Trying to scale up my pricing

[BossTractor]

Currently I have a 2016 John deere 3032e and a frontier RC2060 rotary cutter. I am currently charging $75/hr cutting and $2/km travel one way. I was charging $75/hr travel but recently changed it to Km based pricing cause my biggest expensive is travel (fuel for a 7.3L f350 dually, oil changes, wear and tear, wear on 10 tires, etc $0.44/km).

I am constantly averaging 1.4-1.5 acres an hour with this set up giving me $50-53/acre. Some early season mowing with smooth ground I was around 2ac/hr. Some super rough stuff I was 1ac/hr.

Here's my issue. Next season I'm am looking to purchase a Kioti RX7320 and a 8' dual spindle HD mower.

With that set up at 3mph and 1 foot over lap I'm looking at 2.5/a s an hour. And that's low cause I could cut Around 4-5mph ideally with the bigger tractor and suspension seat.

2.5ac/hr at my current $50ac average gets me around $125/hr. I'd like to be around $150/hr so I'm thinking about just going in at $60/ac for most jobs.

What kind of rates are you guys getting? I gotta add that I'm in Alberta, Canada. Prices here are very inflated due to exchange rate and our huge oil economy. Skids steers average $100/hr with 4hr minimums.

 

[John_Mc]

Is that skid steer price is just for the equipment itself, and does not include the operator?

 

[Bavarian]

There is a website of operation costs for farm equipment. I found one from Saskatchewan. Even when I'm from Manitoba, it's very helpful and detailed in information, cost of ownership, fuel, maintainance and so on.

I don't know how to add a file or post a link here but I've downloaded and stored as pdf on my phone.

 

[BossTractor]

I have viewed the Alberta, Sask, and Manitoba custom rates surveys. Even a few states

 

[BossTractor]

Skidsteer rate is with operator

 

[LD1]

How long have you been in business? How many jobs do you do per year? How many acres per job average?

I have been in the mowing business for about 5 years now. I average 60 jobs per year which is about 9-10 per month. And those average about 4 aces each. But some as small as a corner lot in the city, to over 25 acres.

So I gotta ask, how are you charging? Because you didnt make that clear. Are you charging by the acre? or by the hour? Because neither is the right way to go IMO.

This isnt a simple dirt moving job or excavation job where you can have a structured price. Because EVERY acre is different. Obviously you can mow faster (acres per hour) on a smooth flat 20 acre plot that was just mowed 3 months ago..........vs a 1 acre plot with 8' tall briars, saplings, and hasnt been touched in 10 years. Around here, the 20acre smooth plot that gets mowed 3-4 times a year, you wouldnt touch it for $50/acre. You would be priced out. And if you priced $50 per acre on stuff that aint been touched in 10 years, you are gonna loose money.

So pricing by the acre is a No-no IMO.

Now pricing by the hour I also dont like. I have to cover my drive for starters. And the first question a customer always asks......"how long do you think its gonna take?" If you are too fast, you are shooting yourself in the foot. If you are too slow.....what do you say when you try to bill 6 hours and the customer says "I though you said it was gonna take 4 hours"?

And especially in your case by upgrading equipment......how do you explain to a customer that you are charging $125 (or $150) per hour when billy bob down the street is only charging $70 per hour. The customer doesnt realize that you have a much more capable (faster) machine and billy bob is running a 25hp machine and 5' cutter.And the fact that you can mow twice as fast as him, and only charging 90% more is actually going to be less money to them.

The best way to charge plain and simple is by the job. Its okay to have a "target" rate per hour you want to be at. But dont let the customer be clued in to that information.

My target is $75/hour from the time I leave my shop til the time I return to my shop for my MX5100 and 8' twin. And with well over 1000 acres of all types mowed, I am pretty good at knowing how long a job is going to take me.

So customer calls me, "I got 4 acres I need mowed how much would you charge"
get the basics.
1. Get an address. I am simultaneously looking it up on findlotsize.com (so I can confirm acreage) as well as google to figure the drive time. The satellite view is very helpful in telling me what there is to mow around, trees, houses, fences, etc.
2. When was it mowed last. within a year....just grasses/weeds? Dense briars and saplings....not touched for 5-10 years, or something in between?

From all that I can figure how long it will take me to mow, and will know my drive time.

