Mowing Pricing: Hourly VS Contracts VS Flat Rate

For your minimum wage. Minimum wage, $25 an hour.

Yeah, yeah, yeah, you guys. And we go like, it's crazy over there, you guys.

Minimum wage is $25 an hour.

Yeah, yeah. Plus superannuation. So you get 10% super on top of that.

Hey everyone, it's Mike from landscapebusinesscourse.com and today we're going to be talking to Andrew Little who actually lives in Australia. And little known fact, my mom is from Australia, so I've been there before. I have some relatives over there. But today we're going to be talking about P4P. We're going to talk about contracts, we're going to be talking about minimum wage in Australia. Where he's at is $25 per hour. So don't complain if you're in the US and you're thinking about a 9, 10, 12, $15 per hour minimum wage. $25 per hour is the minimum wage there. So we're gonna go jump right into it. How can you implement P4P on a model that needs that high of a minimum wage? And should you be doing contracts, should you be doing flat pricing, should you be giving just an hourly rate to.

Your customer and then charging by how.

Long you are there? Those are some of the things we're gonna be talking about today. So without any further delay, let's go ahead and talk to Andrew Little from 2manandashovel.com that's the name of his company. Oh, and one more quick announcement. Next week, Landscape Summit 2021 is gonna be taking place.

It's all virtual.

There's no excuse. If you have snow or anything like that, go to landscapebusinesscourse.com conference and we're gonna be sending out some goodies. So if you don't get this sign up right now, you're probably not gonna get it, honestly, because I'm recording this on Monday and by tonight we have to have registrations in if you're gonna get shirts and hats and the stuff we're sending out.

So.

So make sure you sign up even if you don't get the hats and the shirts because you're too late. If it's last minute, I don't care, sign up. It'll be great. Without any further delay, Andrew Little from Australia. Here we go.

Hey, there you are. Another fellow Aussie. I can say fellow because I'm half. I'm half Australian.

Cool.

Yeah, yeah, My mom is. She's from Perth. That's where she was born.

Yeah, good one. Yeah. I'm in Melbourne, so, yeah, Very cool.

Yeah, some of my family lives over there, a bunch of my cousins. I've been only there one time, but I love it. I love it there. It's awesome.

Yeah, yeah, yeah, it's good.

Good stuff, man. You've been kind of following the content for a while. Because I've seen your name before.

Yeah, yeah, I have. Like, I think I found your stuff probably April last year, and I've just been smashing it. Like, it's been, you know, it's been really helpful to the business, and I've implemented, like, a lot of stuff that you've been putting out there. So, yeah, big thanks for that.

Very cool. I looked at your website, too. Did you make that recently?

Yeah, just got it out, like, a month ago. Very cool. So, yeah, so it's going pretty good. But you can probably see in the. In the notes, there's sort of the main thing I want to go on. Like I said, talk about today is just how to do it in Australia. The P4P system.

Got it.

Because I don't think anyone's doing it as far as I'm aware. You might have spoken to a few other Aussies about it, I guess, but I've spoken to a couple of top competitors, and they said they've tried stuff like this. Hasn't worked. The main landscaping coach, I paid, like, 1600 bucks for, you know, like, a session like this with him, and he just said, no, you just got to do your hourly rate here. You got to do, you know, charge hourly rate, $60 plus GST per hour. But I just don't see why it wouldn't work here. I'm like, I really want to give it a go. So that's what it's. You know, we've got a higher minimum wage as well, and so that's a big obstacle, I think, potentially as well.

So I just wanted to hear your thoughts, if you had any ideas about how to go about that for sure.

From a legal standpoint, because this is the part that I'm not as familiar. Is there anything preventing it from happening, or is that not the case?

I don't think so. No, I think.

Not. That I can see. Like, legally, all we got to do, what we have to do is we have to pay our minimum wage.

Right.

So as long as it's same thing here, like, that's. That's your base rate, you know, and for us, It's.

It's around $25 an hour for your minimum wage. Minimum wage is $25 an hour.

Yeah, yeah, yeah. You Guys and we go, fuck. Like it's crazy over there. You guys don't.

The minimum wage is $25 an hour.

Yeah, yeah. Plus superannuation. So you get 10% super. On top of that. So it's $25 per hour.

It's like someone, someone at McDonald's is making 25 bucks an hour, not McDonald's.

Each industry is different. So the landscaping and gardening award rate is around 25 McDonald's. If you have younger guys, it's cheaper. Like they're getting, they get paid not much because they've got like 15 year olds, 16 year olds, 17 year olds. So that's weird.

So they have a minimum wage based upon your industry?

Yeah, yeah, each industry is different. Got a different rate.

I did not know that. That is new information to me.

Okay, so there's that. And what I've been. What a lot of guys do here is you get apprentices. So I don't know if you guys have apprenticeships.

It's not as big a deal, but I know in Australia it's a much bigger deal. My cousin is pretty involved with it.

Yeah, yeah. So and do they have to still.

Be at 25 then?

So the apprentices get a lot less.

So like an under 18 year old, under 21 year old, first year apprentice. The hourly cost to me is $18, 83 cents. So that includes. Super.

That's the weirdest thing, man. That's expensive. Yeah.

So, but like, I think because like you talking about how you guys, you know, 33%, you know, you get your wage, your wage expenses are 33%. Like when I spoke to landscape coach here, he was kind of alluding to, it's almost 50% and that's what everyone's doing. But like I was like, well, with.

