Pricing your landscaping services is a difficult task, especially when you are new. In some areas where there is a lot of competition a ceiling for pricing has been established. You will also come across customers who refuse to pay your rate which may only be $5 more. In this situation you will have to remember that we are in a commodity business and there aren’t many ways to differentiate the services in the lawn business. The balance you have to strike is offering a competitive price but still making enough to stay in business.
For jobs requiring multiple steps such as a mulch installation, it has been best to bid by the complete job and not the cost by the yard. Many companies will quote by the yard installed and it seems by giving the entire cost without the calculation per yard, people are usually on board.
Aeration jobs are usually priced about 2-3 times the equivalent cost to mow the yard.
Mowing jobs for companies that are licensed vary significantly as that is where the competition is highest and varies so much from region to region. Generally you will see $30-$75 per man hour plus any specialized equipment use. An industry figure that gets thrown around is you will need to make at least $1 a minute which includes drive time and loading/unloading. This estimate also assumes this is the time it would take using commercial equipment as you won’t get paid a premium for using a push mower.
All estimates aside, the important thing to is that you shouldn’t initially approach your pricing to what your competition charges as that will be considered later. If the competition was so good at setting prices, why is the failure rate so high in the lawn care business?
Yes, it’s important to be competitive in your market, but you must first know your break-even point and go from there. First you need to know what your costs are to do a job. Everyone is different and your competition may not be charging enough. Don’t take it for granted that the competition knows what they are doing. There are a lot of struggling landscaping businesses that don’t know what their true costs are and their landscaping pricing is too low.
Take a look at the overhead expenses such as labor (including your labor), taxes, insurance, depreciation, fuel, advertising, etc. There are a lot of lawn care businesses that don’t take into account the owner’s time in performing the services and their wife doing the bookkeeping that works for free. If you can’t cover all of the overhead expenses of doing business, this ends up being a hobby (a frustrating one at that) Another thing that is often overlooked is as you use the equipment it wears out and there is no money put back to buy new equipment when it is worn out.
Sure, some of these costs are difficult to break down by the job but they are real costs that you need to figure into the overall equation. Next, figure out what your competition is charging as this may be a ceiling in your area. It may in fact, not be a ceiling depending on the competency of the competition, so don’t be afraid to price higher, provided you can add more value to your service versus the competition. But if you find the competition’s price minus your costs leave you making minimum wage, it may be a good idea to skip getting into the business. There are too many ways to make money to struggle making less than minimum wage but if you don’t know this going into it, you are going to be spending a lot of money on equipment for not a lot of profit potential. In the end, only you can answer how much money you need to make this worth your time, it shouldn’t be your competition.
In addition to this exercise assisting you evaluate the feasibility of starting a landscaping business, it will also help you in planning growth in the business and the timing of purchasing equipment.
A bit of advice to being able to survive in the landscaping business is that if you can help it, don’t sell your services cheap as it brings the cheap people who tend to be more of a pain to work with. By not constantly underbidding (it will happen, especially when cash flow is tight or you don’t estimate correctly) and focus on customer service and developing a professional image you will in time be able to stand out above the competition. Also you will be able to charge more for your services than the competition and get the jobs due to your reputation.
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