So this customer calls for 4 acres, just mowed earlier this spring, wide open nothing to mow around.....yep that will take me about an hour. And you live 45 min away.....so 1.5 hr drive. 2.5 hours.....call it 3 for time to load, unload, meat the customer, get paid, etc......I'd charge $225.

Another example.....customer calls and has 1 acre they need mowed but hasnt been touched for 5 years and impossible to walk. Yea, I'd figure that at a good 1.5 hours + drive.

But the key is, the customer dont need to know my time line, how long I think its gonna take, or how much my target $/hr is. All they need is a flat price.

Good luck. But to answer your question plain and simple.....dont scale your pricing. Simply rethink how you bid.

IF you "were" charging $75/hr......and are now wanting to charge $150 per hour.....are you confident you can mow twice as fast? Otherwise whats the point of the upgrade? What about repeat customers. Someone who you have mowed the last 4 times for.....is this machine upgrade and jump to $150/hr going to make you have to increase your price? Cause if so....anyone up there running a tractor similar to your old setup is going to underbid you.

 

[BossTractor]

This is my first season in business. My jobs are between 2-12 acres. No one size more than the other.

For June and July I'm at 40 jobs so far.

I charge $75/hr currently.

Everything you mentioned is exactly what my thoughts have been. I don't want to charge by the acre. I was just saying a figure I'd like to aim for. I've learned in the last 200 acres and 40 jobs how to judge how long it's gonna take to complete a job. That's why I'm thinking about going to by the job pricing or $125-150/hr depending on the job on the larger set up.

I use a agriculture apps for measuring acreage of the places. It's pretty accurate. I won't touch 1 acre jobs.

I don't want to double my monthly payments and triple my fuel consumption just to end up cutting faster and making less money than I am making currently. That's why I am trying to scale it up.

The larger tractor does open up more opportunities to add more equipment and do other stuff. But right now my staple is mowing.

There are very few people in the area that advertise mowing. It's been very easy to get jobs cause there's only one other guy brush mowing that advertises on Facebook, kijiji, Craigslist etc and he runs a skidsteer mower.

I plan on keeping the smaller set up for my smaller 3-4 acre lots with small gates.
I will advertise it at $75/hr at 1.4 ac/hr average and the larger unit at $150/hr w/ 3ac/hr average so people can hopefully see that yes it costs twice as much, but cuts twice as much.

 

[Ryansweatt2004]

How long have you been in business? How many jobs do you do per year? How many acres per job average?

I have been in the mowing business for about 5 years now. I average 60 jobs per year which is about 9-10 per month. And those average about 4 aces each. But some as small as a corner lot in the city, to over 25 acres.

So I gotta ask, how are you charging? Because you didnt make that clear. Are you charging by the acre? or by the hour? Because neither is the right way to go IMO.

This isnt a simple dirt moving job or excavation job where you can have a structured price. Because EVERY acre is different. Obviously you can mow faster (acres per hour) on a smooth flat 20 acre plot that was just mowed 3 months ago..........vs a 1 acre plot with 8' tall briars, saplings, and hasnt been touched in 10 years. Around here, the 20acre smooth plot that gets mowed 3-4 times a year, you wouldnt touch it for $50/acre. You would be priced out. And if you priced $50 per acre on stuff that aint been touched in 10 years, you are gonna loose money.

So pricing by the acre is a No-no IMO.

Now pricing by the hour I also dont like. I have to cover my drive for starters. And the first question a customer always asks......"how long do you think its gonna take?" If you are too fast, you are shooting yourself in the foot. If you are too slow.....what do you say when you try to bill 6 hours and the customer says "I though you said it was gonna take 4 hours"?

And especially in your case by upgrading equipment......how do you explain to a customer that you are charging $125 (or $150) per hour when billy bob down the street is only charging $70 per hour. The customer doesnt realize that you have a much more capable (faster) machine and billy bob is running a 25hp machine and 5' cutter.And the fact that you can mow twice as fast as him, and only charging 90% more is actually going to be less money to them.

The best way to charge plain and simple is by the job. Its okay to have a "target" rate per hour you want to be at. But dont let the customer be clued in to that information.

My target is $75/hour from the time I leave my shop til the time I return to my shop for my MX5100 and 8' twin. And with well over 1000 acres of all types mowed, I am pretty good at knowing how long a job is going to take me.

