Rideable return on investment rundown
March 10, 2014 By Mike Jiggens
By Barry Truan
VP Marketing & Development, TurfEx
The green industry has seen a major shift in attitude when it comes to purchasing new equipment. The big question is no longer, “How much does it cost?” Instead, it’s all about, “How much money can it make me?”
Recently, many professionals have been asking that question about ride-on spreader/sprayers. As this type of equipment continues to gain popularity, more people wonder how it can work for their operations to become full-service applicators. So, to provide an idea of the potential, here’s a rundown of how to boost profits with a spreader/sprayer, as well as some other perks of owning one.
First of all, there are alternatives to becoming a full service applicator, other than purchasing a ride-on spreader/sprayer. A person can also buy spreader and sprayer attachments, towable units or walk-behind models, which are capable of handling similar applications. The downfall to these other options, though, is that the operator usually sacrifices efficiency. That’s because, generally speaking, dedicated ride-on equipment is typically more productive than other types of products.
Since ride-on spreader/sprayers were first introduced to the market, they’ve proven several advantages over traditional spreaders and sprayers. One of these advantages is maneuverability. Ride-on units have a compact design for accessing small back yards, yet they have the speed and capacity to service properties that are an acre or larger in size.
Additionally, this speed and maneuverability helps increase productivity and reduce labour needs vs. other types of application equipment. In fact, ride-on units can apply granular material up to five times faster than standard walk-behind push spreaders. In many cases, ride-on machines are also more effective than larger spreading and spraying equipment, due to their increased agility.
Versatility is another key benefit of ride-on spreader/sprayers. Operators can quickly switch between spreading and spraying functions, or they can do both at the same time. The spread width is variable to accommodate both small and large lawns, and the spray pattern can also be adjusted from wide to narrow, thanks to the quick-exchange nozzles offered by some manufacturers.
Going full service
In spite of the potential profit boost of owning ride-on spreader/sprayers, many commercial cutters shy away from becoming full service, opting only to mow for their customers. The excuses are fairly common. Many are afraid of the extra knowledge and liability that comes with chemical applications. Others are unwilling to hassle with the licensing process.
In reality, the commitment is not scary at all. With a little common sense and education, most commercial cutters are fully capable of successfully handling fertilizer, herbicide and pesticide applications. Additionally, by taking classes during the offseason or while visiting trade shows, people can achieve the required number of education hours to become licensed without interfering too much with their work schedules.
Furthermore, the licensing issue is actually one of the least threatening concerns for single-service commercial cutters. Instead, they should be more worried about the potential for losing clients who would prefer to work with one full-service contractor, rather than separate providers for their mowing and chemical applications.
Think about it…if homeowners care enough about their lawns to hire a commercial cutter, they probably also have strong interest in paying for professional fertilizer and chemical treatments to promote a full, healthy lawn. The question is, whom will they hire to have this done?
Homeowners will almost always ask their existing lawn care providers first to offer the additional service. But, of course, if the current providers aren’t capable, the homeowners are forced to look for outside help. Oftentimes, this leads to the clients eventually shifting all of their lawn care needs to the new service company that can do everything for them.
If a commercial cutter does purchase a ride-on spreader/sprayer to become full service, a variety of other benefits comes to light. Not only does being full service make someone’s business more appealing to existing clients and potential customers, but it also gives the operator more control over the entire grass growing process. Now, he can better manage the growing habits and overall health of the turf, leading to nicer lawns and more satisfied clients.
How to make money
While the benefits of becoming full service sound nice, the investment in a new piece of equipment only makes sense if the numbers add up. Thankfully, there are a lot of ways to make money with spreader/sprayers, since these machines are capable of performing a wide variety of applications, including applying fertilizer, pesticide, broadleaf control and more. But, to keep things simple, consider the following return on investment scenario using granular fertilizer:
A contractor services a variety of residential and commercial properties averaging 3,000 square feet each. With a ride-onspreader/sprayer and a licensed operator, he figures he can service up to 40 accounts per day with the new machine. To come up with this estimate, he factors six hours of run time in a 10-hour day, operating at an average of 3.5 miles per hour and spreading up to 12 feet wide on each pass. Granted 40 accounts per day is an ambitious schedule, but some contractors who have clients close to one another have been able to achieve this. Others may need to substitute 20 to 30 accounts into the equation to determine a more realistic return on investment based on client proximity.
In this example, the contractor charges a minimum flat rate of $55 per fertilizer application, with an additional charge per 1,000 square feet if the property is larger than 3,000 square feet. Assuming all clients are smaller sized, multiply 40 accounts by $55 per application to determine the daily revenue of $2,200.
• 40 accounts serviced per day x $55 per service = $2,200 daily revenue
Next, calculate the material costs, which must be deducted from the revenue to determine profit. In this case, assume that a 50-pound bag of fertilizer costs $21.25 and is able to cover 11,500 square feet. Based on this fertilizer price, it will cost $1.85 per 1,000 square feet to apply the material. Therefore, if a contractor services 120,000 square feet in a day (40 accounts at 3,000 square feet each), material costs will total approximately $222 per day.
• 120,000 square feet / 1,000 = 120
• 120 x $1.85 = $222
After subtracting material costs from the revenue, a contractor is left with a daily gross profit of $1,978. If he can maintain the same workload every day of the week, he has the potential to earn a weekly gross profit of $9,890. Fortunately, maximizing workload is usually not a problem, as most contractors can easily keep one or two spreader/sprayer crews busy throughout the season.
• $2,200 daily revenue – $222 material costs = $1,978 daily gross profit
• $1,978 daily revenue x 5 days per week = $9,890 weekly gross profit
Of course, there are other overhead costs that still need to be deducted from this amount, including labour, fuel and insurance costs. However, these variables are highly dependent on location and fuel price fluctuations, making it difficult to provide a generalized example.
Nonetheless, after running the basic numbers, it’s easy to see how a spreader/sprayer can boost the bottom line and quickly pay off the initial purchase price, which is typically less than $9,000. In fact, some contractors are operating at a 40 per cent profit margin with their machines. Compare this with mowing services, which oftentimes come in at 10 per cent or less profit margin.
Considering all of the benefits, ride-on spreader/sprayers not only make sense…they can make a lot of money. Few other lawn care services come close to the profit margins of chemical applications. And if a person can raise his company’s level of service while paying off the new equipment investment within a year, the decision is easy. In the end, you’ll likely find that the cost of a ride-on spreader/sprayer is a small price to pay for happier customers and higher profits.
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