Those kind of wages that makes more sense. Like, but the thing, the bottom line is if someone's paying 50% of labor on a lawn care in a mowing company, almost guarantee you you're not having a high margin business. Like there's no way.

Right.

Cause by the time you have overhead, insurance, gas, equipment, all the other stuff, you're not getting 20% profits. That's guaranteed. Right. And so just because everyone else is doing something, honestly in my mind is like, I want to run as far away from it as possible. But at $25 an hour, minimum wage, and if 25 is going to be your, your base pay, like your hourly rate to the customer has to be at least 80 an hour.

Yeah.

Like what do you charge per. Per hour to the customer?

So $60 plus GST, that's, that's, that's like steam for a high end company here.

And that's, that's what you can charge as an hourly rate. But yeah, what I've been sort of thinking is, oh geez. You know, to ideally set up the flat rate pricing, you know, so the way, the way, you know, even charging at 70, like I thought. Yeah, it just seems like a big jump to 80. But that's. Yeah.

Well this is the thing, like when you're on P4P, the guys, they, they do move faster and they are more efficient. Right. And so when you look at a job, for example, say okay, well that's $60. Okay. So that's one budgeted hour on if you're charging the customer $60 per hour or it is.

0.75 of an hour if you're charging 80. So the end of the day for them to hit budget time, they got to cut off 15 minutes somehow. And that's why P4P, it can do that. But man, at 25 an hour minimum.

Steep. Have you, have you, are you in the course, Andrew? Like have you seen the training on P4P and everything?

Yeah, yeah. Okay, good. Like the whole last year's you did and like I've done, yeah, like seeing I've seen everything pretty much.

Okay.

So like I've got a good understanding for it all. But what I've come up with. Maybe I'll run you through what I've come up with.

Go for it. Yep, good.

So I feel like the only way to make it work here is we have to utilize the apprentices so we can, you know, get a lower wage. I've got, I've just hired, I've got three apprentices now and I've got two other full time staff and three apprentices.

Just so I know for context, can you say, hey, you're an apprentice, I'm going to pay you less or is there a program that you have to go through?

Well, it's basically that they just get schooling as well. So they get one day a week is schooling and they'll work with me four days and that's basically it. So all we got to do is if, when we have an apprentice. I've got three landscaping apprentices. So I just got to make sure that they, you know, they're learning what they need to learn. So we don't. I kind of like what you. I'm more of a, see myself more as a businessy sort of guy than a like actual technician. So I like sort of keeping things pretty simplified like you talk about.

And. Yeah, but I just got to make sure that they sort of learn some basic paving, terp installation, all that sort.

Of stuff which is going to happen. And too like if you do open book management too, they're learning business. So like I'm assuming that's kind of the boxes you have to check to be qualified. Got it. Okay, cool. All right, so you got three apprentices now. Keep going. Sorry I interrupted.

So, so yeah, so basically the hourly cost for first, first year young apprentice, 18, 1883. But then second year it goes up to $22. 25 third year 25, 67.

And then adult apprentices. Yeah. There's no discount on them basically. So that's kind of the only way I can see, you know, working a business here and getting the wages down is just getting young guys in and like instead of doing a, like you do, you're 33% sort of the guys get 33% labor here. Like maybe I like, I was thinking of setting it up like the apprentices get less. Like they have a lesser percentage, which is kind of, it's not fair in many ways. Like I love how you got that hierarchical system and everyone's in the same boat. Because my best worker is my young apprentice. He's a guy and he gets paid less than anyone else, but he's, he kills it. So.

Yeah, but honestly, because you honestly, the government's dictating your base pay. Right? That's what's happening. And so I would go against that. I would just have that percentage probably a little bit higher.

Like if you did 35 or even 38, even 40, it's going to be better than what you're probably doing now, which is more closer to 50.

But I think that would work because you got 1883. As long as you're charging. I would try to get your hourly rate up as your apprentices get older. Right. So I'd try to like over the course of the next three years say, okay, we're going to charge 65 this year, 70 next year and then maybe 75 the year after as your apprentices are getting older. And that way they're still above base pay because you don't want them to hit base pay. That's the bottom line. And that's why I'm skittish is because if they're making even 22 an hour base pay, they, you want them to be above base pay before all the benefits starts kicking in. Right. Of efficiency damage cases Yellow slips.

So.

And at the end of the day you're not going to want to keep them for more than three years. You're going to really want. That's it's going to force you to simplify your business. Like if I was you, I'd be like. Simplification would be the main thing because you don't want to have to keep people for three, four, five years and pay them that much money per hour.

Yeah, yeah, yeah.

Yeah. So like. Yeah, I know what you mean.

Yeah, I guess it's sort of picking like you probably can't see my screen.

Right now, but I think I can let you share. One second, let me see here. Participants more allowed to record make cosplayer. Do you have a share button where you can share your screen?

Share screen post disabled.

Oh, here you go. Try, try now.

Let's go. Ah, he's a math user. Let's go.

Yeah.

So, so yeah, this is kind of like my tracking spreadsheet. But you.

Yep.

At the top here, this is sort of what I was like, I'm working with. These are like, sort of like what is like these percentages, like the first year rate for an apprentice. 34%. I was kind of thinking something like that, but maybe I need to move them down a bit.

