How important is having the right crew size to running a successful operation?
It’s one of the core elements. We are in the business of selling time. Our number one line item on our profit and loss statements is labor. Labor, it’s either efficient or inefficient. One of the big factors in determining if it’s efficient or inefficient is the size of the crew. There are a number of different factors that go into a crew, but the crew size directly affects how productive we are. It affects how efficient we are and if we’re achieving our target man hour rate.
My plumber may be missing out on big profits of 150k a year. Hear how to avoid making the same mistake.
Hello! The other day we had a plumber out at our home and the reason is, we got a new grill and we have a gas line coming out of our home. I know it’s a super easy thing to do, but the line from the grill wouldn’t fit onto the line from the house. I didn’t want to mess with it. One, because I didn’t really have time, and two, because it’s natural gas, so I thought we’d just have the plumber out.
We called the plumber and he came out. Actually it was two guys, and they had a $135 minimum to come do the job, which was fine, and it probably took them 10 or 15 minutes to do the work. They fixed it. All was done and then the guy went out to the truck, actually both of the guy’s went out to the truck, and they were writing up the paperwork. I tried to give him my credit card before he even went to the truck, he’s like, “No, no problem. I’ll go write up the paperwork. I’ll come back in.”
I’m in my house about 10 minutes and I walk out to the truck and he’s legitimately out there writing up the paperwork. He’s got a calculator. He’s adding things up. He’s filling out all of the paperwork by hand. I stand around for a few minutes and then I finally just walk back in the house. Then he follows me in and then I give him the credit card, and he charges the credit card, and then we chit-chat for just a second. Great guy, great company, no complaints.
I estimate at an absolute minimum they spent 15 minutes between the time that they finished the job, filled out the paperwork, came back in, charged my card, etc. You get the idea. Plus there were two. If you could imagine, and these guys bill at $120 an hour. I don’t know if it’s $120 an hour for two or $120 an hour each. I’m not even sure, but if you do the math and we’ve done a number of videos on this, and it’s about non-billable time. That non-productive time. This is why a lot of companies do not make very good money, or they can’t figure out why they’re not making more money, or it’s why they don’t think their business is very good.
Let me give you the example math on this. He wasted 15 minutes at my job. For simplicity I’m just going to call it 15 man minutes. It should really be 15 minutes times two guys but let’s just keep this really simple. He wasted 15 minutes at my house. Let’s say through the course of the day, he wastes 15 minutes three more times, so he wastes a total of 1 hour for the whole day, and this is being really conservative. They bill $120 an hour, so in other words, had they not wasted an hour and they did one extra job, and they billed that one extra job at $120, that would have been $120 in profit to the company because all the other money they earned I’m assuming already covered the expenses, the over head, paying the technicians, etc. Generally when you save wasted time, it almost all goes to the bottom line unless you’re losing money in your company. But, let’s just keep it simple. It almost all goes to the bottom line. That $120 would have been profit.
Now imagine the owner of this company were to make an extra $120 per day, 5 days a week, 50 weeks a year. I believe that’s $30,000. I believe that’s correct. If my math is wrong, the point still is valid. That’s an extra 30,000 off this one crew of two guys. Now imagine if he has 5 trucks running around and all 5 trucks are wasting 1 hour a day that could be billed at $120 an hour, the owner’s not taking home $150,000 a year in additional pay that he could be taking if he just fixed the problem of 1 hour of wasted time.
This is a perfect example of waste, and this waste happens in every way. How you fuel the trucks. How you maintain the equipment. How they load their trucks in the morning. You can just go down the list and there’s just tons of this waste. How fast they get out of the yard in the morning. I can go on, and on. Are they doing everything on paper and they’re not using mobiles? Maybe they’re not wasting as much time on filling out an invoice. We don’t do that. We bill back at the office. Maybe the waste is happening when they’re writing down start and stop times. Maybe it’s happening when they’re writing notes. Maybe it’s happening when they’re filling out paperwork for chemicals or writing notes that they leave on the door. A lot of this stuff could be automated or simplified in some way.
