Lessons I have learned
Every landscape project is different. Back when I was in the field as a laborer and then a designer/contractor/owner, I saw firsthand how factors like distance, site access, municipal or HOA codes, and even the occasional tricky client could turn a simple job into a complex puzzle. Material supply issues could throw a wrench into the works, too. Now that I’ve retired from the contracting side and focus solely on design, I can appreciate even more how crucial it is to choose the right pricing strategy for each unique project.
Even though I’ve stepped away from contracting, I still like to keep a finger on the pulse of how landscape construction is estimated and priced. Over the years, I’ve used different methods to price projects, and each has its benefits depending on the circumstances. Here’s a breakdown of some common approaches:
Fixed-Price (Lump-Sum) Contracts
In a fixed-price contract, the client gets one all-inclusive number that covers everything from labor to materials and overhead. This approach gives the client peace of mind because they know exactly what they’re paying. But as a contractor, you take on all the risk for any unforeseen challenges that might pop up during construction. It’s a method I used for well-defined projects where the surprises were minimal.
Time and Materials (T&M) Pricing
Time and materials pricing is a lot more flexible. It works great for projects that are harder to define upfront. The client pays for the actual hours worked and materials used, with a markup to cover overhead and profit. I found this approach particularly useful for smaller jobs or projects that had a lot of unknowns—like when site conditions were unpredictable. But it can leave clients uneasy since there’s no set final price. Clear communication is key here.
Cost Plus Pricing
This was my preferred method of pricing work. Cost plus pricing is like T&M with a bit more structure. You calculate the actual costs of labor, equipment, materials & subs, and then add a fixed percentage or fee for overhead recovery and profit. This gives clients a sense of transparency because they can see where their money is going. The flexibility helps when the project evolves mid-construction, which is common in custom work. The challenge is making sure the client doesn’t feel like they’re footing an open-ended bill. To this end, I would use 'cost plus' to develop a fixed price for each work area and present my client with that fixed price to accomplish each individual, well defined work area.
Unit Pricing
This is an effective method for straightforward work where you can break the project down into measurable components, like per square foot of paving or per plant installed. It’s easy for clients to understand, and it helps to manage changes in scope. But it’s important to account for site-specific challenges that might not be obvious at first glance—things like tough soil or difficult access could quickly eat into your profit if you’re not careful with your calculations.
Design-Build Contracts
In a design-build contract, the contractor handles both the design and construction, which gives them full control over the project from start to finish. I’ve always appreciated this method because it allows the design to evolve based on the client’s budget and the realities of the site. It’s seamless for the client since they only have one point of contact, but it requires a strong design team that can communicate effectively with the construction crew.
Square Foot Pricing
Square foot pricing is another simple approach like unit pricing. You charge based on the size of the project area, which works well for large expanses of lawn or paving. It’s a method I used for straightforward installations where size was the main driver of cost. However, this method doesn’t always account for the unique challenges of a particular site. What looks simple on paper might turn out to be much more complex once you start digging.
Value-Based Pricing
This one is a bit more niche, but it’s worth mentioning, especially for high-end projects. With value-based pricing, the cost isn’t tied directly to the materials and labor. Instead, you price the project based on the value it brings to the client. This works well for luxury projects where the design, materials, and craftsmanship add significant value beyond the cost of raw materials. It takes a deep understanding of the client’s priorities, but when done right, it can be highly profitable.
Every Project (and Contractor) is Unique
Looking back, every project, site, and client I worked with was different, and the same goes for contractors. What works for one project—or one contractor—might not work for another. There’s no one-size-fits-all when it comes to pricing, and trying to base your pricing strategy on someone else’s methods can lead to trouble. The goal is to find the right balance for your unique business model and project, and communicate it clearly to your clients. And be flexible enough to adapt to whatever the job throws at you. It’s all part of the fun! Right!?!
While I’ve moved on from contracting to focus my efforts on design and consulting, I’ve seen first hand how the right pricing strategy can make or break a project. Choose the approach that fits the situation, and you’ll be well on your way to a successful—and profitable—outcome.
Feel free to reach out if you have questions or need some help.
~ Eric
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