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  • telling customer your hourly rate

    Has anyone in the landscape construction field doing residential, bid a job by telling the customer the cost of materials and told them your rate per hour to prevent yourself from underbidding? It just seems like an easier way to bid to me.......

  • #2
    In general it doesn't seem to be done. However one of our members, Andy, I do believe will work on a landscape project and tell the customer it will be $x per hour and you can stop us working any day you feel you might be over budget.

    I think he mainly does this with his excavation work.

    Maybe he can jump in here and explain it more.
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    • #3
      Most lawn care customers don't understand the total amount of work and costs involved in a lawn care business. They only see the time you spend working at their property. They don't see equipment maintenance time and costs, office work, drive time, load and unload time, etc.

      I have always steered away from giving hourly rates to customers. When customers hear your effective rate per man hour they have a tendency to balk at the price.

      I lost a customer once when she calculated my hourly rate. She was a great customer and always left a check on mowing day since she was at work. One day, after two years of her being happy with my work, she was home sick. I could see her watching me from her livingroom window.

      When I got my check, she complained I had only been in her yard for 20 minutes and said she thought I was spending a couple hours in her lawn each week.

      Later that evening, she called and said she had calculated how much I was making per hour and that she wasn't going to pay anyone that much money for 20 minutes work.


      Keith
      Start a profitable lawn care business.

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      • #4
        Most lawn care customers don't understand the total amount of work and costs involved in a lawn care business. They only see the time you spend working at their property. They don't see equipment maintenance time and costs, office work, drive time, load and unload time, etc.

        I have always steered away from giving hourly rates to customers. When customers hear your effective rate per man hour they have a tendency to balk at the price.
        Keith
        I second that.

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        • #5
          In general it doesn't seem to be done. However one of our members, Andy, I do believe will work on a landscape project and tell the customer it will be $x per hour and you can stop us working any day you feel you might be over budget.

          I think he mainly does this with his excavation work.

          Maybe he can jump in here and explain it more.
          Yes Excavation and Tree work is by the hour, by the machine and by the operator, everything else for the most part I just bid, I even bid "normal" french drains by the foot and I generally make a 40% profit net.

          By the hour can scare some people as excavation is one field you can waste a pile of time and make a pile of cash, I will not stand for it with my company, you will get an experienced operator and may the good lord help them if I ever catch them wasting time and i watch everything, I am very easy to work for, just get the job done and do it , I go to great lengths to explain to the client they can stop us anytime they wish, I don't think it has ever happened, in fact we generally stay longer than requested, it is rare we do not get a job I bid and if we don't, it honestly doesn't matter that much to me mainly because we have so much on the books to do, it might be different if we were looking for work.

          Most people have a budget and I respect that as I would to, you will run into things on 90% of the jobs no one expected, only the big guy above knows what is under that soil you are looking at, that has an effect on the cost, I always involve the client every step of the way and some even help which I think it excellent, if they are part of the process, that makes them part of the problem if one should happen, it's the cheapest insurance going and I have great confidence in my staff and our work.
          Andy
          Halifax, Nova Scotia

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          • #6
            Most lawn care customers don't understand the total amount of work and costs involved in a lawn care business. They only see the time you spend working at their property. They don't see equipment maintenance time and costs, office work, drive time, load and unload time, etc.

            I have always steered away from giving hourly rates to customers. When customers hear your effective rate per man hour they have a tendency to balk at the price.

            I lost a customer once when she calculated my hourly rate. She was a great customer and always left a check on mowing day since she was at work. One day, after two years of her being happy with my work, she was home sick. I could see her watching me from her livingroom window.

            When I got my check, she complained I had only been in her yard for 20 minutes and said she thought I was spending a couple hours in her lawn each week.

            Later that evening, she called and said she had calculated how much I was making per hour and that she wasn't going to pay anyone that much money for 20 minutes work.


            Keith
            Keith, there is a very simply answer to this that will work with the majority of the clients and the ball is in our court, we have to educate them and it doesn't take long. If you take the time to explain the process, the equipment and so on they will not balk.

            Had a lady call me this morning, I was on a site doing a drain but she was not far away, had 6 trees not all that large ready to fall on a neighbours boat, I decided to go over at lunch, I spent 30 min explaining the process and she wrote me a cheque and we haven't even been there to do the work, it will work out to be $160.00 an hour, that is big bucks but she understands the risks and the process and that we do everything by the book. She said I was the most expensive but because I took the time to explain everything to her, she wanted us.

            It works and I have a financial balance sheet to prove it, I sometimes wonder why we are afraid to explain we can cut that lawn in 20 min for $85.00....it's simple the machine you are looking at set me back $21,000, people are smarter than we sometimes give them credit for.
            Last edited by picframer; 10-31-2009, 09:13 PM.
            Andy
            Halifax, Nova Scotia

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            • #7
              It works and I have a financial balance sheet to prove it, I sometimes wonder why we are afraid to explain we can cut that lawn in 20 min for $85.00....it's simple the machine you are looking at set me back $21,000, people are smarter than we sometimes give them credit for.
              That is a very interesting point. Your view would be to explain to the customer how your expenses factor into their price? By pointing out equipment and the price of it, it should show to the customer why the bid is what it is? Possibly with the theory behind it being, if they know what some of your costs are, they will be more understanding of the price?

              Do you think it's best to just come out and explain it to them like that or do you wait to see how they react to the bid price first and then explain the expenses to help them understand better?
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              • #8
                That is a very interesting point. Your view would be to explain to the customer how your expenses factor into their price? By pointing out equipment and the price of it, it should show to the customer why the bid is what it is? Possibly with the theory behind it being, if they know what some of your costs are, they will be more understanding of the price?

