How To Determine Lawn Care Pricing (Part 1)

Learn how to set lawn care pricing to earn the most profit for your business.

I receive a ton of questions, and I would say in the top two or three is, how do I price? How do I know exactly what I should charge? I think this is the right question to be asking. The dilemma is that I struggle with giving the exact price and here is why.

I can give you exact pricing, but it’s a cop out for me to do that. That’s the easy solution for me. The problem is, I’m very concerned with giving you accurate advice. I don’t want to be wrong. I don’t want to screw up your business, and I want to give you wise advice. Giving you the exact price to charge is not wise advice.

In this video, I’m going to show you exactly why. I’m going to show you the factors that go into pricing and why I can’t give you the exact price. I’m going to tell you exactly how to figure out the best pricing for you. I’m going to show you numbers and how to do it. You’re going to learn how to price. Once you’ve priced your work, I’m going to show you exactly how to figure out of it’s profitable. I’m also going to show you how to figure out your pricing by square foot. Basically I’m going to show you how to do it, and I’m going to show you how you continue to look at your pricing as your business grows.

Now, to do this I’ve got to go through a few points so this is going to be a three-part video. I’m going to go through and talk about pricing, and then I’m going to show you how to do it. I’m going to show you actual numbers.

There are two things to know. One, there are all kinds of services. Mowing, fertilization, weed control, aeration, pest control, you name it. At the end of the day the pricing is all based on time. For the sake of my example, I’m going to use a residential mowing example. This concept also applies to commercial and it applies to every different service type including digging a whole and sticking a bush in the ground. This is the universal truth behind pricing, and that is pricing is based on time.

You and I are in the business of selling time. Let’s say your competitor has figured out in their business that they should charge three extra dollars for every 1,000 square feet for fertilization and weed control. If they’re smart, they didn’t just copy their competitor. Rather, they figured it out based on time and they know that to do an extra 1,000 square feet it takes this amount of extra time to walk it. They spray it at a certain rate and they figured out what that charge needs to be.

I’m going to go through the example based on mowing, but know that square footage pricing is based on time. It’s not based on square feet. You figured out your square footage pricing based on time. That’s important, so hopefully I’ve made my point.

We’re using a mowing example. If you want to arrive at square footage pricing, which is sort of the premise of this conversation, then you want to figure out if you want to price by gross lot square feet, or do you want to price by net or by turf. You might price from one service to the next differently. For example, you might price mowing based on gross lot square footage. Whereas, you price aeration based on turf, and pest control based on the home square footage.

What net is, and this is how some companies price, you take the gross lot square footage and you pull out of that the footprint of the home and maybe the pool. It depends on how your company works. That’s net. That leaves concrete in. That leaves turf in. That leaves flower beds in. That’s something to know and think about as you’re setting your pricing and as you’re figuring out your pricing by square footage.

The other critical thing is the only way you can price is if you track time. Otherwise, your only other options are to guess and copy your competitors, and neither one of them gets you to the place you want to be…a highly profitable business. I mentioned this already. It’s just about the most important thing I’m going to say. We’re in the business of selling time. Pricing is going to be based on time.

Now, one last thing before I get into the details. Let’s say, now you’re wondering how to price fertilization and weed control because there’s product costs involved. The number one item on your P&L sheet, meaning the biggest expense on your profit and loss statement is labor. Labor is the thing that you want to manage above all other things inside the business because it’s your biggest expense. You’re, again, in the business of selling time. When you’re determining pricing, you first start with how long it’s going to take to perform. Then you figure what you have to charge just purely based on selling time and labor.

Now, you can layer on top of that additional things if you’d like. This could be a whole three-hour conversation in and of itself. But, for the sake of our simple example, we figure out that for fertilization and weed control it takes a technician one hour to do a property of a certain size, and we want to make $40 a man hour. That means, I need to charge $40 any time we do a lot of that size. Let’s just put a number to it of 8,000 to 9,000 square feet. That’s not accurate. That’s just my example.

