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General Talk If it doesn't fit anywhere else, post it here.

Lets call it Pricing


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  #1  
Old 12-08-2007, 03:14 PM
realhuntin
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I hear a lot of talk about HOW to bid this and HOW to bid that or is this a good price to charge for this, is this to much or to little?

I know that every job is different, but the pricing shouldn't change. Providing you have set up a standards price list for service you'll be providding when you began your business venture. This list should have been one of the first things done before even bidding to the first customer. With out a price list how will you know what amount to charge for each service you provide?

When chosing the Services you are going to provide you should have a price to go along with that service. Now there are different chages for added difficulty, say you charge $45 min for cutting up to 3000 sq ft of level to slightly rolling lawn. Add $10.00 to that for every extra 1000 sq. ft and $5 for every step UP of difficulty. (excessive trees, extended plant areas, hilly or steep ditches that require more trimming time).

Lets say you have been cutting and some small landscaping details all summer and you have a customer ask for a fall clean up. You should have a good idea of how long it will take to clean up the leafs.

If not here is a common rule; For every 1000 sq.ft. of yard it should take 1 man 1.5 hrs. @ your hourly rate, if he/she is to blow into wind row and remove. (NOTE: to some who didn't or don't know wind rows are faster and easier to manage and pick up). Clean up around plant areas for every 500 sq. ft. should take 1 man 1.5 hrs. to hand rake and blow into yard. Also you would want to add gutter clean out in this automaticly at a rate of $1.00 per Ln. ft., now you will have dumping charges for this, if you don't have a place to dump for free, this charge should be 1.85 times the cost of dumping at your local dump and this will cover expenses (dump charges, fuel & time). ex. dump charge cost $85.00 x 1.85 = $157.25 now lets put this all together and see what comes of it.

4000 sq ft of yard = 6 man hrs @ $45 per hr.= $270.00
1000 sq ft of plant area = 3 man hrs @ $45 per hr = $135.00
60 Ln ft. of gutter = $1.00 per Ln ft. x 60 Ln ft. = $60.00
Dump/Removal Charge = $85 @ 1.85 multiplier = $157.25

Total Charges for the clean up $622.25 not bad for a days work. If you have an extra hand you should be able to complete this in 4 hours. Pay you helper $8 - $10 per hour if you have more jobs for that day or just pay them $100 bucks for that job.

Lets look @ the P&L for this job;
EXPENSE;
Fuel Cost Truck & Blowers $30
Dumping Charge $85
Extra Labor $100
Total Expense $215.00

P&L = $407.25 you just made $100.00 per hour by using a helper. The P&L will go up only slightly if you do this on your own.

The point I'm trying to make is set your prices and stick to them. every job is different but the hourly charges per man hour and flat rates should stay the same for every customer, if you charge one customer one thing and then charge another a different amount for the same job this will put doubt in their mind.

ex. Customer calls wants the patio pressure washed the patio is of normal dirtiness and it is 10x15 = 150 sq ft you charge this customer $1.00 per sq ft. equaling $150.00 they tell a neighbor and their deck is of equal dirtiness and it is 8x20 = 160 sq ft you charge them $1.50 per sq ft. equaling $240.00 this customer is not going to be happy and probly wont call you back nor will the first customer because you have put doubt into their minds of is this guy for real is he just throwing #'s out there or what.

Don't ever leave room for doubt or a question of your integrity as a business owner/operater. YOU WILL lose if you do.

Hope this helps and I really want to hear some feedback on this one.

Thanks Tim



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  #2  
Old 12-08-2007, 06:42 PM
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Hi Tim,

Thank you so much for that post. Can you explain what a wind row is?
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Old 12-08-2007, 07:57 PM
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Quote:
Originally Posted by [b
Quote[/b] (Team Gopher @ Dec. 08 2007,6:42)]Hi Tim,

Thank you so much for that post. Can you explain what a wind row is?
A WIND ROW is when you blow all grass clipping or leafs into a long narrow row, insted of one or to big piles, this makes it easier to clean up and is faster alaround
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Old 12-08-2007, 08:39 PM
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Oh thank you!

I did a search for wind row and found this image.

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Old 12-09-2007, 08:18 AM
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From experience I have with new LCO's, knowing how to price is just a huge issue.

I think the very first issue you have to confront is cost of doing business.

Can you imagine a successful mfg'ing plant manager shrugging his shoulders when asked what his actual marginal cost is for each additional unit?

Before I got into the lawn care business, I was an accountant with a corrugated package manufacturing company. We knew exactly how much paper and glue was required for each and every box made. We even practically knew how much electricity was needed to make each box too. Nothing was overlooked. A degree in finance didn't hurt with the detailed analysis.