What I have found is you want to go through every single aspect of your company. Everything that’s happening. Watch your team. What are they doing? You look for the waste and then you work on that. When you fix that, and then you re-bill that time because now you don’t have to go hire a lot of new employees, you can sell that time to the customer, almost all that money is profit that comes back to you.
Hopefully the analogy makes sense and the example makes sense. This is why it’s so incredibly important to be thinking this way and working on these things. I hope you’ll apply it in your business.
If you are wanting your crews to improve their quality out in the field, watch this video.
The question is, how can I get my techs and my crews to up their quality level?
I’ve heard different versions of this question many times. At the end of the day it all comes down to training. But, it’s also about communication. What I believe you want to be doing, is going over with your crews and your techs every single morning, any new notes that you’ve put on their route sheets or their mobiles.
I personally like the concept of standing out at the gate, at the yard, or however you operate, and as your crews leave your facility, I would assume if you’re a bigger company they’re staggered, you’re going over very quickly with any changes to the schedule. Anything that’s changed. Anything you need to tell them about, or your manager, or somebody’s doing this, and then they’re pointing out notes. Notes such as, “This client was unhappy about this last time.” “This client asked if you could please do this.” This client said, “While you’re there, could you please check on this?” You can do this very quick.
If you’ve done it right in your software system or from your software system on your printed route sheets or work orders, you can have this highlighted or notated, and you just run through it very quickly. This is a communication thing. You’ve got to literally talk to each of your techs, your teams, your crews about this. Just make sure it’s crystal clear. It only take a few extra minutes, but it results in a higher level of quality, what would be a better level of customer service, fewer redo’s, fewer call backs. It just saves money and it builds your reputation so that all of your marketing works so much better.
Then on top of that, I would highly recommend pictures. If there’s a problem, if there’s a complaint, or if there’s an accident, something safety related, there’s pictures taken of everything. Then those pictures are talked about. Depending on the software system you’re using, you can have that picture attached to a job so it shows up on the mobile. If you’re using mobiles or if they’re using paper, you could print out those pictures. Who cares if it costs you a little bit of extra money to print in color, because it’s worth so much more to you in terms of being great. Terms of doing a really good job with high quality and excellent customer service because again, that makes all of your marketing work so much better. It earns you so many referrals. A little bit of money spent on paper and ink to produce a much higher level of service, has so many major benefits in term of revenue and profits down stream. Print that stuff out stand out there and talk to them about it.
Meet them in the field. Show up at the job unexpected and point things out. Show up unexpected and walk the property with the team. Show up unexpected and show them how to do a better job performing whatever the service is. Show up unexpected with a tech and say, “Hey, last week when you diagnosed whatever brown spot and it wasn’t, it was actually grubs, here’s what you look for,” and you go through that stuff with the team.
It requires lots of training. Lots of in person communication. Lots of in field communication. Lots of showing up at the job site and getting your hands dirty and showing the team, “Here’s how we do it,” and setting that example. Then showing them best practices. Watching what they’re doing, analyzing and saying, “Hey, have you tried this? Hey, have you considered this? Maybe you can do it this way and you’ll save yourself some time and you’ll get home earlier. Maybe if you do it this way, the three times you had to go back to other jobs last week, could have been eliminated because you could have got it right the first time.”
You’re thinking through the actions that are happening with the team and you’re think of ways to take steps out of the process or add steps to the process to either improve and make them even better or to subtract, meaning take away things that are negative that they’re doing that again will make your quality, your customer service, and everything else so much better.
In the end, make your team a lot happier because they’re getting home faster, they’re not pissed that you just had them go back to a property again. All of these things go together, work together to build a really great company and to get your teams, your techs and your crews to do what it is that you want them to do.
Is the cool lawn mower a friend recommended, the best mower for my lawn care business?
When I was at GIE in Louisville, Kentucky, I was reminded that you really don’t want to buy the cool lawn mower. What I mean by that is, walking through GIE, I’m reminded how many different brands there are and how many manufacturers there are selling walk-behinds and riders. There are Skagg and Toro and Exmark and those are just my local brands.
Watch this video to find out how taking care of your team helps your service business.
A question that I received recently is, “Have you found that offering perks to your employees helps to offset the low pay scale common to labor positions?”
