SALES & MARKETING

By Mark Bradley

Hard work and creativity will get you only so far in the intensely competitive and dynamic world of landscaping . A business with no foundation of smart business practices will struggle to keep up , particularly when it comes to understanding and leveraging key metrics . One metric that ’ s often undervalued is revenue per hour ( RPH ).

RPH is a deceptively simple metric representing the total price of the job , based on your estimate , divided by the number of labor hours . This comprehensive indicator of productivity and efficiency is crucial for any landscape business looking to scale and optimize operations .

I am constantly highlighting RPH whenever I meet with a landscape business owner or conduct a webinar . Mastery of this key metric is a real game changer . Let ’ s unpack the significance of RPH and how it can be a catalyst for your business ’ s growth , especially for those engaged with business management tools and resources .

The opportunity in high-RPH work

Many landscape business owners , like me , started as landscape technicians and learned the importance of high RPH through experience . Understanding RPH unlocks one of the biggest bottlenecks that hinders businesses from maximizing profits . By getting more revenue per hour from existing staff , businesses can grow and scale without having to find , train , supervise and equip additional staff . It has an amazing compounding return compared to hiring additional personnel .

A higher RPH allows for better employee compensation , faster overhead recovery and investment in scaling the business . It enables the acquisition of better equipment and improves day-to-day operations . Since overhead costs are allocated across labor , equipment and materials , a higher RPH means more overhead is covered , leading to increased profitability . You can find spaces in your existing business to maximize RPH by understanding a couple of fundamentals .

A higher RPH allows for better employee compensation , faster overhead recovery and investment in scaling the business .

Real-world impact and growth

Consider a company with 10 employees working 15,000 job hours annually . With an RPH of $ 73 , this translates to a gross revenue of $ 1,095,000 . Assuming a 40 % gross profit and 30 % overhead , this leaves a healthy 10 % net profit . But where should this hypothetical company look to increase that RPH number ?

12 OPE + April 2024 www . OPE-Plus . com