Help on determining profit margins

Discussion in 'Starting a Lawn Care Business' started by cpsaucier, Mar 20, 2008.

  1. cpsaucier

    cpsaucier LawnSite Member
    Messages: 7

    I'm green to giving quotes on landscape jobs. I don't know how much I should mark up certain aspects of the job. How much do you add to you material costs? How about labor costs? Just doubling the materials and nilly willying the rest doesn't seem very smart to me and could very well cost me a job when bidding against a savvy quote maker. I know that this question may vary dramatically from person to person but I was wondering if there is a rule of thumb or how you guys price a job out to make sure you don't end up paying the customer to do the job. Any feedback would be appreciated.
  2. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    Tough Q here....

    We all seem to have out contaics, to get supplies and out own tips and tricks with fuel.

    the rule is to find out how much it will cost you to do something.

    I dont mark up a percentage, like mulch fro example, I will fit it in to my lawn care.

    however spending time researching plant price can run into an issue, again you will start to get contaics and a cheeper price
  3. paul vroom

    paul vroom LawnSite Senior Member
    Messages: 260

    I am green also but this worked for me. Per yard of mulch I figured it at a $20 per yard delivery charge plus $45 an hour instillation added on to the original cost of the mulch. $55-60 if the terrain was tough, like a big hill or if I had to bring it around the house. Plantings is a money maker, I doubled the price and charged $50 an hour instillation.

    If it were one planting I still charged a minimum of $40 to install.

    Good Luck!

    Also, if anyone thinks I was to low, please let me know.
  4. topsites

    topsites LawnSite Fanatic
    Messages: 21,652

    I'm guessing it depends what part of the world we live in, around here I do mulch $45 a cubic yard delivered and installed,
    4 cu.yd. minimum thou.

    I mean we're talking $60 an hour to install mulch? All right that's fine if you can install 3 cubic yards an hour with my rates it's closer to 75-85 an hour... But I like taking it a little bit slower and do 2 c.y.'s / hour and I get $15 for delivering so it's more like $40 an hour for the labor, and believe me 2 cubic yards an hour still ain't no joke.

    Why that is so...?

    For this to work I find I have to think a little bit of what's being used...
    When I'm mowing lawn I'm using machines that would cost close to 4g to be replaced, should it blow up unexpectedly in a mushroom cloud due to the reactor core inside the engine melting down. But with mulch, the barrow and pitchfork run me $160 tops, that's if I buy the barrow all put together and everything, 10-tine fork.

    These are the costs that come in beside the truck, there is some to that too, but...
    Shouldn't it cost more to mow lawn, isn't my cost for mowing higher than for spreading mulch?

    More often than not with the mower the cheapest repair costs as much as the most expensive wheel barrow one does. I don't think I've ever had too many problems with that wheel barrow other than maybe a flat tire or a loose nut and bolt. And for the cost of just one lawn mower engine I can buy 6-8 wheel barrows easy and my first one's in its 7th year and has never needed replacing.
    So how does that work, how is anyone getting away with these prices, that's what I'd like to know because I fight tooth and nail to get 45 out of them...

    Hope that helps.
    So yeh start shopping around, you'll want to start getting some prices of what it's going to cost you.
  5. Ravenwood Landscaping

    Ravenwood Landscaping LawnSite Member
    Messages: 117

    I developed a spreadsheet for myself that I can divide a job up into the individual pieces. I calculate my estimated costs of materials, markups, and labor costs (what you pay yourself), then I multiply by my preferred profit margin to get my quote number for each piece. Then I total them all up. Markups and preferred profit margins are totally up to you and what you want to make. If you don't want to markup then don't, if you can get away with triple markup, then go for it. You'll have to figure out for your particular market what you can get away with to make money.
    Now this doesn't always work because some jobs price themselves out way too high and I have to lower my price to be in-line with market prices and the reverse is also true. If know that I can get more for a job because my costs for the type of job are lower for whatever reason and I can charge more, giving me a higher margin.In terms of labor costs, I pay myself $XX/hr, but I charge double for taxes, gas, license costs, etc. This way it doesn't come out my pocket directly, but more out of the company pocket (which is my pocket, technically).
    I am NO EXPERT by any stretch but it's working so far for me. I will be using the actual numbers at the end of the year to find out how close I was on actual costs to know if my quotes were good or need to be adjusted.
  6. larryinalabama

    larryinalabama LawnSite Fanatic
    Messages: 19,703

    I just price my materal the same as the box stores. Sometimes that gives me huge margins, and almost alaways a decient profit. Taht can help your business alot even thought were mostly selling our labor.

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