More about GreenPal
7

Successfully pricing lawn care
and additional services

Chapter

Nailing your pricing strategy for high margins
with less mistakes

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You’re just about ready to go out there and start growing a thriving new business!

However, this chapter is a critical key to making sure that you succeed.
In fact, I can safely say that this is the most important chapter of this blueprint.

What’s that? I’ve already said that a few times?

You’re right… and that’s because all of these chapters are the most important. I called this a blueprint for a reason. When a construction crew puts up a building, they base everything they do off of an engineer’s blueprint. Every single piece of that plan is required to make sure the building is solid.

Leave out an important support pylon on the ground floor and that 23rd floor will come crashing down.

That’s what these chapters are – the support structures that go into making your lawn care company a solid structure that’ll last for years to come.

The way that you price your services is absolutely critical to your success.

Price yourself too high and you won’t be able to close enough new customer to sustain yourself.

Price yourself too low and you’ll find that you’re working your Mean Green off and not making any more than any old dead end job.

The bad news is that there really is no exact formula to figure this out. Even more bad news is that you will make some mistakes. The good news, though, is that this isn’t a big deal. You’re going to get good at pricing your services by doing it.

The good news is on GreenPal we tell you what the average winning bid is alongside the pricing opportunities we send you, so that will help you develop a feel for what the pricing is like in your market.

Maybe you’ll go over or under but with a little experience, you’ll very quickly develop a feel for it.

The reality of your market and what it means to you..

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There’s a funny thing about lawn care. While you don’t want to compete on price – that’s to say you don’t want to be the lowest priced guy out there – you will certainly have to be competitively priced.

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This means that you’ll want to close customers on the idea that you’re competing with other landscapers on the quality of your service. However, what you need to know about lawn care customers is that they don’t have much tolerance for price variations.

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If the average price for an average lawn in your area is $35, then you’re going to want to stay within $5 of that. Sure, there will always be idiots out there who say they’ll do it for $20… but what those customers quickly find is that these low-ballers do a low-ball job of it.

It’s funny how so many people will gladly pay more for quality for clothes or when they go out to eat, yet in this business, not so much. It’s just a mindset, really. Yet as long as you’re diligent and give them a fair bid, you’re bound to do very well.

Pricing is one of those critical elements that tends to run a lot of newbies out of the business. It’s not a matter of guesswork – you need to have a formula for pricing.

That’s true for cutting grass, snow or leaf removal, fertilization, weeding and so on. Lucky for you, there is a way to do this that allows you to be accurate and plan for future revenue and growth as well.

The standard bidding unit – the man hour

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In order to take the big mystery out of bidding for jobs, we’re going to help you to create a standard unit of measure.

Something that you use as a guide whenever you price a new client’s weekly lawn mowing visits or a shrub pruning job for example.

The biggest key behind this unit is having a fairly good understanding of how much time something is going to take.

That’s the tricky part – at least in the beginning. But that’s what your first 10 customers are really for – they allow you to get a good feel for the work and how to gauge the amount of time a lawn or other project will take. A little later on, I’ll go into some ideas that’ll help you better guestimate your time and how to really hone your instincts so you can be right on the money.

Now I know that I’ve mentioned before that thinking of yourself as an hourly employee is no longer acceptable. You’re in business now, and it’s not how much money you make per hour, it’s how much your business makes per hour. It’s a subtle difference but it’s an important one. The difference between an hourly wage and a man hour can mean tens or even hundreds of thousands of dollars to you.

The reason that you use the man hour as your basis or as your standard unit of measure is that this will always be your basis.

You’ll use your man hour formula when it’s just you bidding on a single family home or when you and your 5 crews of 3 guys each are going to do a 400 unit apartment complex. At the end of the day, the number of man hours determines your price.

So how do you figure this out?

Well, let’s start with your $5,000 per month salary or $60,000 per year.
At a regular 40 hour per week job, you can figure out your yearly salary by multiplying your hourly wage by 2,000.

Basically 40 hours per week times 50 weeks with 2 weeks off – maybe paid, maybe not, but it works out as a rule of thumb.

So if you want to make $60,000 then you’re earning $30 per hour, right?

$30 X 2,000 = $60,000.

That’s pretty generic, because you probably won’t work exactly 40 hours per week every week of the year.

Remember in the last chapter, we used an example where you had 68 customers with 4 cuts per month for 7 months and then 2 cuts per month for 2 months.

We figured 40 hours during the busy months per week and 23 for the slower ones. Which means, really, that you’re working about 1,500 hours per year, give or take.

$60,000 / 1,500 = $40 per hour.

