If you only had $20k to spend on a grinder...

[ROLLACOSTA]

Its a tricky one, i think that you price at what you need and what the customer will tolerate...i am a new company, so i will charge so that i get the job and people will pass the word on. If i was out all day everyday and turning work down then my rate will go up....that is not to say that i will price it cheap because i know its worth and mine.

Pricing is a difficult one and one where folk in an area should ideally talk to each other (if they can manage that) and make sure that they are all in the same ball park area for pricing.....its when folk slash prices to get work that it can cock the job up.....but again if people trust you and know you are good at the job and leave the site looking good then they will use you from choice....

I can see stump grinding ,going down to less than £200+vat per day,there are just to many machines out there and not enough stumps,I remember the day you could get £500 per day for a 252..

 

[a_lopa]

I can see stump grinding ,going down to less than £200+vat per day,there are just to many machines out there and not enough stumps,I remember the day you could get £500 per day for a 252..

me too rolla

 

[howel07264]

your right on!

Being a 'new company', how do you know what your real cost are going to be? What is your equipment cost per job?

One problem this industry faces is new companies that charge low prices to get the job figuring they will build up clientele even though profit is low.

Then after a couple of years in business they try to raise prices to make a profit and they find there are now 5 new companies in their area pricing low figuring they will build up clientele.

How do you know the companies you are under bidding to get the work will be around in a few years? You will likely find the low bidders are out of business in a few years only to be replaced by new low bidders.....who are then going to be out of business shortly too.

I save all of my old yellow page books. It's quite interesting to see the company names show up one year.....last a couple of years....and then be gone with the wind. If you under bid these guys you will be gone too.

Dan

Dan, your right on with your comments. I see the same thing all the time.
everyone starts with great expectations then buss. gets slow, they get desperate and start to bid their work cheap to get the job. then after a while they find they cant make it and out they go. Probably the average grinder runs maybe 300hrs. a year. weve seen people quoting "flat" $80 per hour. What is that 24k a year gross. Gee you could do better working at walmart! Some people need to do the math before quiting their day job. Ive got a friend i sub out large clearing jobs to, been grinding for 10 years told me he has never grossed more than 30k in a year. Sad..very sad. If theres not any money in a job my equipment doesn't leave the yard....Regan

 

[howel07264]

Dont do sub jobs!

There are many cost to grinding stumps. Some are as follows:

1. Cost of grinder
2. Depreciation of grinder
3. Parts and service of grinder
4. A vehicle to tow the grinder
5. Phone book and other advertising for grinding
6. Cell phone for ginding
7. Fuel cost for vehicle and grinder
8. Income tax

When all cost are considered, how much do you really make? Simply saying that you "charge enough" to cover all of the cost is not enough. You have to get people to agree to pay. You also have to consider the cyclical nature of the business. If you sub out jobs, you must consider that others will sub out to you. They will also want their 15% and more too. I have had many tell me how much they charge. But none have yet to tell me how much profit per year they make by stump grinding. If anyone tells me there is a living in this or even good part time money I say that they are not counting all of their cost.

Buff, Just telling you what works for me. you said "if you sub out jobs others will sub out to you" Thats not a concern to me with the price i charge for my work.i would price their job at the same rate i would charge any other customer. by the way i do count All my costs. Ive said it before your not going to get rich grinding stumps.....Regan

 

[buff]

TreeCo......If you are new you should do your research before plunking down hard earned money. You know what you will pay for a grinder, you paid for a truck, you have advertising, a cell phone, you know what depreciation on a grinder and a truck will be, there will be fuel and there will be unexpected cost like the exact cost of maintaining your grinder. But this can be estimated too. If you have no idea of what your cost and revenue will be, it is not a good idea to put money in a venture.

 

[buff]

Those things are unpredictable. That is why one can not say " I wil just charge enough to cover everything."

 

[howel07264]

Those things are unpredictable. That is why one can not say " I wil just charge enough to cover everything."

Buff, your right there are a lot expences that are unpredictable and beyond your control. One thing you HAVE control of is how much you charge for your work. Sounds like you might want to put your money in a CD.gauranteed,gov. insured,no sweat! Seriously i would advise anyone considering stump grinding not to do it. too many people out there already desperately underbidding jobs trying to make the payments on the equipment. good luck! ....Regan

 

[buff]

It is true that we have control over what we charge. What we do not have control over is the number of people who are willing to pay it.

 

[howel07264]

Salemanship!

It is true that we have control over what we charge. What we do not have control over is the number of people who are willing to pay it.

