important info for biding

[Phil Nilsson]

If another company hired you to manage their green industry biz (same size as yours) (same number of accounts) (same number of employees) (working the same number of hours you do) ... then what do you think they would pay you per year? ... $ __________ ... what are other companies paying their managers to "handle" a biz your size? ... $ ___________ okay is that not the "market rate" the "going rate" for what your job is worth to do?

If your company were larger, had more employees, more responsibilities would you not expect to earn more? ... sure you would.

Job worth is all relative a compared to what thing. The market decides these things. Collectively the bids are put out there and collectively the customers decide if the work is worth the range of asking prices. The market decides what you'll make ... but the question is what do you think you are worth in that market?

Isn't it true ...

That the main reason you charge what you do is that you think everybody else is charging around that same amount and that you really have no idea what your job should pay you? It must be true because many people coming here ask ... "hey what do you guys charge for doing this work?"

Phil

[Elwood]

The market decides what you'll make ... but the question is what do you think you are worth in that market?

Answer: One Million Dollars!!

Seriously, the first part of your comment says it all. The key is to gain enough market share to gain enough "profit from each job" to add up to what you feel you are worth OR what you are comfortable with as YOUR income. In some markets, people are worth more than what they make and in others, they are worthless, it all depends on your market. I have met some extremely bright and gifted businessmen before who service smaller markets who will never make what I feel they are worth. If you dumped them in Charlotte, Chicago, or another huge market, they would create highly profitable, multi-million dollar companies in a very short period of time, but since they service a smaller market, it is impossible for them to reach a level of income or "salary" for what they are truely worth, BUT they are content where they are at and "money" is not everything to them.

[Phil Nilsson]

Is everybody ready for the shock of their lives?

Okay do this ... figure out the total hours you put into your business for all of last year. All hours are all hours ... selling, working, fixing stuff, desk work, bid prep ... everything you did. Divide your net income (before taxes) by those number of hours. Now you see what you made per hour in your biz.

What is that number? If you're too embarrassed to tell me the answer I'll understand

Phil

[Elwood]

I am grinning from ear to ear on this one Phil!!

I would be willing to bet #1 that if people added up every hour spent on business, "selling, working, fixing stuff, desk work, bid prep ... everything you did" as you put it, and did as you proposed, they would probly find out they are making LESS than or RIGHT AT minimum wage!!!! My #2 is that most don't keep track of most of the hours spend with things other than production anyway. Of course, this is for the one man band to a company that has just a couple employees.

I have seen your angle with this from the beginning. The point is, the people in this industry don't charge enough to get paid what they really are worth or deserve. Who wants all the headaches and work for minimum wage??? Not many, but for those who are agressive and willing to "go for it", it is called "paying your dues". In the end, it will be worth it, but for quite a while, it will be tough.

Meanwhile, people are not really charging enough. Sad thing is, the same is true for MANY businesses. Part of the "gig" so to speak.

What can you do?? Like you have said, people are "trained" to low prices, mostly by new-starts who have no clue about job costs and the proper way to run a business. Say I am a one man band and I want to make $50k per year for my time and I can only work 2200 hours per year, I would have to add almost $23 per man hour to my total expenses for a price per man hour. Do you really think any clients are going to bite on me charging upwards of $60-$75 per man hour to cut their lawn?? Not when uneducated folks will do it for $15!!

It goes back to your comment about the market deciding what you REALLY make. It is up to you to get smart in every way, gain more market share and increase your profits, thus your salary to get it to where you really want it.

[Phil Nilsson]

Elwood says ....
"What can you do?? Like you have said, people are "trained" to low prices, mostly by new-starts who have no clue about job costs and the proper way to run a business. Say I am a one man band and I want to make $50k per year for my time and I can only work 2200 hours per year, I would have to add almost $23 per man hour to my total expenses for a price per man hour. Do you really think any clients are going to bite on me charging upwards of $60-$75 per man hour to cut their lawn?? Not when uneducated folks will do it for $15!!"

_______________________________________

Answer ...

Costs are someplace in the range of about $20 to $25 a man hour (for legit outfits) if you pay an employee around $10 a hour. IF you are the "employee" then you are at $10 an hour plus expenses of the other $10 to $15 per hour to operate. If you work the 2200 you earned $22,000 base and paid your costs (generally speaking) if you charged yourself out at $25 an hour. Many outfits are way beyond hourly rates of $25, many (even one man outfits) are at $30, $35, $40, $45 or even more. This raises the base pay for the solo person substantially.

But to be competitive you need to yourself be worth a salary (AND) make per hour profits from employees.

The original question I had was what is the job worth? If it's $22,000 base for the owner (absorbing himself at the employee rate of pay) ... then can you be happy throwing off let's say an additional $10 bucks an hour toward your owner's pay (per person) (per hour employed) ... if so you are then supposedly getting another $22,000 a year per employee ... so now you are at $44,000 ... owner $22,000 plus employee another $22,000 so now go out and hire more people to (duplicate) that hourly throw off toward your own take home pay ...

But that is NOT what is happening ... many companies are charging around $30 bucks an hour to around $35 an hour less the costs lets' say of the $25 BUT are only racking up 8 months of season time - some are at under 2,000 booked out and sold man hours a season. Yes many throw off good dollars for snow removal but let's limit the conversation to just in-season.

I know of many companies that after everything is said and done are at $30 an hour to with costs approaching the $25 an hour and so that's only $5 an hour toward the "owner's wallet" if that's the case?


Okay so with ..
1 employee ...
2 employees ...
3 employees ...
4 employees ...
5 employees ...

Phil

[Envy Lawn Service]

Envy,
You hit the nail on the head with your selling and closing technique. Those are 3 of the best closings I've ever heard. I have heard it said, " lay it on the table and the one who speaks first looses" and this proves it. Great Post.
Tim
PS: Phil may be looking for a partner for his next book.

Thank you! I just hope many were able to put all 3 of them to good use many, many times this spring to close some accounts and make some money.