How to bid jobs when you have equipment?

[rangerdanger]

I saw a bit of this going on in the work pics thread and wanted to start a new one on it. I'm curious for those with equipment, are you charging more, less, or the same as when you didn't have it. I've always thought one should charge about the same, because you're doing the same job, just faster. But in light of some recent removals, where we charged $700-$1000 per tree and finished it in about 2-3 hours per tree, sometimes less, I'm wondering if we should charge a bit less. With the Gehl and dump trailer we've become extremely efficient at most removals, especially flop and clean ups.

 

[top_notch]

Seems to me you should charge as much as you can but still be competitive with the competition's rates. Were the customers pissed off you finished a $1000 job in three hours? I guess my thought on it is bid as you have been as long as you are still making money. The equipment is there to make you money not enable you to charge the customer less, right? However I'm not a tree business owner so perhaps my opinions should be taken with a grain of salt.

 

[flushcut]

On small jobs I will charge by the hour and make some money but not real money. For bigger jobs I charge a flat rate. I look at it this way the custy is paying to have a tree removed and could care less what you bring to the plate to get it done.
Now having said that I will go as low as $50 a man hour on the really big gigs, country clubs, HOA's, and such, where I am going to make real money over the long run. Then I will bill out certain pieces of equipment, bucket, log truck, big CAT skidsteer, as extra man hours.
But all of this is subject to a pain in the ass fee.

 

[Tucker943]

I saw a bit of this going on in the work pics thread and wanted to start a new one on it. I'm curious for those with equipment, are you charging more, less, or the same as when you didn't have it. I've always thought one should charge about the same, because you're doing the same job, just faster. But in light of some recent removals, where we charged $700-$1000 per tree and finished it in about 2-3 hours per tree, sometimes less, I'm wondering if we should charge a bit less. With the Gehl and dump trailer we've become extremely efficient at most removals, especially flop and clean ups.

Don't ever reduce your rates because you are well equipped. That's like saying "Ive busted my balls to get somewhere and now I want to make less money for having done so". Reduce your rates if you find that you aren't competitive and don't have a solid customer base to rely on. If you are available, reputable, and legitimate, charge good money. Not everybody is all three of those things. Let them charge less to build up a confident customer base.

 

[brendonv]

Hourly up, time on site down. I sometimes feel bad taking the check, but my iron didn't just park itself out back on its own.

 

[Tucker943]

People often forget its a free market. Unless you are the one and only tree service in your region, people are free to shop around for the company or price that best suits their needs. When you are showing up on time for estimates, keeping a reasonably tight schedule, and are doing professional work with no collateral damage, people wont mind paying your asking price, so long as its not out of the ballpark. Plus the thing to remember is trees are luxury expense in many cases. Someone calls up and wants to have 6 removals done so they can have a bigger lawn, well, that's a luxury. Not a need. Cutting your business short to provide luxuries is lunacy. Don't get me wrong, I try to bend a little to help people that NEED a tree down and clearly are on a budget. More so if they are intent on using my company and not just sorting through 10 different bids. But to go prune 20 trees along the 1/4 mile long driveway on a horse farm, Im making the money I want. They wont make me poor so they can stay rich.

 

[treesmith]

I bid pretty much the same. If you cut your throat because you have equipment, what happens if the equipment breaks down right before you start the big job? Then you have to do it the hard way, and for less money than you would to start with.

 

[rangerdanger]

Yea, I really didn't want to bid lower. Dad felt bad at first when we'd bid our normal prices and we finished in a few hours time. But he came around that the iron doesn't pay for itself. My main reason for bidding lower would be to get more work. Like at the horse farm were working at, we did 7 removals, all easy 2-3 hour flop and clean ups. There are a ton of other trees to td at this place though, and my thought was charge less but get more work out of it.

Smaller jobs with less volume we would still charge the same but I'm mainly curious on larger volume jobs or big clients, where there are multiple td's.

 

[brendonv]

Big jobs seem to always come out cheap too, it's weird.

Small climbing jobs are usually good money.

 

[CurSedVoyce]

Funny how that works.. Little jobs do pay well...

Wraptor did not change my pricing... It just made my day easier and faster at times.

 

[NickfromWI]

...Dad felt bad at first when we'd bid our normal prices and we finished in a few hours time. But he came around that the iron doesn't pay for itself. .

I bet you find the difference between what you did bid and what he felt you maybe could've done the job for...lets say its $300. Stash that $300 away and keep adding to it- hundred dollars here, $50 there, etc.

