Introduction

If you aren’t selling, you aren’t working. If you aren’t working, you aren’t able to pay your staff, pay the bills and keep the business running. As a green industry business, selling your services is just as important as knowing how to mow a lawn or dig a valve box. For new businesses just starting out, there is no way around having to sell. And as a well established company with a large number of accounts, you will still need to sustain your book of business and sell to new customers.


Finding prospects that are a great fit for your business can be an arduous and complex process. Sales isn’t always a linear, step by step process. A prospect can move forward, backward, off track and back on track again. There are times when someone will search out your business, know exactly what they need and you may be able to have sold that prospect within minutes. On the other hand, you might wind up with people dragging their feet and could possibly take them months to come to a decision.


The other key component in the process is estimating. If you’re not properly estimating your services you run the risk of putting a price in front of the customer that’s either too low or too high. An estimate that’s too low can actually hurt your business way more than a high one. Putting a small dollar amount on your services means you’ll end up wasting time working on a property that earns you a small profit or none at all - when you could have been doing a project that earns you a fat margin. Now high estimate isn’t the end of the world but if it’s way higher than the competition it’s likely you won't win the business.


Creating and managing a successful sales and estimating process is similar to piecing together a hotrod. It might take a while to even get it up and running. But after spending time, putting the right parts into place, you’ll go from rolling it out of the garage, to cruising, to flying past competition.

Table of Contents

Sales Guide

  • Prospecting
  • Stages of the Pipeline
  • Pipeline Management


Estimating Guide

Lawn Care Estimating

  • Property Size & Condition
  • Time, Materials & Equipment
  • Overhead Costs
  • Figuring Out Dollar & Cents
  • Turning an Estimate into a Contract

Irrigation Installation Estimating

  • Bids vs. Estimates & Proposals
  • Profit
  • Research Your Market
  • Undercutting Caveat
  • Operational Cost (Overhead)
  • Things to Constantly Consider When Estimating
  • Estimating Method: Time & Materials
  • Test & Analyze
  • Other Estimating Methods: Per Head & Per Zone
  • Turning an Estimate into a Contract

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Sales & Estimating Mock Cover

Sales Guide 

 

 

Prospecting

Active Lead Generation

Active lead generation is what might come to mind for most people when you think of selling. A salesperson knocking on your door is actively looking for your business. The person calling your home phone or business line, they’re actively trying to generate a sale. It takes consistent effort to actively generate leads. Some businesses might have a dedicated salesperson to call commercial building managers, homeowner associations and owners of residential properties. Active lead generation is much more  important for the early stages of a company. You need to build up enough accounts to keep your employees busy and your mowers running.You’ll also want to concentrate on your relevant experience and background in the industry. Some use this opportunity to layout the journey that led them to start a business.

 

Passive Lead Generation

Passive lead generation is more and more of a focus for modern companies. It can come in a few different forms, but much of the passive lead generation that we do today is done digitally. Websites, Facebook pages and social media, local directories and other forms of online marketing can all become passive lead generation tools. Let’s look at how some of your digital outlets can generate leads for you, without having to put in the leg work.

 

Website

A well optimized website can help get you found through Google and other search engines. Search Engine Optimization, or SEO, is the practice of creating website content that is relevant for users, which in turn earns you higher rankings in online searches. There’s a lot of competition on the Internet. Even if you operate in a small geographic location, it can be tough to rank high in search engine rankings if you aren’t optimizing your website for the right local search terms. Many businesses attempt to be everything to everyone, when in reality they need to be a few things to a specific group of people.Industry description and outlook.

A website that can generate leads is easy to find (the whole SEO thing), easy to use, informative and has a flow which encourages users to take action. You need to have visitors perform an action on your site like filling out a contact form or calling your business directly. Your website should make it clear that you want visitors to call you and you should give them direction on how to contact you. Make it easy for them, don’t make them do the extra work.

 

Social Media

While social media can take time to set up and maintain, it can also be a passive lead generator. Why? Because many of the platforms allow for businesses to set up pages and profiles with complete business information and easy contact options, so people using those social media outlets can easily call, chat or email you about your services.