We figure out that when you were doing 8,000 to 9,000 square feet for fertilization and weed control I need to be charging $40. That covers my time, makes a profit, recovers overhead and does all of that. Now, on top of that, I’ve got chemical costs. For that size property I know on average across the applications for the year that I’m going to have an average of $7.50 in chemical cost. My price for that service might be 47.50. I’m making the $40 on the labor, and then I’m recovering my cost on the chemical. You could mark it up. All of that’s up to you. You are setting the pricing. But, that’s the idea. Figure out labor first and then you can layer on top of that your mathematical cost, your product cost, and your chemical cost.

Again, this is going to be a couple-part video because there’s a lot to cover here if I’m going to give you the full details.

Now, why is it that when you ask me what I should charge to provide this service that I struggle with answering that question, and why I feel as though if I tell you the exact pricing I’m doing you a tremendous disservice? There’s nothing that would make me feel worse then knowing that I gave you a price that led to unprofitable work or led to potentially harming your company. Here’s why.

If I charge, let’s just make up a number, $30 to mow a little bitty lawn. I tell you for this size lawn you should charge $30. What does your business look like as compared to my business? I’ve worked on my business. We just turned 10 years old. We’ve been working on our business. We’ve become more efficient. We’ve optimized things in our business. We’ve changed. We are nothing like what we were 8-9 years ago, not even similar.

Think about how many men are on your truck versus my truck? At $30, if I have two men on the truck and you run three men, and maybe the three-man may not be as efficient as two. That means you’re going to be on the property for longer and that means you’re not going to be making money at $30 per visit like I do.

How’s your truck set up? Do you pull trailers? What’s the basic setup? If my truck setup shaves four minutes off of my visit time and your truck setup doesn’t, then I’ve immediately got efficiencies you don’t have. My pricing doesn’t work for you.

What’s your equipment setup? Are you out there with 48″ walk-behinds, whereas I’m there with 21″ mowers? Or, am I out there with a 61″ rider and you’re out there with all walk-behinds? Again, who’s more efficient? If I’m more efficient than you, I just killed you by telling you to charge what I charge because I’ve got a totally different setup.

What’s the frequency? Is it biweekly? Is it weekly? Because in mowing that has a huge impact on how long it takes to do the work. Are my properties all flat, whereas you are in a market where there’s a lot of terraced properties? Are your properties wooded where all of mine are builders that came in and cut down all the trees and planted two new trees in the front yard, so I have virtually nothing to mow around? Is mine flat and you have hills? I’m in Texas after all. It’s pretty flat.

Do you mulch or bag? For example, if I mulch most of my properties and you bag, you’ve just added time that I don’t have.

Are your properties constructed in such a way where you have tons of concrete? That means you have a lot more edging. That means you have a lot more blowing, whereas I hardly have any concrete on my properties for the same square footage because now, yes square footage is the same but we’re performing different services. That means different time. In services, I mean we’re spending more time mowing maybe, whereas you’re spending more time blowing. If it’s super-windy in your market and it’s not windy in my market, what’s that do to blowing?

My point is, I’m belaboring it here, but you get the idea of how many variables there are. What about stick edging? In my market I have to stick edge weekly. What if in your market you only have to stick edge every other week or once a month. What about fences? We have fences. What if you don’t have fences? What if you have metal fences versus wood fences? What’s that mean to weed eating time.

Then finally, what’s the spring effect in your market? How much longer does it take you to mow a property in spring than it takes me to mow a property in spring, based on leaves and all kinds of other factors like the type of grass.

This is why the pricing is literally different all over the board, and copying price is a disaster. This is why I could say I charge 30 for this, and if you’re in Toronto and you charge 30, and everything about the way we operate is different. I really, really did you a disservice.

Now, how do you figure this out for yourself? Because it’s really not that hard. If you want to make a lot of money, than you want to learn how to do this. You’ve got to track your time, period. When you’re tracking the time, you need to know how many people are doing the job. That’s easy. Then you want to have measured the property, measured the gross lot square footage. I’d recommend the turf lot square footage. You don’t have to get out there with a measuring wheel. There are measuring tools built into Service Autopilot and there are measuring tools for free all over the web.

