Did you ever find yourself under pricing jobs?

climbingmonkey24

Active Member
In the beginning of your business, did you ever find yourself under pricing jobs? How did you learn to price jobs more appropriately? What are some things you look for when looking at a job that you factor into your pricing. Obviously labor, job size, equipment necessary, etc. are things to consider. Anything else?

When I first started I know I was under pricing and I think a lot of people fall into that trap because they are eager to win jobs. Once I started making money however I realized how to better judge my pricing with how much time and effort is actually going into a job, and to therefore not be afraid to price higher.

What about storm damage? In the event a tree has fallen in the yard and only needs to be cut and up and removed? I recently started a storm damage cleanup job for a big pine that fell and think I might've short-changed myself a little bit with the price now that I've gotten into it.
 

TCtreeswinger

Well-Known Member
You gotta find your fixed and variable numbers and come to an hourly rate. 2 workers and equipment= $200 an hr takes 6 hours=1200. Add extra for travel. Don't want the job add 2 extra hours. Storm damage account for timeliness and unforseen time or expenses. It's tough starting out but good work speaks for itself. Oh also don't bid for the best issue free job as there is always a snag. What would you rather do run around chasing low paying jobs working through a downpour/ snow storm or spend a day doing maintenance being ready to make real money the next? It sucks "needing the money" sucks more losing it while working for it. I've also lost jobs from charging too little and they were jobs I wanted. People will pay more if they believe in your ability to save their tree. This is all coming from a self failed start up that learned a Lot from the folks on here
 

flyingsquirrel25

Well-Known Member
As stated come up with that hourly rate you need to get to pay the bills and make a profit. Then it’s all about estimating time, which is what we are good at. Over time you will learn to took at the job completely. Took me forever to figure out raking up after a pin oak prune TAKES FOREVER. After a while you learn which jobs are time suckers and which ones pay the big bucks. One thing that helped me out early on was I would write down each stage of the job, climbing, chipping, clean up and travel. I would then assign time to that stage and add it all together. Sometimes helped me focus on the whole job, not just the removal. But always remember shorting yourself every once in a while is part of the game. It’s gonna happen even when you become a seasoned, grizzled vet. How you handle it is the true measure!
 

treehumper

Well-Known Member
When I was building out my rate I started with the hourly rate for the employee. Then added the payroll overburden, insurances, equipment allowance, administration, sales, and profit margin. As already mentioned some of these costs are fixed and easier to calculate while the variable costs and well, variable and proportional to the the workload. Presume a standard work year and break it down to monthly, weekly, hourly cost to work out your man-hour target rate. After all that add a percentage for buffering against unexpected expenses.

Compare this to the segment of the market you wish to compete in and where you want to fit in that market. Shoot for that target rate and learn how to sell the value instead of the cost. Cost follows value not the other way around. Think of it like trying to buy expensive jewelry or watches. You'll not hear the price until your told the value. Once that is establish they'll reveal the very reasonable price for all that value. You'll agree with the cost of that value but still may not pay that. Which is fine. They'll show you something in your price range with a lower value proposition. Then you can make the choice. We can do the same by eliminating some of the value from our work, i.e., wood processing, immaculate clean up, chipping, etc....

The point being is you drop your price by withholding an aspect of service (value), not just dropping your price.
 

climbingmonkey24

Active Member
Thanks for all the replies. I think over time with more experience I'll be able to determine how many hours a job may take, etc. Sometimes I find myself thinking I'll be in and out and then it takes half the day. What do you typically charge "per hour?" Do you break your bill down by labor, equipment, etc.?
When I was building out my rate I started with the hourly rate for the employee. Then added the payroll overburden, insurances, equipment allowance, administration, sales, and profit margin. As already mentioned some of these costs are fixed and easier to calculate while the variable costs and well, variable and proportional to the the workload. Presume a standard work year and break it down to monthly, weekly, hourly cost to work out your man-hour target rate. After all that add a percentage for buffering against unexpected expenses.