And I just. Yeah, I think, yeah, I guess I just wanted to run it by you, see if you get a simpler idea to do it. But it probably has to be something like this where a scaled percentage reach.

Well, this is the thing like I don't like having multiple because just complicates everything. Right. It's harder for them to figure out what they're gonna make. It's harder. For example, why should someone get 50% when the guy who's the 34% guy is outworking him? Right. That's the part I don't like. And the thing is too, like if you're a first year person, you're probably not going to be hopefully you're less efficient than the guy who's worked for three or four years. Right. Like the guy who's worked for three or four years should be so efficient that he makes an extra 20, 30% on his wages. Right. So.

Man, that's a high.

You don't want to go that high. You do not want to go over 40%.

So like.

Yeah, say if, if I did 40%, so that would be.

70%. And when you say 40% as well, is it 40%? That's not. Is that the cost of the employee or is that 40% that's what the employee receives. Like, you know what I mean? Like the cost of employee includes superannuation. It includes workers insurance, which for us is another 13%. Do you include that stuff or.

We don't include that. Right. So like that would be on top of the 30%. So we like payroll tax, that's what we call. Right.

So I would, what I would do. What's your. Sorry, mate, what's. What's your, like what percentage do you guys have to pay extra?

We're similar to around that, like, Right. What employee is going to cost us about 10 to 13% more, depending on the state over here. But it's similar, but we don't tack that onto the employee. Like we don't take that into account on their percentage. We just want it to be as simple as possible for them to understand. Right. And that's the thing that we kind of lean more towards, even though it might be less accurate.

Yeah. So for us that would be, say we're at 25 bucks, you know, save the 80%. Like what would that be?

30.

If it was 80 an hour? Is that what you're calculating?

Yeah, probably about 80 an hour.

Like.

Yeah.

Well the thing is this the only way that they would actually make that percentage of the base pay. So for example, if you're charging $60 per hour to the customer and you're giving the employee 33% of labor revenue, that means they're technically making 20 an hour if they hit budget hours on every job and there's no waste or gaps in between. Right. That's why people freak out when I'm like, we charge 80 per hour and then we give 33% of labor revenue to the employees. They're like, oh, that means like you're giving people like 27 an hour. No, no, no. That would be if they were completely efficient, no gaps whatsoever. So that doesn't happen. Right. So even if you give 50% or say 40% of 60, you're still looking at. They can make like 25 if they are perfect. If they are perfect. But there's going to be inefficiencies there. Right. So I think if you had first year apprentices, this P4Pmodel would actually work at 40%, no problem. The problem starts becoming, when you become after two years, you're gonna hit some problems there. Right. Because now they're just hitting base pay all the time unless you do what you're doing here where you move the rate up. But honestly, it just seems super artificial because it's no Longer like that hierarchy you start, like, that's why I hate about places like Australia that do this because you create an instant hierarchy in the company by saying, oh, your first year, your second year, you're like your third year guy could be producing half the amount of revenue as your first year guy, you know.

Yeah.

And so I would, in my opinion, this is just me, my very capitalistic United States weird perspective. And that is I would allow them to make the decision when they hit three years, four years, hey, you can either leave and go do something else, but you're going to keep getting base pay here probably. And then at some point they're not performing well enough and you have to let them go. Which basically means you're probably going to only keep people for one or two years. But if you look at the average of how long employees stay in an industry, it's usually only that long anyways.

Right. And so like, if I was you, I wouldn't make the P2P complicated. I'd keep it simple at 40%, try to up your, up your hourly rate to keep some people maybe that second or third year. But I would allow, just make, I'd focus 100% on simplification of services so that I can. I'm okay with people only staying a year or two.

Yeah. I guess what I'm going to ask just like going along with what you're just saying with simplifying the services. One obstacle I'm having with switching to flat rate pricing for all my ongoing maintenance is.

Like for the smaller ones, it's easy, but it's kind of like, how do you guys handle with the hedge trimming requirements and pruning requirements? Thanks, mate. How do you guys handle all that stuff? Like, I've started trying out because seasonal variations are so difficult and like you've got to prune your camellias in late October. And then you know, like, you know, I might schedule them on a two monthly, every two months we'll do hedge trimming. But then, you know, we might have a bit of dry, you know, might be a bit dry and things aren't growing. And then the clients, like, I don't want to trim now. Like, it just gets messy. I'm finding it really hard to switch to that. And I wanted to know what you guys, how you guys tackle that.

Yeah. Like on P4P, it matters a lot because now the guys are getting paid based upon that. Right. And they're going to let you know if you're off. Right. But the bottom line is like People underestimate how accurate you actually are on your estimates because you've done it for so long. Like, if you look at a hedge right now, you have a pretty good idea of how long it's going to take you or how long it should take. Right. And there's going to be human error. But, but because of human error, they're also going to get a job where you have five budgeted hours and they do it in three. So if they're not going to complain about that, they can't complain about the time when you say five and it takes them seven. Right. So our goal from an estimator standpoint is that four out of five jobs are at or below budget time. Because if we're, if they're beating every single job, it means we're always overestimating the budget hours. Right. But if we're always underestimating the budget hours, they're going to freak out. Right. So our goal is to try to make it where the majority of the jobs are beating budgeted hours. As long as they have to realize, if they can't realize this, that there's human error, then they, they shouldn't. You probably don't want them working for you if they don't understand that it's going to be error in terms of the estimator. But at the end of the day, if you're charging hourly for even maintenance on a customer's property, you're charging the customer the hourly rate. I can guarantee you're leaving 20 to 30% of efficiency of the crew that would otherwise have a stop clock quote unquote on them of like, hey, you have an hour to do that instead of, hey, we're getting charged hourly. We don't mind how long you take. And now the boss is really the customer because they're watching the clock. They're the one seeing how long it takes. And that's uncomfortable for an employee, you know.

