Penny wise, pound foolish

[Farmwithjunk]

Im really confused - He realized he was getting a sweet deal for all those years, went to the open market and again found out he had it good with you.
He then requires a emergency cut on the same day - offers you more money
than the standard, and you accept less?

I notice you mentioned later that you are going to bank the favor on top of all the other favors (charging $125) for how many years or cuts? Do you think you would ever "even up the favors" with this guy? in order to either break even or be profitable? If the market is dictating more, and you are way below market to begin with - how much of a diservice are you doing to your business and family? The nice guy thing is you going over there that day because of his emergency is not yours! - that is above being nice. Giving away the store, is just that: giving away the store

Duc

You're reading far more into this than you need to. I don't believe in undercharging, NOR do I believe in OVERcharging. Simple as that. As it has been mentioned, I did this job unusually cheap as a favor to a friend. This friend has helped me in several areas unrelated to the mowing business. I may even be "ahead of the game" in many regards. I'd suspect you'd get a big laugh from any of my family if you mentioned that "dis-service" thing around them. I put together the business for the benefit of a son-in-law who is unemployed and a son who needs a little "suplimental income".

I'm NOT "way below market". That's simple as pie too. It may be cheaper than YOUR market, but I'm about midpack with my pricing around here. Obviously you don't know too much about the way I operate, because I'm the LAST person to "give away" anything. I'm just a man of my word. I priced the job at $400 and that's what I charged him. Anything more would be gouging and that is not something my business ethics would stand for.

 

[Farmwithjunk]

Yeah that wouldnt fly around here - this horsepower pro-rated thing is silly to say the least. It should matter not if you use a dixie chopper or some type of batwing and tractor setup. Around here its about $100-$125 per cut for 1.5 to 2 acre lots. And its finished under 1 1/2 hours

Silly you say? Construction (excavating) estimating has been done in much the same manner for years. It works. It's fair and equatable to BOTH the customer and contractor. Silly is passing off anything you don't understand as wrong.

And you seriously expect anyone to buy into the idea that it doesn't cost more to move and operate a 95hp tractor and 15' batwing than it does a 5' ZTR LAWN MOWER?!?!? If your operating cost is higher and you DON'T factor that in to your pricing, you're not in business long.

If it takes you 1-1/2 hours to cut a 2-acre lot, you need more adaquate equipment as opposed to soaking your customers. 2 acres would be about 45 minutes with my SMALLEST tractor, in the worst of conditions. I'd sure never expect my customers to absorb the cost of my using under-sized equipment.

Also consider I generally don't mess with piddly little 1-1/2 acre lots. The smallest I do currently is this 5-acre lot. And that, like I mentioned, is more of a favor to a friend than anything else. I can do favors for whomever I so choose, with or without anyone elses approval. That's a perk that comes with owning a thriving business.

 

[Farmwithjunk]

Hi Junk - I find this pricing info very interesting... especially the concept of "tractor horsepower per hour" as a general pricing tool. Can you give me some idea of typical equipment used in each case... under 10 acres, over 10 acres and over 25 acres... both tractor and mowing equipment? And do you change your equipment for overgrown vs. typical mowing height... or first time at a new location (think: rocks, debris, rebar survey markers, etc.) vs. repeat customer and known property?

In my built-up suburban area, there are very few big open fields left. My potential jobs are way smaller than yours area-wise... but (in some cases) terribly nasty. Some of these areas have never been mowed... some are strewn with rocks and cut stone and debris of all sizes and shapes. How... if at all... would you approach such a job?

Dougster

First off, that is a "rule of thumb" technique for establishing "going rate" in any area. It's a way to check your prices against your competitions. I come from a construction estimating background. That is one technique that has been used for decades to "quick-shot" a price for excavating.

I base my rates hourly. They fall with-in the range mentioned. Experience tells you how fast (or slow) you can mow in certain conditions. Nearly all the properties I mow would be considered relatively "clean". I've found all the business we can stay caught up with for now and I don't go after any extremely rough mowing. Just don't have the need. We do some "bid jobs" where a price is determined before hand. In that case, price is based on time I estimate the job to take X hourly rate for equipment used.

The hp/hr estimating method works well to compare your rates against competition, especially when everyone uses different sized equipment. As you do various jobs, look at the end results and keep a running tally. You'll see where it falls into the picture.

Mowing in what I'd consider TRASHY conditions is tough on equipment. Broken parts can be a HUGE variable. I prefer to leave that variable out of the equasion. I deal with rocks. That is a given in this area. It's the construction trash, re-bar, dump sites, ect that I let someone else have the pleasure of mowing in. Don't need 'em. Don't want 'em.

