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greenchoppers
09-03-2009, 10:13 PM
Hello Forum Members,

I have been thinking about how to calculate my REAL costs of cutting any one particular yard. Obviously, I know the fuel costs for driving to and operating equipment at the site. But how do you guys calculate the real cost to operate your equipment?

I have a 48" Toro ZTR and can obviously figure out about how much fuel I will burn operating the ZTR for a single minute, hour, day etc. I am struggling to find ways to calculate the costs of owning the machine, operating the machine (less gas), and on top of that providing and paying for an operator to drive that machine.

I need some help trying to figure this out so that I can plan for the financial health of my business and its future endeavors. Any help given is appreciated.

Thanks. This forum is a great tool for our industry.

mowerbrad
09-03-2009, 10:50 PM
I was having a talk with my toro/stihl dealer a while ago and we were talking about how to calculate the costs of operating a ztr. He was saying that for their demo units they figure for every hour the machine runs it costs $10. That $10 include depreciation of the mower and maintenance costs of the mower. Now the mower that we were talking about was a 60" toro (about $11000 new) so you would have to adjust that number for smaller and larger mowers.

As for insurance on the mower, if you run the mower 4 hours per day for 5 days for 7 months out of the year you would put about 600 hours on the mower. And if you pay $800/year for general liability insurance (which should cover your mower) that would mean that you are paying about $1.30/hour for insurance.

To have an employee to run the mower you just need to know how much you will be paying them an hour. If you figure your employee is paid $10/hour then to run the mower is another $10/hour.

So when you put this all together your operating costs of this mower with an employee would be $21.30/hour minus fuel costs of the mower. With the fuel costs added in (mower using 1.25gal/hour and fuel costs of $3.50/gal) the hourly cost of running that mower would be $25.68/hour. Now this price is just to run ONE mower, so when you get into running multiple mowers and equipment, you can see how the price increases so significantly.

FYS777
09-03-2009, 11:36 PM
I was having a talk with my toro/stihl dealer a while ago and we were talking about how to calculate the costs of operating a ztr. He was saying that for their demo units they figure for every hour the machine runs it costs $10. That $10 include depreciation of the mower and maintenance costs of the mower. Now the mower that we were talking about was a 60" toro (about $11000 new) so you would have to adjust that number for smaller and larger mowers.

As for insurance on the mower, if you run the mower 4 hours per day for 5 days for 7 months out of the year you would put about 600 hours on the mower. And if you pay $800/year for general liability insurance (which should cover your mower) that would mean that you are paying about $1.30/hour for insurance.

To have an employee to run the mower you just need to know how much you will be paying them an hour. If you figure your employee is paid $10/hour then to run the mower is another $10/hour.

So when you put this all together your operating costs of this mower with an employee would be $21.30/hour minus fuel costs of the mower. With the fuel costs added in (mower using 1.25gal/hour and fuel costs of $3.50/gal) the hourly cost of running that mower would be $25.68/hour. Now this price is just to run ONE mower, so when you get into running multiple mowers and equipment, you can see how the price increases so significantly.

thank you mowerbrad, this was very informative, made me do some more thinking!!! if thats possible for me.:laugh::)

SangerLawn
09-04-2009, 07:48 AM
I was having a talk with my toro/stihl dealer a while ago and we were talking about how to calculate the costs of operating a ztr. He was saying that for their demo units they figure for every hour the machine runs it costs $10. That $10 include depreciation of the mower and maintenance costs of the mower. Now the mower that we were talking about was a 60" toro (about $11000 new) so you would have to adjust that number for smaller and larger mowers.

As for insurance on the mower, if you run the mower 4 hours per day for 5 days for 7 months out of the year you would put about 600 hours on the mower. And if you pay $800/year for general liability insurance (which should cover your mower) that would mean that you are paying about $1.30/hour for insurance.

To have an employee to run the mower you just need to know how much you will be paying them an hour. If you figure your employee is paid $10/hour then to run the mower is another $10/hour.

So when you put this all together your operating costs of this mower with an employee would be $21.30/hour minus fuel costs of the mower. With the fuel costs added in (mower using 1.25gal/hour and fuel costs of $3.50/gal) the hourly cost of running that mower would be $25.68/hour. Now this price is just to run ONE mower, so when you get into running multiple mowers and equipment, you can see how the price increases so significantly.

