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View Full Version : Need Help Breaking "Per Hour" Barrier... Please Help


IVPropertyMaintenance
03-22-2012, 11:38 AM
Alright so my rookie mistakes are catching up to me. I started my business in the Spring of last year (2011). The valley I live in has a relatively low population and the average wages are low. Therefore, I found out what competitor are charging and established my going rate based on that. A couple of the local "competitors" who were also one man crews we charging between $15-20/hr. They have been around for a while and are pretty well established so I figured with me just starting out I would go on the low end. I chose $15/hr to be my charging wage for yard care services.

This was fine but definitely not making the money I should be making. Now I am going into this new year with a bunch of customers that are used to paying $15/hr when I need more to keep my head above water. During the winter, I devised some service packages that charge customers a monthly rate that is spread through all 12 months. This was a nice change I think because it will ensure me income throughout the winter as well. Anyways, so I switched a lot of them onto that which is good, but there are still customers that are not going to like to hear the more per hour story.

Also, I have already found myself telling customers $15/hr this year, just out of instinct! I live a pretty modest lifestyle and don't need to get rich off this, but an extra $5/hr this year would really help out. Any ideas on making the transition, or should I just go to bidding job?

One idea I had is to tell my customers that I will work for $15/hr but if i'm running equipment (which is almost all the time) I will be charging an extra $5/hr for gas and wear & tear on the equipment.

I don't know guys, inspire me....:confused:

CS-LawnService
03-22-2012, 01:38 PM
I never give a price per hour I just figure the cost of the job and give them the total in the estimate no need for them to know i make 45 an hour on there lawn

Steve
03-22-2012, 01:44 PM
Here is my view and others may see it differently.

Last year seems to have been a year where you attracted customers with price first and quality somewhere after that.

Since these are price conscious customers, there is a good chance they won't pay more. We have seen this happen to others on the forum and when they tried to raise their prices to that customer base, the customers left in droves, so be prepared for that. I wouldn't try to increase my prices across the board with all of them or you might find yourself without customers. Try raising your prices with smaller groups at first.

You also will need to find new customers this year that are not price focused and are more focused on quality. Quality focused customers would be easier to raise prices on as long as the quality was there.

Does this help?

CHEESE2009
03-22-2012, 04:57 PM
Raising prices is no fun.

What sucks, is that I have had certain clients for so long, I take pride knowing I've been their guy for years... Raising the prices would take that away from me LOL.

If you really underbid a job, accept cash only, and pocket that crap. Maybe even use it to hire a couple of Mexicans to increase your productivity.

willshome
03-22-2012, 05:28 PM
I lock in my customers that have be with me sense the start at my lowest price and new customers pay normal rate. This is a thanks for helping me start-up and make a name for my business.

Hedgemaster
03-22-2012, 05:50 PM
Charging by the hour is easy. It's also crazy.
You're going to screw yourself in a big way if you continue that way.

Price it at what you need to be paid to do it and be done with it.

I try to make between $30 and $60 "an hour" on jobs - I sure as heck am not telling a client that. Even at $30/hr, I'm not making much, but it sure SOUNDS like it to a client. Hourly rates scare clients away because they compare them to what THEY make "per hour".

Also, people want to know "What will it cost to do the job?" - period.
How long it takes you to do said job is irrelevant and your client shouldn't be left wondering what it will cost, and be sitting there with a stopwatch trying to figure it out while you work.


"It will cost $35 to mow, trim, and blow any clippings from hard surfaces."

One day it may take you 30 minutes (yay!) to do that lawn and another it may take 45 because you did a little extra, or had an equipment problem... why bother with an hourly rate? By doing so, you never get to enjoy a bigger profit because you were able to complete the job faster than expected.

SECTLANDSCAPING
03-22-2012, 06:41 PM
I agree with Hedge,

If I was making $15/hour I would quit. I pay guys between $12-$15 hour. The first leaf clean up I did I bid at $300 and it took me and my friend 10 hours. Boy was I a sucker.

hourly rates suck... The worst part is there watching what time you show up and leave. I would consider adding a stop charge or a higher first hour. This is what plumbers, carpenters do. $125 to show up then $75 a hour after.

Hedgemaster
03-22-2012, 07:17 PM
I have many jobs that take me 30 minutes.

