Any business savy guys here

[WarrenF]

In my business, I charge .50 cents a mile roundtrip outside of a fifty mile radius....I.E., if a customer lives 100 miles from my home they pay me $50.00 for the travel. I charge $70.00 per hour from the time I arrive at their home. My business is not tractor related, but that should give you an idea on what to charge. Call a plumber and they will charge you minimum of $70.00 per hour while on site.

Now then, sit down and put a pencil to it. If your truck gets 10 miles per gallon when loaded with with tractor and implement....if you go fifty miles to a job, then you have spent minimum $20.00 in fuel to get there just for your truck. If your tractor will use 2 gallons of diesel working under load, the fuel cost is easily figured.

One thing I will caution you on is this....BAD BUSINESS IS WORSE THAN NO BUSINESS. Why? Because bad businesss costs you time and wear and tear on your equipment. No business means that you have not put that wear on your equipment.

I would suggest that you give the customer one bill....with just a flat fee, however in your head and on your calculator you have all the expenses figured into the bill. Remember if you have 30 thousand dollars invested in your equipment, there MUST be some return on that investment. You will lose some you wished you could have gotten, you will get some you wished you would not have gotten.....but most importantly DO EACH JOB AS IF THEY ARE THE MOST VALUED CUSTOMER. Leave your business cards at each home. Tell your current customers that you will give them a 10 percent discount on the next job...AFTER....they have sent you a PAYING REFERAL.

Get long term with the business, and remember that what you do today will pay you OVER AND OVER again down the road.

Good luck and you are now entering one of the most fulfilling times of your life....WORKING FOR YOURSELF. Note I did not say profitable....I said fulfilling. It may be VERY profitable....and I hope it is,

 

[LabLuvR]

Well, I'm very excited about this new journey. I get to mix a love of hunting with farming. Plus, it is a never ending education. As to how profitable it will be, only time will tell. Will I get rich? No, and I am very aware of that. Whatever I do, I tend to pour my heart and soul into being the best and obsess about learning all I can. I'm expecting this to work out at least on a part time basis. If for some reason it doesn't, I have an insurance license the wife would love to see me put to use.

 

[jmfox]

I hope you do well and have fun. Remember, people hire people, not things.

jmf

 

[AndyMA]

BINGO! The "hidden treasures" in the weeds go with the territory for bush hogging. It SOUNDS good to say you'll charge for every contingency, obstruction, unplanned fuel increase, traffic jam on the way to the job, extra pickle on your hamburger at lunch, ect, but unless you have a steady list of clients that just don't care how much you charge, expect most of those hidden fees to get YOUR COMPETITION all the work. Justified or not, people will always look and USUALLY find someone who'll do the same job without all the extra charges. Give them incentive to shop and they'll eventually find someone who'll do it cheaper than you. Regardless if that guy stays in business long or not, you lost a job, and there's always the NEXT "I'll do it cheaper" contractor. The less complications involved, the fewer technicalities involved in the billing, the fewer question come up. The fewer questions, the less likely you are to give the next customer an answer he doesn't wish to hear.

It's all about the perceptions of your customers. Include in your standard rates, enough of a cushion to cover contingencies. Bid with an eye on where and how you need to add to the bottom line..... and give them ONE NUMBER to swallow.

I have ONE client that we work for "per hour" with no questions asked. They've been in the property maintenance business for 35 years. They know a good price when they hear it. As of now, all the others get a fixed price agreed upon before we sign a contract. Most people cringe when they hear "extra for this" and "fuel surcharge" or any other nice name for hidden cost. It's better to give 'em a high enough price right from the start than a lower one with add-ons at the end.

I agree with this. When we do excavation we usually go with a fixed charge, but with the contract stating that if required blasting or a rock hammer will be charged extra. We usually charge one way trip charge so that in effect we are getting half hourly rate for moving equipment. No body gets charged for the hours it takes to load and get the equipment ready, that's why we charge a 4-8 hour minimum.

Andy

 

[LoneCowboy]

With the mowing business, I've found that most of my clients don't give a hoot where I live or how far I have to travel. A given job is worth no more to THEM if it's 3 blocks away or 3 states away. They just want the best price an d don't usually understand why they should be penalized because of where I live. (or at least that's how some tend to view it) Billing for hourly or cost+ jobs isn't always well received if charges for travel time appear. It creates a bad impression on the customer. Next time he needs my service, he'll tend to look locally. At that point they MAY or MAY NOT find a better price. Point is, they're looking for one. A flat rate price, agreed upon before starting, seems to work best for MOST of my customers. A.