So customer calls me, "I got 4 acres I need mowed how much would you charge"
get the basics.
1. Get an address. I am simultaneously looking it up on findlotsize.com (so I can confirm acreage) as well as google to figure the drive time. The satellite view is very helpful in telling me what there is to mow around, trees, houses, fences, etc.
2. When was it mowed last. within a year....just grasses/weeds? Dense briars and saplings....not touched for 5-10 years, or something in between?

From all that I can figure how long it will take me to mow, and will know my drive time.

So this customer calls for 4 acres, just mowed earlier this spring, wide open nothing to mow around.....yep that will take me about an hour. And you live 45 min away.....so 1.5 hr drive. 2.5 hours.....call it 3 for time to load, unload, meat the customer, get paid, etc......I'd charge $225.

Another example.....customer calls and has 1 acre they need mowed but hasnt been touched for 5 years and impossible to walk. Yea, I'd figure that at a good 1.5 hours + drive.

But the key is, the customer dont need to know my time line, how long I think its gonna take, or how much my target $/hr is. All they need is a flat price.

Good luck. But to answer your question plain and simple.....dont scale your pricing. Simply rethink how you bid.

IF you "were" charging $75/hr......and are now wanting to charge $150 per hour.....are you confident you can mow twice as fast? Otherwise whats the point of the upgrade? What about repeat customers. Someone who you have mowed the last 4 times for.....is this machine upgrade and jump to $150/hr going to make you have to increase your price? Cause if so....anyone up there running a tractor similar to your old setup is going to underbid you.

This is exactly the kind of info I've been wanting to hear with trying to figure out pricing for rototilling.

 

[LD1]

I plan on keeping the smaller set up for my smaller 3-4 acre lots with small gates.
I will advertise it at $75/hr at 1.4 ac/hr average and the larger unit at $150/hr w/ 3ac/hr average so people can hopefully see that yes it costs twice as much, but cuts twice as much.

I still wouldnt advertise like this. People are going to read into your average acre/hr and cost as hard facts. And are going to call you about a 9 acre job, with lots to mow around, and broke up into several smaller sections, and expect you to do it in 3hrs/$450.....and when it takes you 5hr and $750, you are going to have an unhappy customer.

I don't want to double my monthly payments and triple my fuel consumption just to end up cutting faster and making less money than I am making currently. That's why I am trying to scale it up.

Understandable, but scaling up should NOT make you have to charge more to cover your cost. Otherwise there is no advantage to the customer to hire you.....who can mow 3x faster, vs the small guy.

Scaling up should allow you to do the jobs more efficiently. (the larger 3-4+ acre jobs). And by doing them more efficiently, even though it works out to charging alot more per hour, you should still be as cheap as or cheaper than the small guys.

But where you make more money is the fact that you have time to do MORE jobs in a day/week/month whatever.

And your 3/acre per hour average claim.....sure, I agree thats a good average.

But again, you have to take it on a job by job basis. IF you get a wide open smooth 20 acre job thats just pasture and mowed 2-3 times a year, 5+ acres per hr. As thats what I can get on those jobs. But a thick nasty job, you might stall to 1-1.5 acre per hour. So in reality, based on that, your price could be $25/acre, or $150/acre, or anything in between.

Customers like knowing up front what their bill is going to be. And expect to pay that amount and nothing more. If they agree to pay $xx for mowing lot Y....they dont care if you cut it with scissors and it takes all day, or with a 15' batwing and you are done in 15min. Scaling up, you should be able to do bigger jobs cheaper than someone with a 25hp machine and 5' mower. All about efficiency. The sub-1acre jobs, its about a wash. Just depends on location. You will have alot more in transportation, as your rig is likely being moved with a dually diesel truck and heavy equipment trailer. And thet can move their SCUT on a landscape trailer behind a small truck.

 

[LD1]

This is exactly the kind of info I've been wanting to hear with trying to figure out pricing for rototilling.

Tilling is something I have never ventured into. Way too many people with a little BX sized machine advertizing $25-$50 per garden.

I'd have to have a 7' tiller to cover my tracks, they are expensive, not alot of demand out here in farm country because everyone knows someone with a tiller that will work for beer money, and liability. My insurance wouldnt approve. While you arent gonna hit any power lines or water lines tilling 6' down.....thats well within range of phone, cable, irrigation systems, invisible dog fences, etc.

Risk vs reward just not worth my time.