So if I were to charge "$15/hr", I'd be asking just $7.50 to mow those lawns?


:confused: This does not compute. Yeah, I'd quit too.

sunsetlandscaping
03-29-2012, 08:14 PM
Boy oh boy, how many times have I been down this road? More than I can count on my hand. Before I was just trying to complicate things. And it is confusing at first, until you get a feel for it. Try mowing your own grass or a friends and keep track of the time. Then, get a measuring wheel and figure out how many sq. ft. it was you just mowed, and you will get the hang of it. I'm not saying to take a measuring wheel with you to every job, but when your first starting out, it might be the thing to do. Hell, I might even do it this year to refresh my memory.

thom
03-31-2012, 01:20 PM
Alright so my rookie mistakes are catching up to me. I started my business in the Spring of last year (2011). The valley I live in has a relatively low population and the average wages are low. Therefore, I found out what competitor are charging and established my going rate based on that. A couple of the local "competitors" who were also one man crews we charging between $15-20/hr. They have been around for a while and are pretty well established so I figured with me just starting out I would go on the low end. I chose $15/hr to be my charging wage for yard care services.

This was fine but definitely not making the money I should be making. Now I am going into this new year with a bunch of customers that are used to paying $15/hr when I need more to keep my head above water. During the winter, I devised some service packages that charge customers a monthly rate that is spread through all 12 months. This was a nice change I think because it will ensure me income throughout the winter as well. Anyways, so I switched a lot of them onto that which is good, but there are still customers that are not going to like to hear the more per hour story.

Also, I have already found myself telling customers $15/hr this year, just out of instinct! I live a pretty modest lifestyle and don't need to get rich off this, but an extra $5/hr this year would really help out. Any ideas on making the transition, or should I just go to bidding job?

One idea I had is to tell my customers that I will work for $15/hr but if i'm running equipment (which is almost all the time) I will be charging an extra $5/hr for gas and wear & tear on the equipment.

I don't know guys, inspire me....:confused:


Dont quote an hourly rate.Bid the job to make monry.If a customer wants to know how many hours you are billing for,tell them you dont have a set number of hours for the job.
Get a signed contract.

IVPropertyMaintenance
04-02-2012, 09:03 AM
Alright I got my first opportunity to bid a job this year. I have a customer who is used to only paying $15/hr and they called me up and said they wanted gravel spread on their driveway. I found out that a load of gravel will cost $190 delivered. I have spread a load before and it took about 6 hours. If I wanted to charge $20/hr I would be looking at $310. There are no other factors to figure in for other than the "unknown" so I will add an extra 2 hours in for the just in case factor and call it $350.

I definitely like this concept because if I bust it out in half the time I originally anticipated I will be making really good money compared to the $15/hr and even if I take a couple extra hours, I will still be making $20/hr vs. $15/hr. I know it will become more natural, I guess I was just always worried about them asking how many hours I am billing them for.

It's hard because in this case, if they ask how much the gravel was, or simply ask for a receipt, they will know that the rest of the cash went in my pocket and they can quickly find out what I was charging per hour. I wish customers knew about the times we don't make very much on them (like every other job I have done for this customer) and realized that in order for us to keep coming back to take care of them, WE NEED TO MAKE ENOUGH MONEY TO SURVIVE!

stevef1201
04-02-2012, 11:03 AM
A yard of Gravel costs me 125 bucks. Delivery charge is 20 bucks per yard. A yard covers 10x10 2 inches deep. I charge 125 bucks a yards to spread. so to get a yard of gravel deivered and spread is 270 bucks. (I hate doing gravel) I have gotten several jobs even at this price, a motorized wheel barrow helps, and one or two guys. (one to shevel into the wheelbarrow, and one to rake it out) I move the guys around about every 15 mins so they dont get worn out. Time is what ever it takes. My hourly rate? Who knows sometimes it takes an hour sometimes 2 or 3.

IVPropertyMaintenance
04-03-2012, 03:32 PM
A yard of Gravel costs me 125 bucks. Delivery charge is 20 bucks per yard. A yard covers 10x10 2 inches deep. I charge 125 bucks a yards to spread.

Holy crap, you pay $125/yard of gravel? I'm getting an entire truckload (10 yards) for $190. I wish I could charge on your scale... $125/yard X 10 yards = $1250 (gravel) PLUS $125/yard X 10 yards = $1250 (spreading charge). I would be looking at making about $2500 in a day to spread some gravel around for a driveway. That would be a pretty awesome day for me.

