$10 a Lawn and making a profit!

[JP Landscaping]

Take this scenerio for instance:

Lets say you pay your employees $10 and hour and in 1 hour your employee can mow 2 lawns on average. You are paying them $5 per lawn gross pay.
If they work 8 hours a day. you pay them $80 gross.

If I was that employee, and not thinking too deeply, I would figure I can charge $10-$15 per lawn and make 2-3 times as much money as I was making and still be charging 1/2 to 1/3 of the competition.

i know you may be thinking, "he's gonna be broke in no time!"

But consider this, I had a friend who's uncle gave him a brand new riding mower with a ton of attachements (including snow blower), trimmer, blower, etc. because his uncle owned an equipment store. uncle wanted to claim a loss somehow.

Well this friend already owned a pick up and small trailer, big enough to put the mower in.

This is almost the perfect scenerio for him to be able to start his lawncare business charging $15 per lawn. (He was only making $8.50/hr at his factory job)

I mean, this is probably why there are many new competitors trying to charge so low...they figure, i already have equipment to use, my overhead is low since I'm not gonna pay insurance or register...or even if they did, it doesn't cost much to at least register.

Get this... so lets say a LCO pays 65% overhead, 20% company profit, and 15% owner profit. out of a $30 lawn that's $19.50 for company costs.
the company and owner combined are only making $10.50 on the lawn.

I think it's possible for someone in this situation to charge $15 for the same lawn that a larger LCO would charge $30 for and still make about the same amount of profit. That's about $30 per hour if he does 2 lawns per hour. I know of landscapers who charge $30 per labor hour and that includes their overhead.

What do you guys think??

Lets analyze this: what would be his costs?
- basically his operating costs (variable)
gas, maintanence, administration, ??
- his fixed costs would be pretty low
: registration, insurance, adv, what else??

[CHEESE2009]

Situation A:

A guy charges $10.00 a cut & finds loads of work almost instantly, but can only handle 50 customers being one person.

This guys business makes $500.00 a week


Situation B:

A guy charges $20.00 a cut but only has 25 customers, he can STILL handle 50 customers, & already he's making more than the guy from Situation A.

This guys business makes $500.00 a week, & he also does half the work.


Guy in situation A does not make enough money to grow, or to make his business "work for him".



Pros of advertising low prices:
You will be instantly booked with customers

Customers can be replaced easily

You can build relationships with your customers, & charge them more over time. Though so can the guy from Situation B. Not really an advantage, but it's what I'd recommend.


Cons of advertising low prices:

You aren't making a profit, you are just "getting by"

Expenses are difficult to cover & are able to jeopardize your business

Work is generally just a hassle & isn't worth doing

[JP Landscaping]

I agree

I agree with what you are saying. If you can charge double and get half the work it's a better way to go.

but what do you think about the situation where your expenses (at least the start up expenses) are much lower than the competition and therefore allows you to charge much less than the competition?

Like i had written, a company charges $30 for a paticular lawn based on the company's overhead and desired income. but if company A has 1/3 of the expenses of company B and desires the same income, then company A can charge less and still make the same amount of profit.

It's like having two companies with the same equipment, lawns, and expenses,,etc. But if company A is more efficient than B, A can charge less and make the same profits because of their effeciency.

Similar in my example, if you can lower your expenses, then you are able to lower the price you charge. Starting out with free equipment is a huge competitive advantage!

*wish i had an uncle like my friend's*

[CHEESE2009]

but what do you think about the situation where your expenses (at least the start up expenses) are much lower than the competition and therefore allows you to charge much less than the competition?

Then use it to your advantage by not charging less. It's better to make it count.

That's like saying, "my business doesn't have to pay $100.00, so I don't need to make $100.00"

what better time to make a buck than now? No expenses = maximum profit.

Like i had written, a company charges $30 for a paticular lawn based on the company's overhead and desired income. but if company A has 1/3 of the expenses of company B and desires the same income, then company A can charge less and still make the same amount of profit.

It wouldn't necessarily be a profit. At the end of the day, the other company has you beat because it's doing half the work, when you could be to.

You could easily be ahead of them by charging more & doing half the work just like them, & you'd make more $ than them because your expenses allow it.

It's like having two companies with the same equipment, lawns, and expenses,,etc. But if company A is more efficient than B, A can charge less and make the same profits because of their effeciency.

You wouldn't have to rely on efficiency if you charged more. Imagine if you charged more & were still more efficient than them? That would be wonderful!

Similar in my example, if you can lower your expenses, then you are able to lower the price you charge.

You could, but why would you want to lower the price? That's going backwards & it's basically saying no to great profit. You'd be filling your days up with cheap work when you could be making big bucks, using the advantage of free equipment & less expenses.

