How To Bid For Profit

Discussion in 'Starting a Lawn Care Business' started by Sean Adams, Mar 27, 2003.

  1. Sean Adams

    Sean Adams LawnSite Gold Member
    Messages: 3,597

    I know this question is often asked at this site many different ways, producing many different types of answers and opinions.

    First I have to say that every situation is different, every area is different, every company is different. Because of this, everyone's idea of how to bid for profit is going to be different as well.

    I think it is important to realize that estimating for profit is not simple, and there is no "silver bullet" answer.

    First, as stated before every company is different. Therefore, everyone has to base their estimating needs and requirements on their situation.

    For example....

    If Company A and Company B are both going to bid on a property for complete maintenance, their prices could be different for the following reasons....

    Company A has been in business for 10 years. They have 10 employees, own real estate, own several trucks and equipped trailers with state of the art equipment, they are fully insured, pay taxes, bonuses, worker's comp insurance, and have experienced hard working efficient employees that are paid well.

    Comapny B is new to the industry with a solo operator with little experience running the business. The business is run from their home, the equipment is used and not as big, powerful, efficient, etc....

    Because of this, expenses and overhead are going to be considerably different. Because of this, it is likely that price for the work they perform is also going to be different.

    It is said often, and seems like a generic answer to a burning question, but you must know your numbers in order to confidently bid for profit. If you know all of your expense, labor, and overhead costs, you will know what it is going to take to cover those costs, and then add a profit on top of your hourly rate.

    Some people claim that the most effective way to bid is by determining square footgae. This may work for some and not work for others.

    Ultimately it comes down to time. If you can determine the number of "billable" hours you are able to "sell" in a year's time, you will know what it costs to sell one of your "working hours".

    Is this easy to do starting out? Not really. You are learning as you go, determining how quickly or how slowly you or your employees are capable of doing something.

    If this is your first year, take good notes. Write down how long it takes to do all of the things you do. It will help you realize after your first year of working whether or not you are bidding profitably. At that point, the next year you will have a much more solid idea of what you did right and what you did wrong.

    Don't get drawn in by what others say is the proper or correct price to perform a service. You are your own company and therefore, you will have your own prices.
  2. Pugsly

    Pugsly LawnSite Member
    Messages: 59

    Thank You!!!!!

    So first year I probably will either get jobs because i under bid because had no idea how long it would take or I over-bid and not get jobs because i have no idea how long it should take.

    So what does everyone think a fair "hourly rate" should be?

    $25? $40? $50?
  3. Sean Adams

    Sean Adams LawnSite Gold Member
    Messages: 3,597

    I'm not saying all your jobs will be underbid or overbid, just simply that it easier to determine yur speed and efficiency after some time.

    As far as an hourly rate, read what I wrote. You need to know your numbers....

    rent, truck pmt, taxes, insurance, labor, equipment, and so on....break it down so you know what it costs to operate each day based on these expenses.

    Then figure out how many hours you have to sell.

    Divide this expense by number of billable hours to realize what it takes to cover your costs, then add profit. There is more to it than that, but just to get you started....

Share This Page