  unkownfl 
#1 ·
Anyone care to say what percent they are getting? Most of my residential lawns are getting above 50% the best I can figure. The smaller the lawn the larger the % profit. With commercial I am figureing in 15-20% profit. I would rather lose a job to a low baller than get one and not make anything.
 
#2 ·
Here's what I put together.

I calculated all my numbers per working hour here's what I'm getting:
$25 per hour for the guy running the ZTR mower
here's the breakdown per hour -
$12 salary
$4.5 gas
$1 insurance
$3.5 mower replacement (est. 1,500 hr. life, initial cost $5,000)
Maintenance + miscellaneous expenses (truck gas, trailer wear and tear) - $4

$18 per working hour for the helper/weed eater/push mower guy
$12 salary
$3 gas
$1 insurance
$.50 equipment
maintenance/other expenses - $1.5

Puts us at $43 per working hour
company profits/taxes/rainy day fund (pretty much just equipment reinvestment money.) 16% = $7 (rounded up .12 cents)

= $50 2 man working hour


So I try to make 16% on top after all foreseeable expense are payed. Thou... with a truck the price would go up. Forgot to plug that in.
 
#3 ·
Here's what I put together.

I calculated all my numbers per working hour here's what I'm getting:
$25 per hour for the guy running the ZTR mower
here's the breakdown per hour -
$12 salary
$4.5 gas
$1 insurance
$3.5 mower replacement (est. 1,500 hr. life, initial cost $5,000)
Maintenance + miscellaneous expenses (truck gas, trailer wear and tear) - $4

$18 per working hour for the helper/weed eater/push mower guy
$12 salary
$3 gas
$1 insurance
$.50 equipment
maintenance/other expenses - $1.5

Puts us at $43 per working hour
company profits/taxes/rainy day fund (pretty much just equipment reinvestment money.) 16% = $7 (rounded up .12 cents)

= $50 2 man working hour


So I try to make 16% on top after all foreseeable expense are payed. Thou... with a truck the price would go up. Forgot to plug that in.
Those are practically lowballer prices. $25 an hour for a ztr mower AND operator? Where's your profit? WOW $43 an hour for two guys and all the expense? Holy cow that's cheap. You're driving the prices down with those numbers.
 
#4 ·
Lol... that's what I look at when I'm giving a bid. This is purely my direct expenses. I have truck/trailer payments to factor in. as well as tools/workshop stuff etc.

I'm still developing my system for expenses so this is a work in progress. Where do you see that I need to charge more?

This is more for small commercial and residential.

When ALL expense are factored in than it equals about a dollar a minute for (less for weed eater guy becasue they generally don't cost to much.) but for the ZTR guys (and to cover business related expense) it equals a bit more than a buck per minute. It's this still low balling?
 
#5 ·
Here's what I put together.

I calculated all my numbers per working hour here's what I'm getting:
$25 per hour for the guy running the ZTR mower
here's the breakdown per hour -
$12 salaryDoes this include employer side taxes (tax, unemployment, etc?) It seems really low unless you are paying really low.
$4.5 gas Yep
$1 insurance ok
$3.5 mower replacement (est. 1,500 hr. life, initial cost $5,000) what ztr are you buying for 5k that last 1500 hrs? I put in $5 for that 10K mower 2000hrs
Maintenance + miscellaneous expenses (truck gas, trailer wear and tear) - $4if this includes mower maintenance (oil, grease, belts, blades) you might be close for only those items. To add the truck and trailer $4 is really low.

$18 per working hour for the helper/weed eater/push mower guy
$12 salary
$3 gas
$1 insurance
$.50 equipmentI think this is low, this guy has a couple ground of equipment to use at anytime
maintenance/other expenses - $1.5

Puts us at $43 per working hour
company profits/taxes/rainy day fund (pretty much just equipment reinvestment money.) 16% = $7 (rounded up .12 cents)

= $50 2 man working hour


So I try to make 16% on top after all foreseeable expense are payed. Thou... with a truck the price would go up. Forgot to plug that in.
Just trying to help you out. I don't think I can have a employee on a site for less than $45/hr with a worth while profit using handheld equipment. Key words is worth while profit.
 
#8 ·
Just trying to help you out. I don't think I can have a employee on a site for less than $45/hr with a worth while profit using handheld equipment. Key words is worth while profit.
That is what I figured as well $45-$50 per man hour
 
#10 ·
Your paying a lot for insurance. I pay just over $2-K/year for truck/trailer,equip and GL. Time to find new insurance.
Posted via Mobile Device
Just remember insurance can vary greatly. How many trucks/trailers do you own compared to him? What value of equipment compare? Do you have 50K in sales and he has 300K in sales? Is he counting work comp? What coverages? To many variables to say insurance is low or high, FYI the wife shops mine yearly and pay $350/month.
 
#11 ·
Thanks so much for that, djagusch! I was just trying to get some more specifics instead on just saying I'm lowballing. Thanks for that!