Compare this to the segment of the market you wish to compete in and where you want to fit in that market. Shoot for that target rate and learn how to sell the value instead of the cost. Cost follows value not the other way around. Think of it like trying to buy expensive jewelry or watches. You'll not hear the price until your told the value. Once that is establish they'll reveal the very reasonable price for all that value. You'll agree with the cost of that value but still may not pay that. Which is fine. They'll show you something in your price range with a lower value proposition. Then you can make the choice. We can do the same by eliminating some of the value from our work, i.e., wood processing, immaculate clean up, chipping, etc....

The point being is you drop your price by withholding an aspect of service (value), not just dropping your price.
Very good point at the end about dropping your price. I tend to sometimes give customers two quotes , one for cleanup and one without, and sometimes customers decide they want the wood or brush so it's a win win.
 

flyingsquirrel25

Well-Known Member
What do you typically charge "per hour?" Do you break your bill down by labor, equipment, etc.?
What we charge an hour isn’t going to help you. Other than to give you a target to strive for. Many of us have built our businesses out to where we are at, and slowly raised our rate as work load increased, allowing for equipment purchases and upgrades. It’s important that you complete the calculations yourself. It’s part of business and growth. Learn and practice the meathod now so in a few years when you are growing you can make the informed decisions. I’m not trying to sound like a jerk, but it’s easy to use someone else’s number, but it may not be enough for your operation, or may be too high inhibiting your growth.
Seldom do I break a bill down to an hourly rate and when I do it’s only for special circumstances where I don’t want to look at the work first or the client is wishy washy on what they want done and then I’ll give a day rate not an hourly. That way it falls on them to make sure they have enough work to keep us busy for the day.
 

TreeVB

Well-Known Member
I had a guy recently give me a great perspective on what we should be charging per hour. A moving company will charge $50-$65 per man hour in my area. Thats for UNSKILLED labor. What we do involves a lot more risk and skill on top of our other expenses. Keep this in mind when figuring out your hourly.
 

chipper1

Member
I've underbid many jobs in many different businesses, sometimes purposely and others because of inexperience. Many times it's wise to underbid to get your foot in the door, but this can also set you up for failure if they come to expect a low bid every time. When bidding low on purpose I try to offer a reason why I am able to offer them the lower rate at that time, both getting the job and getting my foot in the door to show them how we work.
Every market has an allowable tolerance for specific standard work, but specialty work will typically come at a cost. I did a bid on some storm damage this yr, arriving on the job the client says "the last 3 guys refused to give a bid and walked, the guy coming after me had a crane though if I couldn't handle it". Do you know the prices of your competition, especially the guys doing specialty work. I not only knew how they would price the job, but also how long it would take them with a crew.
I've had a few that I underbid and while I'm doing the job thinking what the heck was I thinking, I had plenty of time to learn the lesson, won't do that again. The lessons that cost us the most are the ones we are the slowest to forget.
It takes a year to get a yrs experience, keep after it, and keep learning as it never stops.
 

flyingsquirrel25

Well-Known Member
I had a guy recently give me a great perspective on what we should be charging per hour. A moving company will charge $50-$65 per man hour in my area. Thats for UNSKILLED labor. What we do involves a lot more risk and skill on top of our other expenses. Keep this in mind when figuring out your hourly.
This is a great point! And have used it with clients before. I use the plumber that charges $95/hr, brings a pickup and a bunch of tools and one guy. Then I compare our equipment/tool cache. Sure he is skilled at what he does, but so are we. I just happen to roll up with 100k + in equipment.

I've underbid many jobs in many different businesses, sometimes purposely and others because of inexperience. Many times it's wise to underbid to get your foot in the door, but this can also set you up for failure if they come to expect a low bid every time. When bidding low on purpose I try to offer a reason why I am able to offer them the lower rate at that time, both getting the job and getting my foot in the door to show them how we work.
Very true as well. It’s important to assess the client before you put you bid in. We have worked on some commercial properties that I “sharpened the pencil” (lower hourly, and no extra hrs) just so I could have my truck on the side of a busy road, or so their employees see us doing a nice job. It’s amazing how much work can be gleaned from employees even if you only work a couple times a year for the employer. Sometimes it’s not all about the $$$ you make on the job, but the $$$ you allocate for free advertising.