It helps to be in more of a rural area I'd guess. I am.

 

[LoneCowboy]

now now, farmwithstuff, big deep breath, relax

Pricing structures are different by region, area, and the size of the lot.
sure, you can do 2 acres in 45 minutes. if it's 15' wide by a whole bunch long.
Smaller pieces cost more per acre, that just makes sense. i can't use bigger equipment on smaller pieces, all you do is turn and turn and turn (and deal with fences) and most of the gates are small. Plus, i have to load and unload more often.
That costs more per acre.
If you have 20 acres in one big non-cross fenced piece, that costs less per acre, cuz it takes me less time. (passing my savings along to you. ) plus you can get big equipment in there.
Is it still a deal for the homeowner? i think so, I think it makes more sense for the under 10 acre slot. Over that amount, it's worth buying a 20/30,000 dollar tractor. under that, probably not.
but, that's my region and my business.
and, like you said, you don't even mess with under 5 acres, not your business.

we REALLY need a business forum.

 

[Farmwithjunk]

now now, farmwithstuff, big deep breath, relax

Pricing structures are different by region, area, and the size of the lot.
sure, you can do 2 acres in 45 minutes. if it's 15' wide by a whole bunch long.
Smaller pieces cost more per acre, that just makes sense. i can't use bigger equipment on smaller pieces, all you do is turn and turn and turn (and deal with fences) and most of the gates are small. Plus, i have to load and unload more often.
That costs more per acre.
If you have 20 acres in one big non-cross fenced piece, that costs less per acre, cuz it takes me less time. (passing my savings along to you. ) plus you can get big equipment in there.
Is it still a deal for the homeowner? i think so, I think it makes more sense for the under 10 acre slot. Over that amount, it's worth buying a 20/30,000 dollar tractor. under that, probably not.
but, that's my region and my business.
and, like you said, you don't even mess with under 5 acres, not your business.

we REALLY need a business forum.

Unless there's an unusual amount of obstructions, and the ground lays fairly smooth, and grass isn't waist deep, I don't have any problem mowing 2-1/2 to 2-3/4 acres an hour with a 6' mower behind a 47 hp tractor.

The most recent addition to the fleet, the Deere 6430 and Bush Hog 15' batwing was a few pesos more than you quoted (about double). And it pays for itself so long as the job is big enough. I wouldn't think of loading/haulin/unloading for less than 10 to 12 hours worth of work. Luckily we have quite a bit of 100 + acre cuts. (380+ hrs billed since we started mowing in April)

We need to make certain we're comparing apples to apples and oranges to oranges. I don't take any "land clearing" jobs or very few smaller cuts. Small end of the curve is around 40 acres average to biggest being 375, with just a tiny handfull of 15 to 20 acre jobs as fill-ins.

 

[LoneCowboy]

Unless there's an unusual amount of obstructions, and the ground lays fairly smooth, and grass isn't waist deep, I don't have any problem mowing 2-1/2 to 2-3/4 acres an hour with a 6' mower behind a 47 hp tractor.

The most recent addition to the fleet, the Deere 6430 and Bush Hog 15' batwing was a few pesos more than you quoted (about double). And it pays for itself so long as the job is big enough. I wouldn't think of loading/haulin/unloading for less than 10 to 12 hours worth of work. Luckily we have quite a bit of 100 + acre cuts. (380+ hrs billed since we started mowing in April)

We need to make certain we're comparing apples to apples and oranges to oranges. I don't take any "land clearing" jobs or very few smaller cuts. Small end of the curve is around 40 acres average to biggest being 375, with just a tiny handfull of 15 to 20 acre jobs as fill-ins.

apples to oranges here.
My biggest job is about 50 acres (and those are rare)
my typical job is 2 to 7 acres.
We'll load and unload for 1 acre (although the minimum dollar is more than that) and do ok with that.
but, different business, different world.
Although, this statement is funny.

Unless there's an unusual amount of obstructions, and the ground lays fairly smooth, and grass isn't waist deep,

, i think ALL my jobs are like that.

 

[Farmwithjunk]

, i think ALL my jobs are like that.

I went into this venture as a 59-3/4 year old that was biding my time 'till retirement. SIL became hoplessly unemployed. Son and his wife had twins and bought small farm and needed more income FAST. I had just stumbled into a bit of a windfall when a developer made me what I STILL consider a ridiculous offer on our farm. I decided if I was going to do this, I was picking my spots, not taking any work I didn't feel comfortable with. The whole ball of wax got a big boost when we took on a client that manages property for folks confined to nursing homes, and are now unable to tend to their property. (A connection aided by my attorney) We work for court appointed "conservators" on nearly 75% of the jobs. Most of this land has been until just recently, well cared for and in great condition. The bulk of it was small "horse farms" or tax shelter farms.