You’ll also remember, though, that we had to tack on taxes and expenses in order to get to the 68 customers. Those expenses were about 28% of your salary that we had to tack onto what you’re earning.

Which means that in order to make $60,000 per year working 1,500 hours, you need to charge $52 per man hour.

Does that sound like a lot? That’s hard to say exactly, but think about it – that means that a lawn that takes you exactly 1 hour to mow, trim and edge will be billed at $52 in order for you to make your goal.

A lawn that takes an hour will be a fairly substantial sized property. If the average price per cut in your area is $35 for an average sized lawn, say a 50 X 75 foot lot, then what that means is that you have to figure out how much of your time you can spend for $35.

You do that like this:

You divide that average price by your man hour figure and then multiply by 100. That’ll give you the percentage of a single hour that this lawn should take you.
Then you can multiply that percentage by 60 and see how much time you can dedicate to this particular yard…

$35 / $52 X 100 = 67%.

60 X 67% = 40.

So basically, at your man hour price of $52, you can afford to spend 40 minutes on this lawn.

So long as you get the work done within that time frame, you’re in good shape.

In fact, if it takes you 30 minutes, then you’re actually ahead of the game.

You could even shave a little bit off your price and quote this lawn for $30 and still be right at your optimum margin for profit. If it takes you a half hour to do this lawn, then you need to get $26 for the job. If you’re getting $30, you’re still ahead and well beyond your minimum income requirements.

Of course, you’ve got to drive from house to house… that can really eat into your profit margin if you aren’t careful. On the other hand, this is why route density is so important. It’s not just about saving time, which of course is money, it’s about maximizing what you earn in a given hour.

Think about this – let’s say you get a customer with a lawn that you quote for $35 per cut. You do the job in half an hour and as soon as you’re done, you go next door or across the street and do another similar sized lawn at the same rate. In a single hour, then, you made $70.

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On the other hand, if you have two $35 lawns that involve 20 minutes of driving time between, then both lawns plus the drive will take you an hour and 20 minutes. Or to put it another way, using up 1.33 man hours or $70.

Since you’re getting $70 for the two lawns, you’re still okay – but you see the difference?

Let me show you another example.

Let’s say that you hire a helper and you guys are doing this standard sized lawn. With his help, it only takes you 15 minutes. In fact, because of that, you two can do 3 lawns in a single hour with only a few minutes of driving time.

Yeah, he costs you $15 per hour, but remember – you’ve now powered your business with 2 men and therefore, 2 man hours because with 2 guys, you can double your productivity.

So that means that you’re making $104 per hour. Even with paying him, your profit margin is still far higher.

Think about it – you two mowed three $35 lawns in a single hour making your company $105. He cost you $15 which means that there’s $90 left to pay expenses, taxes and you – not bad, right?

Now you see why learning this stuff and nailing your man-hour labor rate and taking the time to grow your company can really lead to a tremendous income.

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However, DO NOT get me wrong! This blueprint isn’t about hiring guys and starting crews. You first need to learn how to build yourself up to a solid $5,000 per month before you can show anybody else how to do it with you. IF you hire help too quickly that will spell death for your new business.

Now will your man hour price be exactly $52? Maybe not – it depends on your expenses and so on. At the beginning of your business, you may be able to get away with $45. Just be careful here. You don’t want to undercut yourself too much even in the beginning.

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Remember that your man hour is your standard unit of measure.

It’s based both on how much time it’s going to take you to complete an hour’s worth of work – whatever that might be – as well as being consistent with the market. In the beginning, this is really going to be more of an art than a science. Once you figure this out, though, your bids will be far more scientific.

Let’s discuss a few ways that you can learn to get good at estimating work time.

Getting a feel for the work

Some of these may or may not be applicable to you, but they’ll all hopefully give you some ideas…

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Cut a few lawns for friends and family:

When you first get started you’ll probably end up doing this anyway. Go to your parents’ home, a relative or two and maybe a couple of friends and offer to cut for them. You can give them a family discount and maybe even do a few cuts for nothing.

The idea is to establish your eye for estimating work time. Make sure that for each of these lawns, you measure out the square footage of the yard and note how much of the yard is actually grass to be cut. Also note how much trimming is required and how many edges need done.

Let’s say that your mom’s house sits on a 75 X 75 lot. Finding the square footage is easy – you just multiply the width times the length like this:

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75’ / 75’ = 56,25.

Of course you have to account for the house, driveway, a pool, walkways, a patio, etc.

Then kind of look around and see how many bushes or planters need weed whacking.

You can even measure the edging lengths by walking along and counting steps. Figure on 3 feet per step.