What’s the calculation? I’m going to give you numbers on these other spreadsheets here in a minute, but what’s the basic calculation? Basically, you take the start and end time of the job and you figure out the number of men. Then you get the total time. I’m going to show you what I mean by this. Here’s how you do it.

Let’s just use the example of you’re running a crew of three. You pull up in the truck, you turn off your engine, you write down the start time, or if you’re using software, you clock in. You perform the work. Then when everyone gets back in the truck, you stop the timer. You start the engine, you drive away. Now you have your start time and your end time.

Let’s look at how that would play out. Your property is 10,000 square feet, 4,414 square feet of turf. You are on the property from start to end, meaning they got out of the truck, got back in the truck. Start to end is 20 minutes. I’m keeping the math simple. There were three individuals. The total time on the job was one man hour. You had three men there for 20 minutes. That equates to one man hour or 60 minutes. If you charged the client $30 to mow that lawn, than you made $30 per man hour. If you had been there for 40 minutes, so 40 minutes times three, so you were there for two total hours and you charged $30, then you would have made a man hour rate of $15 per man hour. You kind of get the idea of how the math works. This is the core of pricing every single service.

Now, let’s say that you look at this and you say you’re only making $30 a man hour and you heard me say that you should really be $40 and above per man hour, which is my argument. When I started in the business, I was in the $25 range because I copied a bunch of competitors. Then I was in the 30s for mowing and some other things. I quickly realized those were not good numbers, but I was copying what my market was doing. If you look at your business and say, wait a second, we’re only making 30 a man hour on this property. That’s too low, so what’s your option? Your option is one, to raise the price on that client so that you can make enough money based on the amount of time you’re there. Or, you need to become more efficient and do that property faster.

Where do you find efficiencies? A few of the clues are up here. How many men are doing the job? What’s the setup of the truck? What kind of equipment are you using? Are you picking the right properties, meaning are you predominantly serving a market where the properties are too big or there’s too many trees, whereas if you were to go focus on a different market you could make more money? Those are some of your decisions. All of that goes into pricing.

Now in video part two, I’m going to start showing you numbers and I’m going to show you how to figure this out.

I Run a Two Man Crew, Should I Hire Someone to Replace Me?

The question is, “This will be my 3rd season in business. I run a two man crew. I’m wondering if I need to step away to sell and market and hire someone to replace me?”

Absolutely. Yes. With that question, there is no other reason in my mind to be in business but to give yourself a little bit of leverage. Now, if you desire to be the guy doing all the work and run a 2-man crew, if that’s what you like and that makes you happy, fantastic. From your message, I’m pretty certain, it’s not the case. You need to start this path, as soon as you can. I’m going to answer your question but I would recommend that you go over to the website, howtogrowyourbusinessfast.com. Put in your name and email address and the website will send you 2 videos.

One is of a talk I gave with Planet. It was a webinar about how to get off the track and basically get out of the field. I think it was about an hour. Then, I also gave a talk at GIE in 2013 and it’s a little bit geared towards bigger companies but there is a bunch of stuff in there that you could take away and that’s an hour and a half long talk that I gave. I would highly recommend that you take those 2 resources and figure out how to get out of the field.

Now, let’s say you go hire somebody to take over your position and now you’re free. What are you going to do and what’s your plan of action?

I think a lot of people stay in the role of running the crew because they can’t get their head around, exactly what, why, and how to grow this business. If you can’t answer that question, then you keep saying, “I’m not quite ready yet, I’ll do it next year.” You procrastinate because you don’t know what to do. How do you solve a potential procrastination problem? You need a plan. What’s the plan? If you free yourself up, how are you going to bring in new business? What are you going to do? Are you going to knock on doors, put out door hangers? What is it? Are you going to  talk on the telephone?