If you have workmanís comp it is based on your payroll. That also needs added in.

mowerbrad
09-04-2009, 12:03 PM
If you have workman’s comp it is based on your payroll. That also needs added in.

This is true. Since I actually don't have any employees I don't have workman's comp. But it really isn't a "huge" expense when you compare it hourly to other costs.

So to figure this expense out hourly....

If your employee works an average of 40 hours per week at $10 per hour, he would be making $400/week. Workmans comp for a job such as this would cost 2%-3% of the employees weekly pay roll. So each week for the 40 hours the employee worked you would pay about $10/week (2.5% of payroll) for the workmans comp. And when you divide that $10/week by the 40 hours the employee worked, you would be able to figure out that it would cost $0.25/hour for workmans comp on just one employee. So just add that cost onto the previous number and you will come out with the total hourly price to run a ztr, which should be about $26/hour with fuel.

mommacutz
10-20-2009, 06:59 PM
This is true. Since I actually don't have any employees I don't have workman's comp. But it really isn't a "huge" expense when you compare it hourly to other costs.

So to figure this expense out hourly....

If your employee works an average of 40 hours per week at $10 per hour, he would be making $400/week. Workmans comp for a job such as this would cost 2%-3% of the employees weekly pay roll. So each week for the 40 hours the employee worked you would pay about $10/week (2.5% of payroll) for the workmans comp. And when you divide that $10/week by the 40 hours the employee worked, you would be able to figure out that it would cost $0.25/hour for workmans comp on just one employee. So just add that cost onto the previous number and you will come out with the total hourly price to run a ztr, which should be about $26/hour with fuel.

I just recieved a quote from http://www.bearwiselandscapers.com/ 4.2% and I thought that was a good deal in Florida. I guess I should really check around.:hammerhead:

g21
10-20-2009, 10:23 PM
Kevin,
I really don't recommend figuring your equipment costs like that. You will not be competitive and it is really inaccurate. You should either be "expensing" out your mowers or "depreciating" them over a period of time, ( 3 years or so) It goes under your "equipment ever-heads" in your P&L. Don't go crazy trying to figure out the hourly costs of using different pieces of equipment. It will severely distort your bid hourly rate. I have given you a link on how to calculate your manhour rate.

If you need any further help, don't hesitate to ask.

good Luck.

Tommy
http://www.almanow.com/samplepost/manhours.htm

mommacutz
10-20-2009, 10:48 PM
Kevin,
I really don't recommend figuring your equipment costs like that. You will not be competitive and it is really inaccurate. You should either be "expensing" out your mowers or "depreciating" them over a period of time, ( 3 years or so) It goes under your "equipment ever-heads" in your P&L. Don't go crazy trying to figure out the hourly costs of using different pieces of equipment. It will severely distort your bid hourly rate. I have given you a link on how to calculate your manhour rate.

If you need any further help, don't hesitate to ask.

good Luck.

Tommy
http://www.almanow.com/samplepost/manhours.htm

Great info thanks :cool2:

hackitdown
10-21-2009, 04:57 PM
There have been loads of threads on this question. But this is the way I think of the mower cost, and some of the assumptions I use:

Purchase price: $8,000
Planned useful life: 2,500 hrs
Sale price after use: $2,000
Cost to run for 2500 hrs: $6,000, or $2.40 per hour
Fuel costs me about $1.25 per hr (this year)

Those are the big ones...but that is just the beginning. There is interest on the loan. You need to add in the cost of maintenance and repairs, which can be all over the place, and tough to forecast. DIY service, or dealer service. OEM parts, or aftermarket. Regular maintenance, or just sometimes.

Anyway, for me, it all adds up to about $5 per hr. But remember, that is just the mower.

topsites
10-23-2009, 03:15 AM
I like hackitdown's formula, that's a pretty good analogy of things, although it doesn't
include maintenance but still, that's the way to figure these things.

As for the truck, you also gotta figure tires, maintenance, insurance, etc.
For myself, I find 50 cents a mile an easy figure to deal with, for starting out and even today
that's what I use now that's just me, but it eliminates a lot of headache, 50 cents a mile, done.
Can't tell you if it will work for you, but I thought I'd mention it...