So your mom’s house is about 2,000 square feet, has a double driveway, a curving walk to the front door and a screened in porch on the back. They’ve got hedges all around the house and a small flower bed in the front lawn. After cutting, trimming and edging and then blowing, here’s what you find:

  • Mowing time: 20 minutes

  • Trimming: 10 minutes

  • Edging: 8 minutes

  • Blowing: 7 minutes

So this lawn took you 45 minutes to complete. So if you were going to charge using our $52 man hour figure, you’d have to bid on ¾ of an hour, like so:

$52 X .75 = $39

So your bid would be $39 for this lawn.
It’s a fairly large lawn as well, so that seems fair.

Do this for a few properties you know and after a short time, you’ll be able to look at any new customer’s lawn and make an accurate guess.

First one is free:

If you really want to be spot on with a new customer, this could be a great way to make a really accurate bid. Not only that, it could be a great marketing strategy for you as well. On your door hangers or online, you could advertise something like, “Free estimate including complete mow, trim and edging at no charge!”

Now instead of trying to guess how much time a lawn will take, you’ll know for certain. Not everybody will go for this, believe it or not, but many will. If they don’t want a cut, then simply take a few minutes to measure and use the knowledge you gained from your mom’s house to give them a price.

Get competitive bids:

Here’s one that some folks feel a little weird about. It feels a bit dishonest to ask 3 lawn care companies in your area to come to your house or a relative’s house and give you a quote. You may feel like you’re wasting their time… which you are.

But that’s business. Nobody lands 100% of their estimates. And who knows, one day you may be doing this for a newbie lawn care guy or gal yourself!

Yet this will give you a pretty good understanding of both how these companies bid, what they think the property is worth and what the going rates are in your market. If you feel really bad about it, throw each one a ten dollar bill afterward and say thank you for their time.

Get creative here. And remember, you’re going to make a mistake on price here and there, especially in the beginning. Don’t be afraid of this – mistakes really do have value if you’re willing to learn from them.

Making adjustments to limit mistakes

As I’ve mentioned before and will again – you’re going to make some mistakes, especially in the beginning. But there are ways to limit the number of mistakes you make and ways to learn from them so that you tighten down your bidding system.

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Its one thing to screw up a bid or two, but it’s another to lose money on an ongoing and regular basis. The first and best way to figure out if this is happening is to do a day in review. When you get home after a long day of mowing, look back on that day’s activities and do some quick math.

For example – let's suppose that its 6pm and you just finished up a long 10 hour day.

Based on the man hour figure we came up with, you should've earned $520 for that day…

But what if you didn't?

Suppose you grossed only $480.

On the surface of it, you might say, oh well, close enough. But not acknowledging this factor and not figuring out where the leak is the #1 cause of the utter failure of many lawn care businesses.

As you review your day, you realize that you spent an hour and a half at Mr. Squinchmeyer's house… but in your bid, you quoted him $39, or about 45 minutes.

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What's more.. It turns out that you screwed the pooch here and way under bid this job. Sure, one job once per week isn't going to kill you, but think of it this way…

If you waste $40 once per week every week that comes out to over $2,000 that you're simply pissing away!

Doesn't seem so small now, does it?

And what if you have 3 or 4 Mr. Squinchmeyers?

You will be cutting yourself out of a lot of bread, and even worse be on your way to going out of business.

It's very easy to get yourself into a situation where you've got 70 or 80 clients and half of them are sucking you dry. This is a dangerous pitfall, and it's so easy to avoid.

So what do you do when this happens?

There are a couple of ways to handle it. First, you figure out why the hell it's taking you twice as long on Mrs. Squinchmeyer's yard. Second, you contact him and tell him what's going on.

Tell him that.. You're happy to finish out the month at the rate you quoted, but that if you're to continue servicing his property, you'll have to charge him $78.

Unless you can figure a way to shave your time down. But you'll still have to adjust your fee.

Will he stick with you?

My experience is that it's about 50/50. That's okay, though, because there's a virtually unlimited supply of clients out there. You can easily replace Mr. Squinchmeyer with 2 new clients that you bid accurately on.

You see, it's been my experience that not tracking and adjusting your work and your man hours this way doesn't just cause many lawn care businesses to go under. The guys that let this happen are the ones who piss and moan about how the business doesn't work, how it's a rat race and how nobody should ever try it.

You'll run into this negative attitude, but the truth is that these guys were the cause of their own demise. If you follow the procedures I suggest and carefully track your efforts, you'll not only be able to avoid making crummy money or even going out of business… you'll be able to truly thrive.

On top of all that, after your experience with Mr. Squinchmeyer, you've been able to learn from that situation so you don't repeat it.

Do you see how all of this stuff is like a snowball that gets bigger as you go along? Learning by doing is the best way to truly master this industry.