Just because your freed up, it  doesn’t mean that anything magical is going to happen. You’ve got to know what you’re going to do. It might just be that over the winter, you’re going to get a great website put together. You may plan to start working on your SEO or pay per click or content marketing. If you don’t know what any of that means, do some Google searches. You figure out what the door hanger is going to look like. Maybe you put together a gift card or referral program to garner a new business. Watch my videos and learn about marketing and think of let’s say, 3 ways that you’re going to get new clients. Get that stuff all worked out over the winter and then you start doing it.

Be ridiculously specific with your plan. Don’t just say, I’m going to put out door hangers. No, you have to know which neighborhoods you want to hit, on which day, and how many. You might do 500 in one neighborhood on one day and 500 more to a different neighborhood on the next.

You need to have all of this in place so that when you hire somebody, you don’t get overwhelmed or distracted. Spend the time now to think through exactly what it means to put out door hangers, exactly what it means to get a website up and running, exactly what it means to knock on a door and sell certain things or go knock on all of your existing client’s doors and try to sell them something else. Again, be ridiculously specific where you know step by step what to do. Almost to the point that you could hand it to a friend or business partner or employee and they would look at it and have a pretty good idea of exactly what to do if they were going to do.

If you do that, you’ll overcome the biggest hurdle to growing and getting started. You’ll have an action plan. Once you get out of the business and start doing this and practicing this because it’s a new role, you won’t have to do that anymore.

I’m just saying do that first so that you guarantee yourself a level of success when you do hire somebody to replace you. The very simple answer that I could have answered in 10 seconds is a yes. If you don’t take the action I described to go with, the yes of getting out in the field, then you may not be overly successful. You’ve got to make sure that when you get free, almost all of your time is devoted to selling and marketing activities. If you free yourself up and 80% of your time is devoted to inconsequential things like maintenance and other miscellaneous things, and 20% is devoted to sales and marketing, you might as well have stayed in your old role of doing work and then just work extra hours to do sales and marketing.

If you do it right, you absolutely want to get off that truck and you want to do it now, not next year. Good luck.

1 Man vs 2 Man Mowing Crews – Which is Better?

Watch this video and learn how to decide if you should run 1 man, 2 man, or 3 man lawn mowing crews.

This question is from Joshua.

“I’m getting to the point where I need to expand. I have about 45 residential lawns and five commercial accounts. I am wondering if I should invest in better equipment like 32 inch Scags and just run one man crews. With my current density, I can get about 10 to 12 lawns done a day by myself or 15 with a helper using 21 inch mowers.

Please help me understand the pros and cons of this. I always see single man crews with fertilization but never in lawn maintenance. I know a guy in my city who does 75 by himself because he has the right equipment and density. It seems like the money I save in labor would well cover the equipment cost. No accountability and morale would be an x-factor, but it seems like one man crews are more efficient and a better way to go. Your thoughts?”

My thought is no. You should not do one man crews. I’m certain of that. I do not think one man crews are the way to go. I think you should consider two man crews. I actually run three man crews at our company for residential, but I totally see why two man crews are better.

Here are some things to consider. You could build out a new crew with one man, but I don’t think the angle is to run one man crews. The reason for that is, if you just look at human behavior and how we operate, there’s a level of accountability that’s created with a team.

This is even for us as owners. If you happen to have a business partner, your business partner brings a level of accountability to what you get done, what you do, at least if you have any desire to be a performer and hold up your side of the deal within that business. You’re going to work a little bit harder and you’re going to do a little bit more because you’ve got a business partner.

If you have one person working by himself, short of being measured into job costing and GPS data, really they don’t have anybody to hold them accountable. The guy could make an excuse for being late, for example, the customer came out to talk to him. They don’t use that excuse if you have two people on the job.

Also, I think there’s some value in simply having somebody to work with. Working in isolation is not that exciting. Now, if you put two guys together that hate each other, that’s worse. But, if you put two guys together that work well together and sort of thrive off each other, they can motivate each other when they are tired.

