When I first started out in the business, and for longer than I’m proud to admit, we often priced our jobs based on our gut feelings. We’d do our best to plan out how long a job would take, and then we’d add a contingency fund just in case.

We were profitable not by accident but because the people who were estimating the work had been doing this a long time and were good at guessing. Our profitability relied a little too much on what was inside some people’s heads, and not enough on systems.

This is a process that breaks when companies scale up: how do you teach a new salesperson how to estimate work when it’s a gut feeling they haven’t yet developed?

Using an industry-specific software helps with this, and we’ve relied on Aspire for it since 2020. We created a process that’s repeatable and consistent: so no matter if a client is working with Macy or Kent they’re getting the same pricing.

But even the best software will fail you if you don’t understand your numbers, and that starts with your Profit & Loss Statement (or P&L). Here’s how that works:

Understand your Gross Margin and Set Goals

Your gross margin is what’s left of every dollar you sell after paying the direct costs of doing the work (labor, materials, equipment, and subcontractors) and that money is what you have available to cover overhead and, ultimately, make a profit. 

Your number will vary based on your overhead structure (what you include in overhead versus costing to jobs), the type of work (construction should usually have a higher gross margin than maintenance), and the clients you work for (residential usually is higher than commercial).

Work Backwards from that Number

When estimating a job, you should be pricing it so that if everything goes to plan the gross margin is within your goal range.

When we’re doing renewals and requotes for maintenance work, which we’re working on now at Grunder Landscaping Co. (GLC), we’re looking at the actual gross margin on the job for this year and then adjusting our pricing accordingly.

Understand and Explain Gross Margin to Your Team

Gross margin is one of those numbers that can get confusing for teams. If you’re managing jobs to the gross margin, it can be easy for your team to see a 45% gross margin and think that’s the profit on a job.

We did an exercise with our team at GLC last year that helped explain this, and I think it’s really useful for teams to use. Once labor burden (benefits, taxes, etc) and overhead costs are taken out, the true profit from a job shrinks quickly. Showing your team this can help you manage to gross margin more effectively because your team understands what’s at stake.

ACE Peer Group Executive Coaches Jim Cali and Liz Helton will lead a breakout session at GROW! 2027 that will walk attendees through understanding their gross margin, setting gross margin goals, and then managing to that gross margin so that teams can plan for their end of year profit margin one job at a time. It’s one of many breakout sessions that we’re finalizing now, and we’ll have 40+ for attendees to choose from onsite.

If you’re looking to move your business forward, there’s no better event in the industry than GROW! 2027. We’ll be in Savannah, GA on February 17-19, and early bird pricing to join us will expire on November 1. Lock in your ticket now to save $200 per person.

I’ll see you there!

Marty Grunder
Founder & CEO
The Grow Group & Grunder Landscaping Co.