Hourly rates

Jasonk

Active Member
#1
Just wondering if anyone has a good equation for determining what a piece of equipment should be worth on a by the hour basis.

With the market in our area more competitive than ever, it's important for us to be keeping our numbers sharp.

Any input is appreciated.
 

CreTree

Active Member
#2
I have had no problem with $125/ hr for a truck and chipper, mini with attachments runs $150. Ironically if I climb with a groundie and truck and chipper I find that people think I'm nuts to charge $125 / hr.

Take a few jobs and do your own math with each piece involved.
Good luck!
 

NickfromWI

Well-Known Member
#3
Ive found that using $125/hr for me, in Los Angeles with a chipper, truck, and 2 climbers that swap time on the ground we tend to get comments on our affordable pricing and I feel like we aren't making the money we should be.

I look at around 150-175/hr.

But what kind of machine are you talking about? Who else has one? How much did it cost you? What can you do with it?

I can't imagine that there is a formula that says, "if a machine cost X, hourly rate should be X/some random number."

love
nick
 
#4
I like to get $150 per hour for 2 guys, truck and chipper. I don't get many complaints on pricing. If I add a third guy it's $225 per hour. Bucket I price at $150 per hour for the truck plus operator. Heavy equipment is charged at a different rate. When all I do is climb... no clean-up of any kind... $100+ per man hour and I often hear that I am cheap.
 

Jasonk

Active Member
#5
For the longest time we have figured work on a day/ half day price including a climber , ground man, bucket and chipper.
At $175- hr we have made money and been competetive. Now it seems like if we look at work we may get 2 of 5 jobs that we bid against other companies (not including refferal work as we get almost every one of those jobs).
Going through the numbers I cant work for any less being insured with normal overhead, but I just wanted to make sure I was not missing something.
 

Tr33Climb3r

Well-Known Member
#7
We are at $65 per man per hour. Then every job has an extra $30 added on to cover fuel and maintenance costs.

Seems like we are to cheap.
 

Mangoes

Well-Known Member
#8
Threads like these leave me perplexed.

What is the point in one person who doesnt know their hourly/daily/weekly/monthly/annual operating expense, asking others who dont know their operating expenses what to charge? (presuming that what has been communicated is a true reflection of expense unawareness)

If your market wont let you charge what you need to cover your expense and make some profit, reduce and be aware of your operating expense, diversify services, find something profitable to do....
 

NickfromWI

Well-Known Member
#9
However, you've been a member here for over a decade. Presumably you've been in business for a lot longer. You've got the kinks figured out.

Don't forget some people are still trying figure out the kinks. If you are in a small market it can be hard to really test and fine tune your billing. It's rare that you can call a competitor and ask what they would charge for a particular tree..so new companies sortof have to guess.

No harm in asking!

love
nick
 

Mangoes

Well-Known Member
#10
Understood Nick - that is why I placed the caveat that my perception was dependant on the accuracy of what was interpreted/communicated.

As a business person you have to know and understand your costs. Shooting from the hip can and has led to failure.

On a humerous note what would be a better dialogue, is a comparison of hourly/daily/weekly/monthly/annual operating costs. One could better identify cost and profit management strategies with such open dialogue. Humerous because, like Poker, most would hold tight to those cards. (as I would)
 

djm

Active Member
#12
There a couple of things to add here. What are your costs? add them up and charge a percentage over for profit. Also you may run across a couple of jobs that are worth more than your hourly rate. For example trees on houses after hurricanes. In those situations you can charge more.
In my experience most companies don't charge enough. If you've worked your butt off all year and have no money in the bank after it all you haven't charged enough. Profit is what keeps businesses alive don't be afraid to ask for it. Don't be afraid to lose jobs. The low guys will be climbing on the same saddle and driving the same truck ten years from now.

What we do is f#$@ing dangerous, skilled, hard work. Don't give it away. Good luck!
 

Tony

Well-Known Member
#13
[ QUOTE ]
(not including refferal work as we get almost every one of those jobs).

[/ QUOTE ]

Then I would concentrate on generating this business and not worry about your rates being competitive, but profitable.

Tony
 
#15
Anyone else have a hard time landing the really big tree removals with your normal hourly rate?? I'm very successful bidding small through medium/large trees. Its the huge ones that I seem to never get. This excludes crane jobs, most guys around here don't use cranes so I get them on efficiency.

Easy day example. 3 guys, chip truck/chipper, f350 with trailer carrying dingo & stumper. Extra truck with dump trailer if needed for wood.
job 1 remove crapford pear grind stump $450
job 2 remove blue spruce grind stump, deadwood locust $800
job 3 remove 2 crap apples grind stumps, elevate maple $675

Total = $1925

Days like this are pretty common, some days more pruning, others maybe 2 or 4 jobs, you get the idea...


