Low Overhead

Discussion in 'Lawn Mowing' started by Tn Lawn Man, May 22, 2005.

  1. Tn Lawn Man

    Tn Lawn Man LawnSite Senior Member
    Messages: 479

    I get tickled at how so many people want to justify lowballing by talking about overhead.

    If you are operating your business correctly you will always have low overhead for the job you are doing.

    What these people are really trying to do is say that lowballing prices are ok because their overhead is lower, bologna!! If you think lowballing is fine than just say that. Do not try to cover it up with "overhead" talk.

    If you don't believe me then follow this line of thinking.

    A typical 1/4 acre $30 lawn can be done with a decent commercial 21" $500 mower for as little as you want to take home as profit. You can do it for $10, $15, $20 or whatever you want. Your investment is small. Or as some say, your overhead is small.

    You get a few of them together and now you can justify a nice 48" walkbehind and do them faster, making more money. If you finance it your payment is only $100 a month. But, remember, you can do three to four lawns in the same time frame. So your overhead is still small relative to your client base.

    This example works all the way up to huge office complexes with multiple crews.

    If you run it right, the right machine for the job, then your overhead will always be minimally small. You get into trouble when you use too much machine for the job.

    You don't put a 72" Z on a postage stamp the same way you would be a fool to mow 20 acres with a 21".

    So, overhead is not the issue. I don't want to work for less than market value like so many scrubs. That is the issue.

    FYI, yes I started out in this business with a 21" in the bed of pickup. But I always charged fair market rate.
  2. freddyc

    freddyc LawnSite Senior Member
    Messages: 578

    As you know, overhead consists of several things...machine cost being one. Add insurance, gas....maintenance... and its one bill. Spread out over the annual cutting time, the per/hr cost should be somewhat easily calculated. From there, its your decision how much you need to charge. Everyone is forced to ask market value or less ---with the exception of intangible benefits of people just like your reputation/work.
    So in general, the price for a certain size lawn in a certain area will be $XX. If I can do it for 0.8 X, and still make a good profit, then you would need to compete with me. If your costs are too high, then you can't compete. That doesn't make me a poor businessman or loser. It makes me competitive. If I do it for 0.3 X, then I'm probably missing some of the necessary overhead (I got a Crapsman).

    Anything you do to reduce overhead/cost goes to the bottom line. Period.

    If your costs are low, you don't need to charge as much to make the same profit. Its that simple.

    Call it low balling or good business, only a fool doesn't consider cost in their business.

    The right machine is required for the right job however thats a personal choice also. There is a cutoff point where a certain size machine loses its advantage..its up to you to figure it out in your business.

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