Rates ..Rates..Rates---MID-WEST

Discussion in 'Irrigation' started by prairie, Mar 28, 2002.

  1. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    Maybe he doesn't know he is leaving money on the table....that is the problem with that bidding process. Unless you constantly update the "per head" price, you will never get it right.

    How much does all the stuff cost you on the job, including glue and teflon?


    How much does all the labor on the job cost you, including the supervision?


    How much does it cost for you to be in business on a daily if not hourly basis?


    Don't forget a profit margin of some sort, that is why we do this right?

    All those things added together will give you your bid price. If you don't do it this way, you are probably guessing. If you are guessing, you are probably guessing wrong one way or another.
  2. prairie

    prairie LawnSite Member
    from kansas
    Messages: 115

    Don't know how you think that " cost of material doesn't mean anything" How in the world did you come up with that one?

    To put in a final note: everyone has the same way of quoting..and only a couple of people will ever do the same. Only if copying someone elses.

    Rest asured I have mine set up the way I like and make a great profit.. I'm not saying it's perfict, but who is?
  3. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    "cost of material means nothing"

    Out of context this is a stupid statement.

    What I mean is that the cost of material has no relation or controlling factor on what a job needs to be sold for. 2 times material doesn't tell you squat about the man hours and equipment, overhead and profit to produce a job.

    One job can take $1,000 of material and one can take $1,400 in material yet both could take the same man hours to produce. So one job sells for 2K and the other for $2,800. Which job made money and how much?

    I gave the example of a spray system and a rotor system before. If you get a deal on parts and save 10% are bid prices gonna be 0% cheaper?

    You buy $1,000 of material and sell a job for $2,000. Then find another supplier and prices on material goes down 10% to $900 are you gonna bid at $1,800 thereby taking $100 less for your labor?

    This also works to your disadvanage in bidding in the opposite direction. When working with higher priced materials ( high end products or larger scale products) I'll kick your butt on bidding if you play the material times x factor becasue I know how long it takes to install and my labor costs don't go up in proportion to the materials costs.
  4. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    Hey HB, don't bother man....he is 23 years old and has the world by the balls......probably been doing this irrigation thing for 2-4 years........much more experience than a guy like you who has been in business for probably longer than he has been alive. Besides that, do they actually landscape the flats in Kansas? Is there grass? What kind of system is 1300 bucks? Who the hell pays 1/2 the cost of rotors for sprays? Forget about it. He won't listen................................
  5. prairie

    prairie LawnSite Member
    from kansas
    Messages: 115

    North East Kansas isn't flat, rolling hills. Yes I am 23 and that has no context to what I'm trying to say. The LCO I own was built from the ground up 25 yrs ago by my father. I have lived and breathed landscaping my whole life. Graduated college w/ 2 degrees in business and landscape design. Also w/ a masters in business.

    Now, I'm sorry If I have come of in bad manner. Irrigation is something that is an on going battle for pricing. Even my Lead man in irrigation, that's worked for us for 20 yrs, doesn't know what's going on all the time.

    We average between 33-45% on all our irrigation year after year. Just depending on the conditions. We try to run it as we do the Landscaping side 33-45% margin on everything.
  6. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    I have a BS in horticulture and didn't know near enough about business when I started. I'm still on a big learning curve 31 years later. I've been in business 8 years longer than you've been alive and made 100,000's of thousands of dollars in mistakes in those years. Fortunately I earned more than I've lost.

    I'm not trying to put you down. My purpose on lawnsite is to get the creative juices and ideas flowing as well as bring an awareness of some real good business methods that I have learned from others as well as practical experience with both good and bad. I'm not a real innovative guy so I am to learn from the experience and knowledge of others. I'm also trying to get inside peoples heads so see how or why they think or believe what they do.

    As of now, you still haven't explained to me or anyone else here the LOGIC or method of pricing other than the distributor told you...

    Several of us practice what we preach and know what works.

    I'm throwing down the gauntlet. Explain to us how your pricing method produces consistent earning results when the jobs you do are not all built for identical landscapes with the same materials and production times. If you can't, maybe your distributor can enlighten us as to how this simple method works and where it came from.
  7. prairie

    prairie LawnSite Member
    from kansas
    Messages: 115

    My pricing is bases on material prices and labor.

    ei.sprays- one person can put in a head in one hours time. ($15) plus adding in for pipe, wire, valve, head ect. cost comes to $25 total. That is calculated for 5 spray heads per zone. given a fudge factor of 25% =$31.25 installed spray head will a $55-65 a head customer price. So the rest is for overhead and profit.

    Now if I install rotors the price for the rotor is more, rotors are spread alot further apart so there is more pipe pulling ,wire, pipe, and more man hrs. So the cost per head goes up to $100-125.

