Engineers and Acccountants

  OK, so this blog is mostly about helping Blue Dot Landscaping.  But it is MY blog right?  I can rant sometimes?
  Background: - Gross profit = Money brought in minus costs for product.  We could get into COGS (costs of good sold) and lots of minutia... but let's keep it simple.  You paid $50 for a bicycle.  Your salesperson sold that bicycle for $100.  You had to pay the salesperson $10 commission and $5 to the bike mechanic who serviced the bike.  Your gross profit is $100 less $50 less $10 less $5 = $35.00.
     So you made $35... isn't that nice?  NO!  I know plenty of people who used to be in business - who are no longer in business - because they couldn't figure out that NET profit is what matters, not Gross profit.  And simply - Net profit is gross profit minus all your overhead.  Things like rent, insurance, advertising, etc. 
  OK, so why am I preaching accounting?.....

Email from Mr. X:

On Apr 4, 2011, at 10:25 AM, "MrX (ENG- GVL)" wrote:

Hi, 

You’re advertising an April Special that calls for delivery and spreading of 10 cubic yards of double ground mulch for $339.

Do you also have Black double ground hardwood or cypress mulch?

If so, what’s the cost for similar to above package?

What about for 20 cubic yards of Black mulch package?

Prompt response will be much appreciated. Thank you,

Mr. X

7 minutes later....

From: Rich [mailto:scyardman@gmail.com]
Sent: Monday, April 04, 2011 10:32 AM
To: Mr X (ENG- GVL)
Subject: Re: Mulch inquiry

10 yards dyed black = $499

x2 = 998

Rich Regan

Sent from my iPhone

864 680-9842

20 minutes later

From: Mr X(ENG- GVL)
Sent: Monday, April 04, 2011 10:52 AM
To: 'Rich'
Subject: RE: Mulch inquiry

Rich,

Thank you for your promptness!

Final question: do the quoted prices include tax?

I responded "yes"... and got the following email the next day...

To: 'Rich'
Subject: FW: Mulch inquiry

Hi Rich,

I do wish to give you the business, but not at the quoted $998, here’s why:

I roughly calculated the square footage of existing mulch beds and came-up with approx 4,100 sq feet, hence I feel that 16 cy’s of mulch will suffice.

Next, I did some local price comparisons, which are:

Price of Black double ground hardwood mulch is running between $29 to $34 per cubic yard (plus tax)

Price for local delivery is running between $30 to $36 per 10 cy, and some places at $40 per big, up to (20) cy load.

Quick math:

(max cost): 16 cy x $34* = $544 + 7% tax = $582.08 + $72 for grand total of $654.08, plus approx $200 for labor (I extracted this per your quoted $998 price for 20 cy of mulch at max cost)

(avg. cost): 16cy x $31.50* = $504 + 7% tax = $539.28 + $40 delivery = $576.28 + labor @ $200

(lowest cost): 16cy x $29* = $464 + 7% tax = $496.48 + $40 delivery = $536.48 + labor @ $200

* - over the counter cost to “Joe Public”, it’s a given that your cost is lower.

Based on the above costs are you receptive to the following:

Provide legit (16) cubic yards of black double ground hardwood mulch, uniformly spread it on all existing front, side and back mulch beds, and kindly leave any remaining mulch at the back-end of the driveway (for our redressing of selective flower seeded spots, which will be plainly marked prior to your arrival) for $750 total , this reflects approximation of  (avg. + lowest local prices / 2).

If you are willing, could you do it this Thursday or Friday?

This could become an annual event, if my wife and I find your crew’s performance satisfactory, which based on your advertised reputation, we should.

Who knows, our neighbors may consider you as well once they see your workmanship, and hopefully our endorsement.

Regards,

Mr X

..........................................................................................

  So I thought of all sorts of responses.  Things like explaining about our total costs (insurance, fuel, payroll taxes, and the cost of creating a web site that got him to email us to begin with) and other thoughts like asking him how he decides to buy his bacon and eggs (does he compute the farmers 'costs' and make him an offer?).  I mean, the fact is, if we only did mulch jobs like his, and charged $998, we would be out of business soon.  We would make a little gross profit, but no net profit. HIs silly offer of $750 was ridiculous.  Quite frankly if anyone would do it cheaper than us.... Mr X would be talking to that person... not us.

  I wound up deciding to just let it go.  I didn't respond to his email at all.

Then... the next day....

Hi Rich,

Please let me know if you are interested in my proposal of yesterday.

I didn’t mean to be so lengthy, blame it on my engineering background. I love numbers.

Probably simple query would have been sufficient. Something like: Rich, can you deliver and spread 16 cy of Black double ground hardwood mulch for $750?

If no, I’ll definitely look for another service.

If yes, would early next week work (per your schedule)?

Thank you,

Mr X

And I responded:

Yes, I figured out quickly you were an engineer... Not an accountant .
No, we are not interested.

Rich Regan
Sent from my iPhone
864 680-9842

OK... so I'll never be a good politician.... sigh.

Rich