Yep
Nobody cares where YOU are, offer them a set price. Certainly ones that are further away simply have to bid out at more. Sometimes you get those, sometimes you don't. Sometimes you just can't be competative on jobs that are far away. Sometimes, if the job is the right size for you and your equipment, and you can despite driving for an hour plus. Personally a 30 mile radius isn't much. You need a LOT of business to stay busy 6 months (or whatever the season is there) and pay for the equipment and make money for you.

Insurance is typically a bigger expense for me than fuel. It might flip this year with the price of diesel running $4 vs last year's $3, but I doubt it or it will be close.

 

[Farmwithjunk]

Yep
Nobody cares where YOU are, offer them a set price. Certainly ones that are further away simply have to bid out at more. Sometimes you get those, sometimes you don't. Sometimes you just can't be competative on jobs that are far away. Sometimes, if the job is the right size for you and your equipment, and you can despite driving for an hour plus. Personally a 30 mile radius isn't much. You need a LOT of business to stay busy 6 months (or whatever the season is there) and pay for the equipment and make money for you.

Insurance is typically a bigger expense for me than fuel. It might flip this year with the price of diesel running $4 vs last year's $3, but I doubt it or it will be close.

In most of the cases I deal with, the customer needs to be re-assured that all is well, we can handle the job, and nothing will go wrong on their end or mine. Nothing says confident and trouble free like a simple and to the point bid. Long, drawn out explainations of charges, reasons (excuses) for added surcharges, extra fees if (when) things go wrong, ect, just make things look too risky from their standpoint. Experience will tell you better than anything, just how much you need to factor in on ALL of your work to cover those days when things do go bad. That happens. It's called the high price of doing business.

In the rare instances where a customer wants details, I answer his (or her, in many cases) questions as best I can, but volunteering too much information isn't nessicarily a good thing. Many times that info simply gets passed on to your competition who's just around the corner. Most cases, the customer doesn't want an education in the mowing business. They just want their field cut and for you to be on your way.

Fortunatly, we've got enough work contracted already for the upcoming season to stay busy. 2 new clients have us booked solid. Because of a health issue, I'm on the sidelines for a while. The boys have a busy summer ahead.

 

[EddieWalker]

As a Contractor, I get jobs all over the area. When I first meet a new client, they are looking for that number to compare to the other bids they get. If they are far out in the boonies, my price is going to be more then if they were close to me, but that's figured into my bid for the job. Travel time is just part of any job, just like tools and maintenance of equipment.

I personally get turned off by a list of fees and extras. I want to know how much it will cost, and my clients want the same. It's up to me to determine what my time is worth and let them decide if it's reasonable. I'm not always the cheapest, in fact, I'm closer to the higher end of the scale, but my people are looking for knowledgable, reliable, dependable and respectful when hiring a contractor. Allot of my jobs are fixits from others who didn't finish the job, messed it up or just quit showing up.

One thing that is important when bidding a job is to be clear that if anything changes or they add anything to it, the price will change. They realize this, but will always want that number for the job they think they want done. It's rare that we stick with the budget once I get started as new ideas come up and they change their minds about what they wanted.

After I've worked for a client, we always seem to switch to an hourly rate where they tell me what they want done and I bill them when it's done. We don't even discuss prices except for an estimate of how long it might take to get it done. I'll give them a safe number to be sure I can do it in that amount of time, and when I'm done earlier, they area always happy at the savings.

People like simple. Keep it simple and they will be more likely to hire you again. Make it complicated and they will look for simple in somebody else.

Eddie

 

[charlz]

I'm kinda with the 'one number' camp. Doesn't mean that you don't have a 'formula' whereby you take into account mileage, drive time etc.... you should and it also should include the cost of equipment, insurance and the wage you are paying yourself among everything else.

I don't know anything about foodplots other than what I have read on here. How many trips is it going to take? One? Two? Who decides what gets planted? Is it single crop or a 'standard mix'? Is there an opportunity to allow the customer to control some of the cost?:

OK for me to show up and do the work is going to be $X
Based on your crop selections A,B and D which require fertilizer input J you are looking at $Y for fertilizer and seed.
This gives us a grand total of $Z to put in your food plot.​

This takes the focus off your labor and puts some control into the hands of the customer "uhh... let's just do crop A with no fertilizer..." (which doesn't really matter as your profit is mostly in your 'show up' charge).


