You already know how important estimating is for landscaping businesses.
Good estimates allow you to flawlessly toe the line between competitive pricing and comfortable profit margins, while bad estimates can get you into all kinds of trouble.
While that much is probably old news to you, the question of how to move from bad estimates (or even occasionally bad estimates) to reliably good estimates is less straightforward.
If you’re a business owner, account manager, or estimator seeking to improve the estimating processes for your landscape company, you’ve come to the right place.
How to price landscaping jobs accurately
For every estimate you create, you have to identify your labor costs, overhead costs, material costs, and profit margin as accurately as possible.
Here are seven of our favorite tips for how to estimate landscaping jobs successfully—so the total cost adds up the way you expect.
Make sure everyone’s on the same page
Communication is key during every stage of a client relationship—and especially at the beginning.
To set yourself up for success, find out exactly what your prospective client is looking for in your lawn care or landscaping services. Exactly how many square feet will you be responsible for mowing? Do they expect you to offer sod installation or mulch only specific areas? What material will used for hardscapes?
Make note of what’s most important to them so you can prioritize it in creating the estimate. If they’ve worked with another company before, ask what they liked (and didn’t like) about the experience. Walking through the site with the client can be especially helpful as it gives you a chance to ask questions and point out opportunities for upsells.
In conversations about the job, don’t assume you and the client always use the same words to mean the same things. Ask for clarification when needed, and be as specific as possible about expectations, deliverables, and timelines.
Note pre-existing conditions
During your initial site audit, don’t minimize existing issues or potential problems your crew could face. Overgrowth, excessive weeds, dead plants, inaccessible areas, or hazardous conditions all require an extra investment of time and money.
If a property will require a lot of remedial work before it’s ready for regular service, be sure to include that in the estimate—and talk about it with the client. While you don’t want to leave this work off the estimate, you also want to make sure they recognize it as a one-time expense.
Inaccurate estimates are common across industries, including the landscaping world. They’re often based on subjective evaluations by individual account managers or estimators, causing companies to send estimates that vary greatly from one job to the next.
Implementing a system that helps you stay consistent means no matter who’s assigned to a property, you can trust their measurements to be based on a single source of truth. Templates and checklists are helpful for achieving this kind of consistency, but nothing beats landscape estimating software designed specifically for that purpose.
Account for overhead and markup
Estimates are primarily calculated based on projected labor hours and other landscaping costs. It’s crucial to get that part right, but it’s far from the last step. Adding the correct amount of overhead and markup is what helps your business continue to grow and thrive.
Overhead includes everything that’s needed to keep your business running, from rent and electricity to marketing expenses, office supplies, software subscriptions, and insurance. Understanding these costs allows you to factor them into every job you bid, so at the very least you bring in enough money to keep the lights on.
Assuming you’d like to do more than just break even, though, adding the right amount of markup can be a critical balancing act. Too much and you could price yourself out of a job; too little and you’ll stunt your own growth.
While there’s no perfect answer for exactly how much to mark up your services, it’s important to base the rate on more than just a national average for similar commercial landscaping jobs.
Knowing what other landscapers charge for similar work is important, but you also have to consider what a particular job is worth to you in the final price.
Is the client easy or difficult to work with? Are they known for delivering payment on time or late? Are they likely to send more work your way in the future? How easy will it be to integrate the project into your current workload? Is the property outside your normal service area? How much revenue will they bring in overall?
Thinking through questions like these can help you determine the level of markup you’d need to make pursuing a particular job worthwhile.
Review past work
When you’re estimating a new job, it can be helpful to look back at your past work. Have you provided a similar service for a different client in the past? What did you estimate for that job, and how did it compare to what you eventually spent?
One of the keys to becoming a highly profitable business in the landscape industry is critically evaluating your data.
How much did you charge for landscaping services last year? What was your average hourly rate? How much time did crews spend in the shop instead of on the job site? What were your total material costs, subcontractor costs, or equipment costs? What did you spend on payroll taxes or in sales tax?
If you have reliable job costing data, it's easy to find answers to these types of questions. If your data is incomplete or inaccurate, though, use caution in applying those insights to future work.
Evaluate subcontractor proposals
When you need to include the cost for subcontractors on an estimate, don’t assume their proposals are all created equal. Often, you can’t compare numbers directly because they’ve taken slightly different approaches—and their proposals may include different things.
Before you pick the lowest one and use that number for your estimate, review the details of what they include closely and compare them based on the priorities for your project. That way you know what needs to be included in your own calculations, and what’s already accounted for in theirs.
Check your numbers
There’s nothing worse than doing all this legwork, then sending an estimate that’s wrong because a number was entered incorrectly but no one caught it.
Before you press “send,” check, recheck, and check again. Especially when you use a system that relies on a lot of manual data entry, it’s important to go through the estimate multiple times to make sure everything looks the way it should. If possible, have a few different people take a look internally before you send it off to the client.
Thorough, well-organized, accurate estimates form the foundation of a good landscape business. For more practical advice on creating winning estimates, download our free Estimating handbook below. (It also includes a complimentary checklist, webinar, and infographic.)