Okay, so that covers lawn care… now how about those 3 months we kind of ignored? What do you do during the winter if you live in an area where cutting isn't an option?

Additional services - Working during the off season

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The fact of the matter is that if you want to, you could hustle enough during the season that you don't have to work during the off season.

Like a school teacher, you could take a few months off. In order to do this, though, you have to conserve a bit. Save a portion of your earnings during the heavy work months so that you've got something put aside for the winter.

Many landscapers do this. They have a winter fund and when the work's all done, they kick back and relax, maybe take a vacation.

However, if you're new to the business, I'd strongly suggest doing some extra work during those non-growing months. You'll not only stay in contact with your customers, you'll also continue to put cash in your pocket.

That doesn't mean you can't take time off, but if you're hungry and want to really succeed – then these ideas will either help you make it to your $5,000 monthly income if things haven't quite gone as well as you thought… or they'll help you to push further and get close to that magical $100,000 threshold that so many of us dream about.

It's really possible, and in the next chapter, I'm going to talk more about how to make it a reality.

Thankfully, there's a lot of types of work that relate to lawn care.

The biggest headache to owning a home is that the freakin' yard always needs attention, winter, spring, summer or fall!

For example, here are just a few arrows that you can think about adding to your quiver of services:

  • Leaf removal – in the fall this can be a weekly chore.

  • Snow removal – if you can blow, shovel or plow you can be a real life-saver.

  • Seeding – Most of the time in the early fall.

  • Bed weeding – Some flower beds and planters need to be weeded by hand, which is an extra you can add anytime, most folks opt to get this one once a month.

  • Mulching/PineStraw – a great high margin service to make some cash in the fall in early spring.

  • Pressure washing – Over time, driveways and sidewalks get stained and need cleaning to look great again. You can add this and even do roofs and the house itself if you want. You can rent a pressure washer for $100 a day in most markets.

  • Landscaping – Now I'm being literal here. Landscape design can be an interesting way to make some extra money. If you're into things like flowers, plants and borders, you can offer to create some visually appealing additions to your customers' yards.

The cool thing is … with the GreenPal app you'll have the opportunity to quote all this additional yard work after the second mowing you have with your clients, right through the app. So these prices will be on the client's profile and

there for them to add on with you as the season progresses.

Now here's some more good news.

All of these services still hinge on your man hour. You still need to estimate your bid on how long they'll take. Now obviously, some of these have additional costs like seed, mulch, equipment rental, additional fuel, etc.

At the end of the day, though, it still comes down to the old man hour. Let's take leaf removal, for example. Suppose your customer has a bunch of maple or oak trees and between October and January they drop a few billion leaves. They want you to come out every two weeks and clean them up.

There isn't much overhead here, except maybe fuel for the leaf blower.

Most places require that you bag up the leaves in bio-degradable bags.

Some cities provide these and some don't, so if you have to buy them, take this into account.

Now let's say that you figure it's going to take you 2 hours to clean up the entire yard. Using your man hour unit, you estimate $104 per treatment. Simple, right?

On something like a seeding job, it might go like this:

  • 2 hours to aerate the lawn with the machine: $104

  • Seed cost: $150

  • Machine Rental $100

  • Total bid:

    $354

In this case, assuming you've already bought the seed spreader, you have to factor in supply cost, which is not negotiable. Well, not much anyway. Seed does come in a range of prices from lowest to highest. This estimate actually was a bit on the low side.

But your labor cost remains constant based on your standard man hour unit. You could drop your price a little if you need to, but remember that materials cost cannot be negotiated.

Chapter Review

Great work... Most people do not make it this far... Let's review what we've learned...

As you can now see, your man hour unit is the vital key to your business. Everything you do involves using this as your yardstick. From grass cutting to snow blowing to driving around town – keeping account of your man hours is what fuels your income and your success.

  • Practice estimating your time on your own lawn or that of your friends and family.

  • Give free cuts to new customers to gauge the work involved.

  • Get competitive bids from other lawn companies on a specific yard to gauge pricing.

  • Include additional costs in your estimates for materials.

  • Always remember that you're in a competitive market, so you need to be within $5 of the average price.

When you strip away the actual mowing, trimming, edging and blowing – you see that owning a lawn care business is truly a numbers game.

Keeping track of everything from your expenses to your time is what's going to make the difference between your success and floundering or even sinking.

You now have a complete blueprint to get started. I want to congratulate you on making it this far and I hope that this guide will be an invaluable tool for years to come. You can always come back and brush up on a topic when you need to.

Yet you may be asking yourself, "Okay, but what's next?"

Good question, and in our final chapter, I'm going to give you what you need to actually turn this into a working reality!