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Does anyone charge like this?

Discussion in 'Landscape Architecture and Design' started by Timbo, Jan 27, 2007.

  1. Timbo

    Timbo LawnSite Member
    Messages: 80

    Doing mulch install, basic edging, clean up, etc. I usually charge by the yard. Around $100 or so. Everything included to come up with my estimate. This usually works just fine but occasionally I have run into unexpected problems that cause the job to go over budget and I don't make the money I should.

    I have been thinking of changing the contracts to charge customers (for the final bill) by the cost of materials + the amount of man hours. If I do it this way I think I can really never screw myself. Granted sometimes I over estimate a job and make some decent cash, but I think I would rather be getting my moneys worth for every job. Before I begin a job, the customer would have a full understanding of how the final bill will be calculated. I would probably continue to calculate my estimates by the yard because it is fairly accurate. But the final bill would be materials + labor = final cost before tax.

    Does anyone do it this way and how does it work for you?
  2. MarkintheGarden

    MarkintheGarden LawnSite Bronze Member
    Messages: 1,133

    I am not the best at estimating a job. So I often do as you have and end up over or under budget. I make my estimates within 20%, that gives me some flexibility and informs the customer that overages are a possibility but provides them with a figure they can rely on. I always explain why the costs ran over, and so far no customers have complained.
  3. gringo gardener

    gringo gardener LawnSite Member
    Messages: 95

    okee maybe i have missed something but an ESTIMATE is not the final INVOICE ... could be more could be less ... its an approximation of what they can expect to pay

    there should be if theres not a ledge or conditions/limitations clause on yer estimate form to allow you to charge extra for the unforseens ... this covers extra work related to large rocks or buried obstructions that r in fact unforseen inconveniences ... billed at horuly rates that r not part of the estimate but r part of the final invoice
  4. Timbo

    Timbo LawnSite Member
    Messages: 80

    Maybe my original question was too confusing. I'll try to make it simple.

    Instead of charging by the yard for mulch installation (ex. $100 per yrd.), does anyone charge by materials + man hours? If you do, how does that work out for you? How do your customers react?
  5. elmo1537

    elmo1537 LawnSite Member
    Messages: 93

    we will do it sometimes but most of the times the customer want a set price before we start.

    Once you do it for a while you will start to figure a little over and if by chance something goes wrong you break even. If everything goes well you made a little extra money.

    Also depending on the customer we will offer a credit.

    Let's say we do a mulch job for 1000 but it only cost us 600. I will explain to the customer that the 1000 quote still stand but we would be willing to come back and do some other work. 95% of the time the 400 dollars that we are working off as a credit will turn into a 1000 dollar job. So charge 1000 cost are 600 you offer 400 credit and then do another 1000 dollars worth of work.

    I dont do this all of the time because some customer will watch the clock and when their 400 dollars are spent you are gone. So if you plan on doing this be careful who you offer it to.
  6. JimLewis

    JimLewis LawnSite Fanatic
    Messages: 6,872

    Don't use formulas for bidding anything. That's amateurish.

    The way most people bid jobs is a firm price, based on;

    1) Expected Materials
    2) Expected Labor
    3) Incidentals

    Total Price

    So you take a look at a job and figure out that you would need 4.5 yards of barkmulch. You get barkmulch at a slightly discounted rate of $25 per yard. But usual retail cost in your area is $30. So you charge $30 x 4.5 = $135.00 for materials.

    Next you figure it's going to take you 3 hours to pick up, dump, & spread the barkmulch, as well as your clean-up time. And your hourly rate is $50 per man hour, in which your profit and overhead are already figured in. So your labor is 3 x 50 = $150.

    Finally, you figure maybe you could be off by up to .5 a yard on your barkmulch estimate. And perhaps half an hour off on your labor estimate. So you factor in another $50, just for such incidentals.

    Total price you give the customer is $335.00.

    That's the most typical way to bid a landscaping job. There are other methods, where profit is not built into the hourly rate and added as a line item instead. But that's not quite as common and for now, the method of bidding I described will work fine as long as you know what to charge hourly in order to cover all your expenses and make a profit.

    There are some major problems with trying to bid jobs like, "$135.00 for materials, plus how ever many hours it takes me x $50" First, people don't like to hear your hourly rate. "$50 per hour for some lawn monkey to spread mulch for me? You gotta be kidding!!" Don't ask me why. But when you tell people how much money we charge per hour for maintenance-related jobs it usually doesn't go over so well. The second problem is people don't know you and don't trust you. They naturally assume two things when they hear a bid like this. 1) You don't know what you're doing, because you can't even guestimate how many hours it would take you. and 2) You're going to take your time and work slowly, since you're being paid by the hour. True or not, that's what most people are thinking. So no, bad idea. Don't do that. You will not find it to be very successful.

    Now on some larger projects (paver driveways, flagstone patios, large retaining walls) sometimes I'll let people see our hourly rate inside of a detailed bid. But with these kinds of jobs it's more accepted, because these jobs are seen as being something where more skill is required. But if I told people what we make per hour for spreading their barkmulch they'd usually flip a goard. So don't do that.

    Your next question is going to be, "Well then how to I make sure I don't ever get screwed?" And the answer is; You can't. You will end up screwing yourself some of the time. Some times you will underestimate and end up taking it in the shorts. Welcome to life as a contractor. That's how it goes and we all have done it. But the good news, is that's also the best way to get really good at bidding. You'll make mistakes. But you'll also learn your lesson quickly and never make that mistake again. Underbidding is a process we all go through at one point or another. But it always makes us better bidders afterwards. So it's not totally a bad thing. It's really the best way to learn. The flip side of it is, you'll also over-bid some jobs sometimes. And then you end up profiting way more than you expected. And so sometimes you win, sometimes you lose. If you do it right, you get the estimate dead on most of the time.
  7. elmo1537

    elmo1537 LawnSite Member
    Messages: 93

    Well Said:walking: :cool2:
  8. carcrz

    carcrz LawnSite Silver Member
    Messages: 2,085

    Nice post! I always overestimate on everything when I give them an estimate. I am usually dead on w/ my measurements, quantity, & time so I always make a decent profit, but it is always better to be safe than sorry. If I overestimate too much, the customer gets a little discount too so they feel better about having me do the work for them.
  9. MarkintheGarden

    MarkintheGarden LawnSite Bronze Member
    Messages: 1,133

  10. JimLewis

    JimLewis LawnSite Fanatic
    Messages: 6,872

    No, you misunderstood. When I say don't use magic formulas, I am talking about bidding jobs "by the yard" or bidding irrigation installs "by the head" or "by the zone", or bidding planting jobs like, "cost of plants x 2" or that kind of silly stuff. Even in mowing, I think it's silly to bid "by the acre". Every yard is different. Just bid each job according to it's individual costs and materials.

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