Reasonable percentage mark up for plant material?

[Alexander Smith]

In this market what is the reasonable percentage mark up for plant material on a residential job. I’m new to bidding jobs. Need advice.

[Andrew Garulay, RLA]

It depends on where you are buying them – direct from production nurseries, from re-wholesalers, or from retailers. It also depends on where your market is, how much reputation you have to build your value.

 

In my market, the well established upper level contractors get about 3.5 x the direct price of plants including installation, soil amendments, and warranty. That is roughly 2.25 x retail. They do not line item the plants in the contracts, but many separate out the price for the plants in the final bill in order to collect the sales tax. They don’t  show a 3.5x markup, but a price comparable to retail. The rest of the money is still collected per contract – the difference being the sales tax and any extras.

[mark foster]

In this part of the country,  it seems to be @  2 1/2-3 times the wholesale cost of the plant.   That said, the quickest way to A. loose your shirt, or B. price yourself out of the market, is to depend too heavily on unit prices.  

Work associated with the plantings (added topsoil, amendments, drainage) should be priced separately.  Cincinnati is probably similar to Louisville–silt loam in one place, pottery clay in another….

[Jonathan Smith, RLA]

Does this 2.5-3 x markup include overhead and profit, labor and amendments?

[mark foster]

yes.  but anything beyond the plant itself would be extra (earth moving, drainage etc)

[Jonathan Smith, RLA]

So should you take the wholesale cost and bring it to retail before applying you overhead and profit?  Everything else costs retail.  Seems as though it would be better to purchase materials from a retailer.

[Jonathan Smith, RLA]

If I buy a plant from a wholesale nursery for $10 and sell it for $30, the final price is where I get my labor, overhead and profit?

But if I buy the same plant for $20-25 from a retailer, where do I earn my labor, overhead and profit?

[Andrew Garulay, RLA]

My formula is not to give a price to install, but to estimate the price of someone else to provide and install based on collecting bids and dividing the planting portion of the bid by the total cost of the plants from a particular wholesale catalog. I’ve done this for ten years and it is very consistent…. in my area it is 3.5X the wholesale cost from this paticular catalog on average. Some may pay more or less for their plants, but I need to use one benchmark so that something is consistent in order to compare.

 

The particular nursery that I use the catalog from marks up their wholesale price by a factor of 1.63 for their retail pricing, if that explains anything.

 

I have done pricing for three different well established design/builds. They all had different methods to calculate, but in the end the bottom lines were very similar. One actually did price from that wholesale catalog by doubling the price for the retail price of the plant which they would itemize in the invoice (not the bid) in order to collect sales tax. They would double that price for the plant installed price (4x wholesale). The two other companies used elaborate software that calculated amedments, labor rates, markup, …. which in the end was no more effective at adjusting for variables. The only real difference was the cost of buying and maintaing the software.

 

I would not knock anyone for pricing by a factor as long as they also paid attention to extenuating circumstances.

 

What matters is that you make money and don’t price yourself out of the market or pay too much for your materials.

 

 

 

 

[mark foster]

I agree with Andrew.  The unit price method gets you in trouble on the extremes.  As a young man I supervised a landscape crew and we got a job to put in 200, 3″ caliper trees on a horse farm.  My boss got the work using the basic 3.5% rule and was pleasantly surprised at the small fortune he made in profit– because we installed with machinery and the labor for each was minuscule.  Some time later we got into a project with huge (rather low price) shrubs in beds of acres of mulch on a project which had no room for equipment–the reverse was true because of the time it took to prep the beds/strip sod etc…

So, mostly it works– but if I am ever in doubt, I look at projects by unit cost and then figure it actual time and materials.   

[Anonymous]

Good points Andrew and Mark. I’ll also add that it depends on the size of the job and what you’re installing. A 3.5 multiplier on a job like the 200 tree installation that Mark described would usually be a deal breaker. I would probably approach pricing out a job like that by first the my cost, figuring out the profit I wanted to make on the trees and other materials, labor, equipment (even if you own it) and warranty replacement of 5-10% of the trees.

 

A 3-3.5 multiplier is a guideline for quick estimates. It should include profit, overhead, labor, warranty, equipment, etc. You almost can’t loose on a job in which you sell topsoil and stone with that kind of mark-up.

 

Another thing to consider is the client. Installing 500 hundred junipers in a well drained sunny commercial site should have fewer headaches and call backs than installing 25 Hollies and Azaleas on a residence with a clueless owner with an irrigation system.

[Heather Smith]

These responses are all very helpful. Thanks.

[Author]

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