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Having trouble understanding this one....

Discussion in 'Lawn Mowing' started by CEOAPE, May 15, 2006.


    CEOAPE LawnSite Member
    Messages: 6

    Hey everyone - I'll try to keep this as simple and to the point as possible. I've been cutting grass and plowing snow for the past 3 seasons. I work full-time and have custody of my child each week and have always swore i wouldnt take more than 50 clients total. That being said, i typically try to cut on my days off Tues/wed or if need be, i'll catch up on Thur/Fri. At the close of last Fall, i had about 30 customers. This season i've got 48 which are about 20% commercial and 80% residential, but they're all located within 5 square miles of each other(all in the same side of the same city). Since i've been cutting grass i've always used only 1 other guy and only 1 truck. Because of the increase in business this year, and considering my tight schedule, this year i hired a second guy( 3 of us total). So in late April we set out to cut and at the end of the cutting week, i've paid 18 hours labor @ the rate of $14p/hour ($500 total labor costs each week). The guys that work with me are worth that money as they are as fast as the rest of us without sacrificing quality. Now to the issue i'm having difficulty understanding.... My GROSS monthly profit after calculating income is in the area of $4500. My Monthly expense cost including labor are in the area of $2500. So basically i walk with $2,000 NET each month. That's fine with me, but the question i ask for your experience and help with is why wouldnt i reduce 50+% of my clients therefore keeping 20 or 25 KEY accounts only, at minimum $20 p/week cut, equaling $2,000 each month. That way i would do these myself and spend less travel time, wear and tear on equipment, less labor, and much less stress over my busy schedule and still NET the same money. Since i never intended to go over 50 customers, wouldnt this be in my best interest? What do you all think, seems like i should be reevaluating my situation. Thanks in advance for you expertise.
  2. Littleriver1

    Littleriver1 LawnSite Senior Member
    Messages: 811

    I think you should raise your rates so your employees make money for you. That is the point of having employees. If your booked up then you are in control. If your customers want your service that bad then you must be worth more. The lowest you should get is $50.00 per man hour. I would push for $60.00. What do you have to loose, your going to drop the customers anyway.
  3. DynaMow

    DynaMow LawnSite Senior Member
    Messages: 570

    my friend that is some excellant advice
  4. Precision

    Precision LawnSite Silver Member
    Messages: 2,995

    your gross income would be $4500 and your expenses would be $2500 leaving you with $2000 in Income. No profit. Now after you realize the importance of that.

    Now you need to look at your pricing structure. 20 accounts at $30 per cut is way more profitable than 30 accts at $20 per cut.

    with my company, I have 2 employees and we cut about 100 lawns per week and do side jobs like mulching, sodding and what not. For straight mowing I charge $45 per man hour for the crew members and $60 for me. For other work I try for $60 for their time and $75 or more for mine. Different jobs go even higher.

    My cost for overhead and everything is about $15 per man hour.
    My cost for labor is about $12.25 per man hour
    So charging $45 per man hour nets me $17.75 (in a perfect world) reality is it is usually closer to $12.50 with screw ups and breakage and time lost to rain or whatever.

    Out of that $12.50 I can pay myself when I am not on the crew. Pay for estimates that I don't get and whatever else.

    If your are not doing something along these lines, that is why more work is getting you less profit.

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