How Much Should I Charge (for, to do…)
Or how much do you guys charge……? If you are asking these questions you are to be commended for taking the entrepreneurial plunge. Then again, have you ever taken a job with another company not knowing how much you would be earning for the time you give them? Probably not. So what makes you want to spend countless hours and years working without a plan for a better than wages financial return. You probably have risked risked putting 10’s of thousands of dollars to work with no plan other than to work hard.
It makes no more sense to ask people on social media about what should you charge, than to ask a stranger on the street what they can do to cure your disease. Your question should begin with, what do I need to calculate a profitable price for this. Estimate translates to, you have some work to do. So how do you fix your short comings? Educating yourself is the answer. Experience gained with time and the school of hard knocks is excruciatingly slow and horrendously expensive.
You can speed up the learning process by investing in business oriented classes sponsored by Green Industry Associations, annual industry and trade shows, specialty courses at a university, and hiring a private tutor. Huh? A private tutor? Yes folks, but they are really called business consultants and you should use one just like larger companies do. They give you personalized knowledge, processes and procedures designed for your business. Knowledge is power even in the Green Industry.
Here and there you will see the term “know your numbers”. What does that mean for you? Not much if you don’t have accounting software in your office. If you are taking paper to your accountant, get past the fear and buy it. You need information faster than your accountant or tax preparer can provide and you need to customize some things about it to suit your business. If you used accounting right out of the box or as provided as an internet resource, you are shorting yourself on knowledge. In the end, you need a general ledger in accounting structured suitably for a service or contracting business.
You need payroll records for yourself or employees with a daily code for what you did, such as irrigation service, weekly maintenance, cleanups, mulch, hardscape, landscape or irrigation install (and who for when doing projects). Because you are paying yourself or your staff for all hours on the time card, your job time for projects is really on the card, not when parked at the curb. Unless you have a super tight route and do almost nothing in load, unload, fueling, debris disposal and travel. It’s hard for as maintenance crew to really have more than 6.5 to 7 hours out of maybe 9 hours on client’s sites. The “Buck a Minute” kicked loosely about and with no substantiation or logic behind it is not $540/day/man but more like $390.00 in reality. Factor in hours for sales, bookkeeping, parts runs, evening repairs and you might be 60 cents a minute.
Next you need time data on how long work tasks take. It’s not difficult because most people have smartphones with a clock than can be a timer. Other wise buy a digital stopwatch. Track your edging or trimming time, then go back and measure how many feet you did and write it down. Same for mowing, time it and measure the site. If you have different size mowers do this for each one. Measure and time areas for clean up and mulch. Digging out and replacing a sprinkler head, replacing a controller, prepping paver base, laying pavers, planting a 2” tree, 1, 3, 5, 7 gallon plants. Everything you do has a time value. You must know it, and the cost to provide that time. Only then can you profit.
It all gets down to what you can pay yourself and how much profit is acceptable. If you are grossing $100K to $300k per year, it might be appropriate to pay yourself a salary of 15%-20%. But you should be making a minimal additional profit of at least 10% or $10-$30K per year minimum. First you have to live and second you have to store up reserve cash for your business and retirement. These are the numbers you need to know to succeed. Know your time, your costs and add, not hope for, a profit.