Formula For Figuring Price

Discussion in 'Business Operations' started by jsfrk, Apr 28, 2006.

  1. jsfrk

    jsfrk LawnSite Member
    from Ohio
    Messages: 126

    What is a good formula to use when trying to figure out what to charge for lawncare and/or landscaping?
  2. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    A basic all-around formula which is recognized by businesses the world round is your cost x 3 but... It's not perfect, it's just a guide, it helps but it is one of the easiest to remember and perform.

    It doesn't work in all situations...

    But it works for example with fertilizing it's low:
    Let's say fertilizer costs 8 dollars a bag and you need two bags, so 16 x 3 = 50
    So that gives you 34 dollars to go get the stuff, and spread it... It's tight, money won't be falling from the sky in this case, you should get 20 to pick it up and 20 to spread but hey it works.

    It works for example with mulch it is high:
    If a cubic yard costs me 18, then 5 cubic yards = 90 x 3 = 270, which gives me 30 dollars for picking it up and taking it over, and 150 to spread it - In this case that's a bit high, 25 / yard to spread: (5 x 25) + 30 = 155 + 90 = 245 would be closer but again, cost x 3 does work.

    There are some things where it doesn't work at all, again it is just a basic guide.

    On that note, a business should earn between 3 TO 4 times its cost but keep in mind that while 3 is a bit bare, 4 is close to sky high, meanwhile the in-between involves fractions hence it is why the basic rule is cost x 3.

    Last but not least, it divides as follows after you get paid:
    1/3 for supplies.
    1/3 for the business (which also pays you).
    1/3 for IRS.

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