Large elm example (a recent bid to a homeowner). 4 guys chip truck/chipper, f350 with trailer carrying dingo & stumper, f450 with dump trailer for wood.
I figured 1.5 days. approx 3.5' dbh, 110' tall, fairly brushy. Very limited access, no crane, over 2 yards, fence, wires, you know the drill.

First day extra groundie needed for debris cleanup. Second day, finish off trunk, load big wood/grind stump.

My bid $3600. I was told by the homeowner they want to go with me because we have worked with them in the past, they cant justify going with the highest bid (me). I take a second look at the tree. Looking at it again I think to myself I might even be low for the effort this tree would take. I come back with "my price is firm". Have not heard anything for 2 weeks, tree still standing. Must be fishing for more prices..

The competition around here bids like dip shits. A big tree like this will sell for around $2000. With the days being short this time of year, nobody is getting this bad boy down in a single day. Why am I doomed to compete with dipshitz that are twice my age and still like getting their kicked??

Its very frustrating to lose these big tress on a regular basis. Looking back on the whole year we have not done 1 tree that has take more a day. Lots of crane jobs, lots of trees that were done in 7-8 hours, but no monsters.

To me from an profit/effort stand point it doesn't even make sense to mess with the really big ones when other guys are bidding so low. So it looks like we're stuck grinding it out killing blue spruce, crapples and pears =)

sorry for the ramble!!
 
#16
I find the same thing in my market, Arbor Man. The larger the tree, the lower the profit margin. It's at the point where I just stick to my guns and sell myself. I will not leave my house to break even, I can do that at home playing lego with my 5 year old and its far safer. I'm sure everyone here is aware that the pruning jobs tend to have the greatest profit margins, but every so often I'll land a large removal job where I make decent money.

As a start up who has only been in business for a year, my break even rate is 35/hr. All my minor equipment is bought and paid for. But, the rate is for 'stump time' so to speak. All the commuting, bidding, calls, logistics and increased stress levels add up, so I set my rate for hourly work for myself and pickup at 75/hr. If I bring a ground man in its up to 115/hr. If I rent a chipper for the day...150/hr. If I rent a bucket truck and chipper and have a ground man...175/hr. As mangoes says, one needs to examine one's books in order to better understand the rates to charge in order to allow business growth.
 

NickfromWI

Well-Known Member
#17
I let other companies have those big removals if they want them that badly. I sell my company, prove that we actually have insurance, and if the other guys can do it $500 cheaper, go for it. Legos sounds like a fun day to me!
 

treehumper

Well-Known Member
#18
The only way to iron out the kinks is to know what the particular kink is. That is where the business person (btw, owners that is what you are, not tree guys!) understands their overhead. It will allow you to analyze your efficiency and productivity.

While your hourly rate is a function of your costs plus margin, it is more importantly a function of the value of the work performed, i.e., the value proposition. What is yours? What makes it worth what you believe it to be worth? Does your marketing, formal and informal consistently deliver that value proposition? Does the work your crew(s) perform actually live up to that proposition? Do you correlate how you deliver that value? Does your market actually value what you offer?

How does your competition deliver the goods on those large removals? Is there something else that they are taking into account to arrive at the price? Do they have a market to readily sell the wood?

Remember the definition of insanity, the repetition of something with the expectation of different results.
 

oldoakman

Well-Known Member
#19
Evan,
Not to stir up too much, but us guys that are twice your age need to eat too. Personally I'd just as soon give you young pups the big gnarly removals and take your nice pruning and crabapple removals. Easier on my lumbago!
 

rfwoodvt

Well-Known Member
#20
I'm with the bear on this one. Pass me another single malt would you Oldoak?

FWIW I can't bid the big jobs for crap either. Used to worry about it then I discovered several things, Kinks as TH called them.

1) my overhead is what it is and my bidding was spot on for all the big jobs. Any wiggle room we may have with smaller bids is lost due to the variables that manifest themselves on a much broader scale in these larger jobs. A simple axiom, the larger the job, the greater the chances to be way over, or under, budget.

2)The bigger companies nearby have the strategic edge with thier larger equipment or the fact that this is the market they set up to serve. that allows them to do the work for less, or have the value added benefit of doing it quicker and with more wiggle room for variables. 4 crane picks have fewer surprises than 24 indivdual cuts & lowers.

3) The low ballers see this job, even at half my price, as like winning the Lottery and so they go after them with Gusto and trip all over themselves to get the job.

Those are all things I really can do nothing about in the short term and more to the point, they require my company to move into a market we are currently not set up to serve.

While we can set up to serve that market, we are not sure that is where we want to place our focus.

The old addage, know your market and serve it better than anyone else more than applies in this situation

When I run into a job like that now I try to sub it out to someone who is set up for it. The hard part there is having a relationship with that outfit such that you can at least get a small break on the price so you can make at least a little margin.
 
Top