It's like saying no to a promotion, you could double your hourly salary, hire a helper, afford new & better equipment. Why not take advantage of it?

You have two choices:

a) Make $1000.00 by cutting 100 lawns (no room to grow)
or
b) Make $1000.00 by cutting 50 lawns (a lot of room to grow)

With b) you can even work as hard as a), & do 100 lawns but make $2000.00 instead!

Think about it.


Starting out with free equipment is a huge competitive advantage!

It is, but it doesn't mean you should ignore investing in repairs or replacements. Charging more will save you the headache of major & random expenses.

When that mower breaks, wouldn't you be happy knowing that most of your income wont be lost?



*wish i had an uncle like my friend's*

Me too, my uncle is a cross dresser.

I have been in your shoes & wondered why the heck shouldn't I charge less?

I figured out that in the long run, I would be missing out on a lot if I had done so.

Sure I could gain loads of customers, but they wouldn't be worth anything.

The customers wouldn't provide me with the things I'd need to make even more money.

More money = *insert everything you want & need*


Also, I do think it would be wise to split up your customers.

Go out & grab 25 $10.00 customers, but work hard on getting 25 $20.00 paying customers.

If you want to charge $10.00, try to make it as profitable for you as possible.

An example:

You have 4 customers who pay $10.00 a cut, they all live on the same street = Profit, you don't waste gas & time.

If your customers are all scattered, you'll be spending $10.00 on gas getting to the next lawn, lol.

... someone stole one of my shovels today... lol





A silly example…

Imagine a person was on a game show, & he’s picked to go into a room & grab as many $100.00 bills as he can within 50 seconds.

Wouldn’t you grab all that damn money & murder whoever tried to stop you?!

Anyway,

Imagine this person refusing to go into the room, because he makes as much money as the crowd in the audience.

[MountainViewGreenskeeper]

so charge 20 lol

I have to say your both right. You want to be in a position to charge as little as possible (to get the pros as you stated)you should also want to be able to grow/expand regaurdless if you do or not.

[CHEESE2009]

Another thing...

If your competition charges $20.00, don't charge $10.00.

Charge $19.00 Lol!

...

I have to say that we are both correct too. The plan he had stated is possible for the individual. For me, I would do it but adjust my price as required over time.

If I feel like growing, I'll up my price the next season. Though the advantage of already having money is a beautiful thing & great for emergencies.

The plan for me is to have less work on my plate & to generate more profit by hiring employees.

A good price on my service is what will make my plan work, & happen fast. You have to think ahead & know what you want, & when you want it.

Just think, an extra $1000.00 can get you an employee for 100 hours or more... Might not sound like much (it is), but it's $1000.00 you never had & are willing to give away anyway.

Imagine if you could afford to have an employee for longer, how easy your life would become & how you could use him/her to profit. Use them to take on more work, as you maintain the work you already have. You pay them less then they make for the business & you got yourself a money making machine.

I sounded like an a-hole right there didn't I? ^^^ lol

###########
Holy crow... Now you got me thinking...

I should charge a few customers less & get a crap load of clients & just have employees handle them. The only downside is that I can't avoid the stress they (the customers) will bring.

I can have an entire two-sided business, my big money maker side, & the slow money generating side which I can run across the town. But then knowing me I'll say, "why not have 2 good sides" damn.

Your turning me into a hypocrite!!! LOL

Though I did do something similar with garden weeding.

I had an employee do my garden work, she made $80.00 for every $100.00 I charged. I did this because she was an awesome worker & I knew she needed the work, what do I care anyway? The business still profits (minor) & don't have to get my hands dirty (my hands are usually already dirty, but you know what I mean!)

[ritchiem]

This situation may work if they still lived with mom and dad

[CHEESE2009]

This situation may work if they still lived with mom and dad

basically lol.

Another bit of advice would be for this person to set a goal, try to afford future expenses wants & needs, before the last minute. Plan out how you want your future to look like, & form your business around that.

Maybe you want a house, a family, etc... $$$ A fraction of your income should go towards the things you want. (Disney World, Animal Kingdom Lodge)

Extreme long term, I kinda wanna let Breeze grow & be self sufficient, then I can open up another business elsewhere.

I can call it "Cheese Lawn Service" joking...

I can travel to different areas & have fun building both businesses. I'll be dead before I reach that point if I charge low, though.

[JP Landscaping]

good

this is good analyzing...

When I first started I also thought of the competing on price and in a way I had to because according to my former management college professor... you compete either in price or quality.

No one knew my work so in order to attract attention, i had to compete in price. And I think it's what most starters do- they're kinda forced to.
But as soon as you can show your quality work and have some references to back it up, then you should get out of the price competition because in the long run it's bad for the industry.