 

Local Directories

Local directories are like the online, modern day version of the Yellow Pages. It is important for businesses to be listed in these directories. There are quite a few out there, but ensure that your name, address and phone number are listed consistently across each directory you choose to list yourself in. Also, most directories will ask businesses to “claim” their listings. Do this. It allows you to change any information that might be incorrect or outdated. While these will require work up front, but they are a great form of passive lead generators.

 

[Related: How to Align Sales & Production in Your Business]

 

Stages of the Pipeline

You might set your pipeline up differently than other businesses (we’ll get to the setup later). The path your leads take, should align with your overall business goals and objectives. For an organization with more than one salesperson that wants to analyze each step of the sales process, a more complex pipeline might be best. While a smaller company that relies on its owner to sell the business, might only need a simple, three step process. It depends on your goals.

In general, you should have Leads > Estimates > Sold > Lost > Unqualified.

Let’s take a look at each of these steps in depth and what they mean to your business.

  

Leads

These folks are the product of your hard work (or if you are great at passive lead generation, they are a product of your “smart work”). Leads are anyone that you feel are a potential fit for your business. This might mean that they have interacted with your businesses somehow, like filled out a contact form on your website or have called into your office.

Leads should be closely monitored for their age. You don’t want your leads sitting around for too long before they’re contacted. A potential sale might be missed because of a lack of attention. The lead might have gone with a competitor or might be put off by how long it took you to get back to him/her after saying you would. Keep a close eye on when leads come in, set reminders and automate what you can.

 

 

Estimates

Just like it sounds, the estimate stage of the pipeline is anyone whom you’ve provided with an estimate. This is where you might want to break these stages apart. For companies that work with both residential and commercial properties, you can split estimates up that way. Or, if you have estimates that you know are strong, make them a priority. However you decide to manage your estimates, treat this section of the pipeline with care. Since estimating plays such a vital role in the sales process, we combined the two and will dive into estimating later on.

 

Sold

Again, this might be self explanatory, but if you have quite a few existing customers, it is smart to break these into a sub-group as well. The reason being is that you might have an opportunity to upsell/cross-sell services to some customers and others you may not.

If you provide only mowing for a customer, but know that they could use your pruning services at least once a year, segment those customers accordingly. If you have the ability to cross-sell a service, you’re adding revenue without adding additional drive time or much extra time on the job site.

 

Lost

Any prospect that has not been sold should go into your lost category. They might wind up in this category after being provided an estimate that they thought was too high. Or they went with another service provider.

Whatever the reason, keep detailed notes as to why the prospect fell into the lost category. The reason being that they might not always be considered a loss, but rather just a loss at the moment. It is wise to revisit your lost category annually. If an estimate was lost for pricing, you might not want to dig those leads up unless you know they would be great for your business - don’t get into a pricing battle because it is a ruthless race to the bottom when you’re trying to compete on price.

 

Unqualified

Your unqualified leads will often be similar to your lost category, however you are the one that has made the decision to “unqualify” them as a good fit for your business. This might be because you know their yard or property was too difficult to mow efficiently with the equipment you own. Or, it could be that they are outside of the range that you service. There are a number of reasons that a prospect might not be a great fit for your business and if you’re managing your pipeline efficiently, you shouldn’t have to take on clients who won’t be good for your business.

 

[Related: How to Compensate Your Sales Staff]

 

Pipeline Management

Managing a sales pipeline is what takes many companies from just getting by to a company with processes and prospects who are ready to pay for your services. Setting up a pipeline can take time and effort, but your company will grow because of it.

A more organized sales process can make the difference between a good year in sales and a great year of substantial growth. Even if your business is performing well without a documented sales process, it has the potential to not only grow, but also become easier to sell.

 

Set up

A pipeline can look different from company to company because it should be set up to meet a specific business’ goals and objectives. However, in general, it should match the steps we went through in the last section.

In the past, businesses could set them up on a white-board or even just track them in a paper filing system. While this might work for a few leads and a couple of sales, a growing business is going to need more sustainable set up.

Using CRM software that enables you to identify each step of the pipeline gives your business the information to move leads through the estimating process and hopefully, into the sold category.