The most important part of an underbid job is don’t drop your standards. Don’t take short cuts that cause safety concerns. Just go along like it’s business as usual, because the worse thing that could happen is broken equipment, an injury or worse someone dies. All to rush through and try and make a job pay.
 

southsoundtree

Well-Known Member
The most important part of an underbid job is don’t drop your standards. Don’t take short cuts that cause safety concerns. Just go along like it’s business as usual, because the worse thing that could happen is broken equipment, an injury or worse someone dies. All to rush through and try and make a job pay.

When my guys ask what the end goal is for the day, my first answer is 10 fingers, 10 toes, all truck and equipment safely parked.

After than maybe I'll give them a task-measured goal. Maybe not. Sometimes its just that we will get done what we will get done safely, especially if there is no way we will finish that day.

I try to get work done, to high standards, if its standard service, not drop and go. Ultimately, trying to do 9 hours of work in 8 hours has no free lunch. Which is going to be remembered more by the customer, getting it done in one day leaving them bits and pieces here and there to pick up, or coming back for an hour the next day because its safer and better service?


I tell the customers the same things when they want to know how long. I tell them I simply don't know. I can let them know how long once we're packed and finished, until then, I can only tell them how well it will be done.
 

chipper1

Member
Very true as well. It’s important to assess the client before you put you bid in. We have worked on some commercial properties that I “sharpened the pencil” (lower hourly, and no extra hrs) just so I could have my truck on the side of a busy road, or so their employees see us doing a nice job. It’s amazing how much work can be gleaned from employees even if you only work a couple times a year for the employer. Sometimes it’s not all about the $$$ you make on the job, but the $$$ you allocate for free advertising.

The most important part of an underbid job is don’t drop your standards. Don’t take short cuts that cause safety concerns. Just go along like it’s business as usual, because the worse thing that could happen is broken equipment, an injury or worse someone dies. All to rush through and try and make a job pay.
I agree.
Exposure in a market can have incredible returns, we pay for advertising in the beginning which comes off the bottom line, so why not drop the price a bit to get established in a particular market. At the end of the day many times it still cost much less than the advertising does, and I'm already working on a job I don't have to go bid a job to get the work from the advertising.
I have dropped my standards on different jobs I've done, and at the end of the day I don't typically feel good about it. In the lawn service industry it's very easy to get caught doing this, and when it happens you have the whole season to remind yourself to never do it again. If you have a business vehicle on a site and you do it half way everyone knows it, what they don't see is that you were only paid to do it half way. In some industries this is more acceptable than others, but I try to do the whole job 100% the way I would. If you are on a secluded site there is more of an opportunity to "help someone out" by doing half of what I would normally do, but this is the exception for me rather than the rule. I find it difficult to only doing it half way, and I must bid knowing who I am, or I will underbid every job. I find often times I overbid as I am relatively new to the business and do not have the experience, but I bid the job for my cost and I even tell the customer that, I've gotten many of those jobs because of honesty rather than price.
 

CassieMills

New Member
In the beginning of your business, did you ever find yourself under pricing jobs? How did you learn to price jobs more appropriately? What are some things you look for when looking at a job that you factor into your pricing. Obviously labor, job size, equipment necessary, etc. are things to consider. Anything else?

When I first started I know I was under pricing and I think a lot of people fall into that trap because they are eager to win jobs. Once I started making money however I realized how to better judge my pricing with how much time and effort is actually going into a job, and to therefore not be afraid to price higher.

What about storm damage? In the event a tree has fallen in the yard and only needs to be cut and up and removed? I recently started a storm damage cleanup job for a big pine that fell and think I might've short-changed myself a little bit with the price now that I've gotten into it.
Work evaluation is an important stage after the performance of work. The workers who work as
editors for the company that is presented by the site (Edit: link deleted by Tom Dunlap) check the quality of their work all the time.
 
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