Sod

The numbers this sheet uses

These are mine, measured on my own jobs in Central Texas, on Zoysia. Your pallet might be $240, might be $320. Use your number. The first two lines matter more here than on any other sheet in the series, because the sod is most of the price. One more thing to check before you write anything down: a pallet is 450 square feet or 500, and the difference is 11% of what you are selling.

Sell price to the customer

$450 a pallet, installed

What the sod costs

$275 a pallet, delivered

What the crew is paid

$23 an hour, average

The burden

1.35

What an hour of labor costs

$31, the wage times the burden

The 10-second check

Two numbers before anybody mentions labor. Divide what the sod costs by the price. The $275 over the $450 is 61.1%. That share of every dollar is spoken for before the crew arrives. One minus that is 38.9%, and that is the most gross profit a pallet can ever make. You would only make it if the sod installed itself.

So a 40% gross margin was never on the table at $450 a pallet. Not slowly, not quickly. On mulch the material is a third of the price and the ceiling sits at 67%, which is why nobody thinks about a ceiling on mulch. On sod the ceiling is the whole conversation. Run the same division on every material you sell. It takes 10 seconds, and it tells you what is possible before you argue about anything else.

Divide the material by the price before anybody mentions labor. What is left is the most the job can ever make.

What 35% would take

The sheet has the same three target columns the mulch sheet had, here 25%, 30% and 35%. Take the target off the price, subtract the sod, and what is left is the labor budget. Divide by $31 and it is man-hours a pallet.

At 25%, the gross profit is $112.50, the allowable cost is $337.50, and $62.50 is left for labor. That is 2.02 man-hours a pallet. At 30%, $135 of gross profit, $315 allowable, $40 for labor, 1.29 man-hours. At 35%, $157.50 of gross profit, $292.50 allowable, and $17.50 is left for labor. That is 0.56 man-hours. Thirty-four minutes for one person to grade, prep, lay, cut in, roll and water a pallet.

Nobody hustles their way to 34 minutes. The number was never a pace. It is what $450 and 35% demand of a crew that has never been asked.

The real pace

Now run the sheet the other way. Forget what you want to make and put in what happens. Two hours a pallet is what my crews did, and for a lot of crews on a lot of residential jobs, 2 hours is generous. Two man-hours at $31 is $62 of labor. Add the $275 of sod and the pallet costs $337. The $450 price minus $337 is $113 of gross profit, which is 25.1%.

Owners have told me they make 35% on sod. None of the ones I talked to had divided the sod by the price. You thought 35%. You are at 25%, and that is 10 percentage points on every pallet you have ever installed. The last line on sheet 2 is the one nobody wants to see. To make 35% at 2 hours a pallet, the cost of $337 divided by 0.65 is $518 a pallet. Not $450.

The crew table does the rest. A crew of 3 has 24 man-hours on a full day of laying, so 2 hours a pallet makes the day 12 pallets. A crew of 2, 8 pallets. A crew of 4, 16. A crew of 5, 20 on paper, and a real crew of 5 rarely does that out of one pile. Run it backward and it earns its keep. The same crew of 3 coming home with 9 pallets spent 2.7 man-hours and $83 of labor on each one, against the $62 the price allowed.

One more division, because it explains something that looks wrong. Mulch makes 35% gross on this series and sod makes 25%, and sod is the better hour. Divide the gross profit on a unit by the man-hours it took. Sod is $113 over 2 hours, $56.50 a man-hour. Mulch is $42 over 1.23 hours, $34.15 a man-hour. A gross margin divides by the price, and most of the price of a pallet is sod, which never touches your overhead. Dividing by the hours takes the sod out.

You thought 35%. You are at 25%, and the price to make 35% at 2 hours a pallet is $518.

Three levers, not two

The grid on sheet 3 has the price per pallet across the top, the man-hours per pallet down the side, and the gross margin in every cell, with $275 of sod and a $31 hour throughout. The shaded cell is $450 a pallet at 2 hours, 25% and $113. Push the crew 10% faster, from 2 hours to 1.8, and you climb one row to 26% and $119.20. That is $6.20 a pallet. Charge 11% more, $500 a pallet, and you move one column across to 33% and $163. That is $50 a pallet.