You're right Breeze, it's a good idea to get a handfull of those quick low paying customers to at least break you even while you look for the high paying customers. (finance-diversification is safe). Because if you spend all your time and effort trying to get the high paying customers as a starter with no recognition then you're going to find that this world is tough.

**To clarify that was a scenerio and I wasn't lucky enough to be the guy getting all the free equipment lol **
So how big of operations do you guys have? 1 man... 1 crew...a few crews?

[CHEESE2009]

I'm a one man show for lawn maintenance but I have someone I hire for the odd months. I'm only going to hire another person full time if he can take on his own route alone (50 customers), then I can worry about finding him a partner & they can do 100 customers a week. It'll cost me $14,400.00, but the profit I'd make from them should be $27,600.00-$30,600.00 after I deduct their entire pay for 6 months work. I wouldn't know about finding myself a partner, I might want to just focus on garden work with my extra time.

I'd probably get into doing snow removal like a champ, well at least I'd fund it, but someone else would be riding the tractor. I honestly never liked doing it & enjoy panicking too much as some worker running off & destroying my new tractor.

All of the above is me dreaming, eventually my time will come.

Other than that, I have a full time garden maintenance employee. lol

[psparaco]

I would never in a million years charge $10 a cut. the lowest i've ever charged is $20. ok sure 10 bucks more. but keep in mind. the properties i service are all rental townhomes. middle of group townhomes have about 900 sq.ft. of lawn for 20. end of group had about 3500 sqft and takes me an extra 5 min to do the overall job. i am a 1 man crew and sometimes 2 when my fiance helps me during the school days while our daughter is in school. alone i can drive to the property (2-4 min form home) unload(2 min) trim (3-5 min), mow (5-10 min), cleanup (2-3 min), load my equipment back in my car (2 min) and we off to the next property which is usually 30 seconds to 1 min away and sometimes as i set up my routes. i park my car and knock out 4 lawns in one chunk. so on average i spend 16-26 min per property if you add up the total time amounts. if my fiance helps me. cut that time in half. she usually mows while i trim and cleanup on several properties all within feet of each other. the luxury of doing townhomes. i didnt base muy price off nothing but just deciding from the git go. 20 middles, 25 ends. last year i had 22 clients. this year i have 19 ( from last year) 3 people canceled my service cause they moved to where they didnt need a lawn guy.

[Steve]

Would charging this rate allow for having business insurance and paying taxes or is this concept based on doing everything under the table?

Also what are you thinking one could make as a salary at the end of the year charging such rates?

[JP Landscaping]

interesting

Here's something to think about. Take out the purchase costs of your equipment and trucks (but leave the maintenance and operating costs of operating them)from your overhead costs and see how much you would be able to charge and still make the same amount of money.

In other words, if those trucks and equipment were given to you for free. Example: you get a government grant and use that to buy your equipment.

[SuperiorPower]

Some figures to think about: Say you charge $10 per yard x 50 yards x say 40 cuts per yard per year (i know, it depends on your location), you gross $20,000. Then subtract gas, maintenance, etc, you will not be making much money. If you charge $20 per yard I am guessing you could still have most of those yards and thus make about twice as much money.

It matters not that he doesn't have to pay for the equipment the first time. He still needs to look at their "selling price" as expense. Then he can add this much value to his gross profit. Eventually he will have to replace this equipment. For that reason he needs to be charging enough so that he can place their replacement funds aside to be ready to purchase the equipment at that time.

There are several recent threads about overhead expenses to look up. All of these threads have in depth conversation about overhead, how to figure it, etc. I have posted at least 2 different overhead calculators to help with overhead expense calculation. I will attach the most recent one again.

Hope this helps,
Eli

[picframer]

It matters not that he doesn't have to pay for the equipment the first time. He still needs to look at their "selling price" as expense. Then he can add this much value to his gross profit. Eventually he will have to replace this equipment. For that reason he needs to be charging enough so that he can place their replacement funds aside to be ready to purchase the equipment at that time.

There are several recent threads about overhead expenses to look up. All of these threads have in depth conversation about overhead, how to figure it, etc. I have posted at least 2 different overhead calculators to help with overhead expense calculation. I will attach the most recent one again.

Hope this helps,
Eli

There is no way on earth one can cut lawns for ten bucks and make a profit even if you walked to the customers site, calculate depreciation into this i.e. replacement costs of the mower, trimmer and blower, I amportize everything for mowing except the tractors over two years, I have 169 clients and there is no way on earth I could do any of them for ten bucks, I woun't even attend a lawn that is under $25.00.