    $15 (labor) $55 total for parts and labor fudge factor and you have 100-125.

    Now the key here is this is for a normal lawn, who knows what a normal yard is anyway, but if I have to install just sprays instead of some rotors, then I will stick with my $100/head figure.

    Usually I'm figuring on a 35% rotors and 65% spray figure per lawn.

    If this drops below a margin of 5% I adjust my price by triple that. This all keeps me in the 33-45% profit margin.

    I've spent countless hours trying to develope this and have it all spreadsheeted out. i can go to a customer get my measurements, water pressure and plutg them into my laptop for a design, and then compute my costs. I have this all linked to my design software so I don't have to manually plug in the #'s.

    I hope this gives you some insite on what I'm trying to accomplish.
  8. SprinklerGuy

    SprinklerGuy LawnSite Bronze Member
    Messages: 1,778

    no offense but what a bunch of gobbley goop. Now I know it seems like that is offensive but hear me out............

    YOu said:

    How is that saving time?

    You still have to go to the site and measure right? So do we.
    You still have to plug numbers in right? So do we
    You still have to print the quote right? So do we

    The difference is:

    I know my costs down to the minute
    I know my parts costs down to the elbow
    I know what I want to profit in order to stay in business

    I don't think tossing around numbers and percentages makes your way any better. I think you spent a lot of "countless" hours wasting your time. If you want to be in business as long as HB, you better learn to simplify your process. Just my opinion, and like I said, no offense intended.

    You also said:

    Maybe I am wrong, doubt it though, the labor is less installing rotors for the exact reason you said.......further apart means less heads, means less everything........more pipe perhaps but it takes a hell of a lot less time to install 8 rotors to water 2700 square feet that it takes to install 30+ sprays to water the same area. Right?
  9. dan deutekom

    dan deutekom LawnSite Senior Member
    Messages: 424

    You have to price things by what it costs you to do. Forlmulas are good to "ballpark" The formula of parts cost X 2 is great until you get a job where all material is supplied by home owner. Your part cost is $0. Thus by your formula your install bid is $0. Great way to make money:D
  10. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Messages: 1,712

    ei.sprays- one person can put in a head in one hours time. ($15) plus adding in for pipe, wire, valve, head ect. cost comes to $25 total. That is calculated for 5 spray heads per zone. given a fudge factor of 25% =$31.25 installed spray head will a $55-65 a head customer price. So the rest is for overhead and profit.

    What is the $15 & the $25 represent, labor only? If labor, is it wages or does it include payroll txes, insurances for liability, uniforms etc?

    I don't think the margins are as fat as you say and they do represent a very basic gross profit margin. A true gross profit margin needs to account for all materials cost, ALL labor costs ( not just the wage) and all production equipment costs. When those are subtracted from the sales price you have the gross margin for the OH and profit.

    Read some of my old posts in various places on the method I use for costing and what constitutes overhead.

    When I figure job labor in a regular, established residential with no hardship work I go like this.

    connect to PVB - 1 hr
    hang clock and rain switch, wire valves- 4 hr (we do the Hunter remote)
    each zone valve - 1 hr
    each head - 1 hr
    flush and adjust heads - 7 heads per hour

    These jobs will have maybe 3 sidewalk bores, sometimes a fence or 2 to run pipe under and utilities to dig across in 2 to 3 spots.

    I also tend to round the accumulated hours into something that resembles 8-9 hr days for the crew. So a job totaling 52 hours is 6, 9 hr man days for 54 hrs.

    These hours will allow me to stock the truck, prep the equipment, drive time of less than 30 minutes, instruct the client at the end etc. What we have a a complete package.

    Extra hours get added for drive bores, heavy clay, lots of roots, confined bed areas with excessive hand digging, extra drive time etc. I deduct for large open easy jobs with more than 4 or 5 heads on a zone.

    Extras and deductions may be -10% for head hours only on easy, productive work or +10-20% for clay, roots, lots of hand digging etc. Underground dog fences cost and hour to track and lots of other wire or pipe may csot more too. A single post light is included.

    I'd really like an even more defined way such as separate times for pipe pulling, rain switch, clock install & wire, heads with swing pipe assy, valves etc.

    Problem is we are doing so many things fragmented in the actual install its about impossible to get good numbers. One guy might be making swing joints and nozzling rotors, another doing utility digs or wire tracking etc. We use glue in valves and put a 4.6" piece of pvc on each side of them and frequently make them all up at once with a pvc to poly adapter on the outbound side. The valves may be used individually or we may make a 2 or 3 valve manifold in various configuations right at the truck to be taken to the hole and installed as a unit.

    On jobs with 2-3 " main and larger pipe and swing joints it can double the head time and even triple valve time. On those I figure 200 ft of main, wire and what ever valves come along, per man per day.

    End of part 1.

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