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  dgeorgea February 19, 2009 at 1:49pm

  This left me a little puzzled at first, but actually I think you make a good point.
  
  I have seen a great post by Phil that looks at how to cost a job, including how much you want for yourself. But even if you are happy being a one man band you do need to factor in that you will need to repair and replace equipment, and if you do want to expand, either in terms of services or people you will need to factor this in as well. After all there is little point in building up a great business if it suddenly runs to stop because you cannot afford to replace a van and so cannot get about.
  
  I look forward to seeing how people factor this in.
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  Graeme @ BGS February 19, 2009 at 6:48pm

  I was referring to the amount of “profit” for example money remaining in the bank at the end of the company year (after tax etc) that is retained in the business and used as a reserve or as a means of financing expansion or investment.
  
  I changed my business model a couple of years ago and now factor in a “profit margin”. Each “job” is quoted from a position of quality and sustainability with an appropriate and fair balance between cost, quality, and timeliness.
  
  The key is sustainability, we need to make a reasonable profit in order to remain in business.
  
  I appreciate that we all have different business costs and hence different profit margins but are we shooting yourselves in the foot if we don’t factor in profit?
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  Graeme @ BGS February 20, 2009 at 3:06pm

  My point exactly.
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  Anthony George March 4, 2009 at 11:27am

  I agree with clive on this,
  
  You have to factor in a profit margin if you want to run a business.
  There will always be unexpected costs, Vans breaking down new tools etc. If you don't have a profit you can't re-invest in the business.
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  Nicky @ GardenImprovements.com March 4, 2009 at 1:52pm

  I often found that we were priced out by a little bit on price competition jobs and I think that this is because there are still a ton of firms out there who work for bills and beer money. If you pay tax and insurance and add in a margin for growth and reinvestment then the chances are you won't be the most competitive. This is why referral work and design based work is more valuable because reasonable and durable rates can be applied allowing for more effective margins and allowances. I charge a call-out fee of £20 during high-season for straight forward price jobs - not alot of money but it weeds out those clients who'd normally opt for the cheapest option and saves us some time writing out ineffective quotes.
  
  Niall I aim for a similar rate on site and charge a similar premium for design work - if we're working 16-18 hours a day in and out of site and the office I need to cover my costs and make some profit so my labours are worthwhile - if I ain't with my wife and daughter and have my eyes glued to a design or am elbow-deep in mortar, I want paid for it!!
  
  Nicky Patterson
  
  
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  Graeme @ BGS March 4, 2009 at 5:05pm

  My hour rates are slightly higher and work out at around £30 to £50 per hour per man depending upon the work we undertake. I would say the average is £30 per hour and we normally send out a two man team per van.
  
  I try not to quote hourly rates as this makes us look a lot more expensive to some of the one man band competition. So the quotes are normally for fixed price work. In fact our two man teams can work more efficiently and be just as cost effective than the one guy charging out £15 - £17 per hour.
  
  I also stress that we are not always the cheapest but they pay a premium for the quality service.
  
  When pricing jobs I try to factor in all costs such as allocating 4% towards the bad debt pot (by the end of the year I can normally get this down to about 1% which helps the bottom line but don't forget it cost money to carry the debt!), 2% towards equipment servicing and repairs, 10% for actual running costs whilst on the job plus a percentage of £75 per day per van to cover other fixed costs and then finally a 15% net profit margin. In fact I probably get closer to 60% gross profit but as you know there is always something that crops up and then wages / sub contract costs which can bring the net profit down to very little! This year I will be investing a little over £15K on capital investment and may need to purchase one of the vans out of the lease.
  
  On bad days I reckon the actual true net profit to be as little as £20 per day per van but can be as high as £200 on very good days. Still this is very little when you think of the capital investment and time and effort spent.
  
  As my bank manager keeps telling me I am in business to make money if not work at a burger bar!
  
  My key task this year is to drive our costs down and increase profitability to about 25% of total income which is probably about a fair rate.
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  Colin@Green Room Gardens March 5, 2009 at 10:18pm

  Blimey just seen the rest of the replies I better head of and get a business degree. They didnt teach me this sort of stuff at horticultural college
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  Graeme @ BGS March 7, 2009 at 8:57pm

  Stuart - You will be getting a generator next to brew up on site! :-)
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  steve loftus March 7, 2009 at 9:39pm

  surely its just the boss that has a pick-up,not much good for a ton of sand,but great for carrying their wallets,usually with big chrome bumpers and rollbars,tinted windows and no tow bar.
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  chris nangle March 8, 2009 at 1:11pm

  we always add a profit margin onto the job we charge for materials design and making time then add our profit margin onto that