An accurate estimate is the foundation for a successful project in the landscaping industry. When estimates are too fat or too high, you may not get the business. When they’re too low or too tight, you may win the contract, but you won’t make any money on it. In short, if you don’t have a solid estimating system, you’re putting your company at risk.
For such an important step in the process, landscape companies often treat estimating haphazardly. Thankfully, landscape business management software built specifically for landscapers gives estimating the structure it needs to provide visibility into gross profit per job and, ultimately, improved net profit.
Here are 3 ways landscape estimating software does that:
- Removing inconsistency
- Improving pricing
- Allowing for real-time job costing
Many landscape contractors have generic estimating methods. Maybe they use a homegrown Excel sheet or checklist. The result is forgotten details and a lot of subjectivity and variation in the estimates.
For example, two estimators may come back with two completely different numbers. If you’re a small company and the owner is doing all the estimating, it may not be a huge deal, but when the owner begins delegating the estimating function without a solid system, issues start to arise—and profits and growth can take a hit. Landscape estimating software like Aspire develops profitable proposals by using templates and general conditions unique to your company.
One way to ensure consistency is with kits. A kit is a production factor tied to the estimate. For example, if you need to plant one 2-inch tree, you add its associated kit to the job. The kit automatically factors in prepopulated labor and materials, such as the tree; the correct number of tree stakes; a specific amount of mulch, fertilizer, and compost; and the right amount of labor hours.
Estimating software prevents the need to reinvent the wheel with each proposal and ensures all of the data is accounted for and that you’re on track for a suitable gross profit per job.
After the basics—material, labor, equipment, and subcontractor costs—are accounted for, pricing is the next step. Some companies simply go after a gross margin target of 50 or 60 percent, which can be problematic. For example, if it’s a labor-heavy job, you may be underpricing it, and if it’s a material-heavy job, you may be over pricing it, resulting in potentially uncompetitive or unprofitable bids.
That’s why we prefer the multiple overhead recovery system for pricing and managing margins in the landscape industry. A landscape estimating software system like Aspire Landscape helps you use mark up to recover overhead and margins to generate the final price to ensure every proposal you create is both competitive and profitable.
Allowing for real-time job costing.
Do you know if you’re winning or losing every day—on every job or on every service? Many landscape companies sell work and don’t realize the jobs are unprofitable until the end of month or the end of quarter. Landscape estimating software that allows you to accurately track the performance of the job against the estimate in real time is vital to achieve the gross margins you’re targeting.
Companies that don’t have estimating software with real-time job costing data often attempt to assemble this information manually, with owners or managers spending countless hours on it or hiring part-time or full-time administrative professionals because their multiple systems don’t talk to each other. Even worse, some companies invest substantial time and money on this and still don’t trust the data.
Aspire allows real-time job costing against estimated labor hours, materials, and more. This function ensures owners and managers can make adjustments to their jobs along the way—and avoid a situation where they didn’t make money on a project but didn’t realize it until it was too late.
Overall, effective estimating comes down to whether your company can consistently gather the data you need and enter it into an integrated system to help ensure proper pricing that’s competitive and yet profitable at the same time. Do you have a reliable system for getting this done?
At Aspire, we understand that when you’re running a landscape company, it’s important to have the right tools for the job. That’s why we’ve developed an all-in-one, cloud-based solution with the functionality you need to keep your entire business running smoothly—and profitably. If you’re ready to take your company to the next level, contact us today!
Need help finding the right business management software? Download this helpful buyer’s guide to learn everything you need to know before selecting a solution, from initial research to final decision.
For other tips for achieving consistent and sustainable growth, read our article, "5 Simple Strategies to Grow Your Landscaping Business."
If you enjoyed this blog post, you might also want to read, "8 Ways Business Management Software Can Boost the Profits of Your Landscaping Business."