How to Make an Estimate for Your First Commercial Contract - Ep.72

Hey everyone, it's Mike andes with landscape businesscourse.com thank you for listening to the podcast and thank you for watching on YouTube or Facebook. And today we're going to be talking about really answering a question that I get basically every single week. And without fail, I get this at least once a week. Someone getting their first commercial lawn care and maintenance contract and wondering how to bid it and really being lost as far as how to break down the services and, and how to price out the job. They really lose track because all of a sudden they're used to 25 $30 per lawn mowing service for lawns that are 2 to 5,000 square feet. And then all of a sudden they have acres and acres and many, many man hours and days of working on one job site. So let me try to break it down for you for those of you that have done residential lawn care and landscaping services. But now you're getting a contract for perhaps an HOA or an apartment complex. And there's a lot more moving parts and just a massive amount of more of property to maintain. And during those times it's very hard to get square footage numbers because now it's not the same as your residential because there's so much volume. So do you give a volume discount? And how does that really work? So let me break it down as far as how I would go about doing this. How I would suggest that you easily make the sum of its parts, really try to break down that massive contract for the maintenance of the property and see how you can make it simpler to create the estimate. So let's jump right into this. Don't make this one long. I'm going to show you exactly what we do for our business and how we would break down a big maintenance contract for, for an hoa, apartment complex, strip mall, something like that. Now, if you're in the course, go to the templates and document section and you'll actually see the paperwork that we use. It's a lot more organized than what I'm going to show you here on the board today. But basically this is what it is. Over here I have services.

Services, and then I'm going to list all the services that this particular.

HOA or apartment complex or commercial job want me to do. So their scope of work, basically. So I'm going to say, okay, we're going to do mowing.

And then, you know, as part of mowing is obviously like edging and, you know, trimming the edges and things like that. So we're just assuming that we're also going to include, you know, let's assume that this, this commercial property has a lot of parking lot and a lot of sidewalks. So there's quite a bit of blowing. So I actually make that a separate item here. So now we got blowing, blowing sidewalks, walkways, etc. All right. And then I know that there's a whole bunch of deciduous trees there. And so there's gonna be a ton of leaves come September, October, November. So what I'm doing is I'm do leaf cleanup.

Clean up, and then, you know, the property gonna need all their bushes trimmed at least once a year. So. So I'm going to do tree trimming.

And then I'm going to also do. They're going to need weeding services because they have a bunch of flower beds.

And they're also going to need. Annually, they're going to need bark installed. Hopefully you can see this. Sorry. Bark installed. So bark install here and then also it's going to snow there. But we do a la carte for snow plowing because it doesn't snow here a lot, just usually once or twice a year. And so we do a la carte on call and so. Well, not on call, but like based upon a trigger, like 2 inches of snow or something like that. So I'm gonna do snow plowing and I'm gonna do this bark install instead of annually. This is gonna be a la carte, which means basically they can just choose it as whenever they want they can get this done. And then the snow plowing is also gonna be a la carte. The reason to do this as well is so that the bark installation, for instance, might be several thousand dollars. And instead of making them pay for that over the course of the whole year, they might just want to pay it when it's being done. So these items I'm doing a la carte, but it really comes down to the specific client. Some of them would rather pay $300 a month instead of $3,600 one time per year for a bark install. So whether or not you bake this into the monthly price is really up to you and the client and how you work that out. So I do services, then I'm going to do materials that I'm going to need to buy some materials or products that I need to buy for these different services. Then I'm going to do number of times, number of services.

Services.

Per year.

And then I'm going to do an hourly.

Or just how many man hours, sorry, any man hours over here. So now What I'm gonna do is basically go through all of my services. Okay. If I'm gonna mow one time, do the edging and trimming, how many man hours is that gonna take? Let's say, for instance, it's a pretty big property and it's gonna take two guys an entire day to do this. So 16 hours. An entire day for two guys. Just the mowing and trimming and everything. Okay. For blowing off all of the. The parking lot and the sidewalks and everything, it's gonna take an additional four man hours every single time we do that leaf cleanup, let's say it's going to take.

Let'S say eight man hours to clean up the leaves. And we're going to do that from, let's see here, September to November. So three months out of the year, we're gonna. Twice. We're at two times per month. So we got three months times, we got six times. The number of services per year is gonna go to six. And materials for the leaf cleanup is really just debris. So we're haul a bunch of debris off and I'm gonna say one dump trailer of debris.