When you think about stuff like that, teams are better. I really believe in the team concept in general. I think teams need to be small. I believe in teams outside of just talking about lawn mowing, lawn care, or landscape crews. I just don’t think a one person crew holds up over time. You may see a spike in the beginning and some benefit in the beginning but they don’t hold up.

I also believe that you can get very close to the same level of efficiency with a two man crew. For example, if one guy can do 10 properties, two guys should be able to do about 20. That’s my belief.

The third guy is where I think you start to see less efficiency and less production value. I think two tends to be the magic number, depending on what you’re doing. If you run a scenario where you actually mow and trim bushes and pull weeds and do a number of different things all at the same property, then I think you can get more efficiency out of three guys.

I also think if trained and managed properly, you can get efficiency out of three guys because you can have that third guy do extra things. If you have super tight density, the third guy can move on to the next lawn and just roll his mower, or take his weed eater or whatever down to the next property versus sitting in the truck.

Your business will evolve. What might work today, won’t work in five years or might not still be the best and most efficient approach. Think about these things.

It doesn’t matter if you have one guy or four guys on the property. At the end of the day, equipment matters. You could have one guy and give him the wrong equipment, he’s not going to be productive.

Equipment, doesn’t in my mind, play a factor here. Whether you have one guy or fifty guys, you still have to give them the most efficient equipment. Equipment is a non-factor in this conversation, in my mind.

Also, a lot of times you might look around at most marketplaces, there’s a tremendous number of guys out there that are the owners doing the work. The owner may get 75 jobs done a day, but he has different motivation than a guy that’s getting paid by the hour, maybe even by the job.

The owner has to do this if he wants to feed his five month old baby and his wife and keep up with the rent. He also in most cases can’t just walk away from this thing tomorrow and get another job down the street. That wouldn’t be in the best interest of him and his family.

Whereas, a guy that you’re paying x number of dollars an hour, or by the yard or whatever, he’s got all these options in many cases. He doesn’t have the pressure that the guy that owns the business has. For example, if he slacks off tomorrow, he could probably go get another job in this industry. There’s a great need for people.

I’m simply saying that the business owner is completely invested in his business. You probably won’t find another guy to hire to do those same 75 yards. If you do, he may not be able to maintain that number after 3 years and he is tired and burned out. Will that hold up over time is my question. I don’t think you want to build your business assuming that an employee can accomplish as much as an owner, where all the weight is on that guy’s shoulders.

The other thing that I think you need to think about is as the business scales, asset utilization becomes a challenge. If you’re going to run one man crews, you have to agree with me first and foremost that you could actually make a two man crew almost as efficient as a one man crew.

If you can buy into that, then asset utilization is an absolute consideration. For every additional crew that you start, you have to buy another truck, another truck, and more insurance. With that, you have greater risk. Meaning, for every additional truck you put on the road, there’s a higher probability that somebody’s going to have an accident or something will go wrong that may harm the business.

You start to think about things like that. How can you reduce the number of trucks on the road? How can you reduce the number of trucks you have to buy? How can you reduce the number of pieces of equipment you have to buy? And on, and on, and on.

Then, you start to realize that a two man or three man crew starts to make a little bit of sense. In my company, I think we’re at 40 trucks or something like that. I don’t know the exact number. Let’s say I had to go to all one man crews. Does that mean I need 120 trucks and 120 pieces of equipment?

Well that would be crazy and I’m not going to do that. I need some asset utilization because there’s a lot of hidden cost that comes with each additional truck and each set of equipment that I put on the road. I need to utilize my assets as efficiently as possible.

Also, I believe that one of the absolute biggest hindrances in growing any business is money. It’s cash flow. If you are ready to add another crew but you don’t have the money to buy a truck, the equipment, or all the other things that come with that, then it’s going to slow down the growth of your business. Asset utilization becomes critical as the business starts to scale.

