Providers in landscape maintenance activities include seasonal cleanups, mowing, plant fertilization, weed control, cultivation activities, and a host of other landscape-related projects. Large and small scale landscape maintenance suppliers perform these services on behalf of residential and commercial buildings, educational facilities, government agencies and a wide range of hospitality establishments.  The Landscape Services Cost Array Analysis is designed to provide a breakdown of costs associated with landscape maintenance activities.  Updates will occur at least semi-annually, but more frequent as market conditions change based upon market variability, criticality of events and velocity of market conditions, such as inflationary increases / resource and material availability.  

Overview Landscape Maintenance Services

Landscape Maintenance Costs - 2023 

Wages - 32.8%

Profit - 8.1%

Purchases - 31%

Overhead  - 28.1%

Cost Breakdown USD                                   Wages 32.8%         Purchases 31%         Overhead 28.1%        Profit 8.1%           TOTAL (100%)

Market Pricing Per Hour

(Mar 23)                                                               $24.2                             $23                             $21                     $6                           $74.20

Price Trend 2020-2023 Annual CAGR                                                                                                                                                   4.4%

Crude oil prices  have dropped from summer peaks, but remain highly volatile - record highs of $120 per barrel in summer 2022, bottoming out at $66.74 per barrel in March 2023.  However, crude oil prices have since returned to growth

Price Pressures / Environment  

Cost Breakdown & Key Points

• Average prices have been increasing primarily due to volatile demand and purchase costs. During covid (when commercial landscaping experienced a hiatus) many homeowners were investing more in home improvements, including landscaping services, thus the reallocation of labour / services into the residential market.  When commercial real estate re-opened and more frequent services needed to be resumed this put pressure on an already tight labour marketplace.  In the next three years, the average price of landscape maintenance services is forecast to continue increasing. Strong demand and rising fuel costs will be the primary drivers of service price growth as vendors have been facing volatile fuel costs
• The prices of suppliers’ primary inputs, which include fertilizer materials and gasoline, have been highly volatile. Although external demand drivers have displayed moderate volatility on average, it has not been enough to offset the high volatility of input costs; thus, overall driver volatility has been high
• Switching costs for landscape services are moderate and although there are incentives to stick with one contractor, buyers will be able to terminate most
  contracts early without a financial penalty, however the lack of alternative services limits buyers’ leverage in negotiating lower service prices with vendors
• Time & Material pricing models largely favour suppliers because it allows suppliers to charge more in the event of unforeseen overruns.  In some cases, suppliers can pass along their increased input costs to buyers in the form of higher service prices

• Depreciation 3.7%
• Rent & Utilities 2.2%
• Marketing 1.6%
• Other 20.6 %

The amount spent on trucks and facility machinery has been rising, putting upward pressure on market prices. The invasion of Ukraine by Russia is continuing to strain the production and export of fertilizer from Russia, a leading global source of all
major fertilizers.

• Landscaping materials 22.4%
• Other 8.6% 

• Average wages - administrative & waste services 32.8%

The price of gasoline and other materials have been increasing due to supply chain issues resulting from the Russian invasion of Ukraine and rising demand due to increased post-covid industrial activity. The resulting increase in suppliers' costs has been placing upward pressure on service prices.

During the past three years, wages for workers have been rising as employers have had difficulty hiring and retaining personnel.This trend has been putting upward pressure on market prices.

Outlook & Opportunities

• Supplier ESG Objectives - suppliers in this market have commitments to ESG initiatives. As such, buyers are advised to seek out vendors that can satisfy internal ESG procurement goals or metrics
• As increased borrowing costs become the norm due to higher interest rates, new commercial buildings and home improvement spending is expected to decline.  This trend is expected to put downward pressure on demand for landscape maintenance services and market prices
• Barriers to entry are low because formal training or licenses are not required for basic lawn mowing services and little investment is needed to start a business.  As a result, it is relatively easy for small suppliers to enter the market during times of heightened demand, thus contributing to an overall very low level of market share concentration for landscape maintenance services, promoting competition
• ED&I - as a result of low market share, there are plenty of opportunities for sourcing from women, veteran and minority-owned businesses, meaning buyers may be able to meet diversity metrics or values for this market
• Innovation and service standardization - buyers can take advantage of new technologies which limit utility usage, more environmentally sustainable materials and reduce costs at the same time by reducing the frequency of services (i.e. wild grass meadows which attract various plant / insect species but require minimal maintenance). 

Key Cost Driver Information sourced from  Procurement IQ Procurement Research - 48646332 Landscape Maintenance

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GLS-009 - Ver 1.0 (August 23)

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