 

Monitoring

Once set up, your sales pipeline needs to be monitored for its health. You should have a good idea of how many leads you have in your pipeline and how many estimates are outstanding. You need to have an easy way to see how many people are on the verge of committing to paying for your services or how many leads have become Unqualified.

 

Automate

If you are able to, automating steps is incredibly helpful for busy lawn and irrigation operations. The only way that you’re able to automate tasks is by using software and the information that you gain throughout the different interactions with your leads. There are menial tasks which take time to do, but can be automated and simple with the help of technology. For instance, if an estimate email can be sent to a lead without having to tie up any time from your salespeople, it should happen. If you can send marketing offers automatically after not hearing from a prospect for a length of time, that should occur.

Automating emails and other tasks helps you focus on where you’re needed most. You can dedicate more time to getting out in the field, doing the work and managing your employees, instead of sending off emails and calling customers.

 

Wearing Two Hats

We come across a lot of businesses whose owners are the sole salesperson. This creates some problems. As an owner gets more and more busy and time gets harder to find, sales inevitably becomes less important. So here are a few tips on managing sales as the owner.

Time: It’s important to set aside time everyday for sales. Whether that’s after you send the crews out for the day or another time, take an hour to call new leads, follow-up on estimates, create estimates and review a schedule. This consistent effort will help move people down the pipeline.

Numbers: Know which metrics are important to your sales process and the numbers you need to hit. Whether it’s once a week or once a month, just make sure you get in the habit of checking these metrics.

Optimize: Once a year spend a day reviewing your sales process and ideating ways you can improve and optimize it.

 

Analyze

Each step of the sales process will likely take constant tweaking before you find what works for you.

Whether you’re the lone salesperson at your business or you manage a group of salespeople, you should be setting benchmarks. Look at your weekly:

  • Call numbers
  • Estimates provided
  • Closes

Taking a look at these weekly gives you a chance to analyze your activity in comparison to your performance. If a salesperson is struggling to perform, call numbers should be the very first factor you look at. If the call numbers are there, but the salesperson is still struggling, that might be a good indication that they could use some coaching.

Learning from your sales numbers is important for planning purposes, too. If you know that you need X number of sales each year in order to beat your revenue goals for a season, and you know that you have a close rate of Y% when you give an estimate, you should have a good idea of how many calls your salespeople will have to make over the course of the year in order to accomplish that goal.

As a business owner, you’re likely used to analyzing your numbers. Monitor the health of your marketing and sales efforts so you can see where prospects might be dropping out of the sales funnel and where you’re succeeding.

 

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Lawn Care Estimating

 

We won’t waste your time with some wordy intro about lawn care estimating and how important it is for your business. We’ll just dive head first into it and you’ll see how crucial it is as we go.

 

Property Size & Condition

The reason why you need to know the measurements of a property is obvious but we’ll say it anyways. Knowing the size of a lawn and everything else you’re servicing allows you to calculate how much materials (i.e. fertilizer, weed killer, etc.) and determine what type of equipment (i.e. push mower, riding mower, mower size, etc.) you’ll need for the job.

There are two main options for measuring a property and its various components (i.e. lawn, mulch beds, flower beds, edging, etc.). The old fashion way is using a rolling measure wheel to outline all the areas you want to calculate for your estimate. The other, more advanced, approach is investing in a software system that uses GPS and property lines to measure what you need.

Now, even though here at HindSite we’re biased to technology, that option doesn’t always makes sense. It’s a decision each business has to make on its own. It might be the right investment depending on the size and range of your operation and, even more importantly, how you want to set-up your sales and estimating process.

There are pros and cons to each option. Software has the potential to eliminate property (during the estimating phase) visits all together - saving you time and money. Now, that positive might be seen as a negative for some professionals. Without seeing the property you can’t use your expertise of assessing a property’s condition and characteristics. Is there elevation change (i.e. hills and slopes)? Are there any obstructions (i.e. play sets, lawn furniture, etc.)? If you use software, one way to work around that obstacle is to simply ask the customer when you’re on the phone with them. Also, if you’re concerned that this will eliminate the personal touch during your sales and estimating process, you can create the estimate remotely than schedule a site visit to close the deal.

