Any and all advice will be welcome.
Help Understand Pricing
- Thread starter JosephLobdell
- Start date
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Zero views so far,,I afraid to click on it 
Jeff
It was a beautiful day!
Jeff
It was a beautiful day!
You shouldn't be.Zero views so far,,I afraid to click on it
Jeff
It was a beautiful day!
I've looked at it (twice) and have to admit that I'm clueless what your question is. I'm not in the business but it looks like a bunch of disjointed numbers.
@sundance Updated for clarity maybe.
ClimberBusinessman
ArboristSite Operative
Can you explain what 30% of the company means? Are you running this as a partnership? Also, I assume for the man-hour rates you're including the usage of your equipment the entire time it is on the job-site, correct?
So, I updated the number which is now 10% and that is for the profit margin. Yes, so man hours and then a percentage of total value of the equipment broken down over the course of average work hours in a year; plus worker Mans compensation and taxes on average as well.
ClimberBusinessman
ArboristSite Operative
What's your main question from your numbers? Are you asking whether to raise or lower prices to the customer? If so, that is determined by two main factors, your costs and profit margin, and also your conversion percentage of estimates. Obviously, the first priority is covering all costs, but even if you are totally covering your costs, if your conversion percentage of estimates is 90%, your prices are probably too low. On the other hand, if you're getting 10% of estimates into jobs, your prices are way too high, unless your sales technique or something else is wrong. If the average customer gets three quotes, all else being equal, you should get around 33% of estimates into jobs. That doesn't include the tire-kickers that don't end up hiring anybody to do the work, however.
In terms of profit margin, if you aren't including your own labor, 10% profit margin is on the minimal side, but not horrible. Right now, around 500k in annual revenue, you are going to be in the wilderness of a "profitability desert", where it starts to require more administrative help and more fixed costs, and those don't amortize particularly well until you hit closer to 1 million in annual revenue. You probably could make the same 50k salary doing 200,000 gross revenue with yourself and maybe 1.5 employees, but that would probably just be a one truck and one dump trailer setup, which is a ton of physical work. Your goal should be to get past that profitability desert, and get on toward 1 million if you plan to increase your net profit. However, just based on what is in the spreadsheet, I do have a somewhat hard time seeing where all your expenses are going if you are truly at around $250 per man hour on the job.
I hope this info helps you at least a bit. You probably want to hire a good business accountant to better analyze and sort your numbers and get you better advice than what I can give you. I'm having a lot of trouble trying to figure it out.
In terms of profit margin, if you aren't including your own labor, 10% profit margin is on the minimal side, but not horrible. Right now, around 500k in annual revenue, you are going to be in the wilderness of a "profitability desert", where it starts to require more administrative help and more fixed costs, and those don't amortize particularly well until you hit closer to 1 million in annual revenue. You probably could make the same 50k salary doing 200,000 gross revenue with yourself and maybe 1.5 employees, but that would probably just be a one truck and one dump trailer setup, which is a ton of physical work. Your goal should be to get past that profitability desert, and get on toward 1 million if you plan to increase your net profit. However, just based on what is in the spreadsheet, I do have a somewhat hard time seeing where all your expenses are going if you are truly at around $250 per man hour on the job.
I hope this info helps you at least a bit. You probably want to hire a good business accountant to better analyze and sort your numbers and get you better advice than what I can give you. I'm having a lot of trouble trying to figure it out.
Thank you so much for taking the time to depart some knowledge. It really just for me boiled down to making sure that each piece of equipment could be itemized to suit the needs of the customer; the labor, maintenance, profit margin, the time to travel plus fuel costs, as well as the expected expenses are certain items such as Worker Mans comp, and taxes. Maybe I'm not charging enough but the main goal was to break everything down across the average amount of hours worked in a year and create costs based upon that. These are the numbers you are seeing throughout. There are some outliers like truck and C2T(Cost to Travel) as well as the sum of costs of certain groups of items. Maybe I'm too cheap right now but if I can even out the profit margin in the coming months i feel that the system will be well understood when explained. I just know there has to be a way to break this down to the T and if there isn't then something has to change in the industry.
Really I wanted to see if it made sense to anyone and so far it isn't.
ClimberBusinessman
ArboristSite Operative
That's why I'd recommend contacting an accountant, to help organize your numbers and give you more precise advice.
That is too much info to type, plus we a are much bigger operation. At 6-7 million a year, it gets more in depth, so depending on your business, it should be fairly easy unless you are new to this.
Jeff
It was a beautiful day!
Jeff
It was a beautiful day!
To the business side yes...which is why I asked for input. To the industry no. Very experienced...maybe.That is too much info to type, plus we a are much bigger operation. At 6-7 million a year, it gets more in depth, so depending on your business, it should be fairly easy unless you are new to this.
Jeff
It was a beautiful day!
Ah, got it.
Jeff
Well, I clicked on it. You need an Operations manager that knows what the crew needs, what the job entails, expectations, what they have, the condition of it all. Not just putting a price list of stuff you think they need. Unless you are the main man on the job and all the crew is under your direction. Or you step back and hire a foreman to take some of the stuff you need to do to keep them working, they need to work.Zero views so far,,I afraid to click on it
Jeff
It was a beautiful day!
Jeff
