There is no one set formula for figuring out the price of a maintenance job, be it building maintenance, snow removal or lawn maintenance. All maintenance job bids, however, will have a few common denominators which you’ll have to factor in when determining what to charge a customer. For example, direct cost, indirect costs and overhead costs are three considerations when calculating bids, whether it’s for a single job or for an entire season or year of work. Overpricing can cost you potential business; underpricing can cost you money. Knowing how to arrive at a fair number is crucial.
Ask your potential customer what she currently pays for the proposed maintenance and what services are included. She may not tell you, but asking can’t hurt. If you know her current situation, you can decide if it’s even worth bidding on the job. Perhaps the current maintenance crew does a bang-up job for a fair price, but the homeowner is looking for a cheaper rate. If you can’t honestly do the job for a lower price, don’t bid on the job.
Figure out the numbers involved in the scope of work. In a lawn maintenance bid, these numbers would be the square footage of the lawn, linear footage of areas that need edging and the number of bushes, trees or other plants that need to be pruned.
Consider any other services you need to provide, like fertilizing the lawn or weeding.
Calculate the man-hour costs for the job. If an employee can mow 20,000 square feet in one hour, for instance, and can edge 5,000 linear feet in an hour, you would need to account for four man-hours of work on a lawn that’s 40,000 square feet and has 10,000 feet of edging.
Factor in all your business operating costs, such as your own salary, travel expenses, maintenance equipment purchases and upkeep, office staff and overhead. Include other indirect costs such as insurance. Your profit & loss statement can aid you in this process. Divide this total by the number of employees you have. Let’s say you have five employees and your total operating costs are $60,000 per year. That’s $12,000 per employee, or $1,000 per month. If your employees work 40 hours a week, or 160 hours per month, the operating cost per employee is $6.25 an hour. (See References 1)
Add this operating cost to your employees’ hourly wage. A worker making $10 an hour, plus operating expenses, is costing you $16.25 an hour. Multiplied by five employees, your labor costs are $81.25 an hour for each job (if all five employees are working).
Factor in any profit margin you choose and add it to the labor cost total. If you estimate that the job will take two hours to complete, that’s 10 total man-hours with five employees, or $162.50 for labor costs. A 20 percent profit margin would be $32.50 and the total you’d bid for the job would be $195. Make sure to add any hard or direct costs to the total, such as the price of fertilizer or wood chips. (See References 2)
Review past job bids to determine if you’ve been underbidding or overbidding. Compare the numbers to the formula for figuring out labor and operating costs that you’re now using to see where you’ve been making mistakes.
Dress and behave professionally when making a bid, and be punctual. (See References 3)
Don’t try to recover past losses, due to bad bidding or lack of work, on a single job. If you’re following a formula for bidding that’s accurate and fair, your profits will appear over the longer term.
- lawnmower image by sumos from Fotolia.com