How To Make LOTS of Money With Your Tractor

one of the things we found most difficult about working with customers over the years is this initial project estimate you drive up to the customer's property you get out of the truck introduce yourself and begin to talk about the project these next few minutes we have found to be some of the most important as to whether we're actually going to get the project and as to whether we're going to make any money while we're doing it over the years we've learned a few tips that we want to share with you now that not only will help you get the projects but will help the customer to be more comfortable throughout the entire process let's get started let's say you've determined that you need a hundred dollars an hour to make a reasonable profit at this point a hundred dollars an hour is just hypothetical don't get too hung up on that we'll go through some details on that in a later episode where we actually help you calculate your costs and what you feel like as a reasonable profit but for now let's just use that number and get back to the customer visit that we just started so we're talking about the project learning what the customer needs go through a lot of these details with a customer after we've had a lot of discussion eventually the customer's going to ask us well how much is this going to cost me the first answer that most people come up with is well i want to charge a hundred dollars an hour that's that's what my rate is we have to think in terms of the customer though because the customer really wants to know how much is it going to cost me not what's your hourly rate right so the first question they're going to follow up with is okay well then how long is it going to take you right so you might say and hypothetically oh it'll probably take me two to three hours now what you have said is i'm a hundred dollars an hour it might take two to three hours it might take four it might take five might take one i don't know but probably two to three hours what the customer heard was three hundred dollars max maybe lower that's just that's just the way the customer is going to hear that that scenario if it takes six hours to do the project the customer is not going to be happy and he's going to want to pay you the 300 that he felt like you initially estimated if you only work an hour on a project since you quoted a 100 an hour rate he thinks that 100 is his fee in my opinion this is a sure way to minimize your profits no one's going to be happy it it just doesn't work like you would expect so i'm suggesting that you made your mistake when you first mentioned your hourly rate yeah that's right i'm suggesting that you not share an hourly rate with your customer so why do we tend to want to quote an hourly rate if it gets us into this kind of a scenario well i think most of us believe that the hourly rate is the safest bet for us right we think that this allows us to have the most flexibility if a project takes longer it should be fine let's say the scope of the project changes we should be fine because it'll be covered by this hourly rate and the customer will just pay us for how long we've been here so i'm saying that doesn't work and i think you've probably seen that as well so since it doesn't work let's rethink that a bit and see if we can find another way to handle this problem before we get into the solution for this problem i promised you several weeks ago that i would answer insurance questions that have been asked on tractortimewithtim.com insurance and we pulled in our insurance provider as a partner so that we would get accurate answers and not just some flippant answers these are endorsed by country financial today we're going to talk about umbrella policies let's take a look we're back with my friend steve to answer yet another insurance question this is sponsored by country financial because we wanted to get the answers right and today's question steve is about an umbrella policy does an umbrella policy cover my tractor for hire off premises does it add any coverage like that the umbrella coverage will afford coverage when the base coverage exists so it's over and above your base coverage on there so on your homeowner's policy if you take your vehicle your tractor off premises and you have that coverage added to your policy then the umbrella coverage will take effect okay so i still have to have either this add-on to my homeowners or policy or this contractor's commercial policy to have the coverage yes you need the base coverage for it to apply or if you just never simply take your tractor off your premises okay then the umbrella coverage would apply okay and then the purpose of the umbrella is to to raise those liability limits that's really the yeah say you have a 250 or 500 000 limit on your homeowners then the umbrella starting at a million and you can go up from there is over and above it stacks the coverage okay so it really doesn't add any much new coverage right no it just extends the limits on your existing coverage correct yes hey thanks so much thank you let's look at this same project discussion again only this time we'll consciously not mention our desired 100 an hour rate early in the discussions before we ever talk about pricing we have to evaluate the project to be sure we understand it as we're doing that let's build a task list either mentally or on paper or a little bit of both as to what we need to do for instance if we're going to be doing some yard grading or swale work we might say well first i'm going to rototill the area and then i'm going to move the top soil away and then i'm going to dig out some of the subsoil with my loader and then i'm going to bring some topsoil back on or maybe i have to haul off some some soil some of the subsoil we go through all of those steps right and as you go through them not only are you building a task list you're also interacting with the customer to make sure that we're doing what they want them to do for example if there's seeding to be done is the customer providing the seed do we have a place where we can put that subsoil that we that we took away or just many questions like that that you'll be dealing with so eventually the customer is going to ask how much is this going to cost me rather than quoting a number right then i would walk back through the task list kind of illustrating all the different items that have to be done and that'll help the customer to visualize the complexity of the project now at the same time you can be building your time estimates in your mind while you're while you're verbally going through this so let's say you've decided that you think the project's going to take two to three hours and that you think there might be one part of the project you either don't fully understand or it could be more complicated like perhaps there could be a water line you have to dig around or something that's that's manual so at that stage you say two to three hours to yourself you