 

Labor, Materials & Equipment

Labor, time, materials and equipment... being able to accurately predict how these things interact with a job is what separates an average estimate from an excellent estimate. How much time and labor and what equipment you should be using for a certain property to maximize efficiency are the most potent variables in an estimate.

Think for a second about how changing the type of mower or adding an extra crew member will totally and utterly shift your production rate and cost. And that production rate is time and time is what essentially influences your profit margins (we’ll get to ‘margins’ later).

Most equipment manufacturers will provide an equipment’s production rate that takes into consideration its speed and width (coverage). This should give you the numbers you need to get a general idea of the amount of time it will take to service a property. Another best practice is to also document and track your actual usage and production rate in the field and see if it aligns with the manufacturers’ numbers. The more honest and precise you can get with these numbers the better your estimating process will be.

One of the key factors of having an effective estimating process is knowing how to pinpoint these “hard to pin down” numbers. Even if you’re a one person operation, set yourself a salary and take it into account when estimating. And if you’re not, it’s still a smart approach to include your wage into the labor cost.

 

Overhead Costs

These costs are necessary for your business to operate. They indirectly allow you to perform and complete each job (i.e. project) you have. Not including these when estimating costs will ruin a business. But even failing or forgetting to include relatively small costs will add up over time and devour your profit.

Examples:

  • Office/Shop rent/mortgage
  • Phone bill
  • Internet bill
  • Software
  • Office Supplies
  • Utilities
  • Association Memberships
  • Marketing/Advertising (how much does your website cost per month/year?)
  • Taxes & Regulatory Fees
  • Equipment Maintenance
  • Travel Costs/Trip Charge

Understanding these expenditures help you identify the number of jobs (or properties) you need to complete each month to hit a revenue that’s profitable.

 

 [Related: How Software Helps You Estimate Lawn Maintenance Work]

 

 

Figuring Out Dollar & Cents

 

Now that you know the three main factors that go into calculating a precise lawn care estimate (property size and condition, labor and materials and overhead) it’s time to understand how the final dollar amount on your estimate   and the various ways you might manipulate and fluctuate that amount affects your bottom line.

 

Profit

Profit is how much the business makes after you pay for labor, materials and overhead. As the owner that’s food on your table and dollars in the bank. Some owners calculate their pay into the labor cost. And as we’ve talked before, we recommend you do the same. It’s usually a pretty smart approach if your market allows it. Just think, you’re already getting paid so the profits are completely extra cheddar sprinkled on top of a job.   

Your profit margin(s) (the cool kids simply call them ‘margins’) is the difference between the amount a job cost you to perform and the amount you charge the customer to perform that job. Margins can vary from one place to another and even from service to service. To understand what your margins it’s best to research your market and talk it through with your bookkeeper or accountant to figure out a realistic profit margin for your business.

 

Research Your Market

The main thing you’ll want to figure out while researching competition pricing, is what you can’t charge. Meaning what price would be overcharging. Remember, for the most part, the market sets the price, not you.

HomeAdvisor and Homewyse both have a tool to help understand your local market. They basically offer the same functions, like price averages based on zip-code and square-footage.

As you try to understand the climate of your market you’ll likely come to realize certain customer values and expectations. This is where your pricing comes from. Don’t think about how you value your service. It’s not about what you would pay it’s about what your customer would pay. It’s important to understand that you’re not the customer, you wouldn’t pay someone to fix your irrigation system. So, whatever you would pay for irrigation services or installations is most likely lower than what your customer would pay.

 

Undercutting Caveat

Before we go any further about pinning down your exact number there’s something we need to go over. And that is no one’s handing out trophies for lowest bid, it’s going to end up hurting your business. Winning jobs solely on having the lowest bid is a slippery slope. It’s very difficult for your company to make any profit and no profit means no growth.

Giving the occasional deal to a customer is fine, especially long-time, loyal customers.  But if you provide the lowest bid to one customer, they may tell their friends, and you will have to provide that same price model for all of their references. Then these new customers tell their friends and now you’re Mr. Cheap and have spiraled into the deep abyss of suffocating margins and a kinked cash flow.  

