Loosing Money

[Kennedy's Lawn Care]

I have been in business ( mowing lawns )for 4 years now and this year I picked up a commercial account. My question is how do you know how much to charge on a commercial account. I am pretty sure that I am undercharging on this one. Is there some way to figure this out or a place I can go to lookup a formula so I can get it right. I know from running another business that undercharging may get me the work but it also ( in some cases ) forces others to have to lower there prices to stay competitive. This only hurts both him and me in the long run. Any help would be appreciative..

 

[StarTech]

This is something you would need to research in your particular area as each region will be different. Sometime your competitors will quote you their rates. One thing don't try to uncut them too much as it will come back and bite you in the end. Overhead can be a killer at times.

It is like my repair business. I generally know what other local brick and mortar shops are charging but I don't have a so called brick and mortar shop. So I charge less per hour but I have less overhead than they do. The only thing that is different is I don't give the business the senior citizen discount rates and I charge for all my time. When I raise my rates it is across the board but senior non commercial customers still get a discounted rate along with discounted parts. Just fair as many are living on social security which is not much.

Plus doesn't hurt for you to know what you are doing as several repair shops around have techs that can't even repair simple problems.

 

[SHB]

It starts with understanding your costs
- What wage do you want to make (be sure to factor in non-mowing time, the rent & costs go on independently of it raining or being winter). What could you earn working a regular job?
- Depreciation on your equipment, if you pay $20K for a mower and run it for 2,000 hours, each hour costs $10
- Maintenance on your equipment
- Insurance (liability, health,…)
- Fuel, string, ….
- Taxes

I use MS Excel for stuff like this, but paper & pencil works as well.

This gives you an idea of what it costs to provide your service. Now, do some snooping to figure out what the market price is for the service you are providing in your area. If your projected costs are less than the market price for the service you are offering, you have a viable business. If not, you either need to think about costs or choose a different business. To many folks don’t do this and become one of the 90% of small businesses that fail.

 

[Tiger Small Engine]

It starts with understanding your costs
- What wage do you want to make (be sure to factor in non-mowing time, the rent & costs go on independently of it raining or being winter). What could you earn working a regular job?
- Depreciation on your equipment, if you pay $20K for a mower and run it for 2,000 hours, each hour costs $10
- Maintenance on your equipment
- Insurance (liability, health,…)
- Fuel, string, ….
- Taxes

I use MS Excel for stuff like this, but paper & pencil works as well.

This gives you an idea of what it costs to provide your service. Now, do some snooping to figure out what the market price is for the service you are providing in your area. If your projected costs are less than the market price for the service you are offering, you have a viable business. If not, you either need to think about costs or choose a different business. To many folks don’t do this and become one of the 90% of small businesses that fail.

A good suggestion is to go to Lawnsite. There are many posts discussing rates. I mowed full time professionally for 10 years. It is a tough way to make a living. If you are a solo operator, you wear many hats. After all your expenses, taxes, and paying yourself, the net/net income is often not much. The upside is you are providing a needed service, being your own boss, and doing what you enjoy.
Merry Christmas.

 

[Kennedy's Lawn Care]

A good suggestion is to go to Lawnsite. There are many posts discussing rates. I mowed full time professionally for 10 years. It is a tough way to make a living. If you are a solo operator, you wear many hats. After all your expenses, taxes, and paying yourself, the net/net income is often not much. The upside is you are providing a needed service, being your own boss, and doing what you enjoy.
Merry Christmas.

thank you and this will help. happy new year

 

[Kennedy's Lawn Care]

This is something you would need to research in your particular area as each region will be different. Sometime your competitors will quote you their rates. One thing don't try to uncut them too much as it will come back and bite you in the end. Overhead can be a killer at times.

It is like my repair business. I generally know what other local brick and mortar shops are charging but I don't have a so called brick and mortar shop. So I charge less per hour but I have less overhead than they do. The only thing that is different is I don't give the business the senior citizen discount rates and I charge for all my time. When I raise my rates it is across the board but senior non commercial customers still get a discounted rate along with discounted parts. Just fair as many are living on social security which is not much.

Plus doesn't hurt for you to know what you are doing as several repair shops around have techs that can't even repair simple problems.

thank you I do give seniors a discount but not a business. That is why I am in business and wouldn't expect someone to, just because I am 68

 

[Kennedy's Lawn Care]

I want to thank everyone who responded to my request for information. you all helped and I will try Lawnsite forum.