How to Calculate Lawn Care Job Profits
Ed Ramsden, Jobber customer and owner of Enviromasters Lawn Care, shares his tips on how to calculate job profits and run an efficient business.
Running a lawn maintenance company is great. You’re often working outside and no two days are the same. But just because you get to enjoy the luxury of working outside, you’ll still need to do some work from behind the desk once in awhile to ensure you’re running a profitable business. This is where calculating job profits come in.
Calculating the job profit, or the amount of cash you made or lost on a specific job, is relatively straightforward. Ultimately, this is a quick way to figure out how much money you are making.
Why calculate job profit?
It is important every now and again to take a step back and calculate your job profit. Are you under-bidding jobs? Are there better ways to get the jobs done? What strategic decisions can you make to ensure your company is more profitable?
At Enviromasters, we do a lot of fertilizing and weed control for homes with lawns over an acre in size. It can be tempting to look at these large jobs and get to work without thinking about how much money we’ll make relative to other jobs. After we started calculating job profit we discovered we were making more money spraying for weeds than we were fertilizing. So now we offer a package where we only do weed control instead of fertilizer and weed control.
Before you get started
Before you can calculate your job profit, you need to know three things:
- How much you charged for the job.
- The amount of time spent to complete the job. We use Jobber’s time tracking feature to help with this.
- The value of materials used.
For mowing jobs, you can skip the third step since you aren’t using a significant amount of material. To calculate how much material you used for fertilization or other similar jobs, you’ll need to perform some basic math.
At Enviromasters, we don’t check how much fertilizer we used for each job. It would take too long and we do not have a good way of measuring usage. Instead, we look at how much fertilizer we used over the entire day. As an example, a bag of fertilizer might cost us $30 and does five houses in the city. In this case, each house in the city uses $6 in fertilizer ($30/5 houses).
Calculating job profit
Once we know how much we charged for the job, the time spent to complete the job, and the value of materials used, we can calculate our job profits. To calculate the job profit we can use the following accounting formula:
Job profit = (Revenue) – (Cost of Goods Sold)
In this case, we need to know revenue and cost of goods sold:
Revenue = how much you charged for the job (excluding tax)
Cost of Goods Sold = ((time spent) x (employee wages)) + material
Let’s look at an example:
We charged $85.00 to fertilize a yard and $85.00 to spray the weeds. It took one of our technicians 30 minutes (0.5 hours) to fertilize and one bag of fertilizer. It 45 minutes (0.75 hours) to spray the weeds. We pay our technicians $18/hour.
Side note: We pay about $80 for weed control concentrate that we mix into a water tank lasts us three days. Which is only a couple of dollars per job so we don’t bother keeping track of it for a single job.
Job profit (fertilizer) = $85 – ((0.5 * 18) + 30) = $46.00
Job profit (weed control) = $85 – (0.75 * 18) = $71.50
To turn these numbers into a percentage we calculate the gross job profit margin using this formula:
Gross profit margin = Job profit/revenue
Fertilizer profit margin = $46/$85 = 54%
Weed control profit margin = $71.5//$85 = 84%
Earlier in this article, I mentioned that when we started to look at profit margins, we realized that our weed control services were more profitable than fertilization services. This is an example of the calculation we made that helped us look at our business in a new way. We were able to offer our clientele a new service while ensuring steady profit margins.
Using Jobber to get started
If you’re using Jobber, you can use the Visits Report to help you get the information you need to calculate profits. Head to the Management tab in Jobber and then select the Visits Report.
This report will give you the date a job was performed, the amount you charged, and the time spent at the job. Take a look at this report, use it to help you calculate your profits, and ensure you’re running a profitable business—good luck!