BUFF, Thats where salesmanship comes in. Im not talking about pricing a job trying to rip off a customer. just a fair price for the job.As for as the number willing to pay my price, it runs about 70% of all prospect calls. Being realistic the customer could rent a small grinder for $190 a day and do it themself. Some do.
Most of the time on residential jobs i can come out and do it for them cheaper than they can rent. If i find they are price shopping and getting multiple bids, i dont pursue the job. Could i get 100% of the jobs ?...impossible. could i get 85-90% of the jobs?...possibly,but i would have to cut my prices in half. Thats not a bussiness plan that proves successful....good luck!...Regan

 

[Bigstumps]

There are many cost to grinding stumps. Some are as follows:

1. Cost of grinder
2. Depreciation of grinder
8. Income tax

Depreciation of an asset is the cost associated with owning it!! Income Tax - you'll pay this on any net revenue - that's why accountants look at income before tax - and we all know the beauty of running a business that sees a little cash.

No where can you invest $20,000 and get the kind of return you will with grinding. I'm not saying you'll get rich, but it is the perfect part time or retirement job. It gives you a good return per hour and allows you great flexibility.

If everything were approached with such scepticism as this has been on this board nothing would ever get accomplished. It really surprises me as most tree guys are somewhat entrepreneurs.

 

[howel07264]

Depreciation of an asset is the cost associated with owning it!! Income Tax - you'll pay this on any net revenue - that's why accountants look at income before tax - and we all know the beauty of running a business that sees a little cash.

No where can you invest $20,000 and get the kind of return you will with grinding. I'm not saying you'll get rich, but it is the perfect part time or retirement job. It gives you a good return per hour and allows you great flexibility.

If everything were approached with such scepticism as this has been on this board nothing would ever get accomplished. It really surprises me as most tree guys are somewhat entrepreneurs.

BUFF,BIG STUMPS, I still say dont do it! stick with the CD. ...much safer.
By the way depeciation is a plus on your taxes. unless you expence it. section 179 of the tax code allows you to expence full purchase of equipment in the first year.{offsets your taxable income}....Still say Dont DO IT!
Many more failures in this buss. than success stories.....Regan

 

[buff]

I guess salesmanship is good. But not good enough when the phone stops ringing because you are the highest guy in town. The cost associated with owning something is called expenses. Depreciation is the decreasing value of an asset. Where else can you get the quality return from stump grinding? I have $20,000 cash and I can tell you that I am not buying another stump grinder with it. Again, anyone who tells you that there is a living or even a good part time income in stump grinding is not counting all of his cost. Let us go over them again.

1. $20,000 stump grinder
2. $15,000 for old used truck
3. maintenance cost for truck and grinder
4. expenses
5. yellow pages
6. cell phone
7. fuel for truck and grinder
8. depreciation on grinder and truck
9. other

 

[howel07264]

o-tay

I guess salesmanship is good. But not good enough when the phone stops ringing because you are the highest guy in town. The cost associated with owning something is called expenses. Depreciation is the decreasing value of an asset. Where else can you get the quality return from stump grinding? I have $20,000 cash and I can tell you that I am not buying another stump grinder with it. Again, anyone who tells you that there is a living or even a good part time income in stump grinding is not counting all of his cost. Let us go over them again.

1. $20,000 stump grinder
2. $15,000 for old used truck
3. maintenance cost for truck and grinder
4. expenses
5. yellow pages
6. cell phone
7. fuel for truck and grinder
8. depreciation on grinder and truck
9. other

BUff, your preaching to the choir. AMEN brother!!

 

[Bigstumps]

I guess salesmanship is good. But not good enough when the phone stops ringing because you are the highest guy in town. The cost associated with owning something is called expenses. Depreciation is the decreasing value of an asset. Where else can you get the quality return from stump grinding? I have $20,000 cash and I can tell you that I am not buying another stump grinder with it. Again, anyone who tells you that there is a living or even a good part time income in stump grinding is not counting all of his cost. Let us go over them again.

1. $20,000 stump grinder
2. $15,000 for old used truck
3. maintenance cost for truck and grinder
4. expenses
5. yellow pages
6. cell phone
7. fuel for truck and grinder
8. depreciation on grinder and truck
9. other

Buff,

You can't figure both the cost of the truck and the depreciation!! The Depreciation is the cost!! This is the same for all assets on your books. If you take the accelerated depreciation allowed and write it off in the 1st year, as I did last year, this year you have zero value in the machine, hence no costs as these were already accounted for last year. Of course you still have maintenance and fuel.

