Pricing and bidding for commercial customers (lawn mowing)

Discussion in 'Bidding, Estimating and Pricing' started by LawnLisa, Jul 24, 2019.

  1. LawnLisa

    LawnLisa LawnSite Member
    Messages: 11

    Hi!
    I'm interested in start working for commercial customers with bigger lawns. How do you estimate your pricing for that? Do you calculate a price per hour and then translate it to week or month? Or is it usually per acre? I want to understand if it could increase my profit or not.

    Especially difficult when they have areas on three locations, so would probably take one per day to not waste time in traffic...
     
  2. BCHOutdoor

    BCHOutdoor LawnSite Member
    Messages: 3

    Hi LawnLisa, there are a lot of factors that go into pricing an area especially something that is commercial and I don't think any one system is the "best". But an example of how I would price something out is to first figure out 2 things, how long will it take you to complete a top to bottom cut, edge, trim, debris, and any other requirements of the contract, and your estimated expenses.

    Let's say it takes 2 man hours to complete. Not sure about your business, but I would now have to figure out what it costs me per man hour for those employees. For my $15 an hour employee, I know it costs the business $18.33 per hour (wages, employer paid taxes, workers comp, SUTA, FUTA...etc). Then I would factor a mileage rate (I just use the Federal .545 cents a mile) based on what route it would be on, and then add on $5 or $10 for overhead costs (fuel,trimmer line, admin, etc) depending on property. So for this example, I know it costs me $47.11 (wages, 10 miles, $5 for overhead exp.), and for mowing I like to try and make about 20% - 25% profit. So the absolute lowest I would bid on this example would be $60 a cut. $60 x 32 weeks average here.

    I allow all my commercial to pay in advance for a discount. It helps build capital. Most of them take advantage of the 5% and only have to worry about 1 invoice and check etc.

    So, in short try to figure out your per hour costs and what you want to make. Some acres take longer to cut then others...hope that helps and the next 5 posts will all say something different. Just do what feels right for you.
     
    agm likes this.
  3. OP
    OP
    LawnLisa

    LawnLisa LawnSite Member
    Messages: 11

    Thank you! That's very helpful. I do know how to count the hourly rate from my own expenses and I'm thinking only the transportation cost will differ (fuel etc while working will be roughly the same and labor cost is what it is).

    However, I'm interested in what kind of bid the commercial customers go for. For residential I go by hour because the conditions can vary so much. But in this case I'd be having a 12 month contract with weekly mows in the same areas. How do I estimate a yearly price? I'm in California and mow pretty much all year around but the time to mow will differ between the seasons with rain etc.. Also how much of a discount is suitable for signing up for 12 months? It does provide me some safety. Can I charge the commercial customer by the hour? Or do I give them a fixed weekly/monthly/annual price which I have to estimate in beforehand? If that is the case I need to investigate a lot more before trying this..
     
  4. Wolfgang

    Wolfgang LawnSite Member
    from Ireland
    Messages: 68

    For comm clients we charge a fixed price per visit and list what we do. Most comm people want a fixed price for budget.
    For travel we have zones (ie: zone a might be 10km radius from base, zone b might be 20 km etc) depending where the customer's site is lay will dictate what surcharge needs to be applied
     
    Cam15 likes this.
  5. agm

    agm LawnSite Senior Member
    from NM
    Messages: 329

    Personally, i dont like doing commercial. Although we do have 10 that we do, i dont really care for it. They always go for lowest bidder so your profit margins go down. I can make more doing residential and much prefer doing that.
     
  6. Matthews Lawn Care

    Matthews Lawn Care LawnSite Silver Member
    Messages: 2,620

    You bid them the same way as anything else. The difference is there will be a lot more companies submitting a bid and there will be a contract that dictates what services and when(most of the time).

    So most commercial accts want a seasonal price/cost for all your services. So list how many services x what your rate is = total contract bid.

    Example:

    25 cuts @ $100 = $2500
    3 shrub/tree trims @ $150 = $450
    2 fert apps @ $65 = $130
    25 weeding services @ $10 = $250

    Total contract bid = $3,330

    From there you either charge per item when serviced or you can take total contract bid / 52 weeks(12 months, etc.) and give a flat rate. Usually depends on how the contract is written and what the customer prefers. Good luck!
     
  7. OP
    OP
    LawnLisa

    LawnLisa LawnSite Member
    Messages: 11

    Thank you so much for your input! Does anyone know how many companies that usually bid on a commercial contract? You say that it's competitive but how bad is it? How low are the prices? How low would I have to go?
    I understand it's different from state to state but I would like to compare. I'm in California.
     
  8. BigJlittleC

    BigJlittleC LawnSite Fanatic
    from Chicago
    Messages: 6,062

    Why would you drop your rates to get work?
     
    JLSLLC likes this.
  9. OP
    OP
    LawnLisa

    LawnLisa LawnSite Member
    Messages: 11

    To get a long time contract that includes other services that I can make money on.
    Going low on mowing but still charge for trees, bushes etc
     
  10. BigJlittleC

    BigJlittleC LawnSite Fanatic
    from Chicago
    Messages: 6,062

    Penny pinchers are normally more concerned at the total cost of the contract then one line item.

    The loss leader approach does work if that's your thing.
     

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