So, you’ve decided to add mulching to the list of services you offer. Careful. Figuring how much to charge to do a mulch job can be a nightmare, depending upon the shape of the property. Some contractors consider mulch a losing proposition, but others realize the service can expand your customer base. But bidding on new mulch jobs can be tricky, you don’t want to quote too low or you’ll lose money, but if you quote too high you’ll probably lose the bid.
If you’re new, and you don’t quite know how much it’s costing you to run your business per hour, you need to get out a calculator and do some educated guessing (I mean estimating). If you’re already doing mowing and other landscaping services, you hopefully know this. If you don’t, you should. A basic way to do this is to look at the amount you’re paying for everything associated with your business, from rent to labor to the computer screen you’re looking at right now (and the internet powering it), and calculate down to your hourly cost.
It can be easiest to start with your annual cost because some costs must be multiplied by 12 months to get an annual total, some by 6 months, and others by 52 weeks, but you need that annual cost. Don’t forget to include everything related to your business. For example:
• Rent or home-office expenses
• Insurance (equipment, liability, disability, renter’s insurance, your health insurance, and that of any employee you pay for)
• Vehicle, gas, maintenance, repair, insurance
• Supplies (rakes, shovels, pens, pencils, paper, safety glasses and anything else you supply for your workers, accountant/tax guy, etc.)
• Computers, tablets, internet service, phone
• Advertising, weather apps, software, professional publications, membership dues
• Cost of administrative help, not your laborers (which you need to do separately), like your secretary (don’t forget your portion of social security cost)
• How much you think you should pay yourself (be reasonable, but include it here)
Once you get an annual operating cost, you should divide that by 52 to get your weekly cost and then divide that figure by 40 to get your hourly cost. You need that figure for all your bids, whether mulch or mowing or painting. Successful businesspeople can tell you right off the top of their heads what it costs them per hour to keep the ship afloat.
You’re going to calculate wages and your portion of their social security for your laborers separately because it takes varying amounts of time to do different tasks. You can mow a lot of lawn in an hour, but you’re not going to lay a lot of mulch. How much does one guy cost you for an hour of work? If you have varying pay rates, consider an average of some type, or use the highest-paid worker’s wage.
Now that you know how much it costs you to work for an hour (yes, it’s a horrible thing to face), consider marking that up 7.5% to 10% to get your cost per hour. This markup covers your costs and, yes, there’s profit in it since you already factored in your own pay, but you need that markup little wiggle room for things that fluctuate (did anyone say gas?).
For materials, take the cost of the mulch, again adding that small markup. Determine the cost, with markup, of one yard of mulch. Let’s say $20 per cubic yard.
The last step is to know how long it takes to properly put down a yard of mulch. This is a tough one to do. If you’ve got a crew of strong, motivated young adults, they’re likely to work faster and harder than a crew with an average of age of 60 who naturally tire out earlier. And everyone slows down when the temperature rises or it’s raining. But, after looking around at what estimates from experts, it seems fair to say that it takes about an hour to properly load into a wheelbarrow and then spread 2 yards of mulch.
Of course, mulching is a lot more than just tossing out mulch. You need to consider edging, weeding, possibly putting down some type of weed control, how far you must wheelbarrow the mulch once you’ve dumped it on the property, and whether you water the mulch down after you place it or not. All this adds hours to the job, which means higher labor costs. You may determine, based on the shape of the property, that it needs a lot of prep work. If so, add those hours in.
Putting it all together: Let’s calculate the cost of putting down 10 yards of mulch, which will take about 5 hours because the property owner is great at weeding and really loves using an edger, minimizing your prep work. All you need to do is put down the mulch and straighten a corner or two:
Cost per hour of running your business: $25 an hour x a 5-hour job = $125
Cost per hour of labor: $20 an hour x a 5-hour job = $100
Cost of the mulch at $20 per cubic yard for 5 yards: $200
Charge for the job: $425, plus applicable sales tax.
It all comes down to knowing three things: 1) your average cost per hour for running your business, 2) your average cost per hour for labor, and 3) the cost of the materials. Note: Clearly, these figures are estimates and vary depending upon your costs and the costs of the area.
Posted on March 31, 2022
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