I had this great question come in from Joe who is just starting his lawn care business. He was curious on how to bid and about what kind of insurance he needs. Joe wrote “I just am starting my own business in landscaping and lawn care and I was just wondering if you had any information on how you bid on jobs? What’s the best way to do it, do you try and beat another persons price and their offerings, or do you stay solid in what you believe the price should be for what you provide?
You had a lot of good points in the video on your main page, it really helped me out. Also, another question I had was, when you start your business do you buy insurance for your whole crew or just for yourself and then do the people working for you have their own insurance? How does that work?”
Let’s tackle the insurance question first. You will need business insurance that will cover you and your staff. Give a call to a business insurance company and they will tell you more about the coverage they offer.
Now to answer your question on bidding, one of our Gopher Forum members was nice enough to jump in and share his experiences. Gary wrote “I’m probably as new to lawn care as you are but I do have some years of business experience, so here’s my 2 cents on bidding jobs. Except for gauging our local market, we pay very little attention to what others charge and we find that most of our clients do the same. In my opinion, trying to undercut your competition will get you broke. Trying to match the “big boys” will do the same. The first thing we did was to set a minimum of $40.00 for a basic mow, trim, edge and blow (this was $5 higher than the going rate). Only with 2 out of our 30 properties do we charge any less. These two properties are $35.00 and we edge and trim only. Most people will not shop around if your price is reasonable and people who already have a lawn care service will rarely switch to you if only because you’re offering a lower price.
Here is my philosophy. When starting out, your price should be:
1) competitive in your local market
2) fair to the customer
3) profitable for your company.
Combine these with excellent service and you will get and keep customers. Hope this helps and best of luck.”
Steve: “What % of bids would you suggest a lawn care operator try to land? Where is the sweet spot so they know they are not charging too much or too little?”
Gary: “Well, for me, the target is 100%. Of course that will never happen but why not set your sites high. Since we started in May we have landed all except three of the calls we received. I’m not totally sure why we’ve done so well. Part of the reason may be that other lawn care business owners can’t take new customers. If I were to suddenly stop getting new customers after bidding, the first thing I would have to ask myself is whether or not I was bidding too high. We try to bid in the $60 to $70 per hour range. We also usually bid the first service high to cover the extra time spent to get the lawn to our standards. I say don’t build your company on price. Build it on providing superior work and customer service.”
Steve: “This is a fascinating topic. My concern is if you get 100% of the jobs you bid on, is it possible you could be charging more and not know it?”
Gary: “Wow. That’s a great question. I’ll have to think about that one a little. My son-in-law wants to bid more than the normal “$1 a minute” rule of thumb but I’ve been reluctant to do that. The way I see it, if we’re getting near 100% of our bids, we’re either doing something right or we’re bidding low. From our research in the area, we are right on or slightly above average with what most other lawn care business owners are charging. We only have 2 properties that we know were slightly under bid. More often than not, we are making more than $60 per hour (actual work time). I really don’t know if we want to push for more until we have reached some of our goals and better established our reputation. I can see asking a premium price once we get in a position where it’s not so important that we take on new customers.”
I agree with you on this. You presented us all a very good lawn care business strategy. The first thing a new lawn care business owner should be doing is to fill up their work schedule and then you can replace customers with better paying customers as you go.
If you would like to join in on this discussion further, visit the Gopher Lawn Care Business Forum here.