Cause remember, if you listen to the last video about overhead recovery, you should be charging for things like debris removal and other different types of things that you're doing, like taking stuff to the dump, you should be charging for that. So I'm going to consider that materials or products, other costs that are involved. I'm going to do the same thing now for blowing and for mowing. For mowing, I don't really need a whole lot of materials necessarily. Usually I bake that in the man hourly rate as far as taking clippings away, but number of services per year, I'm going to assume that this person is going to do like a weekly service and they're going to need. Let's do 35 mowing services per year.

And so maybe that's from. Say it just really depends on where you're at in the country as far as how many services you're going to do per year. For us weekly, we're going to be somewhere around that number 35 months, 35 weeks out of the year. If they're doing weekly service. So this is assuming weekly service here. So 35 minutes, 16 man hours per time blowing is going to be done every single week, year round. Because you know, these people just want it done always, regardless of whether or not you're mowing or not, they want it blowed off, you know, wind and things like that during the winter. So I'M just going to assume 52 weeks that you need to blow all the parking lots, all the walkways and everything like that. Let's keep moving on to tree trimming. We're going to do that twice per year, trimming all the trees, the shrubs, et cetera. And every time we do that, it's going to take a crew of two. An entire day. And it's going to take another dump. Trailer, trailer.

Oops of debris.

Okay, sets on the materials. Weeding now is going to take. Let's say it's going to take two hours. Sorry. Whoops. It's going to take two hours. And we're gonna do that once a year, once a month. So 12 services per year. And then under the bark installation materials, let's get. You know, it's quite a big property. So it's gonna take 40 yards.

Of material for the bark installation, and it's going to take 32 hours to install that. And that's gonna be done. We're gonna assume one time per year. The snow. You could just do a rate as far as whether you. Some people charge by the hour for snow plowing. We give them a set price. So we would say, okay, this property is going to cost $499. So we do this a little bit differently for snow plowing, for plowing and salting. So for snow plowing and salting for. We do it a little bit differently. We would say something like, it's basically more square footage. So we would do like $499 per service. And then we'd have a trigger at like 2 inches of snow. 2 inches of snow. And then for salt, and we charge by the pound of salt applied. So we do this one a little bit differently. That's why I do it a la carte. But. So I'm going to disregard this one for now. We're talking more about maintenance and things like that. But that's how we do things like even gutters, you can give them. Give them a price. And then when they need it, or if there's a certain trigger, then you can bake that in. But this is. This is a basic setup as far as what type of services of commercial client is going to need. You can add as many as you want. But now what the challenge is. Okay, like how do we get a number per month? Most commercial applications, they want to. They want to pay based upon a monthly price. So annualize that the cost all year round. So you could add things like fertilization here, core aeration, other different types of treatments, their lawn. There's just so many different things. You could even irrigation installation or, sorry, starting it in the beginning of the year, winterizing it at the end of the year. These are things that they'll need for their irrigation, and they're things that you can upsell them and just create a further and further of a list as far as what services they need. Really, this is looking at talking to the client, seeing what the scope of work is, and creating this here. Now the challenge is, okay, I have my list of services, but now I want an actual number. So we're actually going to go ahead and calculate what we would be charging on this property. So I get my calculator right here. I'm going to assume, I'm going to assume that the hourly rate. Sorry, my red marker is gone. But we're going to assume the hourly rate is $50 per hour. Sorry if that's off the screen for you, but $50 per man hour. And so here we go. We're going to have 16 man hours for mowing. So 16. I'm going to try to put this here. 16 times $50 per man hour. And so $800 times that by 35. So we are going to now get 1715. Sorry, I did that wrong there. So 16. 16. Sorry, I'm getting text messages on my calculator. 16 hours, multiplying that by our hourly rate of $50 per man hour gets $800 90. Now we multiply that by 35 visits in the year, and it comes out to $28,000. So just draw this line real quick, $28,000. Hopefully that's not going off the screen for you. But then here we got our blowing. We have four man hours. We multiply that, our hourly rate of $50, and then we multiply that by how many times we do it in the year, and that comes out to 10,400.

So $10,400.

Then our next one is the leaf cleanup. So what we're going to do here is we're doing this six times twice per month from September to November. And each time we do it takes a dump trailer of debris. So man hours is eight man hours. And we charge our hourly rate. So times that by 50.

Then we are going to this six times. So multiply it by six. And then each time we do it, we are going to have a dump trailer, debris. Let's say we charge $100 for one dump trailer of debris, times that by six, we're going to add $600 in debris cost so now $3,000 for their leaf cleanup.

Alright, now for the tree trimming we got 16 hours per service and we are going to multiply that by our hourly rate of $50. $800 times two. But before we do that, let's go ahead and add the hundred dollars.

