We’ll cover the essentials on what you need to know to create profitable landscaping estimates. In this article, you’ll learn:
- Scoping Project Needs and Specs from the Customer
- Estimating Overhead Costs
- Estimating Materials Costs
- Estimating Subcontractor Costs
- Estimating Labor Costs
- Adding Profit Markups and Margins
- Calculating Total Price
- Calculating Profitable Estimates with Software
Scoping Project Needs and Specs from the Customer
The first step to building an estimate is to understand the Customer’s ask. Unless it’s a maintenance job at the same location, no two jobs are the same. Take the time and build out an estimate with as much detail as possible.
For starters, contractors on a design build job should look at determining:
- Services needed (features, pathways, retaining walls, etc)
- Materials needed
- Site measurements
- Design style
- Quality of current soil on property
- Quantity of soil needing to be added
- Cleanup
Those are only a handful of items to consider when building out an estimate for a single type of job. Most information can be passed over email or a phone call, but your eyes and experience are the best tools to help build an estimate.
Estimating Overhead Costs
Job costs are only one portion of your landscape business’ bigger financial picture. Business owners need to know what their overhead is to price for a profit. If you underestimate or simply don’t know what your overheads costs are, you might as well be running a charity in the landscaping industry.
Here are some landscaping industry overhead costs you need to account for in every estimate:
- Vehicle repairs, maintenance, and expenses (insurance, gas, etc)
- Company cell phones or tablets
- Tools
- Equipment purchases or rentals
- Equipment repairs or maintenance
- Office rent
- Uniforms
- Leases
Estimating Material Costs
Materials costs and availability have never been more unpredictable. Creating a timely and accurate estimate can help businesses and customers stay on budget while avoiding the risk of skyrocketing costs. This reason alone is why it’s essential to get detailed and accurate project and site specs. It’s also important to set your profit margins or markups on materials at a healthy rate so that you’re continuing to estimate for a profit, but not high enough that you’ll lose work from bloated estimates.
Estimating Subcontractor Costs
It’s important to establish relationships with a roster of subcontractors. Despite the added immediate cost of subcontractors, a good subcontractor can make some tasks more efficient from their expertise or by simply having an extra set of hands. This cost can save time and money down the line and provide a more desirable estimate that fits within a customer’s budget.
Estimating Labor Costs
Labor costs and Subcontractor costs are two different line items in an estimate. Understanding how your crew looks and works is important to determining how many people you need on site, who you need on site, how long the project will take with that roster, and where some subcontractor help might be needed.
Labor is one of the heftier parts of a landscape estimate, so make sure to ballpark your labor hours and crew numbers as accurately as possible to determine scheduling and timing for future contracts. Once you consider the amount of hours, you need to incorporate your profit margins on top of those costs.
Adding Profit Markups and Margins
Understanding your profit margins and markups are essential in staying profitable in the landscape industry. Some business owners have a tendency of eyeballing numbers or pulling them out of thin air, often leaving money on the table when submitting estimates to their clients. By incorporating a targeted profit margin in your markup calculation, you can stay profitable and keep a consistent and healthy cash flow within your business no matter the change in scope or scale of the project or job.
Calculating Total Price
Now that you have accounted for all the above costs, it’s time to package it together into one estimated price. The more detail you have in the estimate, the more confidence you can have in that being an accurate number for both your customer’s budget and the money you and your crew can take home.
Before you celebrate a successful estimate, keep in mind that unexpected costs and waste add up. Reworks from mistakes, equipment damage or maintenance, or unbillable time like traveling between sites and lunch breaks all eat into your profit margins. Make sure you and your business are as prepared as possible for unpredictable costs by eliminating the waste, and keeping proper systems and procedures for a safe and profitable landscaping business.
Creating Profitable Estimates with Software and Apps
Estimating mistakes are common but can have a major impact on profits and business operations. Using landscaping estimating software and mobile estimating apps can reduce or completely eliminate these mistakes, increase profits, and speed up job completion times.
- Calculate material costs accurately: estimating software is much more accurate than calculators, spreadsheets, or scratchpads. LMN estimating software uses real-time supplier pricing for the most accurate estimates.
- Accurate specifications: estimating software ensures that product or material specifics are correct up-front before the job is started.
- All necessary equipment and items included: estimating software always includes the necessary equipment and extra items for a job so they aren’t forgotten.
- Accurately calculate labor hours: software makes sure that labor hours for all tasks are accounted for and not forgotten.
- Standardize pricing: since estimates can be standardized with software, more staff can create estimates without as much training while maintaining consistent profitability.
- Real-time inventory tracking: software eliminates the possibility of a salesperson including materials that aren’t actually in stock.
- On-site estimating: mobile estimating apps allow for faster, more accurate estimating on-site without having to go to the office. Sending estimates quickly usually results in more won business.
Request a free estimating software account and increase the profits from your estimates or download LMN Gro mobile estimating apps from Google Play or Apple store.
