How do you go about pricing your services for profit?
Communicating cost increases to your clients aren't the easiest yet it has to be done as a business continues to grow.
Thoughts?
Forum Discussion
73 Replies
Make sure you are including all costs and expenses in your quote. Some of the small, missed expenses can really cut into your bottom line. I typically multiply the cost of parts x 3. Labor is quoted at 2.5 x the hourly rate. I make sure that I am quoting about 60% gross margin so I have room for contingencies that may come up.
Hello - new here and to running a landscaping business. When you are purchasing from retail stores at a normal price, how can I mark up an item by 60% (as seen in comments above) and not have customers give the hairy eye? Do you also charge for time sourcing these materials, plus this markup?
Thanks in advance for your input!Hey Heather, first you should do yourself a budget. The budget is going to tell you what margin you need to charge. Yours with no overhead might be 40% gross margin. Who knows. This will also get you away from asking other people what they charge. It doesn't matter what they charge they would have different overhead.
Also this is margin not mark up, I would try to loose mark up from your vocabulary, it's not the same as margin. Markup doesn't mean anything and doesn't tie to your budget.
Now if your budget that you made is telling you that you need to make a 50% gross margin to have a profitable year then it doesn't matter how you get it but you need to get it somehow.... 50% means your doubling your labour base costs and doubling your materials. But don't separate these out on a quote. Write something like "5 yards of soil + pick up and delivery" so it's just one line item and a price.
If someone asks you to "break down your price" you say "sorry we don't do that" haha. Just like when you buy almost anything else in life, you don't get a breakdown of labour and materials and you don't know the margin the company is making on everything you purchase.This is a great response and also gives me more clarity for my business as well. Thank you! This is another reason why understanding my numbers in my business is so important.
Very true but its a very important step to actually be profitable. You cant look at it like a burden to your customer, you have to understand you cant serve your customers properly if you are not profitable.
This is a great question! Ive heard people survey their clients but you can always do price analysis to your competitors as well and then price according to what feels right for you. You can adjust as you go.
Hello Im new here and i read the comments and thanks all was very imformative and helpful with the economy increase and tariffs fees when ordering supplies outside of the US.
Based on what I create and the materials and time it takes to turn them into a functional piece of art, I price my pieces at anywhere between $300 to $1100 a piece. Most people would say that my products are overpriced but I’d say most of what I create is art first and then functional and art is subjective. If someone is willing to pay for the cost of my products, then it becomes the worth and value. Just my line of thinking.
I had to see what the going rate was for Residential Cleaners in my area. I did this by looking online for the top companies that offered instant quotes. I plotted the quotes and did as many as I needed to gauge size and type of service. From there, I had more of a sense for what i should charge, taking into account my time and materials.
- How I Bid Linear Sewer Work with Confidence and ConsistencyIn construction, efficiency is everything. Whether you’re estimating a small run or an entire subdivision, the most important factor is how quickly and accurately you can translate scope into a reliable number. I approach all my bidding with a structured formula that turns project dimensions into predictable costs—and it’s worked for me time and again.When I bid sewer work, I do it by the linear foot. That ensures I’m consistent across projects and simplifies budgeting both for me and the client. Here’s an example using 8” SDR 35 sewer pipe with pea gravel bedding, based on a 100-foot section. I bid based on what my crew can actually install per hour, and I build in material, labor, equipment, and markup for true margin.MATERIALS – PIPE• 100 ft @ 20-ft sticks = 5 sticks total• Raw Cost: 5 sticks × $300 = $1,500• Markup (30%): $450• Total Pipe Material: $1,950EQUIPMENT & LABOR (Per Hour to Install 100 ft)Description RateExcavator $325/hrPipe Layer $70/hrLabor Hand $50/hrLoader $260/hrTrench Box Rental $100/day = $10/hr → +30% = $13/hrTotal Labor/Equip: $718/hourThis assumes one hour to install 100 feet, which is achievable with an experienced crew.BEDDING MATERIAL – PEA GRAVEL• Volume Needed: 100 ft x 1 ft wide x 0.5 ft deep = 50 cu ft = 1.85 cu yd• Cost/yd (Local): $50• Total Gravel Cost: 1.85 × $50 = $92.59COMBINED TOTAL BEFORE FINAL MARKUP• Pipe (with markup): $1,950• Labor & Equipment: $718• Pea Gravel: $92.59• Subtotal: $2,760.59FINAL MARKUP – 10% ACROSS THE BOARD• $2,760.59 × 1.10 = $3,036.65FINAL COST PER LINEAR FOOT• $3,036.65 ÷ 100 ft = $30.37 per footWHY THIS WORKSThis method gives me full control of my bidding process and keeps everything transparent. It accounts for:• Equipment time• Labor by the hour• Exact material needs• Overhead and markup, built inBy marking up each item 30%, I account for material reliability, risk, and the value of my sourcing and supply. Then I apply a 10% global markup to protect my margins and overhead. That structure gets me into the 25–45% margin zone, depending on the project.If you’re a smaller outfit handling both the management and the work, you should be shooting for 55%+ to stay sustainable. Anything less, and you’re paying for your own jobs out of pocket.Some clients may not understand why their quote is higher than the guy who scribbles numbers on a napkin. But when you break it down this way—clearly, with purpose—it gives them peace of mind that their job is planned, professional, and worth the investment.Closing Thought:One model doesn’t fit every job, but every estimator should have a model. This is mine. Once it’s built, I don’t have to guess, tweak, or second-guess. I plug in the job length, soil conditions, and material specs—and the numbers speak for themselves.
Key Point Deliverance
I'm a one-man shop, my overhead is low. I confirm everything I can think of and do research to make sure there's nothing else I need to include. I also make sure to pad my labor by an hour or two. I tend to think I can do more than I actually can in the course of a day, so it tends to help with both controlling my rate and completion time in my favor.
I crease my prices 10-20% per year to our regular customer.
