Mike Andes explains when lawn-care businesses should stop hiring and buying trucks, and start raising prices instead. The Augusta model grows to $500,000 revenue, then switches to profit mode. At $325 per mow with 0.6 budget hours per job, raising prices adds $10,000 monthly to the bottom line.
Questions this video answers
Around $500,000 in annual revenue.
$325 (average mowing price).
0.6 budget hours per job.
195 budget hours (0.6 × 325 → 195).
Each location has three trucks.
Chapters
When you hit capacity and all of your trucks are being used every day, all of your employees are being used full time, we have a decision to make. Do we go into profit mode or we go into growth mode? Growth mode is I'm going to hire more people, I'm going to buy more trucks and continue to grow the business. Profit mode is I'm going to raise prices, I'm not going to hire more people, and I'm not going to get any more trucks. The Augusta business model is that we grow to around $500,000 in annual revenue and then raise prices. Instead of going out and buying more trucks and, and hiring more people. Here's what it looks like.
Each location has three trucks. This is one of Bloomington's, and then two are out with the crews. And I want to run two guys in each one. So the reason why we came up with 325 is our average mowing price. It comes out to about 0.6 budget hours. 0.6 times 325 comes out to 195 budget hours. That 195 budgeted hours is three full trucks. So two guys in each truck, 65 budget hours.
The first couple years, we're trying to grow as fast as possible, but once we hit capacity, we're not going to go buy trucks. We, we're not going to hire more people. We're just going to raise prices as we get more customers. This is going to keep us around the same amount of capacity, but increase our profits.
And Once we.
Hit 325, we'll go profit mode. So raise prices. We'll lose some, but by the amount that I want to raise prices by, it'll add about 10,000 to the bottom line every single month.