Absolutely. What I have found is that the better you treat your team and the little things that you do for the team, though you might not always get a thank you for those things, they add up.
A lot of companies just aren’t that great to work for and they’re not that fun to work for, and their culture isn’t very good. It’s hard to create a culture out in the field, but you can do the little things for your team. You can surprise them with things. You can bring in food. You can arrange different activities.
There’s stuff you can do. Just simply treating people nice and with respect and not cussing at them and having empathy and understanding for the things they’re going through, and then helping them do extra things like find an apartment or get a checking account or whatever. There’s lots of little things you can do. If you just generally care about people, and you care about your team and the people that you hire that are part of your management, and if your core office team also care about others, then you’ll take good care of your people. That is how you keep people.
In my opinion, investing the extra money to surprise them with things … maybe not TVs and things like that, but food and snacks and maybe some surprise gifts or little bonuses, or a gift card, things of that sort, when they work really hard and they go over and above. Our weather’s been a nightmare and they do extra for the team or the company. You can think of a million different ways that you can just generally be of assistance and care about the team and help the team. That stuff adds up.
Then they refer you. Your team refers you and helps you find new employees. They stick around longer. They have a generally happier attitude out in the field. They’re more likely to smile at your clients. It just adds up.
In my opinion, yes. Every cent you spend to take better care of someone else, to take better care of your team and give them a better life, it’s a smart way to run your company.
Don’t be embarrassed! Use this quick tip to learn trees flowers and weeds!
There’s nothing worse than being on a property with a client and they ask you a question about a disease, or a weed, or a tree issue, or the type of grass they have, and you don’t know how to answer the question. Just as bad, you send someone on your team out to diagnose a problem or work with a client and they can’t answer the question. It just makes your company look foolish and maybe not as professional as your competitors.
One of the easiest ways to solve this, and this is the exact problem I bumped into when I first got started in the industry, actually for the second time because I was out of the industry for quite some time. I got back in just before 2005, and prior I had just been a high school kid mowing lawns. I didn’t know my bushes, my trees, my grass. I didn’t know any of that stuff 10 years ago. What I did is, I learned my top 10 bushes, top 10 trees, top 10 … I don’t think it was really my top 10 flowers, it might have been. I definitely learned my top 10 weeds. I learned my top 10 of a whole bunch of stuff. I basically just memorized them.
I decided to do this after having a whole bunch of bad experiences where a client would point at a bush and say, “Hey, what’s that bush?” Pretty much everybody on the street had that same bush and I couldn’t tell them what it was. I’d play it off like, “Oh, it just slipped my mind. It’s on the tip of my tongue, I can’t remember.” Well, that’s really embarrassing, so my recommendation is to apply the 80-20 rule to this.
There’s only so many different types of bushes. In fact, in my market, I really only need to learn 3 types of grass or turf. I only need to learn so many trees. There are probably 5 predominant types of trees. You’re going to have the same thing in your market. Probably the bushes and the flowers are going to be the ones you have to learn the most of, and weeds. I would say weeds as well. Again, the 80-20 rule applies here.
If you create within your business, sort of a … You know, just print out a picture of each of these things from the web, write the name on it, and create sort of like a flip card. You memorize them, your team memorizes them, you bring somebody onto the team that’s new that’s going to be out in the field, make sure they know these things. If they don’t know them, have them go through these pictures with the names on them and memorize them.
It’s real simple and this could be solved in a day. You don’t put yourself in an embarrassing spot and your team doesn’t make your company look bad. Then, take that idea and apply it to other aspects of the company. What is it that you can apply this 80-20 concept to? It’s powerful and it’s a fast way to bring people up to speed.
One of the absolute best ways to grow the revenue of your business is to sell more work to the clients you already have. It’s a lot easier to sell them more work than it is to go get additional clients.
One of the best and fastest tricks to do this that I’ve found is to have your technicians, your crews, your teams in the field, take a picture of any issue that they see or anything that needs to be done. The same could be true for your inspectors, or your managers, when they’re out at the property.
In years past, trying to have a tech or a crew write down notes on a route sheet was somewhat of battle. They’d do it but you had to really stay on top of them. It’s so much easier to get them to just snap a picture.
