Scott Bierman, owner of Pro-Mow Lawn Care in Charleston, Illinois, says he knew his job bidding was off, but he didn’t realize by how much. When he actually began tracking man hours and analyzing equipment costs, he says it wasn’t just eye opening — it was upsetting. There were a few jobs that they not only made no money, but they were losing as much as $50. Since getting a better grip on his prices with the help of LandOpt, a service organization that empowers landscape contractors to attain higher profits and growth, Bierman says he’s gradually increased profitability.
“Before bringing LandOpt in to help us revamp our systems, we were bidding jobs simply on labor rate and how long we thought it might take to do a job,” Bierman says. “We didn’t have any formula or system in place to come up with a price and while we thought we were hitting the mark, there were some jobs that we were pretty far off — and that was really hurting us.”
Bierman says he expected to find a few jobs that weren’t profitable. But what he was shocked to find that there were some jobs he was losing money on. In the worst case scenarios, there were several jobs that were losing $50 each time the crew went out.
“It’s like we were leaving fifty bucks on their front porch every time we went there,” Bierman says. “These were jobs that we bid low man hours on. We thought they would take us two hours but they were taking us more than double that.”
By utilizing an estimating tool from LandOpt, Bierman says he now runs numbers on every job and knows exactly what he should be charging. That’s been incredibly helpful in bidding new work more competitively and more profitably. But he also had to go back and deal with those jobs that were losing money. Bierman says he had to let those clients know he was raising his prices. That’s never an easy conversation but Bierman says he was pleasantly surprised at how many contracts he kept. That showed that his customers were happy with the service he was doing and willing to stay on board even at the higher price.
In the end, Bierman says they terminated 20-25 clients that wouldn’t be able to adapt to the new price. And with another 20-25, they worked out a deal in which the price would slowly increase 5 to 7 percent each year so that the customer wasn’t hit with the change all at once.
“These were some of our long-held customers of a decade or more who wanted to stay with us but were struggling with the new price,” Bierman says. “We wanted to keep their business but we also need to gain profitability. By slowly increasing them, we’re getting there. And by weeding out some of the customers that we were losing a lot of money on and wouldn’t adapt to a new price, we instantly put ourselves in better shape.”
Bierman says his best advice to other contractors who are struggling with profitable bidding is to get on top of your numbers.
“It doesn’t take long for a few poorly priced jobs to really impact profitability,” Bierman says. “Now that we’re on top of our numbers, we’re making up for lost time with rising profitability.”
Read More: Be Smarter in Bidding Jobs
Our Like a Boss series highlights some common business challenges landscape professionals face and how they conquer them.