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Discussion in 'Lawn Mowing' started by Charles, May 12, 2000.

  1. Charles

    Charles Moderator, Friend, Angel
    Messages: 11,810

    Lets put aside what the customers and the market value of what controls our value for this post. When I started I didn't ask an accountant what I should charge per hour. How many of you did? Just for example lets say you have a one man operation and you are making 35$ gross per hour including drive time.<br>You need to deduct from this hourly pay:<br> income taxes, insurance, fuel, equipment cost(including vehicle and trailor and tires and maintenance, medical insurance, dental insurance, a retirement plan, vacation money, paid holidays, liability insurance.<br>Unlike working for a company all this comes out of our pocket. I have heard the argument that we work for the customer on a regular basis so we should expect less money. But at what hourly rate would cover these expenses and benefits? We are wondering why most lawn services fail. Has anyone set down with an accountant or business consultant and figured out what they should be charging without including the competition and the customer? When we price a lawn we should take into consideration that the customer should have to contribute to the above cost, benefits and expenses that a normal corporation would. This post can be expanded to include crews also and things I left out. just trying to find out what we SHOULD be worth not what we are worth on todays market.
  2. geogunn

    geogunn LawnSite Gold Member
    from TN
    Messages: 3,009

    in my area...it is strictly what the market will tolerate.<p>while cuting for a person today, a neighbor walked up. wanted an estimate for his church. short story follows....<p>a huge lot with ditches and dozens of trees. my price $85 bucks.<p>his response...priceless. he hadn't laughed that hard since archie bunker and &quot;all in the family&quot;. I am so sure.<p>&quot;what am I worth?&quot; about $85 bucks more than a gutlaugh! good luck to all!<p>GEO
  3. OP

    Charles Moderator, Friend, Angel
    Messages: 11,810

    This was not meant to be a negative post on my part. Just that we need some mark to strive for. Some in this forum say &quot;you want more money then you are price gouging&quot;. Some feel guilty for charging what they do. Some have no answer to the customer that says they are too high. Just trying to give the newbie some idea what they need to charge to make it in this business. Some factual goal. Not something pulled out of thin air.
  4. osc

    osc LawnSite Senior Member
    Messages: 502

    The only thing my accountant advised me on was that I pay too much of a wage and I think she was wrong about that.<br>I personally think that it goes back to another post several days ago. I look at the day as a whole and how much revenue can I generate. I don't even like talking to people in terms of an hourly rate. It is a losing proposition even when you think you've won.<br>I understand what you are driving at and I know what kind of money I need to generate every month to pay expenses and then live etc.. To be in business and pay all the expenses I would think that any kind of biz would need 3-400 dollars in profit per working day to make it go right.<br>I look at jobs like if it can tie up half a day then I want to clear $300.00 at a minimum and if I have any amount of employees involved I want to &quot;clear&quot; more than that.<br>When you think in terms of an hourly wage you may as well go get a job. I can almost guarantee you that most wealthy people have no idea how much they make per hour. One reason is that if you own the biz, you're never off the clock. The other reason is when you make several hundred or thousands of dollars per day you really have no desire to do math on a per hour basis.<br>Pick a number that you like and learn how to do it more efficiently as if it were production in a factory. There are ways to automate your production line and sqeeze efficiency and more profit per hour and per day.<p>Happy Cutting!<br>
  5. OP

    Charles Moderator, Friend, Angel
    Messages: 11,810

    Now we are getting somewhere. Thanks osc
  6. Doug406

    Doug406 LawnSite Member
    Messages: 134

    Good point osc. One thing I would like to add is that if you cannot meet your budget from revenues, then try hiring a couple of employees, and offer benifits to keep them. That way while you are paying them, you can handle more work to pay more bills and if done right more money on the bottom line. But they would have to be good employees. I sometimes wonder how the solo guys out there can make enough money, but I know alot of them do. As for me, it is not really the money, it is the enjoyment of doing something that i love, being in control of it, and providing enough for my family year around. Just for free i will say, I have a 6 month budget of $19,110 I must clear to pay all overhead(which is alot) including employees and overtime. This amount will give me 3 grand a month x 12 months for my personal account. We are exeeding that by far and still room to grow before another employee is needed. Just my thoughts.
  7. HOMER

    HOMER LawnSite Gold Member
    Messages: 3,180

    Charles, I don't know if this is the proper way to go about things, but I sat down last fall, wrote down my annual take per customer, figured approximately how many total hours per year I would spend in their lawn and divided it by 30 which is the # of cuttings I provide. I was surprised to find that my per hour revenue was (on average) 55-60 per hour. I know I'm close, probably added more time than it actually takes per cut to be on the safe side. It also showed me which jobs I was just scrapeing by on. When I bid a job I base it on $35.00 per hour, knowing the ones that won't take me an hour, and the ones I think will take longer I add $10.00 to that to make $45.00 per hour. Most of my residential lawns generate $85.00 per month with a few going for $100.00 per month. I am using fewer helpers this year and doing a lot of the trimming myself, I got lazy last year and gave away a lot of my money when I could do the work faster. The lawns I bring in $85.00 a month on usually take only .5 or less to complete so as long as it doesn't take me more than that I automatically know I am making double what I have quoted. Last month I billed out around $8900.00, I don't know how that stacks up against everybody else but I do feel I am pricing my yards( most of them anyway) as high as I can get away with. I beleive hourly quotes are better left in your head and then go after the work as efficiently as possible to &quot;up&quot; your bottom line. I wnat to reach $10,000.00 per month in invoices at least by next season and keep the same # of accounts, if I can do this without incurring any more debt then I should be O.K. I have , in an accountants eyes, probably got way too much debt on paper but as long as the lenders aren't coming after it then I have to figure out how to do more with what I have. This was long winded but it was refreshing to see something other than what kind of tires do I have on my trailer! We need to be more helpful in the business end of things I think, equipment is merely a tool, knowledge is power.............I need the knowledge to pay for the tools!<p>Homer
  8. Richard Martin