The trailer...
I figure open ones last about 10-12 years, because the wooden boards start to falling apart, you might get 12-14 maybe 15 years out of it.
They cost around $1,500 new, so $100 a year cost, plus $100 a year on tires, lucky us that's about all they need.
So $200 a year for the trailer, roughly speaking, unless you get an enclosed then I don't know.

Laters

elite lawns
10-24-2009, 11:53 PM
Thanks guys for your helpful info.

BearWise Landscapers
11-30-2009, 02:28 PM
This is true. Since I actually don't have any employees I don't have workman's comp. But it really isn't a "huge" expense when you compare it hourly to other costs.

So to figure this expense out hourly....

If your employee works an average of 40 hours per week at $10 per hour, he would be making $400/week. Workmans comp for a job such as this would cost 2%-3% of the employees weekly pay roll. So each week for the 40 hours the employee worked you would pay about $10/week (2.5% of payroll) for the workmans comp. And when you divide that $10/week by the 40 hours the employee worked, you would be able to figure out that it would cost $0.25/hour for workmans comp on just one employee. So just add that cost onto the previous number and you will come out with the total hourly price to run a ztr, which should be about $26/hour with fuel.

I just recieved a quote from http://www.bearwiselandscapers.com/ 4.2% and I thought that was a good deal in Florida. I guess I should really check around.:hammerhead:

MommaCutz, I am responding to your previous comment. I greatly appreciate you requesting a quote through our website, www.BearWiseLandscapers.com.

Please keep in mind though that MowerBrad is located in Michigan. Every state has different workers' compensation laws and the rates for landscaping businesses are different in each state. In Florida, the rates are set by the state government for each of the 600 employee job classifications. Florida had the second highest workers comp rates behind California about 5 years ago. Now Florida is one of the lower rated states, but is probably still higher than Michigan. Since the rates for workers comp in Florida will be the same for your business regardless of which carrier you are with, it is important for your company to do business with an agency and a carrier that will offer other value-added benefits. Carriers can compete on price through dividend plans that they offer to landscapers with a certain premium threshold and they can also have a big effect on your future premium by the way they handle your claims.

For Florida landscaping businesses, here is an article about the current workers comp rates (http://www.BearWiseLandscapers.com/articles/2009/newest-2009-florida-workers-comp-rates/). These rates are going to go down on January 1st, 2010.

JimLublin
11-30-2009, 07:00 PM
Tommy,

I watched your piece on figuring out man hour costs, it seems like you really know what's going on. I am new to the lawn care maintenance business and I am in the process of putting together a business plan. Have some questions about figuring out a hourly rate for labor. You had mentioned in your video about not adding the owners pay in your hourly costs at what point does the owner get paid? I have a pretty good idea what my costs will be, just need to learn how to bid lawn maintenance, obviously my overhead is low, because I'm working from house and I do not have any employees at this point. So cost per hour is about $10 hr.. However at what point do you plug in the owners pay? You had mentioned not to put in $50,000 a year owners pay. Can you clarify and help?

Thanks
Jim

PMLAWN
12-01-2009, 10:14 AM
Tommy,

I watched your piece on figuring out man hour costs, it seems like you really know what's going on. I am new to the lawn care maintenance business and I am in the process of putting together a business plan. Have some questions about figuring out a hourly rate for labor. You had mentioned in your video about not adding the owners pay in your hourly costs at what point does the owner get paid? I have a pretty good idea what my costs will be, just need to learn how to bid lawn maintenance, obviously my overhead is low, because I'm working from house and I do not have any employees at this point. So cost per hour is about $10 hr.. However at what point do you plug in the owners pay? You had mentioned not to put in $50,000 a year owners pay. Can you clarify and help?

Thanks
Jim

I believe what he said was to pay yourself as a worker --(if you want to make $12 an hour, add that to your overall rate and pay yourself each week for the hours you work) Do not just sit back and collect 50K for doing nothing
You as the owner have control over the profit. This is where the "money for doing nothing" comes from. You can take it all each year if you want, but better to put some back into the business, leave some as cash, and if you need it, take a small part for you.