The big questions for many commercial lawn mowing contractors are… “What should I charge?” “Am I charging enough?” “Am I charging too much?”
The unfortunate reality is that most lawn maintenance contractors have no idea what their true costs are or even how to begin to estimate them. Without knowing your true costs it is almost impossible to put forth competitive bids that leave enough room for you to make the living you deserve.
When you don’t understand your costs, most lawn cutting jobs end up being bid in one of three ways:
- Pure guess work.
- Asking around to see what others are charging.
- A “back of the envelope” estimate that often fails to capture your true costs.
I’ll tackle the “how-to” of bidding in a later blog post, but I want to share right away that many of you are likely grossly undercharging for your services. In the end, everyone wins (including your clients) when you charge a fair price that ensures timely customer service and healthy margins that enable you to build a sustainable business.
Top Ten Signs You Need to Raise Your Commercial Mowing Contract Prices
1. Every time you quote a price you win the contract. That is never a good sign and almost always signals you are priced way too low. In my experience, if you are closing about 20% of new jobs bid, you are probably at a price point from which you can build a sustainable business. If you are closing almost everything you bid, you are priced way too low.
2. You can’t keep good help. Admittedly, the commercial lawn mowing business has a high degree of turnover, but if you are constantly changing help you likely aren’t charging enough. You need enough gross margin to be able to pay and keep at least a core set of key employees, otherwise you are constantly retraining help and you will never have the chance to leave your business.
3. You don’t ever get a vacation. Your inability to leave the business, even for a few days, is a sure sign you don’t have the key people you need to build a sustainable business. If you can never leave, you’ve simply got a job, you don’t own a business. A great test for business sustainability is to try to take off two weeks, in season. If you can do that, you likely have the team and systems in place that prove you have a sustainable business with key leaders and repeatable systems in place.
4. My equipment sucks. Having great equipment and plan to upgrade and replace it on a regular schedule is only possible with a sustainable business model. If you are patching together your mowers every morning or dealing with constant breakdowns you likely aren’t charging enough to have the profits to reinvest in your business.
5. You don’t have any commercial lawn mowing equipment. I dare to say if your trucks and trailers are filled with homeowner brand equipment you will never be profitable. Having the cashflow to invest in great commercial mowing brands like Scag, Exmark, Toro, Walker and any of the many top name commercial equipment brands is critical to productivity.
6. You feel like you have way too many employees for the amount of work you are doing. I see this all the time. Under-capitalized businesses are never able to purchase the proper equipment and instead add people. Ideally, you want to have the best equipment possible with the least amount of people. Your largest expense will always be labor and labor decreases as you gain economies of scale with the proper lawn mowing equipment.
7. You can’t keep a customer. If you are constantly changing customers, you may be priced way too low. Most clients care about more than just price. They expect quality, timeliness of service and a professional looking crew on their property. If you aren’t providing those necessities for your client’s because you have crappy equipment and poor help, don’t expect to keep them.
8. You haven’t done any maintenance on your equipment in weeks or months. Poor equipment maintenance often happens when companies are stretched for cash. With too little cash flow there is no money left over to invest in preventative maintenance. Ideally, you should be sharpening your commercial lawn mower blades every week and replacing them monthly. Failure to do so results in torn grass, sad looking lawns and miserable customers.
9. You only buy the lowest priced replacement lawnmower blades you can find. Lack of sustainable profits can lead one to make some short-term decisions that lead to long-term negative consequences. There are many providers of commercial lawnmower blades available, but there absolutely is a difference in quality. Make sure you are using original equipment parts from your manufacturer or purchase quality aftermarket mower blades from reliable companies like Mow More Supplies. Quite frankly, using low quality replacement blades is not only bad for your lawns, but dangerous and more expensive as they wear out and break.
10. You dread going to work each morning. This is a sure sign you need to raise your prices. A well run lawn maintenance business should enable you to generate enough money to have the best equipment, a reasonable cutting schedule (3.5 days/week), a great team and a business that is both fun and profitable.
In future posts I’ll share with you more specifics on bidding and managing your business, but for now take a good look at your own business and realize that charging higher prices is likely the right thing to do for you and your clients.