In so many words, I've got the perfect scenario for easy mowing. No need for taking on abusive conditions. The new tractor splits its duty as our main acreage mower and main tractor on Jonathons farm. It's just a tad overkill for either task, but just the ticket for doing BOTH.

Long story short, I prefer to specialize, and NOT try to take on every conceivable job or service. Being an old fart has its priveledges sometimes.

 

[ducati996]

Silly you say? Construction (excavating) estimating has been done in much the same manner for years. It works. It's fair and equatable to BOTH the customer and contractor. Silly is passing off anything you don't understand as wrong.

And you seriously expect anyone to buy into the idea that it doesn't cost more to move and operate a 95hp tractor and 15' batwing than it does a 5' ZTR LAWN MOWER?!?!? If your operating cost is higher and you DON'T factor that in to your pricing, you're not in business long.

If it takes you 1-1/2 hours to cut a 2-acre lot, you need more adaquate equipment as opposed to soaking your customers. 2 acres would be about 45 minutes with my SMALLEST tractor, in the worst of conditions. I'd sure never expect my customers to absorb the cost of my using under-sized equipment.

Also consider I generally don't mess with piddly little 1-1/2 acre lots. The smallest I do currently is this 5-acre lot. And that, like I mentioned, is more of a favor to a friend than anything else. I can do favors for whomever I so choose, with or without anyone elses approval. That's a perk that comes with owning a thriving business.

Why you getting so huffy? I wasnt offending you - or at least I didnt think I was

anyway you mentioned a 10 acre plot - at $20 -$28 an acre - thats low to me...anyway there are so many variables that we could go on indefinately

 

[ducati996]

You're reading far more into this than you need to. I don't believe in undercharging, NOR do I believe in OVERcharging. Simple as that. As it has been mentioned, I did this job unusually cheap as a favor to a friend. This friend has helped me in several areas unrelated to the mowing business. I may even be "ahead of the game" in many regards. I'd suspect you'd get a big laugh from any of my family if you mentioned that "dis-service" thing around them. I put together the business for the benefit of a son-in-law who is unemployed and a son who needs a little "suplimental income".

I'm NOT "way below market". That's simple as pie too. It may be cheaper than YOUR market, but I'm about midpack with my pricing around here. Obviously you don't know too much about the way I operate, because I'm the LAST person to "give away" anything. I'm just a man of my word. I priced the job at $400 and that's what I charged him. Anything more would be gouging and that is not something my business ethics would stand for.

Im sure there is a lot more to the story - so forgive me with going what was given and stating my opinion - I honestly still feel you left money on the table. You should not take offense from anyone saying this

Regards

Duc

 

[SuburbanMD]

Im sure there is a lot more to the story - so forgive me with going what was given and stating my opinion - I honestly still feel you left money on the table. You should not take offense from anyone saying this

Regards

Duc

This reminds me of an article I read recently about Marriott International's chief dealmaker (link below). The relevant quote is:

Sullivan learned early that dealmaking in the hotel world is different than in other industries because companies like Marriott prefer to make multiple deals, sometimes years apart, with the same developers. "I don't want to build 500 hotels with 500 people," Sullivan said. "I want to build 500 hotels with 50 people. . . . If I screw the other side, eventually they will find out and they'll get me."

"He gives when he needs to give, and he always leaves a little on the table so he can do another deal with them," Marriott said. "He could have taken more from time to time."



A Man of His Words - washingtonpost.com

 

[ducati996]

This reminds me of an article I read recently about Marriott International's chief dealmaker (link below). The relevant quote is:

Sullivan learned early that dealmaking in the hotel world is different than in other industries because companies like Marriott prefer to make multiple deals, sometimes years apart, with the same developers. "I don't want to build 500 hotels with 500 people," Sullivan said. "I want to build 500 hotels with 50 people. . . . If I screw the other side, eventually they will find out and they'll get me."

"He gives when he needs to give, and he always leaves a little on the table so he can do another deal with them," Marriott said. "He could have taken more from time to time."