Plus, if you run into problems on the job, your back’s against the wall.  You didn’t budget enough money to handle disruptions to the original plan, and the money will be coming out of your own pocket. Quality has a value and that value should be conveyed through your prices. This means, low prices can be interpreted as shoddy work. People are willing to pay more for great work and pristine curbside appeal.

 

Test & Analyze Your Numbers/Price

This little tip can help you separate yourself from your competitors. Most small businesses, particularly new ones, will try to go with their gut. What they don’t understand is how this approach is too volatile and baseless to operate a successful business. Most of your competitors never test their prices. Tracking data and analyzing where you can make more money will eventually put your business miles ahead of the competition. Just think how much more money you’ll make and how much faster you’ll grow if your margins are 10% higher for each job than everyone else. That compounds pretty dang quick.

 

 [Related: Lawn Care Contract Template]

 

 

Turning an Estimate into a Contract

 

Now that the customer is sold you need to put that information into a legally binding piece of paper, what the lawyers call a contractual agreement. Here are a few of the things you’ll want to include in your contract.

 

What will you be doing for the customer?

This is where you include all the lawn services - from mowing to mulching - you’ll be providing the customer. It’s super important to be clear during this portion of a lawn care contract. If the service is going to be done in a specific area of the property, then that detail should be noted. For example, your contract might include something like “edging front sidewalk.”

Grouping your services by their frequency is one way to help the customer better understand what’s going to be done and when. That means the services that are involved in the weekly (or bi-weekly) maintenance of their lawn should be in the same section. It’s also a good idea to state what’s not included in this regular visit when appropriate.

Next, you’ll want to go over any service that has its own frequency. For example you might offer a “Turf Fertilization Program” that’s administered three times during the term of the agreement. Lastly, even though it might be included more towards the end of the contract, it’s a good idea to explain how any missed - agreed upon - service will be communicated to the customer and not billed.

 

What's the cost?

As you’re well aware of, lawn services can be priced in many ways. So how your contract presents your price(s) might be drastically different to that of another lawn care business. I’ve seen contracts that list all of the services then have the grand total at the end. The downside of this approach is the customer doesn’t know what makes up this price - they’re completely oblivious to the cost breakdown.

Conversely, I’ve seen contracts that attach a dollar amount to every little service, leaving the customer's head spinning and uncertain of what they’ll actually be charged. Basically, instead of telling you to do it one way or another, I’m telling you the two extremes and leaving how to present your pricing, up to you. Just make sure that the price is somewhere in your contract and the customer understands how much they will be paying.

 

How do they pay? What if they don't?

Somewhere in your contract you’ll want to include invoice-related details. You should clearly state how they can pay (e.g. check, cash, credit card, direct debit), what their pay period is (e.g. 30 days of the date of invoice) and what happens if they fail to make a payment (e.g. lawn service will cease until payment is made or all balances 15 days or more past due are subject to a certain service charge).  Vice-versa, it’s a good idea - especially if you offer auto-billing and auto-payments - to state how you’ll return any payments made on mistaken charges.

 

What else do they need to know?

Like any legally-binding documents, it’s vital to clarify any ambiguities in your lawn care contract. This varies, but can be anything from special provisions to modifications or amendments to who’s responsible for certain damages to causes of termination to insurance coverage.

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Irrigation Installation Estimating 

We won’t waste your time with some wordy intro about irrigation estimating and how important it is for your business. We’ll just dive head first into it and you’ll see how crucial it is as we go.

 

Bids vs. Estimates & Proposals

We know it’s just a difference of nomenclature but saying your estimate is a ‘proposal’ and not a ‘bid’ can actually go a long way. Proposals (or estimates) imply that you’re educating the customer. Bids imply your giving them the lowest possible price. We have plenty of customers who have won the majority of their contracts - not by being the lowest price - but by explaining what they do and demonstrating the value and expertise they have to offer.

 

Profit

Profit is how much the business makes after you pay for labor, materials and overhead. As the owner that’s food on your table and dollars in the bank. Some owners calculate their pay into the labor cost. It’s usually a pretty smart approach if your market allows it. Just think, you’re already getting paid so the profits are completely extra cheddar sprinkled on top of a job.   

