How to Price Your Tree Service Right: Expert Guide to Profitable Margins

Small tree and landscaping businesses celebrate 10-15% profit margins, while 15-year-old companies can reach impressive margins of 30-45%. The tree service profit margins show the gap between surviving and thriving businesses.

Smart pricing strategies can increase your profit margins by 30% or more without additional costs.

While some people might be scared by the phrase ‘profit margin’, you actually don’t need an accounting degree to calculate this. We created this complete guide to help you price your tree services and maximize your profits. Let’s dive into the exact steps you need to boost your bottom line.

The Real Profit Margins 90% of Companies Don’t Know

Here is a brutal truth of the tree care industry – most of the companies don’t even think of things like margin profit, they just find a benchmark and price it, that’s it. However, tree service profit margins vary substantially based on job size and service type. Understanding these variations can potentially help you 5 times your revenue or more.

Industry Standards (Big Jobs vs Small Jobs)

The first thing that might surprise you is small, quick jobs should target higher profit margins than larger projects. One-off tree removal or trimming jobs that take an hour or less profit margins typically range between 60-80%. Whereas larger, more complex projects usually target lower margins, between 15-20%.

But why?

The main reason lies in projects that need more resources, equipment, and labor but bring in higher total revenue.

Here’s a breakdown of typical cost factors that affect margins:

Despite lower margins, larger projects provide more stable, predictable income. They’re the foundation of sustainable growth. Yet the real success lies in balancing both – using high-margin quick jobs to boost profitability while building long-term stability with larger projects.

What Should Your Margins Really Look Like?

The benchmarks below are based on industry averages and account for typical operating costs, market competition, and sustainable business growth. Your business operations will show good profit margins at these levels:

• 10% – you’re in the game
• 15% – excellent
• 20% or more – crushing it

Successful tree service companies maintain an average profit margin between 10-30%. Small tree service businesses often target 20-30% margins after expenses.

But there is more – within all the tree care businesses, Plant Health Care(PHC) services rank as the most profitable segment, with margins exceeding 30%. Tree injections can yield up to 400% profit when charged at $8.50 per injection site.

Tree Care service type substantially affects profitability. To cite an instance, foliar sprays – they can achieve 60-75% profit margins when stops are close together. Tree care chemicals are a great way to get substantial markup opportunities, especially when you have bark drenches, tree sprays, and deep root fertilizations.

Another important factor is tree care seasonal demand. It can affect profit margins throughout the year. Peak seasons, from early spring to late summer, see increased competition. You retain control of target margins during these periods through careful job selection and efficient crew management.

These profit margins become consistently achievable when tree care companies focus on:

• Monitoring business expenses closely
• Optimizing service pricing
• Streamlining operations
• Providing value-added specialized services

Getting Your Profit Numbers Right

Your tree service business’s financial health depends on accurate profit margin calculations. Let’s make this process simple by breaking it down into easy steps.

The Basic Math You Need to Know

There are only a couple of steps you need to understand your total costs and revenue to calculate profit margins correctly. Here’s how you can do it, for more hands-on instruction, click our How to Create a Tree Service Estimate Template That Wins More Jobs to learn more:

1. Calculate Total Revenue
   • Add up all job payments
   • Factor in seasonal price changes
2. Determine Direct Costs
   • Labor expenses
   • Equipment costs
   • Materials used
3. Factor in Overhead Costs
   • Office expenses
   • Insurance
   • Marketing costs
4. Apply the Margin Formula
   • Subtract total costs from revenue
   • Divide by revenue
   • Multiply by 100 to get percentage

Here’s a real example using a $2,000 tree removal job:

That’s how simple the formula is.

Download free calculation template

But for more advanced calculations, there are also more factors you need to consider. ArborNote’s free profit margin calculator template works great for tree care businesses. This template:

• Equipment depreciation calculations
• Labor cost allocation
• Overhead distribution
• Seasonal pricing adjustments

ArborNote’s estimating feature helps track profit margins in different service types, so each job gets priced right to maximize profitability. The software calculates optimal pricing based on your target margins and takes into account all cost factors and service complexities.

How to Boost Your Profit Margin

Boosting profit margins in tree care services needs smart planning and modern tools. Here are proven ways to make your business more profitable.

Smart Job Selection

Your bottom line gets a substantial boost when you pick the right jobs. Before setting price, think over these factors when selecting jobs:

• Job complexity and resource requirements
• Location and accessibility
• Seasonal demand fluctuations
• Equipment availability
• Crew expertise levels

Successful tree care companies focus on jobs that line up with what they do best. This approach optimizes efficiency and increases profit potential.

Efficient Crew Management

A well-managed crew can dramatically improve your bottom line. Start by planning your routes carefully to minimize travel time between jobs. This small step alone can save hours of paid labor time each week.

Match your crew size precisely to job requirements. While having enough hands on deck is crucial for safety, overstaffing directly cuts into your profits. Regular equipment tracking prevents costly breakdowns that can derail your schedule and budget.

Keep a close eye on job completion times to improve your scheduling accuracy and avoid overtime costs. Clear communication between your office and field teams helps prevent expensive mistakes and rework. When everyone knows exactly what needs to be done, jobs get completed right the first time.

Want to make crew management even easier? ArborNote’s digital system helps you track jobs, manage crews, and monitor profits all in one place. Book a demo to learn more.

Technology Advancement

Modern technology is essential for maintaining competitive margins in the tree care industry. ArborNote provides:

• Operational Benefits: Access immediate data analytics and detailed job scheduling, along with tools for client communication.
• Financial Advantages: Utilize automated invoicing, payment tracking, and profit margin monitoring to streamline financial operations.
• Field Operations: Benefit from GPS tree mapping, equipment tracking, and crew activity monitoring to enhance field efficiency.

ArborNote simplifies tree care business operations with features like individual calendars, drag-and-drop work orders, and automated client updates. Seamless integration with QuickBooks and Hubspot reduces admin work and boosts cash flow. While setup requires time, it leads to improved efficiency, customer satisfaction, resource allocation, and profit margins.

Ready to streamline your operations? Book a demo with ArborNote today and see how our software can help your business grow.