I have received several emails requesting information regarding pricing and calculating overhead cost for a lawn care business. Thus, the following article is a brief breakdown of a way to estimate your lawn care companies actual overhead cost. This does not take into account advertising, uniforms, insurance, etc.
Like so many individuals out there who start their own lawn care business, I worked hard to quickly build up my clientele. Having no prior experience in the Green Industry, I needed a way to see what the other guys were charging for their services. This would at least give me a starting point on where to initially base my pricing structure.
From spending countless hours reading forum post, I was able to figure out that most people doing lawn care basically used one of two ways to calculate their prices. There were the price per square foot guys and the price per hour guys. The price per square foot method seemed to me as if it would include just too many variables to be very accurate, or at least for my requirements. Thus, I decided to attempt to do all my estimating by the hour.
Ok, now my problem was what to charge per hour, and what was my competition charging. Since I hadn’t actually started my business yet, nobody in the industry knew who I was. Thus, I went through the yellow pages and called several of the companies who were running display ads. I figured these companies must be larger considering the cost of yellow page advertising, and knowing that where they were in their business was where I wanted to be, I asked for an estimate to mow my personal homes own lawn. I was told by a few that they only did commercial properties, but I did manage to get 3 different companies to come out and bid my property.
At the time my home sat on a little under a half acre of land, with very few obstructions. I knew it took me about an hour to mow, trim and sweep off my small driveway (I didn’t even own a blower). Of the three guys that came out, I received one bid for $35.00, one bid for $32.00 and one bid for $20.00.
I immediately threw out the $20.00 bid as it just seemed out of place with the other two bids, and his rig and equipment looked old and dilapidated. Of the other two bids, one guy stood out from the other. His truck and equipment was very neat and clean. His truck had his company name on it, and his physical appearance was neat and very professional. He also happened to be the $35.00 bid guy as well. So I said to myself, “Self… if you can present yourself as a professional with good appearance, clean and well maintained equipment, then you can get more money for your services.”
Well this gave me a starting point of $35.00 per hour. I figured if I could mow a lawn equivalent to the size of my own for $35, and it would take me approximately an hour to do it, then I would be making $35.00 per hour.
It was several customers, and dozens of bids later that I finally got a grasp of the bidding thing and what I needed to be charging to actually make a decent profit. That $35 an hour I initially began charging was fine and a good starting point, but it did not take into account any of the equipment cost factors. So I developed me a little spread sheet to calculate my equipment cost. This spread sheet worked fine until I began to add employees, and that just opened up another hornets nest of problems.
My little spread sheet ended up developing into a tool I could use to calculate my primary expenses, and tell me what I should bid new customers at. It also let me know if the customers I was already servicing were being charged enough and whether I should be increasing my service fees.
You can download a copy of that spread sheet by clicking on it below. Keep in mind though, this is not some fancy spread sheet designed to impress the world, it was developed to accomplish what I needed it to do. If it helps you out that’s great, if it’s not what you are needing, then perhaps it will give you some ideas on developing your own. If you come up with any improvements, send me a copy I would love to see what you come up with.
Lawn Care Overhead Cost Estimating
Note: You will need Microsoft Excel or an Excel viewer in order to open the document.