Your profit margin(s) (the cool kids simply call them ‘margins’) is the difference between the amount a job cost you to perform and the amount you charge the customer to perform that job. Margins can vary from one place to another and even from service to service. To understand your margins it’s best to research your market and talk it through with your bookkeeper or accountant to figure out a realistic profit margin for your business.

 

Research Your Market

The main thing you’ll want to figure out while researching competition pricing, is what you can’t charge. Meaning what price would be overcharging. Remember, for the most part, the market sets the price, not you.

HomeAdvisor and Homewyse both have a tool to help understand your local market. They basically offer the same functions, like price averages based on zip-code and square-footage.

As you try to understand the climate of your market you’ll likely come to realize what customers value and expect. This is where your pricing comes from. Don’t think about how you value your service. It’s not about what you would pay it’s about what your customer would pay. It’s important to understand that you’re not the customer, you wouldn’t pay someone to fix your irrigation system. So, whatever you would pay for irrigation services or installations is most likely lower than what your customer would pay.

 

Undercutting Caveat

Before we go any further about pinning down your exact number there’s something we need to go over. And that is no one’s handing out trophies for lowest bid, it’s going to end up hurting your business. Winning jobs solely on having the lowest bid is a slippery slope. It’s very difficult for your company to make any profit and no profit means no growth.

Giving the occasional deal to a customer is fine, especially long-time, loyal customers.  But if you provide the lowest bid to one customer, they may tell their friends, and you will have to provide that same price model for all of their references. Then these new customers tell their friends and now you’re Mr. Cheap and have spiraled into the deep abyss of suffocating margins and a kinked cash flow.  

Plus, if you run into problems on the job, your backs against the wall.  You didn’t budget enough money to handle disruptions to the original plan, and the money will be coming out of your own pocket. Quality has a value and that value should be conveyed through your prices. This means, low prices can be interpreted as shoddy work. People are willing to pay more for great work and pristine curbside appeal.



Operational Cost (Overhead)

These costs are necessary for your business to operate. They indirectly allow you to perform and complete each job (i.e. project) you have. Not including these when estimating costs will ruin a business. But even failing or forgetting to include relatively small costs will add up over time and devour your profit.

Examples:

  • Phone bill
  • Internet bill
  • Software
  • Office Supplies
  • Office/Shop rent/mortgage
  • Utilities
  • Association Memberships
  • Marketing/Advertising (how much does your website cost per month/year?)
  • Taxes & Regulatory Fees
  • Equipment Maintenance

To best apply your overhead to your estimates you should calculate your hourly operating cost. What this number is and how you calculate can vary depending on your business and philosophy. If you have an accountant or bookkeeper they can help you with this number. If not, we recommend reaching out to an accountant. Understanding these expenditures and that hourly operating rate will help you identify the number of jobs (or properties) you need to complete each month to hit a revenue that’s profitable.

 

 

Things to Constantly Consider When Estimating

Note: Installs are based upon a myriad of conditions, variables, specifications and characteristics that are unique from one project and property to another. As one person said on lawnsite “Now, before I get blasted I know we all.do this differently but some have of the same formula as well.” With that said here are a bunch of things to consider:

Property & Project Details: What’s under the surface? Is it rocky? Is it shallow? Is it sandy? Is it clay? Or is it a new construction with black dirt? What’s the necessary flow? Number of Zones? Number and type of heads? Drip, Rotary, Spray? How much pipe will you need? What kind of piping? Number and type of controllers? What’s the water source? City, county or well? Is a well necessary? Will you need pumps and pressure tanks? How many feet of wiring? How many valve boxes? Any rain sensors?

Location: What’s your market? From pricing norms to labor cost what a business charges varies from city to city, state to state, region to region.

Margins & Mark-Ups: 30%-45% margin to allow for the unseen. Here are a few ideas: In most cases, materials would be marked up 15 percent to 20 percent above the re-wholesale price for the materials. (The re-wholesale price is the amount that a contractor would pay an irrigation supplier or nursery for materials.) Other contractors will charge the “list” price for irrigation materials when pricing residential or small commercial projects.

 

Estimating Method: Time & Materials

Some businesses only use this time and material estimating for repairs and maintenance. While others use it for installs and maintenance. We believe, after time and if properly executed this is the most accurate process.