don't say that to the customer when you get ready to quote a price i would say it'll be five hundred dollars and if we have an issue with this water line or whatever hypothetically it'll be an extra 100 so 500 is the most likely possibly 600 if the worst case happens now at that stage the customer doesn't really have any more questions right you've answered their primary question which is how much is this going to cost me they don't have a follow-on of well how much time is it going to take now truth is they may ask you how much time it's going to take but that's going to be in a later part of the discussion where they're really thinking about a totally different thing they're thinking about well how much work do i have to take off can we do it over lunch is going to take all day is it going to take half day so there really more logistics planning than they are trying to estimate your cost okay so we get there on project day and you actually accomplish the project in an hour and a half it went smoothly as can be since it went so smoothly the customer is going to be thrilled they're going to happily write you that check for 500 and i would encourage you even if the job took say five hours or even if there was some complexity there that made it go a little harder than what you thought it would be try not to ask them for that extra hundred dollars do the work for the initial five hundred dollars now if it goes really really awry yeah you can ask for the extra money that's why we mentioned that but for the most part that mention of the extra hundred dollars is to allow you to come in under your maximum quote in this way the customer is going to be happy and you're going to be happy in those rare cases where you totally underestimated something the project went per plan but it just took you longer use that as a learning experience and make sure you estimate a little longer next time so why am i asking for five hundred dollars instead of the three hundred dollars if i expect it truly to take three hours well it's because i'm taking the risk right i have bit a fixed bid here of five hundred dollars taking almost all of the risk maybe that extra hundred dollars if something went awry so i believe that puts us in a position where we can handle um the extra bid amount and the customer should actually be actually more comfortable and more pleased that we came right out with a fixed number at the beginning rather than making them try to quiz us to figure out that the total amount now are they going to really understand how long something's going to take i doubt it for the most part the customer doesn't understand the capabilities of our equipment near as well as we do so often they have called us simply because the project looked overwhelming to them right i mean it might be a project that would have taken them 10 or 12 hours by hand and so they finally bailed out and said i i just can't do this i need help so i'm going to call someone with a tractor so when we come in with a 500 rate they're probably not going to be scared off by that now there are exceptions for instance garden tilling people can kind of envision themselves renting a garden till or even purchasing a garden tiller and and getting that job done but most of the jobs we do you the customer sees a big pile of brush in the corner and i see a few minutes with a chainsaw and two to three grapples full of brush hauled over to the burn pile and we're done that difference is what really helps us to be able to quote maybe a little higher rate than the standard hourly rate one other aspect i want to remind you of here is i am trying to oversimplify this i'm not trying to get into any details about travel costs travel time other areas that that need to be dealt with yes but for this topic specific topic i only have a few minutes so i i just don't want to to over complicate things so we're talking about just the time on the scene quoting an hourly rate and a time estimate boxes you in it's very hard to charge the customer more than that initial time estimate and if you get done faster the customer expects to pay less this is exactly the opposite of your original intention your intention by using an hourly fee is to transfer a lot of that risk to the customer so that you'll always get kind of paid the same amount per hour but it doesn't actually work that way so i recommend that we we just step up we make a commitment and price things with a good solid fixed rate estimate and stick to it i think in the long run you'll be better off with this approach i do sometimes make an exception sometimes the project is just very big and very complex and we know we want to do a small portion of it and then we really don't know where to go from there another example is someone just doesn't think our little tractor will do the job and they think they're going to be wasting money with us piddling in both of these cases what i try to do is say okay we will work for you for say three hours four hours whatever time we agree on for a fixed fee at the end of that time you can either tell us to go home and we'll all be happy or we can sign up for the next stage of the project we have found this to work very well in fact today we have not had anyone say okay that was good enough let's let's let's terminate and and go on they're so impressed with the quality of work that the little tractor can do not tearing up their grass all these things that you already know that they invariably ask us back but these are the exception cases that i work on providing a good solid estimate up front will make the customer more comfortable a trusting and more comfortable customer makes the entire project go more smoothly in future episodes we'll dive into this in some more detail for example we'll look into how to calculate those internally desired hourly rates and some other ways that we think can help make the customer more comfortable it's something that we've learned to be pretty good at over the years you see it in our videos you can tell that our customers enjoy working with us and it just it just makes things go much smoother i hope you've enjoyed this i hope you found it helpful leave some information in the comments section below feedback about what you think about this episode some of your experiences as well thanks for watching everybody we'll see you next time on tractor time with tim thanks dad thanks dad this is why i came home hey [Music] now

Channel: Tractor Time with Tim

Views: 271,485

Keywords: Tractor Time with Tim, compact tractor, John Deere, Kubota, Mahindra, Kioti, Yanmar, DIY, tractor, traktor, country financail, business insurance, make money, make lots of money, pay for it, advice, tips, john deere 1025r, tractor business, side hussle, good works tractor, ttwt, tractor tim, tractor time, deere 2038r, customer, how to, how to start a business, landscaping business, how to make money with a tractor

Id: VWzl6CHdlcc

Length: 15min 7sec (907 seconds)

Published: Wed Jul 28 2021