Let’s use bushes as an example. They’re out at the property, the crew sees the bushes need to be trimmed because they’ve been trained to know what to look for. They don’t have to do anything more than snap a picture of the bushes, maybe a couple pictures, and then when that phone comes back to the office those pictures are uploaded and they are emailed to the client.
Email the client and say, “Hey, while we were out today we noticed that your bushes need to be trimmed. Let us know if we can help.” Sending a picture is a great way to sell. That picture really makes all the difference.
In an example like this you get credit in two ways. One, you can bring more revenue into the business because this is one of the most effective ways to up sell work. And two, it’s also perceived as a high level of customer service. You are paying attention to what’s going on at your client’s property.
I would highly recommend if you want to sell more work and make more money that you consider this approach. Just simply have your teams take pictures in the field, bring those pictures to the office, and then email the client the picture with a quick note. You can pre-write this note so within whatever system you’re using or email system you can have a number of different pre-written emails. One for bush trimming, one for irrigation, one for pest control, one for all the different services that you offer.
We have found this to be such a compelling and successful way to up sell that we built this functionality right into Service Autopilot, but you don’t have to have Service Autopilot to do it. If you’re a Service Autopilot user, you’re listening this, we have all of this now on the dispatch board, on the mobiles, and in the document templates. If you’re not using Service Autopilot, then I’d recommend having your teams use the phone that they’re using now and then bring those back in to you every day. It’s worth the effort even if you don’t have a system that will facilitate this.
The question is, “Should I allow employee smoking in the truck or at the job site?”
I think the answer is an absolute no. Remember that we are in the business of theater. We are putting on a show for our clients and we want that to be a very positive experience. We want every interaction with them, with us, to be a positive one.
You don’t know who you’re dealing with. You don’t know how they think. You don’t know what they care about. So, you have to go as far as you can to protect your image. That’s why you answer your phone. That’s why the person that answers your phone is very friendly and positive. That’s why when you’re on the job site, you’re in a clean truck. That’s why they’re in a clean outfit, uniform, clothes, whatever the case maybe, because every little thing matters in your overall brand and appearance.
Smoking detracts from that. You don’t want them sitting on the property smoking because it just takes away from your overall appearance.
Likewise, and maybe even a bigger concern, is a lot of work is built based on time. If the individual, the homeowner or the business owner sees an individual out there smoking, their assumption is, it’s just like if they see them out there on their telephone, they think they’re billing me while they’re taking a break.
They are on the clock, getting charged and they see the crew screwing around. You don’t want to give people any reason to think that. So I believe, if there’s going to be any smoking and personal cellphone conversations, they need to happen off the property, away from the client’s site.
Whether or not you let your team smoke in the truck or not, that’s your call. But, if you’re minimizing drive time and break time and all of that kind of stuff, you may have no choice but to let them smoke in the truck if you’re not willing to let them smoke at the property because there would be nowhere else to do it.
You have to make that decision. The place where I take a hard line is never on the job site, ever. If they need to smoke on a big commercial property, they need to go off the job site. They need to do it when they’re on break or on lunch. Never ever, ever on the job site.
I know that there will be many that may disagree with that point, but I think it’s incredibly important when you think about the fact that you’re in the business of putting on a show and making that show be a very, very positive one.
Watch this video to learn how to set lawn care pricing to earn the most profit for your business.
If you’re watching this video, I’d highly encourage you to watch video number one and video number two if you have not already, because this video is based on the last two videos. And in it, I’m talking about how to figure out lawn care pricing for yourself as your business evolves.
In the last video, what we did was figure out the time for eleven properties within the seven thousand and seven thousand nine hundred and ninety nine square feet range. Remember, we’re using mowing as an example and we determined that our price based on hitting our target of forty dollars per man hour, the price needs to be twenty nine dollars and seventeen cents to mow properties within this range.
So basically what we’ve done, is we went through our business and we just simply tracked our time and measured our properties and we figured out, for all the different square footage ranges, what we need to be charging to hit our goals and we could do this for every service…fertilization, weed control, lawn mowing, aeration and all the different service types. Then, what we do is we basically build out our lawn care pricing. We call it a price matrix in Service Autopilot. It could be just a layout like this for you inside a spreadsheet. We figured out in our business, hypothetically I’m saying your business, that for five thousand to six thousand square feet, you might need to charge twenty eight. And for six to seven thousand, you might need to charge twenty eight dollars. Again, keep in mind, we’re using fictitious numbers to lay out a simple example.