Charles

 

[Dayton 13]

Figure what percent return you want out of the investment and then plug in your depreciation, taxes and other controllable and fixed expenses. Plus factor in how much you plan on charging (sales) and how much you want to make off of those sales (margin). Your rate of return should exceed any amount you would make from a bank through CD's, Mutual Funds, etc. If it does not, you are better off investing money elsewhere.

For our business, we would expect a 15% return in order for us justify spending the money. However, all business models are somewhat different. Hope this helps.

 

[LabLuvR]

Well here is what I am thinking. The charges will be XYZ for the first acre. The first acre would be the most expensive since it entails the traveling. The balance of acres planted would be at a reduced rate, since travel was incorporated into the first acre. That make any sense?

Also in the first acre I would have built in travel charges of 200 miles round trip. Regardless though of actual miles traveled, the 200 miles would be a fixed part of the first acre cost. The reason I used 200 miles is that probably is a worst case scenerio, with 100 probably being the average.

The additional acres would have a cost factored in of running the equipment per hour, to include fuel and deprectiation along with my desired hourly wage.

 

[jmfox]

It seems to me, if you can make money on the 1st acre then any remaining acres will be capitalized. I'd make sure it is clear that the 1st acre is contiguous with any remaining acres.

jmf

 

[ahlkey]

You first need to look at your desired outcome and keep it simple. I have always approached it based on the KISS philosophy - namely - "keep it simple stupid". Therefore, charge only one price and don't add extra's to complicate matters. Let your work speak for yourself and compete with everyone within your travel zone. In order to compete, keep it simple, and equalize matters by not charging for travel time. However, factor in a per mile rate into your price to cover fuel, etc... I have always used the IRS business rate which in 2008 is currently set at 50.5 cents per mile up from the 2007 rate of 48.5 cents. So if you have to travel 50 miles factor in $25 for the round trip. That should cover gas, oil, depreciation, etc...which in theory is how the IRS sets the rate. The rate can change more than once per year (up or down) which makes it a variable so you do not lose out. The IRS also doesn't give you a hassle given it is their rate and all you need to do is keep a log account rather than receipts, etc... and you should always be on the positive side. In the end, you are do not in the transportation business and customers really HATE to pay you for transportation time. Don't give them a reason to look elsewhere. The fact that you can say you do not charge labor for transportation will be a big positive.

In the end equalize the competitive bid, do good work, be willing to broaden your travel region and I guarantee you will turn work away.

 

[LabLuvR]

Yes, the acreage rate would be based on contiguous acres. The mileage rate set by the Feds won't cut it, I will have to charge more. The reason is, I will be using a heavy duty truck to pull a trailer with a lot of heavy equipment. My miles per gallon will probably be in the neighborhood of seven which really sucks. But I see what you are saying.

 

[AlanB]

If you have not done it yet, you need to start assembling your business "team"

I would say a banker and a CPA (An attornery if doing anything complicated like a LLC) and then an outside advisor, maybe your dad, maybe an extension agent, maybe someone from Planet, or someone in a similar business in a non-compete area.

The point being, that the decisions, and what you base it on, will be made somewhat by these guys input, ie, what you are discussing above, needs too be addressed by your CPA and how you should do it BEFORE you start.

The money I have spent with the CPA has come back too us many times over in saved mistakes. I started with a "bookkeeper" and AFTER the audit, went to a CPA.

There are basically two methods to pick from, and both camps will tell you theirs is "correct", sound's to me very much like the lawncare biz.

Camp 1, go look, see what you think it will bear, factor in your rough costs in your head, take into account outside factors such as PIA factor of the client, shoot em a price and see if they go for it.

Camp 2, figure out each individual cost, do time motion studies, figure out milage, gas costs etc. and work up individual prices on each component of the job, add it together, add P&O then give a price.

I am a camp 1 guy, and think most the camp 2 guys end up just taking a more educated swag then we do, but it still boils down to a swag.

Good luck with whatever way you choose.

Remember, you can go to bed Tired, broke and hungry doing this, or go to bed broke and hungry. You don't have to do that job, and if it is not paying out, just go to bed broke and hungry. The temptation will be there at some point to cut your prices to get the work.