Pros & Cons

Pros: This method can be pretty dang precise once you have a few installations under your belt and you’ve analyzed your cost and time of past installs. Once you can accurately pin down those numbers, this method is quite effective.

Cons: That said, this experience and the ability to analyze past work, means it might take time and sweat to before you can calculate the most exact number.

 

Labor Rate, Customer Rate & Time

Your Labor Rate & Cost

Irrigation Estimating Labor Cost Equations

This part can be a bit tricky. How many people you’ll need and how long it will take for them to complete the job isn’t always straightforward. And it’s even more difficult if it’s your first installation. The hours a job takes (i.e. time) depends on property size and characteristics. As briefly mentioned above, the required installation time can vary dramatically. Even two properties of the same size, can have drastically different times depending on zones, heads, valve boxes, soil type and so on.

Not accurately estimating labor cost or the time a job will take is where most businesses will lose their money because labor and time go hand in hand and, as we all know, time is money. This can either put your price way over or way under the competition. Of course having a lower estimate might win you the job but will hurt you in the long run.

Another quick tip is to account for drive time/trip charge (the amount you pay in wages, gas and even vehicle maintenance) to send your crew to the job site. After calculating all of this most hourly rates fell between $15 and $40 per hour. This is based on our own research and varies depending on your location and labor market.

 

The Customer's Labor Rate & Cost

Irrigation Estimating Labor Cost Equations (1)

Customers hourly rate is the amount you charge the customer for labor per hour. The hours should be the same as your hours when you calculated your labor cost. Now if you want a profit (and you probably should) this number shouldn’t be the same as the amount you’re paying your employees.

So obviously you should first figure out how much the job is going to cost you then calculate what you’ll charge the customer. The difference between your hourly cost rate and the rate you charge the customer plus the mark-up you apply to materials (we’ll get to that next) is what makes up your profit margins. Some businesses mark this up by 30% but like everything else this varies. Based on our research this rate typically falls anywhere between $36 and $88 per hour, depending on location and market.

 

Materials & Equipment

Simply, this is all the material and equipment you’ll need to complete the work plus the price markup you charge the customer.

 

Final Equation

Estimating Pillar Page Equations

 

Test & Analyze Your Numbers

This little tip can help you separate yourself from your competitors. Most small businesses, particularly new ones, will try to go with their gut. What they don’t understand is how this approach is too volatile and baseless to operate a successful business. Most of your competitors never test their prices. Tracking data and analyzing where you can make more money will eventually put your business miles ahead of the competition. Just think how much more money you’ll make and how much faster you’ll grow if your margins are 10% higher for each job than everyone else. That compounds pretty dang quick.

Here’s a quote from lawnsite that shows you how testing and analyzing your numbers and estimating process can eventually build a pretty impressive process and a nearly bulletproof equation.

“I'll get into a little more detail here. The heart of my estimating is a spreadsheet where I input all of my overhead costs for everything. Fuel, insurance, uniform rental, utilities, equipment and truck repairs etc. [This ends up being] about 35 or so separate overhead costs. Every single thing that hits our books as an indirect expense is tracked here. This spreadsheet calculates our hourly operating cost. This is the cost to operate the company before we pay a single person. It's the cost that we incur just to exist. I adjust the costs in this spreadsheet quarterly based on our actual number. This spreadsheet feeds into my other estimating spreadsheets so that when I am [estimating an installation] project I am using the most current overhead numbers.

My individual installation spreadsheet is set up so that I can input all of the materials costs. I have detailed control over how much markup we apply to every piece of material that we sell/use. The spreadsheet automatically calculates the man-hours needed for [certain installation actions] on our own internal benchmarking that we have done with our crews. The summary sheet of the estimating spreadsheet breaks down all of the costs, shows us our profit margin and details out how many hours / days will be needed to complete the project based on the size of the crew that we select.

The more detail that you can use in your estimating the more accuracy you will have. Most of these things are pretty easy to implement. Some of our benchmarking was literally as easy as standing there with a stopwatch and watching the crews plant plants and timing their performance. The one thing that I have learned is that I need to continually refine my estimating practices to get the best results.”