So, just simply lay out something like this for the different services at different square footage ranges. Then, when you go out, you measure the property with a measuring wheel or you go online and you measure it with satellite imagery or pictorial imagery. You can literally look at the square footage, look at your spreadsheet, or if you use Service Autopilot, it will figure out for you based on the price matrix and it will give you a price. Service Autopilot really simplifies pricing and it also helps ensure that you’re always pricing your properties to achieve your target man hour rate.
So, that’s the basic premise of figuring out your lawn care pricing from the beginning so that you can set it and then price off of it from that point forward.
Now, something you might find as your business evolves, you might have originally set prices like this, at twenty eight dollars and twenty eight for this square footage. But, then what happens as it evolves and as your property makes changes and maybe as a little bit of the market you serve changes or the demographic you serve changes, you’re going to notice that maybe you’re starting to achieve a little bit different man hour rates. So, maybe your goal is to achieve a man hour rate clocked around forty eight dollars. So, let’s just go with that.
If you’re trying to achieve forty eight dollars per man hour when you’re mowing, and you’re nailing that on this property right here, five thousand to six thousand square feet. But, now on six thousand to seven thousand square feet, you’re not. You’re more on this forty six dollar per man hour range. So then, you’d probably need to raise that price to about twenty nine dollars to continue to achieve a forty eight dollar per man hour range.
In video number two, we went through and we tracked all of our time and that helped us figure out how much we’re making per man hour. Then, once we figure out how much we’re making per man hour, and we figure out averages across the square footage ranges, we can then really analyze our business and we can really adjust the business. Something we found years ago at our business is, we were really doing okay in this five thousand to ten thousand square foot range. But, as soon as we got into the bigger stuff, fourteen, fifteen, sixteen thousand square feet for residential, we weren’t making money, or, we were not making good money. It wasn’t holding up.
In my example right here, notice what happens, we’re pricing six thousand to seven thousand square feet at twenty eight dollars. Remember that these are made up numbers, these are not my exact pricing and it would be totally different for you and your market. But in my example, notice that, six thousand to seven thousand square feet is priced at twenty eight dollars. We’re pricing fifteen to sixteen thousand square feet at thirty two dollars. But what’s happening on those properties based on how long they’re taking us, we’re only making thirty seven dollars per man hour. Our target in my example, was forty eight, so notice how far we’re under performing.
So what that would tell me as the owner of the business is that, we either need to stop doing properties like these or we need to figure out how to be more efficient. Maybe we need to construct a route that has bigger equipment on it, so that we can go through this type of property faster and we basically group all of those properties into one crew and get through them faster. You’ve got to watch out on the back side though. You could drive up your non-billable time. You might get your per man hour time, you might optimize it and make the per man hour time you want, but then your non-billable goes way up. You may end up with tons of drive time and so you still don’t end up profitable for the day.
There are lots of considerations here and those are things to think about. And, I know that I’m not going to win as much business, but at least when I do win the business, we’re making money and that’s the goal.
And so, the point of this screen here is to show you two things. Once you figure out your average pricing by square footage, you then take that and you set that for each of the square footage ranges. Then over time, you re-analyze your business and you figure out by square footage range, what man hour rate you are earning right now, on average. If it’s too low, you back into it. If you want to go up to earning forty five here, if you want it to go up to forty eight, how much do you need to raise this twenty eight dollar price? And if you watch my video number one, or excuse me number two, and you paused the video on some of my formulas, then you can kind of figure out how, this one here is about raising the price. So you can look at my formulas and figure out how to do this for yourself.
I hope that makes sense. If you have questions about this, post them in the comment section and I will, based on the comments, potentially record additional videos on this topic.
Learn how to set lawn care pricing to earn the most profit for your business.
In a prior video, we were talking about how to price. This is part two. Part one sets this video up and I recommend watching it. We’re talking about the subject of how to learn to price your work versus copying the pricing of someone else. Let’s now look at some actual numbers. There’s a couple of things to know as I go through this video.
