“How to estimate landscaping jobs?” is a question that most landscaping and lawn care company owners struggle with on a daily basis.
According to statistics, out of every 5 jobs, a typical contractor loses money on one, reaches the break even point on one, makes the expected profit on two and hits a financial home run on one.
If you take on 50 jobs in a year, it means you’ll be losing money on 10 jobs on average. That is insane! Now imagine if you could replace these 10 bad jobs with 10 good ones - you’d be doubling your profit margins. And it all comes down to estimating the jobs correctly. Here’s how you do it!
1. Know your operational costs.
The first thing you need to know is how much does it take to keep your company up and running throughout the year. Profitable estimating begins with an accurate blueprint of how much it costs annually to operate your company. Take a look at your ledger to understand how much money goes into your business annually.
2. Don’t forget the overheads.
Make sure you price your jobs in such a manner that you account for the recovery of overhead costs (one example would be the cost of gas it takes to drive to the properties).
3. Calculate the cost of materials.
You need to find out how to calculate the cost of landscaping material. This is a straightforward cost to pin down if you have the site measurements. You can use an automated landscape measurement tool like SiteRecon to remotely measure the site very quickly with a very high degree of accuracy. These measurements will help you determine exactly how much material you need.
4. Use production rates to estimate the equipment and labor cost.
Different equipment produce different amounts of work per hour. You need to know how much turf can your different mowers mow in an hour. If you do not have that data with you, consider conducting time studies with your crew to find out production rate for the different machines that you use. As a benchmark, you can get started with industry standard production rates from NALP. To access them, CLICK HERE
5. Create a killer proposal
Once you’ve nailed the pricing, you need to create a killer proposal that’ll sweep your prospects off their feet. Don’t just send them a boring pdf document with some generic information about the services. Create a personalized, detailed, interactive proposal containing the site map and send a report with the proposal - illustrating the current state of the property and pointing out the enhancements/services you’ll be doing.
Finally - compare the planned cost with the actual cost
Once you start servicing the property, you need to compare the cost you estimated with the costs incurred. If you’re not keeping record of how much time the different tasks need and how to speed them up, you’re not going to find success. Top LM150 companies that make money on jobs are always looking for opportunities to improve their business efficiency. If you want to become a master estimator, you need to do the same.