Setting Your Profit Margins
Before you can quote any job, you need to establish your gross profit margin. Consider all your business costs and determine how much profit you want after expenses. Whether that's 50%, 30%, or 20% - the correct answer is whatever margin consistently brings you business.
You don't want to:
Lose jobs from margins being too high
Miss opportunities to maximize earnings
Feel unsatisfied with your daily profits
Once you've decided on your margin, calculate your COGS (Cost of Goods Sold) to determine the final price you'll quote to clients.
Understanding Installation Categories
Most Christmas light installations fall into three main categories:
1. Roof Lines
What you need to price:
Unit cost of bulbs
Sockets
Clips and accessories
Installation time: 1-3 minutes per foot of roof line
2. Landscaping (Trees, Bushes, Shrubs)
What you need to price:
String lights
Accessories
Installation time: 8-12 minutes per string of lights
3. Ornaments (Flood Lights, Wreaths, Garlands)
What you need to price:
Unit costs per item
Accessories
Installation time: 15-20 minutes per unit
Note: These time estimates include laying out extension cords, setting up equipment, and fall protection. They're based on 10+ years of data for average installers working in non-snowy, above-freezing conditions.
Calculating Removal Time
For each installation type, add 25% to your installation time to estimate removal time. For example, if installation takes 60 minutes, removal will take approximately 15 minutes.
Pricing Examples
Product Pricing
Let's calculate pricing for a 50% margin:
Roof Line Example:
Light bulb: $1.25
Socket: $0.30
Accessories (10% of unit price): $0.15
Your cost: $1.70 per foot
Client price (50% margin): $3.40 per foot
Landscaping Example:
Mini lights string: $18.00
Accessories (10%): $1.80
Your cost: $19.80 per string
Client price (50% margin): $39.60 per string
Labor Pricing
For labor, we recommend a 70% margin because of the high costs of:
Recruiting and training employees
Competitive compensation
Performance incentives
Employee retention
Example: If you pay employees $30/hour, clients pay $100/hour at 70% margin.
Selling vs. Leasing Models
Selling Model
Customers own the lights after installation. Use the pricing structure above.
Leasing Model
Customers don't own the lights. You'll need to:
Blend labor costs into product pricing
Charge the same price year after year
Lower product pricing slightly to stay competitive
Advertise pricing over multiple years (2-3 years)
Creating Simple Quotes
Key Principles
Keep it simple - confused customers don't buy
No hourly rates - quote total job cost instead
Include removal as a flat cost in labor
Be transparent - no hidden costs
Remember: Customers want a turnkey solution
Sample Quote
Here's how a professional quote should look:
Roof Lines:
200 ft × $3.40 = $680
Landscaping:
20 strings × $39.60 = $792
Labor Calculation:
Roof line: 200 ft × 2 min = 400 min (6.7 hours)
Plus 25% for removal = 8.3 hours
Tree wraps: 20 strings × 10 min = 200 min (3.3 hours)
Plus 25% for removal = 4.2 hours
Total labor: 12.5 hours × $100 = $1,250
Total Quote: $2,722
Payment Best Practices
Collect 100% payment before Christmas:
Charge 50% deposit before starting
Collect remaining 50% immediately after installation
Important: Money collection becomes increasingly difficult after the holidays