That’s some elite stuff right there. To get to that level of precision should be the goal of any irrigation business. I honestly could explain the process better myself. Everything is accounted for and continually improving. Just look at how their process is constantly updating numbers and learning from past jobs so they’re as accurate as possible and the equation and pumping out numbers as precise as possible with the right margins.



Other Estimating Methods: Per Head & Per Zone

Although we think time and materials estimating is the proper way to estimate, some industry vets swear by a few other models.The reason we’re showing these two method is so you have a complete understanding of irrigation installation estimating. The majority of businesses that use these have been doing installs a long time. Their process usually involves going to a property for a walkthrough, looking at it, making a rough estimate to how many and what types of sprinkler heads or zones they’ll need and running the math on the spot. It’s a bit old fashion but it works for them.

Estimating per head or per zone is pretty straightforward. Per head is when you take the number of heads you’ll need to install and times it by a number you charge a customer for installing each head. Per zone is pretty much the same thing but instead of heads it’s zones. How many zones you install is usually a smaller number so the price per zone is naturally higher.

 

Per Head

Estimating Pillar Page Equations (1)

Additional Work: This can be anything from well work (i.e. digging a well) to putting in one or multiple pumps.

 

Market Rate: Based on what we’ve seen from the industry these number range as following:

$90-$125 per rotary head

$45-$75 per spray head

$.50-$1 per feet of drip irrigation

Pro: Less volatile than time & material. Less time needed to calculate bid. Accounts for weird layouts or zones with an abnormal amount of heads.

Con: Not as precise as time and material since it doesn’t really take into consideration the vast majority of - not just the install job - but also the operating cost of a business. There’s a lot of other actions and time required to install one head from running pipe to putting in a valve box. In addition, the actual price of a head can vary quite drastically. The quality and type of head, not just function (i.e. spray, drip, rotary), can affect the price.

 

Per Zone

Estimating Pillar Page Equations (2)

Additional Work: This can be anything from well work (i.e. digging a well) to putting in one or multiple pumps.

 

Market Rate: Based on what we’ve seen from the industry and depending on your location and market these numbers range as following:

Larger Projects: $300-$800 per zone

Smaller Projects: $700-$1200 per zone

Pro: Less volatile than time & material. Less time needed to calculate bid. Side note: this can actually be an effective and quick way to get a rough idea of what a job will cost before actually running the numbers.

Con: Just like per head pricing this method isn’t as precise as time and material because it doesn’t really take into account the vast majority of - not just the install job - but also the operating cost of a business. Additionally, what a zone actually costs on your end can be drastically different. One zone might have 25 heads and another might be a simple small drip zone.

 

[Related: Irrigation Service Contract Template] 

 

 

Turning an Estimate into a Contract

Now that the customer is sold you need to put that information into a legally binding piece of paper, what the lawyers call a contractual agreement. Here are a few of the things you’ll want to include in your contract.

 

What will you be doing for the customer?

This is where you include all the services - from start-ups to in-season check-ups to blow-outs - you’ll be providing the customer. It’s super important to be clear during this portion of your irrigation service contract.

 

What’s the customer’s cost?

As mentioned in the last section, picking your price involves a few factors. And once you determine this number (and method) it’s important to clearly define how much the customer is being charged and why the cost is what it is. This may include listing your hourly rates of technicians or simply stating how much a start-up (or winterization) is going to cost.

 

How do they pay? What if they don’t?

Somewhere in your contract you’ll want to include invoice-related details. You should clearly state how they can pay (e.g. check, cash, credit card, direct debit), what their pay period is (e.g. 30 days of the date of invoice) and what happens if they fail to make a payment (e.g.services will cease until payment is made or all balances 15 days or more past due are subject to a certain service charge).  Vice-versa, it’s a good idea - especially if you offer auto-billing and auto-payments - to state how you’ll return any payments made on mistaken charges.

 

What else do they need to know?

Like any legally-binding documents, it’s vital to clarify any ambiguities in your irrigation service contract. This varies, but can be anything from special provisions to modifications or amendments to who’s responsible for certain damages to causes of termination to insurance coverage.

 

 

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