One, we’re going to talk in terms of per man hour pricing. How much are you making per man hour? When I’m talking in terms of per man hour here, for example, I could tell you that you need to be making forty dollars or more per man hour. When I say forty dollars or more, that includes their salary and their labor burden meaning the taxes you’re paying them. It would include worker’s comp. It would have overhead things in there such as insurance and truck and fuel and administrative costs in the office.
All of that is rolled into this one number that you need to be making per man hour to pay for that employee, all the overhead that goes into selling the work, and having the office administration support that individual. As we’re talking about these per man hour numbers, that’s what all is included within that number.
Let’s talk details here. In this example, I have eleven properties. First, what we did was, we went out and measured all of our client’s properties and figured out for those eleven properties their gross lot. Let’s just use gross lot square footage. We’re using a mowing example so in video number one we were using a mowing example and I’m going to continue to use a mowing example. For these eleven properties, they all fall within the seven thousand to seven thousand nine hundred and ninety square foot gross lot. I know that’s a small property. I’m just trying to keep this example really simple.
Then, what we did was we went out and we tracked time for all of the mowing jobs that we performed. When the truck arrives, we start the clock. When the crew gets back in the truck, we stop the clock. For these eleven properties, here’s how much time we were on the property. We were physically there for twenty minutes, physically at this property for twenty-three, physically at this one for twenty-one. We ran three man crews, so when you take the time we were physically there, multiply that by the number of individuals in the truck, we had total time at the property of sixty minutes. That means three men were there for twenty so, twenty times three is sixty.
Now, what we did because we weren’t sure how to price, we heard one of our competitors say, “Hey I charge thirty dollars per man hour for a property that’s seven thousand to seven thousand nine hundred and ninety-nine square feet.” Now if you watch video number one on pricing, you’ll know why this is such a disastrous thing to do. Don’t copy someone else’s pricing.
Let’s say you did that. You heard that I said thirty dollars is a good price for seven thousand to seven thousand nine hundred and ninety-nine square feet so you went and you charged all of your clients that have that square footage that price. But, now you’ve started tracking your time and you’ve figured out what you’re actually making per man hour.
Now, something else I’ve said is I believe that at a minimum you need to be charging about forty dollars per man hour, minimum. Now look what happens because possibly you copied my pricing. Once you start tracking time on this job, you made thirty a man hour. On this job, you made twenty-six dollars a man hour and let’s look down here, you made thirteen dollars a man hour on this job. It took you one hundred and thirty-two minutes, over two hours to perform this job. You made thirteen a man hour.
You pay your guys fourteen dollars an hour so you’re not even recovering what you paid them per hour. Not to mention the overhead which includes fuel, the truck, the taxes you’re paying them, and the insurance. So, you’re really losing money. You’re basically paying this client to let you mow their lawn. That’s what happened because you may have copied my pricing and because maybe you weren’t ever tracking your time to know how you were doing.
I say “you” in general, not “you” specifically.
All right, so what’s happened now after tracking these eleven jobs, you’re making an average of twenty-four dollars a man hour. That is not a profitable number that you can build a good business on. I’m positive of that. I don’t care what market you’re in. You’ll see some really low numbers in the commercial business but they just have totally different margins. It’s a different business. But, all of what I’m talking about holds up in residential and in commercial. All of my numbers in red here are the result of copying somebody else’s price and you’ve ended up with basically very low profit margins and probably a business that you don’t love.
Now that you’re tracking your time and you’ve measured all of your properties, you can actually figure out what to charge. For example, if I want to make forty dollars per man hour and I know that that property took me sixty minutes, then I can do a little bit of math and you can see my formula is right up here. If you want to copy this stuff and just pause the video, you can reconstruct this spreadsheet. But, you can see that I need to charge this client forty dollars, not thirty dollars if I want to make forty a man hour. On this client, I need to charge them forty-six dollars, not thirty dollars if I want to make forty a man hour.
If I go through here and work on all of my pricing, it will show dramatic results. Here look at this one. I need to charge sixty-six dollars, not thirty dollars for this property to get myself to an average price of forty dollars per man hour. Once you’re aware of pricing and where you stand as a business, you can start to make some decisions on how to set pricing. If this were my business and I was looking at this, here are some things I would do.
