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View Full Version : Figuring your hourly rate


stevenf
11-22-2009, 09:26 PM
Trying to grow up and take my business seriourly. I have two commercial accounts which has been a HUGE experience. I have WAY underbid myself in some areas, cut even and profited on others.
Im trying to workup an hourly rate. I have always tried to opporate at $60.00 an hour because thats the most I have gotten away with on residentials.
How do you guys figure in wear and tear on eqipment. How many hours do you give commercial mowers life span? How do you figure vehicle wear and tear? Hand helds also.... Just looking for some ideas because I have never run equipment on a full time schedual.

stevenf
11-22-2009, 10:04 PM
Here is a run down of what I came up with.
Mower=2,000 hours= $4.00 per hour
Handhelds=1.5 years @ 40 hours week= $1.00 per hour
Fuel=2.14 gallons per hour on equipment @3.00 per gallon= $6.42 per hour
Truck= $20k= 150k mile lifespan, 10k miles per year= $6.92 per hour
Insurance= $2.60 per hour

The total houly expense cost not including fuel for the truck is $20.94 per hour. Thats 20.94 per hour that I have to clear just to make no profit. If I were to hire employees at $10.00 per hour and charge $35.00 per man hour. My hourly rate would be $55.94 per hour only for me to clear $25.00 per hour before taxes.

Either I am way off of there really is no money in this business.

mowerbrad
11-22-2009, 10:22 PM
You definately did a very good job on breaking down your expenses which everyone should do, it gives you the best idea of what you need to charge.

There is money in this business but you have to work smart in order to cash in on it. Try to think of ways to save yourself some money. Getting accounts near each other is a great way to save money, if you can mow 2-3 lawns at every stop (without moving the truck), you can save a little money. It is all about being smart.

Commercial mower life span can be all over the board. 2000 hours is probably a good average, but if you take care of your equipment well I don't see any reason that you shouldn't get 2500+ hours out of a mower.

ALC-GregH
11-22-2009, 10:39 PM
^^^^^^^^^^^^^^^ coming from someone that is losing 3K in one season buying a mower then selling it! :)

This belongs in the "starting a lawn care business.....

TYCINC
11-22-2009, 10:40 PM
Doing a lot of things yourself is where youll save money. . .mostly working on your trucks and equip. . servicing equip yourself. . if the brakes go or the starter goes in your truck- do that yourself. . taking things to the shop or paying employees to do things you can do yourself really adds up. .

and an employee doesnt just cost the ten dollars an hour. . youve got taxes, workers comp etc to pay on him. . . so hes really costing you what, 13/14/15 or so dollars an hour. . .

topsites
11-23-2009, 04:05 AM
I'd have to agree, for the most part the cost of doing business is just something that grows on you over time.

So I couldn't tell you how much it costs me per machine because it's different from one job to the next,
it's more like a feeling that develops over time, after so many years you somehow just know these things.
It's kind of like with an acquired taste lol
Anyhow...

Making mistakes early on is a somewhat unfortunate, but normal and necessary part of this process.
We can try and teach you, but again unfortunately the best way to learn is through making these mistakes,
because that is how we remember best.

Possibly the one thing I can tell you that might come in handy, is keep an eye on your expenses.
Watch, when you spend money, how much you spend and where it's going, when, how often, what for, why, and so on.
Keeping track of that should help, doesn't have to be exact but do keep an eye on it.

tlc23
11-23-2009, 11:12 AM
A 36 wb doesn't cost 8k. Are you running your truck a full hour for every billable hour? If you are running your mower for a full hour then you can't be using your handhelds at the same time unless you have an employee and that would be 2 man hours not one. I doubt you are using your handhelds 40 hours a week, if you are then @ 55 a hour you should be making very good money. Also remember when your mower has 2k hours it should still have some value the same with the truck.

stevenf
11-23-2009, 02:38 PM
A 36 wb doesn't cost 8k. Are you running your truck a full hour for every billable hour? If you are running your mower for a full hour then you can't be using your handhelds at the same time unless you have an employee and that would be 2 man hours not one. I doubt you are using your handhelds 40 hours a week, if you are then @ 55 a hour you should be making very good money. Also remember when your mower has 2k hours it should still have some value the same with the truck.
I am aware of that. Things not listed in the signature include 2006 z71 and 48/19 scam tiger cat.
Posted via Mobile Device

mowerbrad
11-23-2009, 04:16 PM
^^^^^^^^^^^^^^^ coming from someone that is losing 3K in one season buying a mower then selling it! :)

This belongs in the "starting a lawn care business.....

I'm never going to hear the end of this am I?:waving:

Oldtimer
11-23-2009, 05:42 PM
The total houly expense cost not including fuel for the truck is $20.94 per hour. Thats 20.94 per hour that I have to clear just to make no profit. If I were to hire employees at $10.00 per hour and charge $35.00 per man hour. My hourly rate would be $55.94 per hour only for me to clear $25.00 per hour before taxes.

Take that $25.00 per hour & pay taxes, health insurance, dental insurance, life insurance, workers comp, retirement plan & an annual vacation. You would probably be better off flipping burgers and getting the benefits.


Oldtimer

ed2hess
11-24-2009, 06:21 PM
I see the advise all the time about needing to figure out your hourly rate. I guess we are stupid but we never did that. We use the old accountant to tell us how we are doing and adjust accordingly. And before the accountant I had a shoe box.and I watched to see how high the pile of money was.

stevenf
11-24-2009, 08:37 PM
I see the advise all the time about needing to figure out your hourly rate. I guess we are stupid but we never did that. We use the old accountant to tell us how we are doing and adjust accordingly. And before the accountant I had a shoe box.and I watched to see how high the pile of money was.

I am beginning to lean toward this route also. I am wanting to focus my business as a full service maintenance company. Landscape installs, maintenance, lawn care, perimeter pest control and fert, irrigation maintenance...
I did lawn care part time when I was younger but now that I am legit, things just dont add up like they used to. On paper it seems that I will be profiting least in grass cutting. I guess I will have to take that loss because most commercials want one person that takes care of everything.
I have always heard that in the first five years a business will know if they are going to make it. I now understand that it may very well take that long just to learn and fully understand my operating cost.