I totally forgot about taxs on employees... man... that adds about $4 bucks per employe so I'll be paying $16 per employe if I keep the "real" salary at $12. This is my first year to be a registered business so taxes are still new to me. (pretty much the first year to do business so don't get to offended! lol)

Mower replacement cost. - I'm buying used with about 300-400 hours. est. 2000 hrs. life. That is probably a bit optimistic. Always better to be on the low side. I'll up my number a bit.

2.5K sounds like a safe bet to me for total insurance. Keep in mind that I don't run the business 40-50 hrs a week. More like 20-25 hrs. I probably will only go with liability insurance this year. I won't get a truck tell August. (I suppose I'll have to get insurance than but I assume a personal insurance will be all I need?)

Equipment insurance does sound good thou.

Thanks guys!
 
#12 ·
I think your cost of doing business is way to high. You need to reduce it to be competitive. You spend $7.5 an hour in fuel? $2 dollars an hour on insurance?
$7.5/hr of fuel is not much especially for 2 guys. A 61" ZTR eats 1.3 to 1.8 gph in my fleet. So I'm going to shoot for 1.8g/hr at $4/gal to be safe on fuel prices. Now add a trimming going for that hr and include 2stroke oil. His $7.5/hr doesn't sound too far off.
 
#13 ·
So is this a work only truck? I know your liability insurance on the business can't be much. Unemployment and workers comp can't be much only paying them <$12 this shouldn't be figured twice. You can't figure 100% of your vehicle insurance into your hourly rate if you don't use that vehicle 100% same for fuel etc. This will only mess up your hourly rate and makes you charge a higher rate which entails you to loose business due to higher bids. You would have that insurance premium regardless of the business or not. Same with the payment on the truck you would have the payment regardless of the business or not if it's not 100% business use. Still $7.5 an hour in fuel is crazy high for a mowing gig. $5.5 in maintenance what do you have an airplane? Figuring the hourly rate with a full hour on ztr can be tricky. Are you figuring this out for a specific job or day? Why would you figure a total of 10 hours on the mower if he only uses it for 6 and the rest doing other things on the job. I highly doubt any operation is running the mower all day without down time job to job.
 
#14 ·
Thanks so much for that, djagusch! I was just trying to get some more specifics instead on just saying I'm lowballing. Thanks for that!

I totally forgot about taxs on employees... man... that adds about $4 bucks per employe so I'll be paying $16 per employe if I keep the "real" salary at $12. This is my first year to be a registered business so taxes are still new to me. (pretty much the first year to do business so don't get to offended! lol)

Mower replacement cost. - I'm buying used with about 300-400 hours. est. 2000 hrs. life. That is probably a bit optimistic. Always better to be on the low side. I'll up my number a bit.

2.5K sounds like a safe bet to me for total insurance. Keep in mind that I don't run the business 40-50 hrs a week. More like 20-25 hrs. I probably will only go with liability insurance this year. I won't get a truck tell August. (I suppose I'll have to get insurance than but I assume a personal insurance will be all I need?)

Equipment insurance does sound good thou.

Thanks guys!
No, you'll need commercial insurance for the truck. It's best to shop for a policy that covers everything. Liability, truck and equipment. It's going to be cheaper then separating them. You could even add a umbrella policy that would have even more coverage. Also, the number of account you have makes a difference on the price. The more you have, the higher it goes.
 
#17 ·
Oh, alrighty. You guys are quick on the replies today!

Sounds like a nice big umbrella policy would be best than. Might as well get insurance for the truck along with everything else. 2k isn't much to pay for peace of mind.

unknownfl - well I do have that helicopter... works great for holding the mower up for changing blades. I'm gonna pay it off in about 2,500 years. :laugh:

as far as fuel price. I'm trying to leave room in case of a price at the pump increase. My ZTR uses a little over a gallon an hour (48" 19 hp Kawi) I est. 1.5 g. at $3.50 a g.
weed eater/blower/push mower - 1 gallon an hour. (oil for 4 mix'es included) $3.50.

Well... I est. for down time etc. If I have a job that would take me an 1 hr. solo. Assume I use the ZTR for 40 min. I would than take my hourly total which applies for pretty much any sitition. and reduce it by a 1/3. Same with the price using smaller equipment. I would take 2/3 of that. Than add the business profit on top and call it a bid!
 
#18 · (Edited)
See the problem with your hourly rate is, you're trying to combine fixed and variable rates to some how give you a skewed hourly rate.

On the insurance aspect it will vary state to state. In Florida you can get a normal policy on the vehicle assuming it isn't a commercial truck like a dump etc. and just add business use to the policy. A commercial policy is more for a dump truck, tractor trailer, etc. Then you could buy a policy for general liability for x amount. This will be based off your gross revenue, equipment if you chose, and number of employees. Usually will be less than 500 per year for a solo person and maybe a 100 or 2 more for 2 employees. If you add your equipment it normally will have to be paid in full at least the rider will be and that will probably at least double your premium.
 