Eventually something is going to need extensive repairs or replacement. At that point you can say "told you so."

love
nick

 

[CurSedVoyce]

300.00... part of an equipment payment...

 

[lumberjack]

Bid to make money and up to what the market will allow.

I can do a tree cheaper now, make more on the tree, have more money in the bank, and more time sitting on the couch at home (or doing other work). No point not making money, even if you have to charge half of what you would have before to get the job. Do the job, clear more money than before even at a reduced price and do so in less time. It's all a win!

 

[TC3]

I'd say a small increase would not only be justifiable, but easy to explain to customers... "We wanted to serve you better." And it's the truth.
People sometimes lay an egg over stump grinding prices. I say, "Look, if I get one stray pebble flinging itself through a window, I'm on the hook for it. I accept the responsibility & liability, and I have the know-how to use the equipment right.",and they pay... 'cause it's true. Why would I charge less for that?

 

[lumberjack]

If you add equipment, and have to raise your prices to do it, something is wrong.

 

[MasterBlaster]

I've been asked to work slower, lol...

 

[Al Smith]

Well really sometimes you can "kill the job " if you burn it out and it looks like a person is gouging a customer even though it was competatively priced .It really doesn't make a diff what the job is ,tree work ,shoving off an acre of top soil ,plowing a driveway .You blow through it the people think they are getting a royal screwin without even a kiss so to speak .Human nature ya know .

 

[TC3]

If I add equipment and don't raise my prices, I was overcharging to begin with.

 

[thattreeguy]

when i did huge removals up north, and had to hire in extra equip, i billed out for my crew (with my normal toys) and the hired on equip
a mini ex was 75 an hour, a wheel loader, dump truck, self loader or prentice with winch was 100 an hour per machine.
i threw my dingo and stumper in on my normal list of toys so that if i could do the job in 8 hours without extra charges..id get the job....i figured 200 an hour for a 3 man crew with forestry boom chipper dingo and grinder
1600 a day......and i was taking in a lot of work...the stumper and dingo thrown in were enough to kick my competitors around a bit.....
a lot of jobs i did 1600 up to 2000 a day with a 4th man crew rental rate...whatever we could do in a day by the day, drive time billed 1 way
1600 for the 4 men for cash.....
be careful though 1 breakdown and you are farged

 

[TC3]

What if you went on that same job and used handsaws & shovels? Someone once said, "Price, quality, speed. You get to pick only two of those." Equipment costs $$$. Period.

 

[lumberjack]

Clearly I have no first hand nor theoretical knowledge on this subject. I don't even own a handsaw!

If you have to raise your rates for the same production unit of work to afford a machine, you're doing something wrong. Raise your hourly rates for sure, but what you bring to a job doesn't effect the value of the work. The job is worth x dollars, doesn't matter how you accomplish it.

Doing tree work we regularly gross $300+/hr with a 3 man crew. One member of that crew doesn't run a chainsaw even. On the bigger job we're on now, we beat the next bid $31k to $49k, and we're averaging $92/hr/man including the 45-75 minutes at lunch.

 

[TC3]

Raise your hourly rates for sure

So is it apples or oranges? What if your competition for the 31k job said they'd do it for 24k... maybe their equipment is long paid for & they don't view it as an overhead? I'd say they're viewing it wrong, but they'd still get the job & it might look like you were trying to gouge. "But I have equipment to pay for!" No?

 

[lumberjack]

Paying your equipment off does little for decreasing operating overhead. You're right that they are viewing it "incorrectly."

Using my job as an example, I could have done it for $22k (for example) and still made ok money by my standards. Still, just because I can do it "cheap" doesn't mean the market hasn't dictated the job is worth more.

By the same token, if I can't afford to do the (normal) job with equipment, I surely can't afford to do it manually.


We haven't even discussed building equity in an a depreciating asset vs the "rent" of labor and how that builds the bottom line.

 

[Tucker943]

Your hourly target figures should be based on profit and overhead. Don't look at the equipment and say "well I should be getting this much". Look at your cost to operate and the money you are targeting on top of that for quality of life, and bid from there. I used to bid work based on what I thought the competitors might bid. I wised up. I bid it based on MY costs. If I bid based on their costs I'll either lose a ton of work or become as broke as them.

 

[lumberjack]

I use a combination. Assessment of market value and profit minimums. Usually market value is higher than the minimum so then you have to factor in the customer's apparent budget and find that happy spot.

Don't work for free, but don't cut profits because you think the work is worth more than what it is going for. I'd rather clear 800 in a day than nothing. Granted I prefer double that or better.