Yeah.

I was just gonna say, are you recording this?

I am, yeah. I can send it to you after.

Yeah, cool. Great.

Yeah, cool. Like, it's what I was, what I was sort of asking is.

How do you set it up with the clients? Like, that's what I'm struggling. I'm working on. Like when I go do a quote to the clients because they want us to just come take the garden and just handle it, you know, ongoing. And I'm struggling with trimming and pruning, like trimming the hedges and bushes and then annual, there's annual pruning stuff. And so, like, A basic idea I'm working on is I go in, I say, hey, do you want the hedges trimmed, like, every two months? You know, you want it really pristine, or do you want it every three months to be a little bit shaggy? And then I'll just, like, tick that box. But it's just what I'm struggling with is not that.

Straightforward gardening.

Are you just giving them. Are you giving them an hourly rate and say, hey, here's the stuff. We're going to do the schedule, and our hourly rate is 60 an hour? Is that what you're saying?

What I figured is I give them with P4P, I'm going to have to give them a price for a go in. Most visits will mow and blow sort of thing and weed. And then maybe every second or third visit, we do all the trimming as well. And so I give them a price on, you know, mowing, blowing, and weeding every four weeks, and then a price on the trimming every eight weeks or 12 weeks. And then I schedule it in like that. That's kind of what I'm thinking. But, man, I've been grappling with this and having a hard time with it, so selling it to customers and. Because it's not what people do here. It's not what people do here. I don't know.

Just so I'm unclear, what. When you go to an estimate, you kind of get what they want, and then you say, hey, this is our hourly rate. Is that basically what happens?

No, I want to give them. That's what I used to do, and now I'm trying to give you a flat rate. So flat price to say, hey, it's a hundred. That's me. 100 bucks for the mowing, the blowing, and the weeding every four weeks. And it's going to be $260 for trimming every eight weeks.

Okay, so what you're going to do, say, for example, I'm going to write this down. Just give me a second. So let's say, okay, we're going to mow for this person. We're going to do bed. Let's just call it bed maintenance. That could be like weeding, whatever it might be maintenance. We're going to do bush trimming.

And do you guys do anything else, like fertilization or anything?

Yeah, we do. I'm going to share my screen with you again and I'll show you how I. Basically.

You'Ll recognize this.

Oh, yes. Let's go.

Yeah, so that's kind of what I've got Happening now. Okay.

Yep, yep. Okay, cool. All right, that works.

Yeah, I'm going to remove this because that's a pain in the ass. I don't know if you can see me highlighting that. Yep, yep, that's pain in the ass.

Okay.

Yeah. But the rest we do.

Yeah. So like, you know, when are you trying, you're just currently trying to go to flat rate though, right? In the past, you just given an hourly rate.

I've been working on, I've been selling more flat rate customers over the last year and I've probably got about a quarter of our customers are on a flat rate.

And. But they're only the smaller ones. I'm finding it hard any, anything more than like two or three hours. I've just quite the hourly rate because that's another thing I'm struggling with the bigger ones.

Struggling with that because at.

The end of the day, the end of the day, what you're, what you're going to do on P4P is you're going to create. So for example, let's say we're going to do weekly mowing and it's going to take us an hour. Let's just say, for example. Right. Okay. That's going to go on the schedule and that's going to be taken into account on this sheet. Right. We're going to do annual pruning or if we're going to do every three months or whatever it might be. And then the bottom line is each visit needs to have its budgeted hours right. For P4P. And then in terms of the monthly price to the customer, you're just simply going to take the hours, the materials, add that up, divide it by 12 and give them a monthly price. Right. If you want to do a 12 month contract, but really on the back end, you do have to figure out how many hours is it going to take. If I trim the bushes three times a year each visit. Right. So let's say it's eight hours. Okay, well multiply that by, you know, three. That's 24 hours. I keep adding this all up. I get this massive number at the end. Divide that by 12. That's the rate that I give to the customers. This is a 12 month contract. Here you go. But then on the back end, you're splitting every single visit up with the hours.

Right?

Right.

Okay.

You're already doing the hard work. What you're doing right here, you're doing the hard work of figuring out how many hours are on the trimming, how many hours are on et Cetera.

So, okay, so to understand you better, you give your customers a consistent price every month. But we might do more work one month with the guys. They might trim everything. We're not going to charge the customer any extra there. They've got the same price, but I'm divvying up the hours within. Okay, that's so much better. That's a good way of doing it. Yeah, that's what I was struggling with because the clients were getting confused and like. Yeah, that works well. Yeah.

And then I know it's early morning your time there, but last night my time, I post a video with a 2,400amonth per month contract and we talk about that.

Oh, cool. Yep.

So feel free to watch that too. But you're exactly right. And that's if you want to do 12 month contracts. If you wanted to do a la carte where they literally just saw the price for each item, you could do that as well. That could be like, hey, mowing, hey. We know it's an hour, that's going to be $60. Weeding once a month, that's going to be 40. They could pick that way as well. That's the way we do it locally. But in our market, 12 month contracts are not as popular. In your market, you probably do servicing year round more. It's more level. And so you're going to probably stick to that 12 month contract. But the way that you calculate it is exactly the same.

