A Complete Guide to Lawn Care Business Profit Margins
Your lawn care business’s profit margin tells you how successful you are at pricing your services, managing your costs, and staying profitable.
With a healthy profit margin, you don’t have to stress about paying bills. You have the means to invest in your business and grow it.
In this article, you’ll learn what profit margins lawn care and landscaping businesses should aim for, how to calculate your own, and how to profit more on each job.
Learn about lawn care and landscaping profit margins:
Is a lawn care business profitable?
Successful lawn care and landscaping can have operating profit margins between 15% to 45%. Your operating profit margin tells you how much money you take home after deducting your operating costs—labor, material, equipment, and overhead costs.
Your lawn care business can be profitable if you estimate your costs accurately and set competitive lawn care service prices.
READ MORE: Profit margins: a complete guide for business owners
What a healthy profit margin means for your business will depend on many factors, such as:
- The services you offer. Some services are more time consuming or require more supplies than others. This increases your operating costs and can lower your profit margin.
- Your service area. If the cost of living and average landscaper salary are higher in your area, your labor costs will be higher—and a 40% profit margin might not be possible for your business. Average lawn care prices in your area will affect the prices you set and the revenue you can make.
- Whether you offer commercial or residential services. Commercial jobs are worth more and can bring lots of revenue, but they also require more expensive equipment, longer labor hours, and more staff.
READ MORE: How to price, bid, and win commercial lawn care contracts
How do I calculate lawn care and landscaping profit margins?
To calculate your current profit margin, follow these steps:
- Determine your overall revenue for one time period
- Calculate your operating costs from that period
- Subtract your expenses from your revenue
- Divide this number by your revenue to get a decimal
- Multiply the answer by 100 to find the percentage
Let’s say you make $5,000 in one month, and your total operating costs add up to $3,200. Here’s how to calculate your profit margin for the month:
- Monthly revenue: $5,000
- Operating costs: $3,200
- 5,000 – 3,200 = 1,800
- 1,800 / 5,000 = 0.36
- 0.36 x 100 = 36%
Your profit margin for the month would be 36%—a very healthy profit margin.
You should review and recalculate your profit margin at least once every three months. Regular reporting will tell you when you need to adjust pricing, cut down expenses, and make other strategic decisions to make your business more profitable.
READ MORE: How to create a small business budget (with free template)
4 ways to increase lawn care and landscaping profits
If your profit margins aren’t where they should be, follow this advice to increase profits without making drastic changes. Phil Sarros, founder of Sarros Landscaping and Dirt Monkey University, shares some of his advice on keeping profit margins healthy.
1. Raise your prices
Start by raising prices incrementally—by 2–3%, for example. Phil knows from experience that small price increases can add up over time.
“If you raise your price by 3%, and you have a $100 dollar job, you’re now charging $103 for that job,” said Phil. “A $1,000 job becomes a $1,030 job.”
Before you raise your prices, learn how to handle price objections from customers. It’s normal to hear complaints, and knowing how to respond to them will help you keep clients and improve their experience with your business.
READ MORE: What to do when customers say your price is too high [examples]
2. Reduce overhead costs
You can profit more on jobs when you cut out unnecessary or extra overhead costs. Set a small goal, like reducing your monthly overhead costs by $100. Then evaluate your expenses to see where you think you could save a few dollars.
Phil suggests sifting through your monthly bills one by one. “Reconsider your cellphone bill, reduce your insurance payment, or lower or renegotiate your rent,” he said.
3. Make your team more efficient
When your team is more efficient, you can complete more work in less time. Reduce wasted labor by cutting down tasks outside of field work and customer service, like driving time and coffee runs.
To reduce your wasted labor, get your workers to complete other tasks during billable hours, such as:
- Completing lawn care invoices, quotes, and other paperwork
- Handing out lawn care flyers to neighbors
- Checking supply inventory
- Inspecting equipment
- Updating your landscaping website and social media profiles
- Sending thank-you notes to clients
“Improve your efficiency on how fast the guys load and unload in the morning,” said Phil. “Or, don’t let them stop at the gas station on the way to the job.”
Pro Tip: To measure how your employees are using their time, track employee time and view job reports in Jobber. Time tracking helps you measure productivity, calculate hourly rates for different types of work, and invoice clients properly.
4. Bring in more clients
Gaining more lawn care and landscaping clients gives you more freedom to raise your prices—and that can help you reach higher profit margins.
Try these tactics to market your lawn care services and win more jobs:
- Set up a Facebook business page, then come up with lawn care Facebook post ideas that educate and entertain your followers
- Run lawn care ads on social media and direct potential clients to your Facebook page, Instagram feed, or landscaping website.
- Buy t-shirts or uniforms to wear on the job, and use a vehicle wrap or decal to promote your services on the go.
- Hand out business cards with your name, business name, and contact details.
- Create a free Google Business Profile and ask your lawn care and landscaping clients to leave positive reviews.
- List your company on lead generation websites like Thumbtack or Taskrabbit.
READ MORE: The best lawn care advertising ideas: how to market your business
Remember—when you get more clients, you need more labor, equipment, and supplies. Use our tips above to keep your operating costs low as your revenue grows.
Keeping lawn care profit margins on track
Profit margins tell you how well your business is really doing, so pay close attention to your finances and watch how your profit margin changes month to month.
You can stay profitable—and improve your margins—by making expense adjustments or cuts when you need to, raising your prices, and making your business run more efficiently.
Originally published in January 2020. Last updated on June 22nd, 2022.