A Man of His Words - washingtonpost.com

SuburbanMD,
Im glad you felt my quote was the perfect lead in - but I disagree because
"Farmwithjunk" was giving this guy a deal for years - and it certainly didnt sound like he liked the guy or liked doing business with him at the time

see his quote:

Farmwithjunk quoted:
"I've mowed a 5-acre lot for a friend of a friend for the last 5 years. I started doing it more as a favor than anything else. That was way before I started mowing for $$$.$$ on a regular basis. When I first did it, I charged just about enough to make it worth my while but not enough to really turn a profit. ($125) Like I said, just a favor.

Well, after 3 years, I decided I needed to charge a fair rate. Fair to ME. SO 2 years ago, I told the guy I needed $250. (It's 15 miles from the house.) He balks at my price, but after he got a few HIGHER prices, he called back and agreed. I mowed it 4 times last summer @ $250.

Last fall this guy decided to plant 110 trees scattered randomly across the lot. It takes longer to mow with everything to dodge now. That and I lost my parking spot across the road. (Deep ditch on the front of the lot I mow prevents me from getting truck and trailer off the road) Adding insult to injury, he decides to "save money" by mowing 2 times a year instead of 4. Weeds and bermuda grass now waist high. In the past we cut at 18".

And when he calls last week, I tell him no way I mow for $250 under present conditions. Price is now $400. He goes off, finally hanging up the phone. Good riddence. "

 

[KrumpsBrother]

Why feed the kids? It makes them grow faster! Healthy grass will grow faster, but it sure beats half grass and half weeds. Grass that is fertilized will have a better chance at surviving a drought, the same way a healthy person will have a better chance of surviving in a famine than someone half starved already.

KBF,

I was just wondering, from what LC described, it sounds like a run down house with alot of junk, why spend the money on the fertilizer (which aint cheap), only to spend even more money paying someone to mow it weekly? Not to mention the time the absentee owners spend on thier riding mower.

Pasture grass here is fertilized according to soil analysis and desired yields per acre, weeds are treated with hebicides, which is much more effective and less costly than mowing.


KB

 

[LoneCowboy]

KBF,

I was just wondering, from what LC described, it sounds like a run down house with alot of junk, why spend the money on the fertilizer (which aint cheap), only to spend even more money paying someone to mow it weekly? Not to mention the time the absentee owners spend on thier riding mower.

Pasture grass here is fertilized according to soil analysis and desired yields per acre, weeds are treated with hebicides, which is much more effective and less costly than mowing.


KB

Sorry, it's my confusing post
It's the house next door that we take care of that we fertilized, not the place that's run down.

Spraying is NOT less costly than mowing. Insurance alone is (are you sitting down) for one guy with a spray truck (just business liability) is 8000 a year (that's right, eight thousand). No, we don't spray.

 

[john_bud]

Yeah that wouldnt fly around here - this horsepower pro-rated thing is silly to say the least. It should matter not if you use a dixie chopper or some type of batwing and tractor setup. Around here its about $100-$125 per cut for 1.5 to 2 acre lots. And its finished under 1 1/2 hours

Interesting.


A small job would probably have a hour tacked on for delivery and setup. That's relatively standard. The 1.5 acre lot would then be billed for 2.5 hours and if pay was $100 - guess what? 40 bucks an hour.

Magically, that's about the time it would take my L3410 with 5' cutter to do a 1.5 acre lot with a fair amount of obstructions. It is a 30 hp tractor $1.25 * 30 *2.5 = $93.75.

Amazingly close with both methods.

 

[ducati996]

Interesting.


A small job would probably have a hour tacked on for delivery and setup. That's relatively standard. The 1.5 acre lot would then be billed for 2.5 hours and if pay was $100 - guess what? 40 bucks an hour.

Magically, that's about the time it would take my L3410 with 5' cutter to do a 1.5 acre lot with a fair amount of obstructions. It is a 30 hp tractor $1.25 * 30 *2.5 = $93.75.

Amazingly close with both methods.

I gave a quick estimate - and that was including triming and clean up, using a ZTR (wright standers or others), and most likely its a 45 minutes job. Some lots are priced higher (2 acre), sometimes twice a week, and my size machine (and yours) would be too big. There is no shortage of customers, and the better accounts are in the commerical properties, which Im not disclosing prices or estimates.

Hope this helps

Duc

 

[Farmwithjunk]

Why you getting so huffy? I wasnt offending you - or at least I didnt think I was

anyway you mentioned a 10 acre plot - at $20 -$28 an acre - thats low to me...anyway there are so many variables that we could go on indefinately

I'm not "getting huffy", just defending what I know to be right. To paraphrase an old ice hockey term, your wording seemed a little "chippy".

