# Yearly Profit Margin



## preach it

About this time of year I figure out my profit margin so far for the year. At this point it is 30% profit. It will go up as the year ends as most of my expenses are in the spring. I have averaged most years about 33% profit. I am curious if this is comparable to others in the Tree Service industry. Let me know what kind of profit margin some of you have in the tree business.


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## mckeetree

preach it said:


> About this time of year I figure out my profit margin so far for the year. At this point it is 30% profit. It will go up as the year ends as most of my expenses are in the spring. I have averaged most years about 33% profit. I am curious if this is comparable to others in the Tree Service industry. Let me know what kind of profit margin some of you have in the tree business.



Average overall about 18%.


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## preach it

I trim and remove trees and grind stumps. I try to keep my costs down by not venturing very long distances. I try to replace equipment as it wears out, sometimes with new, sometimes used. The thirty percent profit looks good on paper but I wish that I had more coming in.


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## appalachianarbo

Today I'm at 43%

Gotta make an insurance payment though this week!


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## mckeetree

appalachianarbo said:


> Today I'm at 43%
> 
> Gotta make an insurance payment though this week!



43% huh. Mmmmmmmm.


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## Slvrmple72

The wife lets me keep 5%:greenchainsaw: I am at 42% up 18% from last year! My body aches pretty much all of the time so I am seriously thinking of a Toro Dingo/trailer next year. Now if I can just get a loan...?


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## appalachianarbo

> 43% huh. Mmmmmmmm.



Yup. Extremely low overhead.


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## BCbound

Curious, Are these profit margins after you pay yourself a wage?


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## preach it

For me the profit margin is my wage.


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## mckeetree

preach it said:


> For me the profit margin is my wage.



Really?


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## preach it

Yes. Small business, one occassional employee besides me, the owner. Some days pay well, some don't. But over all the profit margin is about 30%. I have averaged about that most years. I did buy another stump grinder this year which brought my profits down a little bit at this point. It is a bigger grinder which will bring bigger profits with bigger contracts in the future. I am just trying to find out if my profit percentage is high, low, or average. If it is high, then I am doing something right, if it is low, I need to change some things.


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## mckeetree

preach it said:


> Yes. Small business, one occassional employee besides me, the owner. Some days pay well, some don't. But over all the profit margin is about 30%. I have averaged about that most years. I did buy another stump grinder this year which brought my profits down a little bit at this point. It is a bigger grinder which will bring bigger profits with bigger contracts in the future. I am just trying to find out if my profit percentage is high, low, or average. If it is high, then I am doing something right, if it is low, I need to change some things.



Well for us it would be high. If this company could average 30% clear profit I could retire in 7 or 8 years.


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## Garfield

*Apples to Oranges*

To get meaningful comparisons you have to use the same formula to arrive at the numbers and be comparing similar sized companies. A one man show with climbing gear, no insurance and a hand saw may bill out 40,000 and have an 80% profit margin = 32,000 A larger company could have 1,000,000 in sales with a 15% margin= 150,000. Me, I borrowed money to buy equipment so.....it's not good. Hoping to grow the business next year.


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## BC WetCoast

preach it said:


> Yes. Small business, one occassional employee besides me, the owner. Some days pay well, some don't. But over all the profit margin is about 30%. I have averaged about that most years. I did buy another stump grinder this year which brought my profits down a little bit at this point. It is a bigger grinder which will bring bigger profits with bigger contracts in the future. I am just trying to find out if my profit percentage is high, low, or average. If it is high, then I am doing something right, if it is low, I need to change some things.



Buying the grinder shouldn't have a drastic negative effect on your profits. You should be amortizing the cost of the grinder over the expected life, say 8 years. So if you spent $24,000 on the grinder, then your yearly cost will only be $3000. 

Don't confuse profitability from cash flow. Profitability takes non-cash items such as depreciation into account.


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## arbor pro

I hit 50% this year as a one-man show. Worked my butt off though and did almost double the work volume of last year with not much more overhead. A big factor I think was that I did a lot of hourly-billed work vs bidding. It sure helps the bottom line when you're billing out almost every minute of your day!


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## chucknduck

so is 50% good for a three man show, one climber(owner) and two groundies? Im from New mexico, so over head is lower than a lot of states(free brush and chip disposal, cheap living).


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