Tim, you're talking a very structured approach to bidding jobs and I cannot agree more. But, I want to ask you this. How many guys do you think bid a $40 grass cutting job simply because their friends said that's how much to charge?

I think most everyone of us did that when we first started. We had little idea of costs and little idea of what the market would actually bear.

Here's an example of what happens though. The going rate of residential lawns is $40 per cut in a certain area of the country. But, someone gets a late start or is in need of new customers. So, that guy drops his price and starts bidding at $30. Then someone else hears how this guy is doing 10 yards per day and bring home $300 per day. This third guy decides he can do a couple yards each day after work or school. So, he loads up a barely functioning push lawn mower into his truck and starts doing lawns for $20 or $25 for extra money.

Over the course of a year or two, lowballing drops the price out of the market and no one makes money. The guy charging $20 gives up and just continues with his day job. The guy charging $30 has an equipment breakdown that he can't afford to fix and has to drop out. The only one left to pick up the pieces is the professional who has a steady structure of well paying customers. Prices begin to rise and the whole cycle starts over again. I wonder about the length of the cycle. 5 years?

Your example of $1/sq.ft. for pressure washing is excellent. If the going rate is $1, that is only one half of the equation. A company still has to know its costs. If a company has a brand new high pressure, high flow Hotsy warm water pressure washer in addition to a 250 gallon tank carrying filtered water in an enclosed dual axle trailer and a brand new $45grand F-350 to haul it all, doing deck work might not be the best use of his resources. His costs alone might approach $1/ft^2. Somewhere there is an equilibrium point. Instead of doing deck work, his equipment might be better suited for industial cleaning and paint stripping.

That's why nobody can really ever tell anyone else exactly how much they should bid on a job. One guy might be able to make a great living at $1/sq.ft. while another guy might go broke.

All this illustrates the need for a business plan long before you get heavy into the business. You have to know what the going rate per hour is and what your costs per hour are. You have to know what types of customers to target and what equipment you will need to service those customers once you get them.

I don't think a business plan solves all questions by any means. But, it gives a good basis to begin with and it can always be adjusted later.

You started a good discussion, Tim.
Thanks for the ice breaker into the subject.

Keith
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Old 12-09-2007, 08:50 AM
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Quote:
Originally Posted by [b
Quote[/b] (StartALawnCareBusiness @ Dec. 09 2007,8:18)]*I wonder about the length of the cycle. *5 years?

Your example of $1/sq.ft. for pressure washing is excellent. *If the going rate is $1, that is only one half of the equation. *A company still has to know its costs. *If a company has a brand new high pressure, high flow Hotsy warm water pressure washer in addition to a 250 gallon tank carrying filtered water in an enclosed dual axle trailer and a brand new $45grand F-350 to haul it all, doing deck work might not be the best use of his resources. *His costs alone might approach $1/ft^2. *Somewhere there is an equilibrium point. *Instead of doing deck work, his equipment might be better suited for industial cleaning and paint stripping.

That's why nobody can really ever tell anyone else exactly how much they should bid on a job. *One guy might be able to make a great living at $1/sq.ft. while another guy might go broke.

All this illustrates the need for a business plan long before you get heavy into the business. *You have to know what the going rate per hour is and what your costs per hour are. *You have to know what types of customers to target and what equipment you will need to service those customers once you get them.

I don't think a business plan solves all questions by any means. *But, it gives a good basis to begin with and it can always be adjusted later.

You started a good discussion, Tim. *
Thanks for the ice breaker into the subject.

Keith
Your probly closer than you relise, for my area I think we are there, I just stated this past April we had the worste drought in over 20 years, (what was I thinking LOL). We stayed very busy all *season, I even had 5 phone calls from other guys wanting me to buy their equipment (because they had big loans @ the bank on it) and put them to work. So I think this past season is going to weed out the low ballers.

As far as the pressure washing I truly understand what your saying and I can't agree with you more on it. My trade buddy had one of the rigs you speek of and he sold it a few years back because it cost him more to own it than it made. I was just speeking of small patio's and deck's may be I wasn't clear on that part, my apologize for that.

But it seems we both agree on SETTING prices before you offer a service to a customer. What I was tring to show is you need good pricing and rates before you can bid jobs, you can't go out there and just thow a # in the air and expect to make it.

Thanks for the insight Keith



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  #7  
Old 12-09-2007, 08:01 PM
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It would be nice if all pricing was cut and dry like that, but there are too many factors involved to charge everyone the same rates. I charge based on what I think it should cost. It has always worked up until now, so I will stick with the way I have been doing it. I appreciate your info and idea.
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