On mulch, a 1% raise beat a crew 1% faster about 3 to 1. On sod it is about 7 to 1, for one reason. On mulch the labor is a third of what the customer pays. On sod it is 14 cents of every dollar, and you can only squeeze the part you are paying for. You are paying for sod. Matching even a 10% raise, $45 a pallet, on speed alone would take the crew from 2 hours a pallet to 33 minutes. That is 72% fewer hours on every pallet, and no crew has them.

There is a third lever, and it only exists on a material this expensive. Buy the pallet for $250 instead of $275 and the $25 goes straight to gross profit, every pallet. One phone call to your supplier is worth 4 times what a 10% faster crew gets you. On mulch the order was price, then speed. On sod it is price, then purchasing, then speed. Your supplier relationship is worth more than the crew's hustle. That is an uncomfortable thing to say out loud. The math does not care.

The gap

On sod the gap comes from two places, the hours and the pallets. The hours are the same division as mulch. A crew of 3, 8 hours on the job, 10 pallets on the ground. The 24 man-hours divided by 10 pallets is 2.4 man-hours a pallet, and the 2.40 row of the grid at $450 reads 22%. Not 25%, and nowhere near 35%. In dollars, each pallet was priced for $62 of labor and took $74.40. The extra $12.40 came out of the $113 of gross profit, which leaves $100.60 a pallet.

The pallets hold the other half, and on sod they hold more, because the pallet is 61% of the price. That is the top layer from the start of this page, the pallets that came off the truck against the pallets that went into the ground. The slow day cost $12.40 a pallet in labor. The top layer costs about $10 a pallet in sod. The pallet came in about $22 under what it should have made, and only one of those two numbers shows up on a timesheet.

Ray's foreman texts him both numbers when the truck is empty, the pallets down and the hours, so the top layer has been a line in his sod price since the first job. Dana's crew throws out the same layer for the same good reason, and she meets it in December, when her supplier's invoices show a few more pallets than she billed her customers for. Same crew, same layer. One of them priced it.

The budget was 2 man-hours a pallet. The crew ran 2.4. That is $12.40 a pallet, and the top layer is another $10 that no timesheet will ever show.

Where it goes wrong on your job

Two hours a pallet is 2 hours on ground that is graded, raked and watered. If the crew is grading, hauling off the old turf or fixing sprinklers first, those hours belong to another line, and a quote that says sod, installed, quietly swallowed them. The top layer: your crew is throwing out the worst of every pallet so the customer does not call in 3 weeks, and they are right to. It is still sod you paid $275 a pallet for, and nobody wrote it down. The delivery fee: four pallets came on one truck and the fee was $450, the price of a fifth pallet. Spread across the 4, that is $112.50 a pallet that was never in the quote. The pallet that shrank: if your supplier went from 500 square feet to 450 and your price did not move, you took an 11% pay cut and nobody told you. And you cannot buy part of a pallet. The lawn measured to 8.2 pallets, so the quote priced 8.2. The supplier sells whole pallets. The ninth got bought and delivered, 0.8 of it went in the dumpster, and that is $220 of sod nobody paid for. Quote by the pallet, round up, and say so on the quote.

One job over budget usually has one of those behind it. Write it down and move on. Five jobs over with no story is your real pace, or your real pallet count, and then one of three numbers has to move: the price, the pallet, or the pace. On sod they run in that order, because that is the order of what each one is worth.

What to do with this

Pull your last sod invoice and your last sod quote. Divide what the pallet costs you by the installed price and subtract that share from 1, and you have your ceiling in 10 seconds. Read the square feet per pallet off the same invoice and check it against the number your quote was built on. Then ask your foreman what comes off the top of a pallet before it goes in the ground. Those three numbers are the whole sheet, and every one of them is on paper you already have.