View Full Version : Cost Breakdown
03-02-2009, 07:22 AM
can someone explain to me how to breakdown operating costs?
I would like to know what each job is costing me. I am charging
40.00 per hour (bidding flat rate) so i think i will be alright, but
i need to know what it cost for each cut. please excuse the newbie
question. thanks for any input.:dizzy:
03-03-2009, 08:04 AM
Nothing? Come on guys, help a brother out:confused:
03-03-2009, 01:47 PM
if your charging by the hour you need to figure your costs by the hour.
mower replacement cost / 2000? hours
fuel per hour
wages per hour
insurance truck and GL / hour
and so on add up all your costs/ season, then divide it by the number of hours that you work in that season there is your cost per hour.
03-03-2009, 05:37 PM
Just my 2 cents here.
A good way to break it down would be as follows.
mower replacement cost / 2000? hours ----This is simple, if you need a new lawnmower in approx 2000hrs then you take the cost of a new mower devided by 2000 and there you go
fuel per hour----How big is your tank, how many hour does your tank last at operating speed divide by that number and you have your cost per hour of fuel
wages per hour----This is a simple one, however factor in that for an 8 hour day you need to know the down time traveling from site to site, so you pay your employees for 8hrs but you are only mowing for 6hrs, you need to cost that difference and build that in to your hourly rate. That will have to be based on assumed hours of productivity.
insurance truck and GL / hour----Again simple because you know your fixed cost per year. the tricky part again is knowing the hours of work to break it down by. I tend to estimate rate of fuel burn in a city at approx 1.6times normal on a tow vehicle. So you will will need to fill your gas tank .6 of a tank sooner than you did before. If you normally put in 100 ltrs in gas, assume for the same period you will burn 160ltrs when towing and driving from site to site. This is just and example number but it should help.
Oil Changes and service----For example if you need to change your oil every 100hrs of operation. Cost of oil change divided by 100hrs = how much you should charge per hour in this case if it cost you 200 dollars to do all of your machines, you must ad 2dollars of cost to each hour charged out to recoup that.
THINK OF EVERYTHING. You don't get far by ignoring costs, be real about it and understand that while it will make the numbers look a little worse you will be prepared for every eventuality. Knowing your true cost is absolutely key to success, it will allow you to be able to go that extra mile to get a contract and know you are covered and not out a single penny for taking it on. Once you do this you always do this.
For a skid steer I know that it costs me 17-20$ per hour to cover all of my costs *I don't have a payment BTW so that keeps it down* but this covers everything including WCB etc. and tire or track replacement down the road.
Hope this helps
PS don't forget oil and lube for your truck either.
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