Sorry, we got 16 times 50 and now we are going to add the dump trailer debris, that's 100. And now we're going to multiply that two visits because we're doing that service tree trimming twice per year. So Times that by 2, 1800 dollars. Write that in over here.

All right, now we got weeding services monthly two hours. So 2 times 50 is 100 times that by 12 times per year we have $1200 per year for weeding. And last one here for this bark install. Let's assume that on this example we're not going to do a la carte. This is going to be baked into the monthly price. So they say, hey, we want this annually. We, we want a bark installation one time per year and we want to pay for it though every month of the year so that we don't have this massive cost in say the spring for this muls installation. So what we're going to do is we're into 32 hours and it's going to be a one time cost and we are going to multiply that 32 hours by our hourly rate. So $1,600. However, remember we still have 40 yards of product. So let's assume here that we are going to charge $30 per yard of bark mulch. And remember, you might get it at $20 per yard, but like the last video on overhead recovery talks about, you want to charge an upsell, you want to charge extra on that in order to get overhead recovery. So even if we get this at 20 bucks, $20 per yard, we're going to charge $30 per yard. So $30 per yard, 40 yards. We are going to add $1,200 to the price of this. And, and we're going to charge $2800 total for this one time bark installation. So now what we're going to do is we're going to add up all of these costs that are involved with each of these services. So remember we're trying to get a maintenance contract price and so we're going to add these up. These are the annual prices for all of the services. So we're going to add the 2800, we're going to add 1200, we're going to add 1800 we're going to add 3000, we are going to add 10,400, and we are going to add 28,000. So our total, our grand total for all of these services and everything involved. So I'm going to erase all this real quick. The total for this entire property and all the services in the entire year is going to be four $47,200. That is what we are going to charge for an entire year. However, most maintenance contracts for commercial applications want you to divide that by 12 to get a monthly price. So now we're going to divide that number by 12, and our total is going to come out to $3,933.

This is per month, monthly cost, and this is the number that you're going to present to the commercial HOA or the apartment manager and say, hey, for $3,900, $33.33, we will maintain your property and do all of those services. And you'd create a scope of work based upon all those services. How many times they'd be done per year? A lot of people will want what, what months out of the year those will be done. For instance, like the leaf cleanup, they don't want that in the middle of spring. They want that September, October, November, or whenever the leafs are falling. And so you would create the scope of work basically just using the diagram that we just made with all the services. How many times per year, what you're going to be hauling off of as far as debris and, you know, fertilization, things like that, as far as product cost to you and your hours. And you're basically not going to get in there at your hours, obviously, but you're going to give your scope of work to them using that. And then this is how we come up with our number for the services year round and a monthly cost. It's very simple. Break down the services that they want, figure out how many hours it takes per service of that one item, and then how many times you have to do that service over the course of a year. Figure out the cost for that item like we did, add up all the total cost per year, divide by 12, and you have the monthly cost. Now, a lot of people will give some sort of a discount on this number because they say, hey, there's so much work they're giving us. You know, it's better than having $3,900 a month clients. You'd rather have a one $3,900 a month client. So some people would say, hey, you should give a 10% discount off of this because of the volume that you're giving this person. And even though you usually charge $50 an hour, you should charge less because now it's bigger. So you could, you could. We don't do this. We do not discount. I want to make the same hourly rate on a commercial job as I would for a residential job. They already get economies of scale as far as the amount of work being done and the hourly rates and stuff. When we are figuring out how many hours go into the job, however, some people will just take this number divide, you know, give them some sort of a discount for volume and this would number would end up being something like $3,500 per month. So this would then be the number that you would present to that commercial job and say, hey, these are the services we're doing, this is when we're going to do it. And this is our monthly price year round at a 12 month cost. Then you would give that as the maintenance price and then give other options for upselling things like pressure washing or gutter clean outs or things that they didn't even include in their scope of work. You can have a price list a la carte items listed below that. So if you're in the course though, do check out the document that we have in there. It's basically you can print it out and fill in all the different boxes as far as treatment packages as well. So in ours for our estimator they just have to circle if they want a basic package or premium package for fertilization and it bakes all the numbers right into it based upon the mowing price. So it's pretty cool. But you can create your own just using that same diagram and chart that we just made right there. So I hope that helps. So many of you ask me all the time about how to get your first mowing maintenance contract for commercial applications. Not so much how to get it, but you kind of have someone's offered it to you and now you're asking how do I make the estimate? So I hope that helps a little bit. Until next time. Be great because nothing else pays. Mike Andy's Landscape businesscourse.com youm gotta check it out. New website's pretty cool. Thanks so much for all of you joining the course. It's been really fun. I look forward to seeing you on landscapebusinesscourse.com.