Also I’m going to leave you with this one. If you build your business around one man crews, then you have the real risk of when one of your guys quits. You have a little less risk when you have two or three guys on a crew because if one guy doesn’t show, the other two can carry the slack. Maybe they finish at 6:00 normally, but now they finish at 9:00. But, at least the work got done. Or, maybe they don’t complete the jobs that night, but you take a couple properties from that crew and you spread them out among other crews. The work can still get done.

From the standpoint of service autopilot, the software company that I have, one of the things that I notice is that we have a set of customers that seem to have a level of peace in their life and in their business. Then we have a set of customers that the world is burning down around them every single day.

Everything is a disaster and the world is going to end at any given moment. That’s the basic take I have on how a group of our clients live their life. I understand it and I get it. The difference is, in most cases, how they manage their business. If you organize your business in such a way that you look at all the potential bottlenecks, you look at all the potential failure points and you say, how do I mitigate this risk, how do I eliminate this risk, that brings a level of calmness to your company and it brings a level of calmness to your life.

The reason I just said that to you is, imagine that you create your business around a lot of one man crews. Things happen all the time. When guys don’t show up, it screws with everything. Now you’re really screwing with your business. If you don’t have a guy show up, you’re scrambling and everything is a mess.

You have to reroute everything. You jeopardize customer service. And now, you’re screwing with your other employees because you’re having them take on the extra jobs. You’re having everybody scramble to help you get out of this bind which then makes your employees’ lives miserable as well. Everything they do for you becomes a burden because they are constantly helping you put out one more fire in your business because you’re not on top of your game.

Contrast that to a guy that has multiple crews with multiple people with backup people in place. If a guy doesn’t show, that’s ok because you have a backup plan. You already know what you’re going to do.

I guess that’s maybe one of the best arguments for not having a one man crew. What I see are, most successful clients have their stuff together. They have thought ahead and solved the potential problems. They’ve created backup plans.

When things go bad, and they go bad every single day, they can make quick changes and the world doesn’t fall apart on them. They don’t become stressed out. I think if you went with the one man crew, you’d create that. I think you’d constantly be in the state of scramble.

For that reason alone, don’t go with the one man crew. Go with two, and eventually you can reconsider everything and look at three. The way to do that to run a test. You measure it, you track times, you see how you perform, how much money you make per day per man when you’re doing a two man crew. Then, throw in a third man and see how they do.

Don’t just assume that they’re going to do everything right. Get out there and see what they are doing. Teach them how to be efficient. Take a look at density. If you sold a couple more yards, would that solve the efficiency problem the three man crew was facing?

You go through this set of questions and try to figure out why you can’t make three man as efficient as two, and you see if you can solve it.

If eventually you’ve asked yourself a series of 15 questions and nothing you’ve tried fixed the problem of efficiency, then you know.

Everything is a test. Everything is a trial. As your business evolves, you have to retest everything and that’s a lot of work. It’s hard but that’s how you create a highly profitable business. Two men, don’t go with one. Eventually test three and see if it works for your company. Periodically reevaluate as your company completely changes as you grown over time. Good luck.

Best Lawn Care Truck Stand to Mount Laptops and iPads

 

I think the best stand to hold your laptop or iPad in your lawn care / landscape truck is a Ram Mount stand.

I’ve been asked many times if we use iPads, mobile phones or laptops in our trucks.

The device we use depends on what the crew / tech / manager does in the field.  Many of our trucks are fitted with (and will be for a while to come) inexpensive refurbished Dell laptops.

They are inexpensive and give us a lot of power.  Most important they have a full keyboard that is fast to type on.

It is much easier and faster to type notes, call details, estimates, etc. from a full keyboard than it is from a small iPad keyboard.

We use a Ram Mount laptop stand.  You can visit their site at www.ram-mount.com.

Over the years, we have tried inexpensive stands but they have not been worth it.  Ram Mount stands are the best.  The laptop stays still while driving and does not bounce while typing.  They are very much like the stands used in police cars.

If you want to mount your iPad in the truck they have a stand for it as well…
http://www.ram-mount.com/NewProducts/AppleiPadMounts/tabid/2614/Default.aspx