Announcement

Collapse
No announcement yet.

Figuring your business costs (a must read)

Collapse
X
  • Filter
  • Time
  • Show
Clear All
new posts

  • #16
    Can you tell me where the $960 in maintenance comes from? Is the equipment tuned up several times per year because of the amount of hours run?
    What do you think the average annual maintenance fee would be for such a mower?
    - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
    Download your Free trial of Gopher Lawn Care Software.

    Comment


    • #17
      What do you think the average annual maintenance fee would be for such a mower?
      Average? Consisderably less than that. I, personally, would be happy to service it probably at least 2-3 times for that price. I know it greatly depends what needs to be done and what the specific piece of equipment is.

      Here is a nugget for you. I find it takes about 2 times as long and costs about 2 times as much to service a ZTR as it does a tractor type mower. Kinda strange but that is the way it seems to work.

      Eli

      Comment


      • #18
        Here is a nugget for you. I find it takes about 2 times as long and costs about 2 times as much to service a ZTR as it does a tractor type mower. Kinda strange but that is the way it seems to work.
        Oh that is fascinating! Why is that the case?
        - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
        Download your Free trial of Gopher Lawn Care Software.

        Comment


        • #19
          Hey Eli,

          Thanks for taking the time to look this thread over. We have since purchased this company, and have been focused on turning it around over the past 6 months. We have been able to lower some cost, and increase our marketing dollars. We have increased the company's revenue 30% over the winter by renegociating contracts, and getting new commercial contracts. It still blows my mind to this very day on what it should actually cost to cut a residential lawn. We have recently brought on a landscape designer to help sell some larger jobs, which will bring in chunks of money.

          We were getting the maintenance cost from our local dealer. The maintenance of all of the equipment was a HUGE white elephant in the room when we took everything over, stuff was breaking left and right (honestly may have been better off buying all new equipment).

          We have noted that the most profitable part of the company is the full landscape installs and fertilization / chemical aps.

          I was wondering how you came up with the lower rates on the equipment, is that from depreciation?

          Again thanks for taking the time.

          Comment


          • #20

            Jan = how many cuts?
            Feb = ?
            Mar = ?
            Apr = ?
            May = ?
            Jun = ?
            July = ?
            Aug = ?
            Sep = ?
            Oct = ?
            Nov = ?
            Dec = ?
            This kind of sucks for me, I only get about 6 months of actually grass cutting.. the rest is winter or fall.

            If the summer is good like last year, I usually start mid May and finish 1st week of October. Then I could promote fall cleanup for the rest of Oct. then Nov, Dec, Jan, Feb, and March is winter so yeah.

            I am trying to get myself a bigger truck so I can do some plowing in the winter time so I can afford to pay for school and other bills

            Comment


            • #21
              I was wondering how you came up with the lower rates on the equipment, is that from depreciation?

              First congrats on buying the business. Something that I was always told is "big jobs, big profits." "small jobs, small profits". One reason is you are not constantly stopping, storing your equipment to go to the next job, etc. When you can start working on a job and just continue working rather than stopping and loading the equipment every 20 minutes you get a lot more done.

              As far the lower cost, I figured it this way:

              For example, you valued the mower at $8500. I consisdered that the purchase price. By figuring it the way you did you had to absorb the entire $8500 for that year and then the next year it would have cost you next to nothing since the $8500 was paid for in the first year. does that makes sense or am I speaking all jumbled (its been a long day).

              So for example, with the mower it would look something like this:

              $8500 divided by 2 (because you are splitting the cost up in 2 years with the intent of buy a new mower every 2 years. If you intend to replace the equipment every 3 years divid by 3, etc.) = $4250.

              $4250 + $1520 in gas + $960 maintance = $6,730.

              0.29% X 2000working hours = 580 operating hours per year.

              $6730 / 580 = $11.60.

              Now if you end up getting 3 years out of the mower without a great increase in maintenance costs your actual cost per hour would be:

              $1520 + $960 / 580 hours = $4.27 per hour. However, due to normal wear and tear, I would anticipate your maintenance costs to be higher the 3rd year (and each consecutive year) than it was the previous year. That is when your will more likely see bearings go out of the deck, belts go bad, etc.

              Hope that helps.

              Eli

              Comment


              • #22
                It still blows my mind to this very day on what it should actually cost to cut a residential lawn.
                What do you mean by this? Do you mean figuring your total hourly expenses? Or so you mean what you should charge?
                - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
                Download your Free trial of Gopher Lawn Care Software.

                Comment


                • #23
                  Eli, thanks for the explanation I completely understand what you are saying and you are completely right, we should be factoring in cost over our life time use of the equipment.

                  Steve,

                  I mean if you factor in travel to and from a job, cost of equipment, overhead, etc... it would cost nearly $45 for a town house, and $90 for a decent size yard every week.

                  Im thinking if it takes you 10 minutes to travel to the job, (no travel back), it takes a two man crew to cut, edge, trim, blow, round-up, trash pick-up, etc... takes 18 minutes, unloading and reloading the trailer takes 2 minutes total, you are looking at 30 minutes of cost.

                  Our example would yield $81.69 per/hr to break even, I would like to ad 20% profit to that (I know its high for the industry) making our hourly rate $98.03.

                  That said we would need to have a bottom line show up fee of $49.01 per/half hour. Now I see that is being mind blowing from the outside looking in because I personally would only think to pay $25 - $35 to get my grass cut.....until I owned a lawn care business. In the realm of professional services $100 per/hr is normal, whether its an electriction, plumber, bug exterminator, etc... But the perceived value of a lawn care company is typically very low.

                  A lot of our lawns are 10,000 - 15,000 sqft and take near an hour to complete, I dont have an exact time (but I will shortly), that would mean we should be charging near $100 per/cut, holly crap. We use a 36" walk behind on a lot of the nicer lawns because our riders would tear the properties up.

                  Comment


                  • #24
                    Very very interesting! Ok so now how do you go about combating this? How do you make a profit and still hit the price range that would be acceptable in your area? What is your plan or options?
                    - Subscribe to my Lawn Care Marketing Blog Feed and get daily tips sent to you. Free!
                    Download your Free trial of Gopher Lawn Care Software.

                    Comment


                    • #25
                      No plan B,

                      Cluster jobs, and do large commercial contracts.

                      If your customer hires you based on price, they will leave you based on price...

                      Comment


                      • #26
                        If your customer hires you based on price, they will leave you based on price...
                        Wow, what a true statement!!!! That is a phenomenal statement.

                        When I was growing up my dad always said, when referring to customers in a hurry, "the worse you want it, the worse you get it".


                        And here is one you guys may be able to modify for yourselves. My brother, who is also a business owner, introduced me to the saying, "We have no quarrel with our competitor's prices. They know what their product is worth!!" You guys could change that to say, "We have no quarrel with our competitor's prices. They know what their services are worth!!"

                        Comment

                        Bottom Ad Widget

                        Collapse
                        Working...
                        X