#20 ·
Here's what I put together.

I calculated all my numbers per working hour here's what I'm getting:
$25 per hour for the guy running the ZTR mower
here's the breakdown per hour -
$12 salary
$4.5 gas
$1 insurance
$3.5 mower replacement (est. 1,500 hr. life, initial cost $5,000)
Maintenance + miscellaneous expenses (truck gas, trailer wear and tear) - $4

$18 per working hour for the helper/weed eater/push mower guy
$12 salary
$3 gas
$1 insurance
$.50 equipment
maintenance/other expenses - $1.5

Puts us at $43 per working hour
company profits/taxes/rainy day fund (pretty much just equipment reinvestment money.) 16% = $7 (rounded up .12 cents)

= $50 2 man working hour


So I try to make 16% on top after all foreseeable expense are payed. Thou... with a truck the price would go up. Forgot to plug that in.
Good lord I was looking at those numbers and said man mine is around 50 and then noticed you are OKC, I am Tulsa. I do finger a little more than 1500 hours on replacement. A couple of years ago a rental place told me they figure closer to 3k to 3.5k.
 
#21 ·
Hey! Good to see another Oklahoma guy on here. I'm actually Ponca City. So far the lawn industry has treated my decently here. Temp. in the summer defiantly is tough as well as the limited grass growth during that time.

Always wondered whether people don't pay as much here for lawn stuff because for the most part our lawns don't look to good on most years... maybe not thou.

Nice that our un-employment rate is only 6.8%, I think it keeps some of the lowballers out because they have jobs. This theory is yet to be proven thou. lol
 
#22 ·
I keep it simple - Last year, gross $125K - I have 5 mowers, trade one each year for $3500 - $4000/yr. I put $4000 into a savings account for truck trailer depreciation,
I paid myself $11000 (W2)
I paid my wife $9000 (W2)
S Corporation Dividend (Left over Cash after all bills and employee wages were pd) - $36000

That is a total of $56000 true net on $125 Gross
 
#23 ·
Hey! Good to see another Oklahoma guy on here. I'm actually Ponca City. So far the lawn industry has treated my decently here. Temp. in the summer defiantly is tough as well as the limited grass growth during that time.

Always wondered whether people don't pay as much here for lawn stuff because for the most part our lawns don't look to good on most years... maybe not thou.

Nice that our un-employment rate is only 6.8%, I think it keeps some of the lowballers out because they have jobs. This theory is yet to be proven thou. lol
Have a few friends that live in Ponca. Love the Marlin Mansion. Hate the wind. In the last 20 so years I have been to Ponca 30 to 40 times I believe the wind has blown all but once. Take care and go eat at the head country BBQ joint! :cool2:
 
#24 ·
I keep it simple - Last year, gross $125K - I have 5 mowers, trade one each year for $3500 - $4000/yr. I put $4000 into a savings account for truck trailer depreciation,
I paid myself $11000 (W2)
I paid my wife $9000 (W2)
S Corporation Dividend (Left over Cash after all bills and employee wages were pd) - $36000

That is a total of $56000 true net on $125 Gross
Your asking for it. You're paying pretty low wages and to much in distributions (what you're calling dividends). I don't know your age but you're not paying much into your SS and medicare.
 
#25 ·
I keep it simple - Last year, gross $125K - I have 5 mowers, trade one each year for $3500 - $4000/yr. I put $4000 into a savings account for truck trailer depreciation,
I paid myself $11000 (W2)
I paid my wife $9000 (W2)
S Corporation Dividend (Left over Cash after all bills and employee wages were pd) - $36000

That is a total of $56000 true net on $125 Gross
Pretty good congradulations, my numbers are not as good. 2 years ago bought some equipment didnt this last year. CPA said more taxes please. So this year I will dump some money at the end of the year. Maybe a business trip to beach!
 
#26 ·
Your asking for it. You're paying pretty low wages and to much in distributions (what you're calling dividends). I don't know your age but you're not paying much into your SS and medicare.
I pay myself and my wife $15/hr. Interesting how people make observations and come to conclusions without the facts. I am retired, and collecting SS.
They were concerned about how much money I was going to make because it was something they like to know in case they need to penalize my SS payment. In discussions with them (I filled out a 5 page business forcast) I bluntly asked them if they thought $15/hr to sit on a mower was to low. They were actually quite impressed that I was willing to subject that much to SS taxes and income tax. I pay income tax on the distribution, and that is the law to the letter, and I am following it. I was in a high income job for 38 years and paid in maximum on SS and medicare for those 38 years, and I am offended when people make assumptions based on ignorance that I am not carrying my end of the load
 
This is an older thread, you may not receive a response, and could be reviving an old thread. Please consider creating a new thread.
Top