Then, once you know your expenses are in line, begin plugging expenses into this worksheet to be certain you’re pricing for profit. First, review the charts on page 63 and compare those benchmarks to your numbers.
Huston has developed a pricing worksheet based on a three-man maintenance crew, but you can apply the bottom-up pricing concept to any service in your business. Irrigation service work can bring in about 20 percent net profit margin, while tree work ranges from 10 to 15 percent net profit margin (commercial) or 15 to 20 percent profit (residential). “These are averages, but they are realistic,” Huston says. Maintenance businesses should shoot for 10 to 12 percent net profit margin, for both residential and commercial accounts. “The commercial sector is more competitive,” Huston says, making a comparison to the retail world: commercial work brings in more of a “re-wholesale” price. Commercial work doesn’t net quite as much – more like 10 to 15 percent.
Today’s market can bear a 15 to 20 percent net profit margin for residential installation jobs. Installation work generally reels in a 20 percent net profit margin in a normal market, Huston says. Huston says lawn care companies should achieve a 25 percent net profit margin – “that just seems to be what the market will let you get away with,” he says. Reference the budget charts on page 63 to see where you should start. Pricing services correctly will ensure the maximum profit margin. “Of course, you want to maximize your profit and bottom line, because that’s what business is all about,” says Jim Huston. Every expense in your business takes a little bite out of the profit of a job – materials, equipment depreciation, labor, even the utility bills you pay to keep the lights on. But that’s what happens when you price projects without analyzing your costs. You’re not in business to give away landscape services.
0 kommentar(er)
