When managing a winning landscaping company, there are many pieces you have to properly manage. From your workforce to your accounting, you have a lot on your mind as an owner or contractor. Streamlining these tasks into processes, and quantifying these processes with numbers will allow you to track your company with confidence, knowing exactly where you stand on all your important indicators. One of those important processes is pricing. Ensuring that when you go out to a potential job site, and give a quote, that it is spot on, leaving you room for profit, is a must. Improper pricing can lead to losing money, something nobody wants to do. When you go into a consultation, you should have a mental or physical checklist that you go through to ensure your quote meets certain criteria. We will go over exactly what criteria you need to consider when properly pricing your landscaping jobs.
The first thing to consider when pricing a landscaping job is if you are going to charge an overall fixed price, or if you will calculate an hourly fee, and bill as you go. There are benefits to both, as an hourly rate gives you more wiggle room if the length of the project is not clear, whereas a customer can feel more comfortable with a fixed rate, knowing the exact cost no matter the number of materials and time invested on your part. However, there are also cons, as with an hourly rate, you are not rewarded for efficiency, and with a fixed rate, underestimated costs will be absorbed by your profit margin. This is up to you as the contractor, but typically, as you grow, a better pricing process will lead you to be able to give solidly fixed rates.
The next piece to consider is the general scope of the landscaping job. There are a variety of factors to consider here, such as; location, yard size, time constraints, and materials. This will give you a general idea of the size of the project so that when you get into estimations of individual costs, you are already able to work within a predetermined range. Remember, this is the part of the consultation where you are talking to the client directly, so make sure to track every detail, and ask every relevant question.
Whatever the landscaping job is, and no matter the size of your company, it is going to require labor. The best way to figure out your total labor costs is by multiplying the hourly pay of your workers, by the number of workers, which will give you your hourly labor cost. Then, multiply this number by the estimated number of hours for the entire job, and you will have the cost of labor. Think back to the scope of work, and use your prior experience to determine how long similar jobs have taken.
This one is pretty simple but is almost entirely unique to you. Depending on the job, you are going to need to estimate the number of materials required. This can be anything from gravel to fertilizer, so we will add a short list of example materials.
Calculate exactly how much of these you will need, and the cost you will accrue after purchase from your local landscape supply store, such as Nature’s Mulch. We may be biased, but we would wager you will find the best prices, and customer service with us.
Now, there are more than just direct costs associated with your landscaping job. You have a variety of other costs associated with running your business. Office staff, software, advertising, rent, and other bills all come into play. You need to ensure that you are considering these costs as well, and making sure that when you mark up your services, there is plenty of room to profit.
After you have estimated all of your costs for the job, you are ready to add your markup in order to profit. This is entirely unique to your brand, location, and style of landscaping. It also depends on the job, whether it be lawn maintenance or a luxury backyard design. Ensure that you are making money, with enough wiggle room if costs change.
Now that we have gone over the basics, there are a couple of other ways you can price more accurately, and reduce costs. Firstly, you can invest in business management software that will track all relevant numbers, and use previous exact job costs, to assist you in calculating the cost of future jobs. There is much software out there, with features beyond just pricing. Furthermore, you can consistently work with a landscape supply store, like Nature’s Mulch, buying in bulk, so you will get cheaper prices, and have consistent knowledge of material costs. The lower your costs, the higher your profit, and the more money in your pocket.