One Guy, One Truck, Two Grinders, No Yellow Page Ad, Cell Phone - $135,000 last year before expenses. And of course I put all fuel and tons of other maintenance items against it. Expensed my new machine with accelerated depreciation and showed the IRS as little as possible.

This year I will buy a new truck just for the write off. My truck, tools, grinders have all been depreciated to zero!!!

It is a lot easier to sit at your computer and say "that will never make money" than actually getting out doing it.

Lets face it, grinding stumps, or cutting down trees is not rocket science. All it takes is doing it a little better and smarter than your competition. Everything is competitive these days, but to not try because there are too many people already in it is a cop out. If there are that many people in it, it just means there are that many I can easily take business from.

 

[howel07264]

rock and roll

Buff,

You can't figure both the cost of the truck and the depreciation!! The Depreciation is the cost!! This is the same for all assets on your books. If you take the accelerated depreciation allowed and write it off in the 1st year, as I did last year, this year you have zero value in the machine, hence no costs as these were already accounted for last year. Of course you still have maintenance and fuel.

One Guy, One Truck, Two Grinders, No Yellow Page Ad, Cell Phone - $135,000 last year before expenses. And of course I put all fuel and tons of other maintenance items against it. Expensed my new machine with accelerated depreciation and showed the IRS as little as possible.

This year I will buy a new truck just for the write off. My truck, tools, grinders have all been depreciated to zero!!!

It is a lot easier to sit at your computer and say "that will never make money" than actually getting out doing it.

Lets face it, grinding stumps, or cutting down trees is not rocket science. All it takes is doing it a little better and smarter than your competition. Everything is competitive these days, but to not try because there are too many people already in it is a cop out. If there are that many people in it, it just means there are that many I can easily take business from.

Bigstumps, great gross for a stump grinding buss. Your gross is probably in the top 1% of all stump buss. just a guess. keep it going....Regan

 

[buff]

I have had a lot of guys tell me what they gross and what they charge and about the magic of depreciation. But I have yet to have anyone tell me their profit.

 

[howel07264]

Net....50 bucks a year

I have had a lot of guys tell me what they gross and what they charge and about the magic of depreciation. But I have yet to have anyone tell me their profit.

Buff, I gross about 500k a year. after ALL expences i net about $50 per year. Net just enough to keep me in levi garrett chew. tobacco. I really consider what i do a public service. Dont look to make anything, just want to make a lot of friends....What i really want is just to be LOVED!.....Regan

As Rodney King once said "CANT WE ALL JUST GET ALONG"

 

[buff]

How did you get from $135,000 gross grinding stumps to $500,000 gross with only a ten percent return paid with a lot of love. You have been sniffing too much diesel fume.

 

[howel07264]

What???

How did you get from $135,000 gross grinding stumps to $500,000 gross with only a ten percent return paid with a lot of love. You have been sniffing too much diesel fume.

IM CONFUSED. I THINK YOUR COMBINING MINE AND BIGSTUMPS POSTS TOGETHER. DONT UNDERSTAND "ONLY A TEN PERCENT RETURN WITH LOTS OF LOVE". MY NET PROFIT OF $50 ANNUALLY IS ACTUALLY .001 PERCENT OF 500K GROSS. NOT BAD HUH? . YOUR RIGHT ABOUT SNIFFING TO MANY FUMES,BUT THEY WERE GASOLINE FUMES. I DID ALL THAT VOLUME WITH MY ALPINE MAGNUM.....AMAZING MACHINE!...HAVE A LITTLE FUN BRO!..REGAN

SORRY ABOUT THE CAPS,FORGOT IT WAS ON.

 

[stumpy66]

its all very well talking about how much is charged and how much you make...and whether you do this or that. A business is a risk which ever way you look at it, owning a bar happens more than starting a stump business, that is risky..but some make money, some go bust...owning a stump business is the same. there aint no golden pot waiting for everyone at the end of a rainbow. But if you see an chance take it. As for all the pessimism, some talk of 200 pound a day for stump removal....it will only happen for a while if folk let it, then there will be no grinders about cos there are all bust or running 2nd hand slow unreliable equip. the circle continues. I charge what i think is a fair amount for the job, i think long term and care for my customers. whether i will be here in 2, 3 or 10 years time will be down to market forces and how i have adapted to them. Life is not all about the money, if you can earn more at walmart, go work for them. i like stumping....i will take the risk and see what adventures lie in store for me...... fortune favours the brave.