 

[Farmwithjunk]

Im sure there is a lot more to the story - so forgive me with going what was given and stating my opinion - I honestly still feel you left money on the table. You should not take offense from anyone saying this

Regards

Duc

Again, I'm taking just about all there is "on the table" with most of my work. Mowing just doesn't pay as much in these parts as it apparently does in other areas of the country. The one job I did cheap was as a favor for a friend who used the lot I mowed to ride his dirt bike on. The owner wouldn't have cut it back then. It would have been overgrown and left uncut if he had to pay the full price. It's in Jefferson County Kentucky. The county government merged with Louisville CITY gov a few years back. Now the county has several "city" ordinance's requiring lots in suburban areas to be kept mowed. He has no choice nowday. My friend doesn't use the lot any longer.

I priced mowing the 5 acres at $400. That was MY price. The owner was begging to get it cut before he got fined. I wasn't going to take advantage of him, just because he's in a bind. Not my way. The lot is mowed. I contacted him today. We set up a regular mowing schedule from now on. I get my $400 which is more than double the "going rate" in this area. I charge that much now because of extenuating circumstances. (no place to park truck at the lot/too many trees/no access for bigger tractor because of drainage ditch)

 

[Farmwithjunk]

Interesting.


A small job would probably have a hour tacked on for delivery and setup. That's relatively standard. The 1.5 acre lot would then be billed for 2.5 hours and if pay was $100 - guess what? 40 bucks an hour.

Magically, that's about the time it would take my L3410 with 5' cutter to do a 1.5 acre lot with a fair amount of obstructions. It is a 30 hp tractor $1.25 * 30 *2.5 = $93.75.

Amazingly close with both methods.

The term HP/Hr was coined by a gentleman named Lester Larson. He was the Chief Engineer for the University of Nebraska Tractor Testing Lab. He laid down the protocol for testing and comparing farm tractors in the beginning stages of Nebraska Testing. His hp/hr and hp/hr per gallon fuel comparison is still the ultimate "level playing field" for rating tractor performance. It's not the above all and end all way of pricing work, but it IS a good way of determining "going rates" when you have price info from several contractors to compare. As I mentioned, it's a good "rule of thumb" for fast and easy pricing with various sized equipment. It gets you in the ballpark without a lot of calculations or guessing. The concept throws a lot of people for a loop. It's just "too simple" in some eyes. The same basic premise is used in a number of construction estimating software packages for excavating work.

The fly in the ointment in the earlier post's was attempting to relate bush hogging rates/time to finish mowing rates/time. Apples to oranges don't compare well.

 

[KrumpsBrother]

Spraying is NOT less costly than mowing. Insurance alone is (are you sitting down) for one guy with a spray truck (just business liability) is 8000 a year (that's right, eight thousand). No, we don't spray.

Do some reasearch on weed control/pasture management and check the facts.

I didn't have to pay 8000$ to the applicator who spayed Grazon P+D on my pastures. I paid 12$/acre @ 60 acres, and not a weed to be found. Cows are happy and I didn't have to mow my hay crop down either, and far less soil compaction from not having to mow every few weeks. I have my pastures sprayed once a year.

Fact is that applying herbicide IS cheaper than repeated mowings for weed control. It's a vital part of the system for proper pasture management.

Many people move from the city to the country and feel they need a 10 acre lawn, hence the repeated cuttings for weed control. I think you've got a good business filling this niche market and wish you the best of luck (at least better than last week!).

KB

 

[DTCOOPER]

I just wish that folks down here were as willing to pay for equipment, expertise, insurance, fuel, other expenses, as those in other parts of the country. I suppose a few "prostitutes" (insert slang term here) are to blame for setting the market at a ridiculously low level.
Typically, we are able to charge 20.00 per acre for mowing. Lots of trees, ponds, etc, we can usually get 25.00 per acre. I am in a very rural area, where lots of folks have tractors. Bittersweet thing is that more and more folks are moving out here to the sticks, and buying small acreages. Most will buy themselves a small rider for a year or two, until they realize that an MTD 16HP mower is not designed to cut 2-1/2 acres of knee high grass. THEN they will come around to paying the 20-25 per acre. But as I said, even at these prices, it's hard to break even, much less make a profit. Especially when you load up Saturday morning at 6:00, drive 17 miles, unload, mow a "4 acre guaranteed clean pasture" for 80 bucks, and irrepairably cut a front R1 Tire on the Case DX33.. Soooo, $15.00 fuel (tractor and truck), insurance, 2 hours, 60.00 dollar tire..... equates to lost my tail this Saturday.. Oh well, comes easy and goes easier I suppose..