                Do you think it's best to just come out and explain it to them like that or do you wait to see how they react to the bid price first and then explain the expenses to help them understand better?
                I am straight up and I do not hesitate to explain the cost of any equipment, education is critical, if you want a trunk slammer job then by all means hire one with the equipment to match, if you want a professional job it comes with a price. I educate every client, I even show them the blades on the tractors for lawn care and explain why we use them. Like I have said before, knowledge is power, tell the customer the facts, you gain a lot of trust and respect, it works and I don;t care what anyone thinks, I have done this in so many companies and every one took off, none has taken off like this business however it's pretty amazing.
                Andy
                Halifax, Nova Scotia

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                • #9
                  Had a lady call me this morning, I was on a site doing a drain but she was not far away, had 6 trees not all that large ready to fall on a neighbours boat, I decided to go over at lunch, I spent 30 min explaining the process and she wrote me a cheque and we haven't even been there to do the work, it will work out to be $160.00 an hour, that is big bucks but she understands the risks and the process and that we do everything by the book. She said I was the most expensive but because I took the time to explain everything to her, she wanted us.
                  In such situations does the homeowner ever try and nail down a ball park length of time you think the job will take? How do you handle it when they do try to get a length of time?
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                  • #10
                    In such situations does the homeowner ever try and nail down a ball park length of time you think the job will take? How do you handle it when they do try to get a length of time?
                    Yes and I would personally want ballpark to, I can tell you based on exoerience I have seen these jobs run from $x to $x, if you have a budget, you know our rate, just tell me when to stop, it honestly doesn't happen all that often.
                    Andy
                    Halifax, Nova Scotia

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                    • #11
                      I am straight up and I do not hesitate to explain the cost of any equipment, education is critical, if you want a trunk slammer job then by all means hire one with the equipment to match, if you want a professional job it comes with a price. I educate every client, I even show them the blades on the tractors for lawn care and explain why we use them. Like I have said before, knowledge is power, tell the customer the facts, you gain a lot of trust and respect, it works and I don;t care what anyone thinks, I have done this in so many companies and every one took off, none has taken off like this business however it's pretty amazing.
                      With all do respect Andy I disagree. I have been in the property maintenance business for 25 years and at least in my part of the world people(clients) don't give a crap about what your equipment costs or what your overhead costs are.
                      Whether they are commercial or even my wealthy residential customers they don't care.
                      They all want quality service at the best prices period. Now there are some exceptions of course and I'm sure you are very successful because of the equipment and projects that your company can handle that others can't. That alone will command good money.

                      Back in the day I worked for a Tool & Die company that built 20 ton plus dies.
                      There were only a few company's at that time in the U.S. that had the equipment to handle the very large stuff. They could virtually charge whatever they wanted because there was very little competition.

                      Property Maintenance nowadays is so competitive price wise and then you throw the trunk slammers in there as well and competition stiffens even more.

                      I think you are a smart business man to offer services that others can't because they just don't have the capitol or equipment or experience to do the kind of work you do. I think that 99% of the people on this forum don't do what you do as far as the excavation side. Keep up the good work.

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                      • #12
                        With all do respect Andy I disagree.
                        And that is fine, what I do know is I go against the grain, I started a security monitoring company with 8 employees, in January we were 451, we went from $200,000 a year to 17 Million, I spent 14 years as the Regional Vice President of the largest bank in Canada, I know what it takes to build a company and it's all about educating the customer.

                        If the customer doesn't care about the equipment on their site, they are probably far below my standards or target market anyhow, while I do a lot of excavation work, I only started in April, for lawn care, spraying, seeding, sod, top soil and mulch, it will has generated $186,780 as of today so I must be doing something right.

                        It's the way I do things and I do not expect everyone else to follow.
                        Andy
                        Halifax, Nova Scotia

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                        • #13
                          Could this possibly come down to a matter of the presentation style? Where if you come across as a friend of the customer and you are showing off some of the equipment that will be needed, you can them drop into the conversation how much the equipment costs and that could give the customer a fuller view of what is involved?

                          Could it also come down to the type of job?

                          Where many home owners have cut their own lawn before and bought a lawn mower, very very few have ever done excavation work and probably never bought any such equipment?
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                          • #14
                            Could this possibly come down to a matter of the presentation style? Where if you come across as a friend of the customer and you are showing off some of the equipment that will be needed, you can them drop into the conversation how much the equipment costs and that could give the customer a fuller view of what is involved?

                            Could it also come down to the type of job?

                            Where many home owners have cut their own lawn before and bought a lawn mower, very very few have ever done excavation work and probably never bought any such equipment?
                            It is presentation and prentation skills along with a host of other skills required or one should work towards.

                            I know what works, I have built many companies over the years, I befriend the customer just about every time, but then again I have had training in this area that is really paying off and has for a few sompanies I own.

                            If someone says to me a customer doesn't care what arrives or in on their property to do the job.....I say BS with all due respect.

                            If you want to spend the rest of your life living hand to mouth that is a choice, my point is the thinking is in a box, if you want to make serious coin you have to step outside the box, you have to understand the customer needs and it's about what you can do to help them or make their lawn the talk of the block.

                            I can give examples in at least 7 industries I went into, it's not me it's the mindset and how to do it. I have done business in every province in Canada and it has wored every time, it also depends on the target market.
                            Andy
                            Halifax, Nova Scotia

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                            • #15
                              it also depends on the target market.
                              How does this factor change things?
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