Pricing Services To Stay In Business
For a new bush hogging or land clearing business owner, pricing a job is one of the hardest aspects. Underbidding could result in lost profits, negative income, or even a lawsuit. Overbidding could result in a lost opportunity you desperately need to keep your business going. As mentioned in other blogs you must have the mindset that your time is valuable and every minute you spend working for someone else you need to be paid for. Second, the value of your time should reflect the income you need to run your business, have a personal income and money to invest in growing your business.
Bush Hogging Pricing Variables
If you are starting a bush hogging or land clearing business you already have an idea of the type or work, machinery and time required to do the work. As outlined in the video above from DigginLife21 on YouTube, not only do you have to account for all your time and materials, you must account for errors and overruns. A calculator like the one below can help you avoid costly quoting mistakes. As you learn you will become faster and more accurate.
Business Pricing Variables:
- Your desired annual income (if you work with your wife, her wages must be included)
- Profit margin percentage – Generally 30-40% is needed to be successful
- Car, truck, equipment payments
- Repair and maintenance over a year
- Unforeseen expenses
- Health insurance
- Growing the business. 10 billable hours a week to start and growing over time
- Marketing expenses – if you cannot be seen, people will not buy your service
Marketing A Bush Hogging Business
Customer Unrealistic Pricing Expectations
Job Pricing Variables:
- Employee wages
- Travel distance
- Hourly rate
- Profit margin percentage – Generally 30-40% is needed to be successful in long-term
- Fuel costs
- Dump fees
- Unforeseen expenses
- Access to the jobsite
- Risk of damage or injury – liability
- Customer friendliness and cooperation
- Payment terms (deposit, credit card, etc)
Bush Hogging Quote Calculator
Click the image to the right to download an bush hogging pricing calculator in Excel. Save a copy to your computer before using. If you want to unprotect the document after downloading, just hit enter is asked for a password.
The calculator is a good way to get started. Seeing the figures prevents you from rationalizing a low price because you can see you are working for nearly free or at a loss. You can see if your job pricing supports your family and your business goals. You can change the numbers in the calculator to come up with 3 quotes from low to high as a sales technique.
“If we only do A, the price is the lowest. If we do B, the price is in the middle. If we do C, that includes the best of everything. If I were you, I’d probably go with B.”
How you present a quote can often determine if you get the job and at what price point. As mention in our marketing video, looking and acting professional is the first step to building customer confidence in your proposal and why you charge what you do. If you look like a redneck with a tractor, customers will expect your service to be priced that way. If you appear to be a professional and successful business, they will be more willing to pay for a quality service. Appearance and presentation count.
If you are concerned about the price, do not show it. If you appear shaky or immediately say “well maybe I can sharpen my pencil a bit” you have told the customer you are unsure of your price and are willing to negotiate. If you work on your quote after leaving the customer’s location, you appear busy and have time to think about the quotes.
“I will get this quote to you in the next 1-2 days. I have to run to another job now.”
People like doing business with people that are busy and successful. By sending the quote over later by email you will have their email for ongoing marketing and documenting communication. If the customer cannot see your face, they cannot see if you are nervous about the pricing. As you gain confidence, being face-to-face is a major benefit so they can see your confidence and you can sell them on your services over the next guy. Building a relationship will get you more deals than perhaps any other selling technique. In the end people do business people they know, like and trust. You might even become friends.
Offer 3 Options
Sales history has shown buyers will choose the middle option over 50% of the time. The key to this is to maintain your profitability in all scenarios. It is also critical to list exactly what is being included in each quote so there is no debating after the job is done.
Get A Signed Order & Contract
It is not enough to provide 3 quotes. Once a quote is accepted, you should convert the quote to an order. An order includes payment terms, legal verbiage to protect your business and the service you will deliver. It also conveys to the customer you are running a viable business and you both have responsibilities in the transaction. If you get into a dispute with a customer without a contract, you have nothing to support your position.