So it's probably because. Is that because you guys just have such a cold winter and because you don't have.

We don't grow. Nothing grows for three months. Right. So it's hard to keep contracts through that time. And so we do winter services, we call it, but it's not like we can charge what we would in the, in the summer when we're doing like mulch and all. If someone's full service. Right. So if someone's full service, a 12 month contract makes sense. Especially in an environment where you are actually trimming throughout the year and like stuff is growing year round.

So like, so you guys literally will divvy up your mowing price, weeding price, trimming hedges price, annual pruning price, and the customers will select which one they want because that feel like that would be really. I don't feel like that would, that would, that would be really different here. But with other services here. We do stuff like that in other industries.

Yeah. Like, like you know, at the end date, you know, it comes down to a little bit like is your Market, for example, there's some of our franchisees see like only 12 month contracts are sell because like everyone just expects to have a monthly price they pay year round. Right. And that works. Literally, it's just a matter of, okay, what are all our hours going to be based upon the schedule of these services divided by 12. There's your monthly rake.

Right.

Otherwise like in our market, people like the fact and we don't have to do any sort of in person estimates. We can just, you know, look at their property, get all their prices and then they can kind of choose the ones that they want.

Right.

And then they're only billed when the work is done. Right. So in our market that's what people like. But the 12 month contract, it works with P4P. It's just a matter of doing a little more addition and then dividing it by 12.

Yeah, yeah.

Does that make sense?

It does, yeah. I think the like the 12 month contract, because I don't, I don't lock them. I don't know, I just give them a price and monthly price.

We're the same way, like we don't, we don't even, it's not really even a contract for us too. It's the same way like hey, here's your monthly price. We're going to get everything done. Right. And here's the schedule that we're going to do that on.

Yeah. And like that, that's, that's, that's selling here so far with the smaller jobs that I'm quoting is working. So I'll probably just go with that.

Yeah, I would say it's probably an easier sell if people are used to an hourly rate. They're going to be more inclined to like a monthly price over what we kind of do mostly in our market locally. And that is a la carte where like they literally can choose the ones they want. But the bottom line is you got to make sure you're really, really good in your description of each service when you're going to do it and the ramifications of them. You can't just be like, oh, we're going to take care of your beds. Oh, we're going to trim your bushes. You've got to get really defined in terms of what you're going to do and what you're not going to do. Because now you're basing that estimate based on a specific amount of budgeted hours and if they deviate from that, like, oh, we put a new hedge in, like make sure you trim the bushes. Now it's like, oh, wait a second, like that's going to be more. Right. Because that's what's so easy about giving an hourly rate to the customers. Hey, if they give me one work, I just do it, you know.

Yeah. Because I'm finding that's happening all the time. Like some customers, I'll quote them and then they'll put even new plants in. And so what you got to then go back and just adjust the price.

Yep. So it requires a little more verbiage. It requires a little bit more verbiage in your estimate. But what I would do if I was you is kind of put together like a general template of what a 12 month kind of agreement or monthly agreement looks like for full service. And then just change a few things in there because you will want like five subtitles under Bush trimming. How, how often are you going to do it? You're going to haul away the debris? Which bushes are you going to do? Which ones do you not do? Like, are you not going to do the big trees? Being very clear about that and then stating even if you need to, like additional work is going to be charged at this rate.

Right.

That's not encompassed in that estimate. Sorry I cut you off.

Yeah, yeah, well, that's all right. I was gonna say as well, what I've had with a couple of my customers who I have charged this flat rate pricing. Then they're sort of, it's. I've done it based on. Yeah, this. Four weeks. Every four weeks will come, this is the price. But then they'll say, oh, we're not home this week, you can't come, can you come back next visit? And they keep just like screwing us around. Fill my head in. I don't.

Because they're your boss at the end of the day, if they're, if you're paying, if they're paying you hourly, they are your boss.

This is not the alley. These are ones who I've done. I've got a flat rate pricing so it's not hourly.

And.

They'Ll. Yeah, like they'll say we're not home, you're gonna come, can you come back in four weeks time? And then we come back and everything's obviously grown a bit more, there's more weeds and I've just charged the same price.

But it's.

In those situations, do you have like have like a cancellation fee or more money?

More money. Just say, look, look in our, in our. As long as you've given the schedule, if they're gonna move it four Weeks, hey, we're now out of our agreement here. And there was more growth, I'm gonna have to charge you for that. Right. And if a customer is not gonna understand that you don't want them. Right. And they do that one time and they'll never change schedules on you again. They won't ever say, oh, don't mow today when you show up. They won't do any of that stuff if you just stick to your guns on, hey, like if, if we've scheduled and you change that, that's a work change order. Like we're going to charge more. And if you put like for example on every one of our estimates, it's part of the fine print is.

You know, any work that's not included or mentioned in this estimate will be charged at. And then we give a rate.

Yeah. Okay, you give like an hourly, right? For extra work?

Yep. So that way you'd probably put $60 there. But that way if they push you off a month, you don't have to say anything, you don't do anything. You just go do the job and then whatever you're over budget hours on, you're going to charge that much at $60 per hour.

Okay. So you don't worry about then figuring out what the exact price would be. You charge me hourly rate at that point.