Instead, I am charging the customer $350 for the job. The gravel guys do a pretty good job spreading the load by driving slowly while they dump the gravel. All I have to do is create clean edges and level the surface (which will probably take me a half day. All in all, a profit of about $160 for a half days work. Not great pay but it's hard to make a lot more than that in this area. Plus, this is just my second year in business, gotta build a name for myself before I go around charging crazy prices.

SECTLANDSCAPING
04-03-2012, 05:56 PM
Holy crap, you pay $125/yard of gravel? I'm getting an entire truckload (10 yards) for $190. I wish I could charge on your scale... $125/yard X 10 yards = $1250 (gravel) PLUS $125/yard X 10 yards = $1250 (spreading charge). I would be looking at making about $2500 in a day to spread some gravel around for a driveway. That would be a pretty awesome day for me.

Instead, I am charging the customer $350 for the job. The gravel guys do a pretty good job spreading the load by driving slowly while they dump the gravel. All I have to do is create clean edges and level the surface (which will probably take me a half day. All in all, a profit of about $160 for a half days work. Not great pay but it's hard to make a lot more than that in this area. Plus, this is just my second year in business, gotta build a name for myself before I go around charging crazy prices.
$1250 is close to what I would charge for labor. Then another $400 for materials and delivery. I dont think a paving company would touch it for less then $2000. It wouldnt matter if it was there 1st year or 20th in business.

I wouldnt care about the customer knowing either. I just charged someone $40 a yard for compost, my cost was $29. They even asked the delivery driver how much it cost. Then I charged $900 for labor and finished in 5 hours. They were very pleased! If you ever been to a mechanic you would know they double the cost of parts and get them at a discount.

IVPropertyMaintenance
04-04-2012, 11:52 AM
I guess it's just knowing your area too. There is no way I would stay around charging prices like that out here. Where I am at, I might be able to sneak a couple high prices by people but most people out here are surviving on wages between $10-$20/hour and wouldn't be able to afford Over a thousand dollars for me to spread the gravel for them. They would just hire someone at $10/hr and get it done.

I have to be competitive with others out there, can't be giving prices from another part of the country. I guess I need to find the confidence to bid big...

SECTLANDSCAPING
04-04-2012, 02:32 PM
Theres not much difference between our areas. Even my price would be half of the others in my area. Theres always someone willing to work for $10 a hour and theres always someone willing to pay $100 hour.
Typical costs in Oregon
Medium: $1,863 (12'x50')
Typical costs in Florida
Medium: $2,047 (12'x50')


Typical costs in Connecticut
Medium: $2,737 (12'x50')

picframer
04-04-2012, 06:58 PM
Alright I got my first opportunity to bid a job this year. I have a customer who is used to only paying $15/hr and they called me up and said they wanted gravel spread on their driveway. I found out that a load of gravel will cost $190 delivered. I have spread a load before and it took about 6 hours. If I wanted to charge $20/hr I would be looking at $310. There are no other factors to figure in for other than the "unknown" so I will add an extra 2 hours in for the just in case factor and call it $350.

I definitely like this concept because if I bust it out in half the time I originally anticipated I will be making really good money compared to the $15/hr and even if I take a couple extra hours, I will still be making $20/hr vs. $15/hr. I know it will become more natural, I guess I was just always worried about them asking how many hours I am billing them for.

It's hard because in this case, if they ask how much the gravel was, or simply ask for a receipt, they will know that the rest of the cash went in my pocket and they can quickly find out what I was charging per hour. I wish customers knew about the times we don't make very much on them (like every other job I have done for this customer) and realized that in order for us to keep coming back to take care of them, WE NEED TO MAKE ENOUGH MONEY TO SURVIVE!

This is where equipment seems to win, I can spread 16 yards per hour and charge $75.00 plus $65.00 float fee for a total of $130.00, I did three sites today and have two tomorrow.

I fully understand you need to make money but ut's also desperate hard to compete when the comp has equipment and does it in a fraction of the time for 1/2 to 1/3 of the cost and the results would be next to impossible if by hand, here is an example.

http://www.oakridgeyardcare.ca/images/drive1.jpg