How much should I charge - can I charge - for my services as a gardener?
This must be the number one question, asked in different ways by so many people - even those who have been in business for a couple of years or more. Indeed, you asked a further question: "How can I be more competitive?" - implying that you think you may be losing work to cheaper firms.
You are engaged in garden maintenance, with a number of customers who appreciate your work, and you are reluctant to try to increase your rates in case you upset them. This scenario is perhaps the most commonplace in the garden maintenance industry. When you start working for a customer, you agree terms and continue working, season after season, year after year, for the same money - reluctant to discuss new terms.
While I can understand your reticence, unless you are able to keep pace with the rate of inflation (ignoring for the moment that your skills base is always increasing and therefore the value of your time should be recognised), you will not be able to continue in business. Put plainly, you will either bankrupt yourself or have to close down and find alternative employment.
Trying to compare market rates
The problem with combining the notion of "rates" by trying to establish your competitors' charges is somewhat futile. You can have no idea whether they are making a living from their work or are loading more money onto their credit cards or personal loans. You can only guess at their outgoings or whether they have private means or a second income, and therefore their charges may reflect that additional financial luxury that you may not necessarily have. For example, their mortgage and/or vehicle finances may have been paid off while yours have not. There are so many factors that render outward comparisons meaningless.
Unlike, say, a manufacturer of goods who will engage in market research and customer surveys to establish the most popular flavour/colour/size of a product, garden maintenance is impossible to qualify. There is a whole range of factors that are more to do with your personal skills and social intercourse between your client and yourself as well as their perception of the value you bring to their garden than with any market research issues. Put simply, your ability to do the job satisfactorily is all your customers are looking for.
Your financial requirements
Of much greater importance to you is to clearly and accurately establish the amount of money that you need to survive in business. With an open mind, ignoring all thoughts of how much you think you are worth compared with your competitors, write down a list of all outgoings in your household and business. Be as thorough and concise as you can, and double-check everything.
The list will no doubt include rent/mortgage, electricity, heating/gas/oil, food and clothing, holidays, television licence, insurance, both home and business, professional charges, accountant, bank charges, council tax, water rates, postage, school fees, pet food - the list will go on and on.
Once you have a comprehensive schedule, with nothing omitted or forgotten, you will find the grand total of your family and business outgoings. Add a percentage for inflation in the coming year. Your figures should reflect the year ahead if they are to be accurate. Divide that grand total into the 52 weeks in the year, because your bills do not stop simply because of the weather. Neither do they go on holiday.
You do, however, have to stop for bad weather, bank holidays and annual holidays as well as days lost through illness or transport problems. It is sensible to assume you will only work 45 weeks a year. You will probably only work for an average of 40 hours per week, giving a total of 1,800 "chargeable" hours.
Divide your grand total outgoings with the 1,800 hours you can work and that is the figure you need to charge per hour just to survive. This figure will not include any profit or provide you with any savings ability. It will not permit you to expand your operation by renting extra land or premises and will not cover the cost of any new equipment. That extra requirement is something only you can decide, but the likely costs should be included in your grand total plus.
Be prepared to increase your rates
You should not be reluctant to increase your rates to reflect this newfound realisation. Sadly, too many small contractors start self-employment without appreciating the true costs. Whereas they have been earning, say, £20,000 a year working for another company, and found themselves reasonably comfortable on that amount, as a self-employed person their income should be at least 50 per cent greater, possibly (dependant on your location and regional variations) as much as 100 per cent higher.
A total of £40,000 divided by 1,800 hours equals slightly more than £22 per hour. This figure, without any additional costs for petrol and oil for machinery - some sites will require more than others and therefore the hourly rate must reflect that cost - is the minimum hourly charge.
It really does not matter whether or not your competitors charge more or less than you. Similarly, if a potential customer offers you less than the amount you know you need to survive, it is better to decline the job than knowingly lose money by accepting. Your rate is your rate.
Alan Sargent is an independent gardens consultant at the School of Garden Management - www.tsogm.org.
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