We don't like to do that. Like first of all, we never really have the whole push off problem. Right. But we have it in our fine print in case it happens. But traditionally we're going to just tell them, hey, look, you have to stick to this and that's ideally what you do. And if they change something around.

We don't, we don't ever want to use the hourly rate. We never want to. We would either drop them probably, or send it back. And if it's a big job price and an estimator back a month later, like, hey, your job's completely changed now. But if it's like, like turning bushes, for example, and they push us off a month, that's when we might start pushing back in terms of like, hey, we spent way more time because of this. That's a work change order. But honestly, it doesn't happen much if you just stick to your guns and be like, it's very clear in the verbiage of your estimate. That's where people get fall into error is like, let's put mowing or trimming bushes and then an hourly rate. Like, yeah, like there's so much ambiguity there. The customer can push you around, they can tell you when they're gonna do it. But if you're telling them when you're gonna do it, how you're going to do it, what is included, they don't really have much wiggle room.

Yeah, I suppose just. Yeah, it's like setting that boundary, you know, once you, it's kind of like that. Once you let them get away with it, they keep pushing it until they get away with, you know, more and more, you know, that makes sense. That's really helpful.

Cool. That's kind of the like quite a bit of like, you know, they're the main, the main problems I've had was figuring out how to do P4P with our.

You know, with a high minimum wage. So it seems like your advice is just, you know, we just gotta charge more. Basically we just gotta get that price up.

You know.

Yeah. I think the thing is like a lot of people, you know, cause at the end of the day when you're doing PvP, it's a function of obviously the hourly rate. So if you're able to move the hourly rate up, therefore you can pay your guys more. Right. And some people like, well my customers won't pay $80 an hour, but remember that's a function of time, it's per hour. Well, if your guys can get more done in an hour, you can charge less budgeted hours. Does that make sense?

Yeah. Yeah.

Right. So if I'm charging the customer $60 per hour and it's gonna take them four hours, it's gonna equal $240 to the customer.

Right.

Now if I'm charging them $80 per hour. But my guys get done in three hours, same price.

Right. So at the end of the day the customer, it doesn't actually affect their price, it's just that our guys got more efficient. Yeah, right. So a lot of times people on P4P, they get afraid of charging a higher rate, but your guys get more efficient and therefore get the 6amount of work done in the same amount of time or the same amount of work done for the same price, I should say.

And I suppose I'm just thinking while you're saying that as well, like one of the main, you know, concerns I think about with doing this is obviously like the guys, you know, will, you know, you're like just trying to get it done quick and you might not.

Go that extra mile.

And you know, we've got a lot of high end customers, we need it done spot on. Obviously like that yellow sleep systems. Really great. I was just thinking Then like, do you send feedback forms? I thought like, maybe to get it started, to get this thing started. Do you send like little forms to the, to the customers saying, hey guys, we're just, you know, want to make sure everything's all good. Just let us give us, send us some feedback on how performance has been.

Yeah, we have an automation that every three months goes to them and asks for survey. And then basically that automation triggers, if they give us a five star survey, then it asks them for an online review. That's kind of how our system works. But even if you did it more of a manual standpoint, without automations, you know. Yes, we are asking for their feedback for that exact reason. To kind of keep the guys honest. Especially on big full service properties where you can kind of cut corners for a while. Right. And so, but especially if you had your crew, like one crew does the job this week and they do all those services and then the next week another crew is there or another person, they kind of keep each other honest. Like the quality control is kind of baked into the system because they show up and they're like, this is not weeded last week. Like someone, they're gonna tell you. Right. And so, and you can just see in the pattern of P4P, like if there are people that are just skimping on things and going too fast, so it's less of an issue than people usually make it out to be.

Yeah, cool. And like, so, like, so you haven't had anyone in Australia speaking to you?

Not speaking like this? No, but there's quite a few of the people in the course. There's quite a few, like Australia outside of. I think honestly they beat up Canada in terms of the number of people in the course. But. Yeah, I never talked like this. This is great.

Yeah. Okay. Yeah, cool. Yeah. Okay. So I guess like.

Schedule, payment plan.

What if clients cancel?

I think my recommendation, the P4P thing would be try, if at all possible, keep the percentage the same and then simplify your services so much so that like you're not keeping people for. You don't need them to be super experienced. You can get those apprentices and they be really efficient. That might mean cutting out certain services, but if you're paying $25 base pay, P4P is not gonna be very effective because there's not enough upside for them to get excited about. You know, like if someone's making 25 an hour, but their base is 18, they're very incentivized to move fast. But if they know their base pay is 25 and that's comfortable living wages for them. They're not incentivized to work faster on P4P.

So you're saying like literally have just all apprentices, like Zoe's saying? Yeah, like, oh my God, yeah. Okay, well, the thing about that.

Yeah, but you can only do that. See, the reason you say that, the only reason, the only way you can do that is if you simplify things. Because you're not going to be able to rely on someone to be around for five years. Right? But like you just said, the person who's been around for five years literally might be costing twice as much and making the company half as much as the guy who just started.

You know what, it's not even that, it's what I'm.