    Richard Martin LawnSite Fanatic
    Messages: 14,695

    Charles wrote:<p>{just trying to find out what we SHOULD be worth not what we are worth on todays market.}<p>It varies from market to market. You could compare yourself to other skilled equiptment operators such as backhoe or frontend loader operators. While the equiptment we use is not as large it is still as dangerous and takes a good bit of skill to produce a decent looking job. Using this premise, however flawed, you could lay claim to being worth from $25.00 to over $50.00 an hour. Lets use $35.00 as an example. Add the 40% cost of employing yourself (FICA, self-employment tax etc.) and you are up to $49.00 an hour without benefits. Continue on with benefits, company costs (insurance, equiptment, maintenance etc.) and company profit and you are probably in the neighborhood of $65.00 to $75.00 an hour for each person that you employ. I sat down at the end of the year last year and figured up what my exact costs were and found out that on paper I lost $18,000. Numbers can be twisted any way you want to to achieve the desired results. I may have lost 18k last year on paper but I am happier and earning considerably more money now than I ever did as a carpenter.
  9. OP

    Charles Moderator, Friend, Angel
    Messages: 11,810

    Thanks guys! Now this is the kinda indepth studying some of us need. And you hit it right. I was speaking of that internal clock that most of us who have been in it awhile keep. Some lawn businesses have no idea where they are financially or where they need to be to make it long term. You get in the lawn business and try to get an idea of what the going rates are. But those rates can be deceiving, because companies get the job and a year later may raise their price to get it inline with what they need to make a good profit lets face it we do not have a book that tells us the recommended retail rate we should charge. Like mechanics and stores do. is the going rate in your area sufficient? Or are most of these business teetering on bankruptsy? No matter what area of the country you live in your med insur, life insur, liability insur etc are going to be close to the same. Now your property taxes up north are astronomical compared to the south. Which adds to most of your cost of living. You have to consider that when you are figuring up what you need to make. Unless you have many contracts the seasonal part of our business plays a large part of the equation. I work now 10hr days,five days a week. 10-1/2 months out of the year. That may decrease with droughts as we all know. So making the most out of every job we do is very important. i have limited my schedule this year so i can rest and have a life too. More ideas as you know are welcome.<br><p><font size="1">Edited by: Charles
  10. GrassMaster

    GrassMaster Senior Member
    Messages: 447

    Hello Everybody:<p>Just my 2 cents worth & that's about all, 2 cents!LOL<p>Expenses vary place to place & there is not anybody that can tell you what to charge & be very close. Not even a CPA, unless you already have close to a years records of expenses under your belt. Then they can only figure what your expenses an hour are. Then you have to add to that for what kind of profit you want.<p>It's my understanding that people that cut grass at Cape Cod charge about $1.50 a minute & in Sasser, Ga. the cutter gets about $20 to $25 an hour if they are very lucky!<p>Expenses vary to much with each business. Example do you do all your repairs, do you make payments on all your trucks, do you charge tv's, camcorders & vcr's to your business? Get the picture!<p>All 3 of these places are roughly 100 miles apart & this is guesstimates. Cutting 1/2 acre lawn, Albany,Ga. $35, Columbus, Ga. $45 & Atlanta, Ga. $55+. That's to mow, trim, edge & blow. <p>The easiest way to do this is measure the lawn, amount of time you are there & pay per service on your lawn. I mean every one of them, also keep good records of all expenses. I figure this weekly from the very beginning & of course you need a month min. to even begin figuring & a good year to come close.<p>What I learned very quick & what surprised me the most was amount of time & money for the lawns. There were very large differences in profit. Some of them I was barely breaking even & I learned that I had to do better on my bidding to be able to make a decent bottom line.<p>This was a lot of help to me when first starting out. Lucky for me when I first started out I wasn't getting year round contracts, so pretty quick I learned that I had to bid better to be able to make a decent bottom line.<p>3 years into the business, I started growing very fast & I had to purchase bigger & better equipment. I got a bad attitude, I soon realized I was the competition & I wasn't going to let my competition dictate what I charge to cut grass. People are going to have to get off the money to have me do their work.<p>If you been in business a few years & people are giving you work because of your prices, you probably need to take another look at yourself. I want people to give me work becuse of who & what I am. They must be willing to pay top dollar to have GrassMaster Lawn Service parked in front of their property, or I will be parked somewhere else.<p>I then concentrated on my image & services. I was getting so sick & tired of bidding all the time. So I decided that I wanted a smaller customer base & more profit per customer.<p>I then decided to charge what the market could bare & then some. Yes, sometimes I was a, what some people call a P.O.S. In most cases I could eliminate most of the El Cheapo's on the phone. I don't have time to figure if I could do it for $5 less than Joe & Son's yard work at 555-5555 or charge the same. Because I wanted $10 to $20 more than what they get, min.<p>I wanted top dollar & then some!<p>----------<br>GrassMaster - Home: www.lawnservicing.com<br>My Start Up Page www.lawnservicing.com/startup/<br><p><font size="1">Edited by: GrassMaster

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