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$10 a Lawn and making a profit!


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  #11  
Old 02-19-2010, 10:57 PM
psparaco psparaco is offline
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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.
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  #12  
Old 02-20-2010, 10:24 AM
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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?
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  #13  
Old 02-20-2010, 11:40 AM
JP Landscaping JP Landscaping is offline
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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.
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Old 02-20-2010, 12:41 PM
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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,
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File Type: xls Simple LCO Overhead estimator.xls (37.0 KB, 45 views)
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  #15  
Old 02-20-2010, 02:34 PM
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Quote:
Originally Posted by SuperiorPower View Post
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.
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  #16  
Old 02-21-2010, 01:48 AM
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very good points... but I think you can make a profit in the right situation..you just won't make a as much profit as you should be making. Well at least until you have to replace the equipment you got for free. but like I read before, if you maintain your equipment right, it lasts.

take this...the employee earns $10/hr. If it takes 30 min per lawn for a $30 lawn, then he gets paid $5 per lawn.

At this rate he can mow 16 lawns in a day or 80 possible lawns mowed in 40 hours or 1 week. if you consider 35 mowing weeks in the season, that makes 2800 mows for the season.

if he charges $15 per lawn (half of his boss) he will gross $42000 for the season.

as an employee at $10/hr ($5/mow avg), he will gross only $14000.

True. out of those 42000 he has to take out OPERATING expenses (to keep it simple)

Gas ($4/lawn) 11200, truck insurance 300, biz cards he printed out 50, maintenace 1000, Liab insurance 800, business registration 100,printing paper and ink 80,
- total = 13530 lets round it to $14000 in case we forgot something

- So 42000 - 14000 = $28000 gross
- That's twice as much as he made working for his boss!

as far as saving for equipment, You wouldn't expect to replace your equipment the first year, and if you do, then you can send it to warranty.

Now we're saying this is a one man operation, Two mowers (a good one and a back up one), two trimmers and a blower. How much can all this equipment cost to replace? not 14000 a year.

lets say you spend 5 grand on this equipment and you expect it to last you 5 years. then you can set aside 1000 each year (depreciation) for when you have to replace it...that still leaves him $27,000.

Now is he making a profit? If his opportunity cost for the time spent working for his boss is $14000 gross, I think he is making profit.

What do you guys think?
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Old 05-06-2010, 10:53 AM
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Quote:
Originally Posted by JP Landscaping View Post
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??
This was probably already covered but I didn't read all the reply's. At %50 or your revenue going to expenses I think they will be out of business in no time. At the same time someones uncle who gives away equipment to claim a loss is both a crook and not a good businessman so chances are he is out of business or shut down anyway. A minimum I like to shoot for is no more than %15 expenses. So far I am able to beat that target. Hopefully it stays that way.
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  #18  
Old 05-07-2010, 12:07 AM
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Not to mention that as a self employed person you also have both sides of the income tax and SS and FICA to pay.

Not taken into account is invoices, rain delays, non payers etc.
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Old 05-07-2010, 12:22 AM
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ok but self employment is 7.65% additionally to the 7.65% that would be deducted from your pay if you were an employee anyway. So 1 yard out of the day's bunch would pay for that.

I still think in the right situation you can make a profit charging $15 per lawn that would take you about 30 minutes to complete. I know landscapers who charge $30 an hour and they have more overhead than would be needed.

lets say you buy a used self porpelled mower in good condition for $300. A trimmer and a blower for an additional 300. if you already have a truck, then you are set for business.

What would be your overhead?

You are already paying insurance for the truck so you don't need it.
you would have gas, maintenance (wouldn't be much for a 21'' mower, etc), advertising, and depreciation of equipment.
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  #20  
Old 05-07-2010, 02:41 AM
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7.65% are you kidding me? where are the taxes that low? I am taxed about 22.5%.
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