Because the guys I have now, I've got Brandon, he's in his second year, he's killing it. I've got Sam, he's starting with me, he's in his first year still. I've got Hudson, who's in his, just starting his first year. I've got Christian who's been around for four years now, he's solid. And I've got Hamish, who's been two or three years. So it's, I think when you say that it's just a label of the apprentice, that it's like, oh, only apprentices, no one does that really. Like it's just this label that they have and it makes. Because I've sort of, I feel like, oh, is that right to have only apprentices? Like, is that right for them? Do they need someone more experienced around?

But really think about like this, like, what if it's fair or not. The thing is, if they're making $18 an hour base pay as a first year apprentice for you, but because you have P4P, they can make 24, 25. Whereas if they go someplace else, they're going to be a first year apprentice anyways and they're going to make 18, they'll love it.

It's like no one pays them that much. No one pays them that much. Everyone pays in base rate.

But then that sense of entitlement comes when they're the third or fourth year person. Like, you owe me to pay me 25 an hour total. Different mindset. Right?

Um, they'll have to be all under 21 though, because adult apprentices, once you're 21 or over, if you start then, then it's like they go back to sort of 25 bucks an hour to start with.

That's crazy. That would be tough. That would be tough. Like 21 and under, that's a tough one. So like when they hit 21 or is it 20 and below?

So they have to start at 20 or below. Like if they like I started with Brandon, he was 28 months, that's about as late as you can start your apprenticeship. So he's, he's over 21 now. But yeah, so I still stick by.

My guns on that. That would be what I would do. But the thing is, if you're gonna do more complicated services, hardscaping, in depth, planting, you're probably gonna have to pay up, right? But if you wanna do use P4P and get this is the bottom line, you're going to attract the best first year apprentices of anyone. Every first year apprentice will want to work for you.

Right? Yeah, yeah. And you know what, it's no different to how McDonald's operate or like we've got grilled burgers over here. Like they only have young people. You know, it's all about simplification.

They have figured out how to make a 15 year old know how to flip fries and make burgers, right. You don't need a chef, you don't need a chef in there. Cause they've simplified things, right?

So yeah, yeah, it makes sense. It's like a big.

It's a total change, it's a total change of the business model, you know. But honestly, in my opinion, even your brand of two men and a shovel to me. Oh, you're sitting on a ball, aren't you?

Yeah, the big.

Yes, let's go.

I need to get one here.

What was I gonna say? I totally lost my train of thought.

Well.

I was thinking the challenges there are like, I've got, I do have, I've got two, I've just, I've got one young apprentice and these other two apprentices are adult apprentices. I took two of them on. Our government right now is paying half of all our apprentices wages for the next year because of COVID and they have been all last year. So I was like, fuck it, I'll just get another couple. Just because right now they're so subsidised. So that sort of works now I guess. But I'm like, yeah, it's. How would I get this thing? Because I was hoping to get some sort of PPP thing happening in the next few months and how they do it now I've got like, I've got Christian, he's. I've got two casual guys and two Adult apprentices. And I've only got one young apprentice. Yep. Would I just have to implement it and start it, you know, do like 40%, raise their wages and you know the guys will get paid sometimes. Obviously the base rates can be pretty high and they might hit base rate a lot but they'll get, sometimes they get a performance fee and that like that's better than nothing.

That's what I would do. That's what I would do. Right. And the thing is like the.

Yeah, like allow their, their tenor, how long they're with you to be the thing that bumps up the base pay. But then keep your percentage the same. Right. And that what that basically would do is create more of a meritocracy where a first year guy can make 25. He can on P4P.

Right.

By keeping the percentage the same. And so you're going to attract more of those first year people but they're cheaper and they're like again, I truly believe you're going to attract the best people if that's the model you're going to use. And what I was going to say was your brand in my opinion leans itself very much to simple services. Two men in a shovel. What do you guys do? We do maintenance and we do simple services and we do, we take care of your property. Right. Like.

It'S not like you're doing, you know, two men and an arbor or like a wall. Like nothing complicated. Right. It's simple. And so that's a different business model. It's completely changing probably the direction you might have been thinking. It might not be the way you want to go. But with that labor rate, I don't see you having a high margin business unless you, you're charging $100 or more per hour, which is possible if you're going to do really specialized services. It's just which business model do you want to go? You either go more of the McDonald's route or you go more of the five star restaurant that is producing very high prices. But they pay their chefs an exorbitant amount.

Yeah, I'm definitely much more drawn and I actually like the idea of having a lot of young guys coming in and I don't know, like. Yeah, cuz I like, I watch we've got a place called Grilled. Grilled burgers here. I don't know if you guys have it there. I think it's Australian but I always watch them and they just, they're killing it. They just, yeah. Say it's the McDonald's type thing.

And yeah, that works for me. So.

Yeah.

Okay.

The other one last thing I had, I guess was. And you probably. Yeah, like profit sharing.

Don't worry about this for now or.

So are you coming to conference in a couple weeks or not?

I think it may as well. I mean, that's probably the only time I can. So I'm in Australia.

Be there.

Yeah, so. Oh yeah, that's a good point.

We're gonna go into depth a lot there. But the short answer that I would give you now is I would do profit sharing and I'd do it from day one. Because at the end of the day, even if you're not making money, if there's a profit sharing incentive, it gives them incentive to stay and it encourages them to think about and at least be able to see your numbers. Like if you're not making money or like you're just kind of taking all the money and growing the business with it, like they'll actually see like, oh, he's not making money hand over fist and I'm not the one out working while he's just sitting in the car all the time and driving around doing estimates. Right. Like they'll actually start to appreciate what you do if you're not making the money. Now, if you're making a bunch of profit, giving them 10% is not going to hurt you. It's only you're going to make more by giving them 10 or 15% or whatever it is to the team than if you were to take all the profits but then not be invested in the company.

