SPECIAL FOCUS- FALL FERTILIZATION: Fiscal Fundamentals

Finding the delicate balance between turning a profit, covering costs and not gouging your customers is always tough. Pricing fall fertilization can be especially difficult for lawn care operators (LCOs) who are new to it. After all, it’s never easy for the untrained eye to gauge how much labor and man-hours will be poured into a project from simply eyeballing it.

What’s more, spring and fall fertilization can involve different variables, which can translate into different expenses for the LCO and, thus, a different pricing structure.

Many lawn care technicians, like Rusty Stout, vice president, Complete Lawn Service, Vienna, Va., believe that fall is the best time for fertilization. "Most of the energy goes to the roots in the fall and there’s less top growth," Stout says. "In our area, we probably put down two-thirds of our fertilizer in the fall and then just a little bit in the spring, a little bit more in the late spring and nothing in the summer."

Gary Borobich, vice president of U.S. Turf Control in South Burlington, Vt., asserts that fertilization should occur all year, but recognizes the differences in the method and application. "Obviously you’re changing the nutrients that you put down in the fall vs. what you’re doing all throughout the summer. We use almost straight potassium during what we call our late fall fertilization, which is near the third week of October."

But despite the differences in spring and fall applications, his company’s pricing structure for both is the same. Borobich’s pricing strategy is measured by the square foot. His 90-percent residential customer base receives a price break as square footage increases. "So for our smaller sites its about $5 per 1,000 square feet," he explains. "Then for our larger sites, which would be around 20,000 square feet, we have a built-in stop charge, which starts at $30 to $35."

"Obviously we can’t go treat a 3,000-square-foot lawn for $15, so for properties less than 20,000 square feet we have established a price chart, and for sites with more than 20,000 square feet, we add $4 or $5 dollars per 1,000 square feet," Borobich says, adding that he sometimes even charges as little as $3 for each additional 1,000 square feet, depending on the product he puts down.

Stout does things a little differently. He charges an average price for every visit, crediting his new business management software as the catalyst for simplifying his pricing structure and eliminating guesswork. "We’ve rounded it out so that the base price is about $14 per 1,000 square feet," he says.

Yet another pricing strategy is to roll the cost of fertilization into a package price. This is how Mark Leahy, president, Blades of Green, Churchton, Md., does business. "We have three different programs and in each program the pricing for fertilization remains the same. To arrive at a price per square foot, I look at square footage, labor and materials, and average all of this together."

Formulas for averaging expenses and calculating a profit-earning price will vary from LCO to LCO because each company has different equipment, employees and products that they use. Stout maintains that these must be factored into a price to ensure profit. "For us, the labor is probably one-third of the cost," he says. "The materials are probably less than that. And after that you still have to consider overhead."

Establishing a price is not a simple by-the-numbers process, Stout asserts. "Gas prices affect us, petroleum affects fertilizer prices, and material prices are going up," he says.

For instance, between 18 and 20 percent of Borobich’s costs cover products on an annual average, but because straight potassium is used for his company’s fall applications, his product costs are closer to a range of 10 to 12 percent. "We look at all of our chemical costs when we’re ordering," Borobich says. "We ask ourselves, ’How much have they gone up in price?’ That way we already have our overhead cost."

Meanwhile, Borobich says that labor makes up between 12 and 15 percent of his application cost.

Examining the mistakes of others also is helpful when deciding how to charge your customers. Stout says the most common rookie mistake he’s seen is not taking into account all of these costs. "Sometimes people just apply straight mowing rates to the price," he explains. "They’ll say, ‘It cost me $4 per 1,000 square feet to mow a property that size and I can apply fertilizer quicker than that.’ But you have to consider the overhead, the profit and the mark-up."

Borobich says he’s observed LCOs making the mistake of mismeasuring square-footage, which can lead to using more product than originally intended, diminishing returns. "Some may overfertilize," adds Leahy. "And then a lot of product goes to waste and affects costs, and if they haven’t figured out their costs, that’s where they’re most likely to go wrong."