First off, I’m not quite sure what this fifty-three is here so I’m going to delete that. Something is not quite right about that number. The calculation must have been wrong. Oh that’s what it was. I know what I did there. That was actually correct. Here’s what this tells me. If I look at my eleven jobs, then I need to be charging on average fifty-three dollars to mow a seven thousand to seven thousand nine hundred and ninety-nine square foot property. That’s what these numbers are telling me.
If I want to make forty dollars per man hour, that needs to be my price. By the way, for me in my market, that’s way high. I would never get that so my numbers are fictitious. I made up these numbers in terms of how long this took. As a result, these numbers are all false. I could never get fifty-three dollars. In fact, thirty dollars in my market is a high-end price. It’s towards the top of the market for just mowing a small lawn like this. Don’t get caught up in these numbers please, but this is what the data is telling me. I need to be charging fifty-three dollars.
Now, here’s what I would first do. I’ve taken a bunch of properties. I’ve figured out how long they take so that I can figure out what the average amount of time it takes me to do a property of this size. That allows me to find my average pricing. Immediately, I would look at some of the anomalies. This one here, this one here, this one here, and the ninety-nine minutes down here. I would look at these and figure out why these properties take so much longer than all the others. Is it us as a company we’re doing something wrong? Is it that there’s something about these properties that isn’t right? Or is it that these properties are in an area, maybe that they have tons of trees on these properties?
Then I could make some decisions. You can look and see that you just aren’t making money on certain types of properties so you decide not to do those any more. If that were the case and you took your worst performers off the table, now look at what it does. It gets your price down to twenty-nine dollars.
Now we’re starting to get into a more realistic price. I’ve just gotten my poor performers off the table. I either fired or I left the market which probably meant firing them, but I made some decisions in my business and now I’ve got more accurate pricing. Maybe it’s a part of town where you just don’t make any money on properties that size so you leave that part of town and you go where there are more properties like this one and this one. These are properties that I can get through a lot faster, maybe I go find a lot more of those types of properties.
Since I got rid of some properties, I’ve got a new price. I’ve figured out that I should be charging about twenty-nine dollars on average for a property between seven thousand and seven thousand nine hundred and ninety-nine square feet. I set that price and now that’s what we start to quote. Then periodically I come back through here, and if you use ServiceAutopilot, this is on the job costing report. Out to the right you can figure this stuff out. We have a training that teaches you how to do this or you can copy all of my formulas and my spreadsheets and you can figure this out for yourself.
As your business evolves and you optimize the business meaning as you raise prices, you become more efficient, you change your setup, and you change different procedures and training within your company, these numbers are going to change from year to year and you can go back and reset pricing. Another option is, if within seven thousand and seven thousand nine hundred and ninety-nine square feet you just find a ton of variance, meaning that at the top end versus the low end of those seven thousand square foot properties there’s three or four dollars in pricing variance, then maybe you break all of this down into ranges.
You look at all of your properties from seven thousand to seven thousand and five hundred square feet. You plot the time. You put in how much you want to make per man hour and notice again in my formula I have forty dollars in there if you want to copy this, it’s forty dollars. You put in how much you want to make and it tells you what you need to be charging and you figure out your pricing based on that.
Everything I just told you, you can do it for yourself very easily and you can do it for every single service you have within your business.
It’s true. It does take work. It’s absolutely true that it would be easier for me to just to tell you how much you should charge, but look at how dangerous that is. I think it’s impossible tell someone how much they can charge, but it’s possible to give hints and say, “I feel you need to be at least forty a man hour or fifty a man hour or sixty-five a man hour depending on what that service is.” For each service, pest control versus lawn care versus mowing, you do need to be achieving a different man hour rate. You have a different cost for the people. You have a different cost for the trucks that they’re running.
You do need to be achieving a different man hour rate depending on the service and in some cases it doesn’t cost you any more to provide one service over the other, but the market will support a higher price. You should be charging a higher price. That’s the way to think about it.
In video number three, we’re going to move on to looking at setting rates.