Right.

Like the local shop, for example, 30% of the profits go to the team, right. And somebody like, oh my word, that's like a third of your profits. Yeah, but I don't believe I'd be have as profitable business if I wasn't giving a 30% to them. Right. And so I would do it from day one. Even if you're not making money and even if you had debt, I'd be saying, hey, look guys, when we start becoming profitable here, what's on the table? All of a sudden they become, you start becoming profitable because they become more efficient, right? So at the conference we're going to talk about like P4P is kind of like the foundation. On top of that you build open book management, which is you sharing the numbers, them actually caring about the numbers. And the last one is profit sharing. And in that order, kind of building the culture of the business. I feel like you do need to have all three and that's kind of the order I Would recommend it. Like, I wouldn't try implementing profit sharing without having P4P. I wouldn't try doing open book management without P4P. Right. I would do P4P open book management and then profit sharing.

Yeah. So just. Yeah, start with, I'll get the P for pay happening. I'll come to your conference and obviously, you know, go into depth about it then.

And.

Yeah, because like, you can't do profit sharing if you're not going to share the numbers. Because otherwise they just think you're pulling numbers out of thin air. Right. If you're not going to show them your P and L, show them the expenses, and you're like, hey, I'm going to give everyone a percentage of profit and then you just give them a bonus check at the end of the quarter, for example. Like, they didn't. They don't have any correlation between what they do on a daily basis and that. That check they just got. But if you're showing them the numbers. Okay, guys, we bought this truck. That kind of hurt us on this month. You know, we spent some more money on advertising or we had a damage, big damage case. Like that really hurt us. They start to actually think like an owner. Right. And that's really the goal.

Yeah, yeah. That's obviously with that. Like, you pay yourself your wage as the owner, you get your wage and then after that, you know.

Exactly. Divvy out the profits.

Yeah.

So good.

All right. That's kind of it. So I guess just to go over it again, I know you like this sort of time.

So for now, I like the idea of. Yeah, I love a good thing about it, though. But. Yeah, attracting young talent, young guys in. But now we're just gonna have to do, you know, the base rate is gonna have to be 25 an hour because that's what I've got some guys. And there might be, you know, I'll start with P2P, but, you know, most of the time they might hit base rate. That's just how it's gonna be until I get the Apprentices Inc. Basically, yeah.

You could think this is an easy sell for the guys. That is. Look, your base pay is going to be what's mandated by your apprenticeship or adult later, whatever you are. But then P4P is a percentage and if you can beat that, you can make more. Like that's easy sell for them because there's only upside.

Right. Sorry to cut you off. If I have to keep my apprentices now, like, I'm.

Like, I wouldn't want to Start paying my young apprentices now that base rate. Because I don't know, like they're not.

Oh, you're already above that. I got you paying above that.

That's what saved me right now, having the young guys in that I am paying only a little bit. So what if I, what I was originally gonna do is staggering. Like give the apprentices a lower base rate than the other guys until I've got only apprentices and, and then change it. Like that's the best thing I can think of. Does that make sense?

I think that'd be fine. I think it'd be fine. What's gonna happen over time is as they get more experience and become more costly, they're not gonna P4P becomes ineffective. And that's what I don't like. Right. Cause they just keep hitting base pay all the time. You eliminated all benefit of P4P. But again, the person who's actually gonna be efficient on P4P is that first year guy that would otherwise make 1883. Having the opportunity to make 25. And I truly believe, because you will do that over any other competition, you will attract the best people. Yes, they're young, but you will attract the cream of the crop because they have that opportunity to make 25 bucks. And in between going to high school and college or whatever it is, you're going to get the best people.

Yeah. And I'll just have to make sure, you know, marketing and I'm getting in front of them, finding out how to get in front of all the best young people. And as long as I get in front of them and I offer them what I've got, they'll, they'll be like, oh, this is better than the other guys. So.

Well, you get a couple apprentices that are first time ears and you know, local, you know, they know everyone in town or whatever. They come to your place and they're making 24, 25 an hour and all their friends are making 18. I promise you, you're gonna have a lot of applications. Right.

And it'll be easy as well. Actually, I just realized because I'll just. If I get in with the tafes. The TAFE is the apprentices go to a TAFE to start. If I form a close contact with them and they know how I operate with the young guys, that's how like, yeah, it'll work.

Yeah, Good stuff, man. Well, hey, let me know how it works out. Like, I know that's a very interesting situation there. So I kind of learned something too about the whole apprenticeship program and the fact that my goodness, 25 hour, $25 an hour for minimum wage. I thought we were bad at 15 so not so bad. Yeah.

Like we look at you guys we go wow, like it's sort of tough for some people minimum wage over there so yeah.

Oh man.

Cool.

Well hey I appreciate Andrew, I'll send you a recording. I know Josh is going to ask you once he sees this one can he use pieces of this or not? Totally fine either way.

Yeah, yeah do it.

I mean it'll help some people if, especially if they're in Australia. It will hopefully help some people because I don't talk about this for sure at all.

Yeah, I love that.

Good, cool. I appreciate it Andrew, you have a good day.

Thank you so much Mike. Cheers mate.

Take care. Bye bye. Yeah.