A successful landscape maintenance business should aim for a gross margin of around 50 to 55%. This is the difference between the quantity for which you buy a product and the quantity you sell, expressed as a percentage. Operating profit margins should be between 15 and 45%, with net profit margins of 10 to 12 percent for residential and commercial accounts. Irrigation services can generate a net profit margin of about 20 percent, while tree jobs range from 10 to 15 percent net profit margin (commercial) or 15 to 20 percent profit margin (residential).Start-ups have a lot to prove and a reputation to build, so it's important to make sure your services are worth the 50% gross profit margin before setting it that high.
Every expense your company spends slightly reduces the profits from a job, so it's important to manage and maximize labor in order to make the most of your profits. To do this, you can use business landscape software to help you better manage your business and prevent errors from happening in the first place. The LMN Pro software provides tools that help garden business owners identify efficiencies or opportunities to increase the profitability of their businesses. Phil Sarros, founder of Sarros Landscaping and Dirt Monkey University, shares some of his tips for keeping profit margins healthy. Make a list of all your gardening supplies, then determine how much material you'll need from each one (it's always best to overestimate them) and then add up the cost.
This will help you find the right landscape prices for different services offered. Understanding and optimizing your field labor ratio is a powerful metric for determining how much money a landscaping company or landscaper can make in a year. It's up to you to weigh the pros and cons before deciding which tiered pricing method is right for you and your company. By doing this, you can prevent factors that damage profit margins from harming your company and double your profits.