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rixtag
08-28-2000, 12:44 PM
I have a few questions and I would appreciate some assistance. I understand man-hours and how that is figured but I do not understand how you can figure your expenses, gas, travel time and such. I guess what is confusing is when you all say I can't even load up for less than $$$$. I need help on how you can determine what expense make a job more or less profitable and if there are any base figures that you start from to help you determine if you can maintain the margin you would like? I hope that this isn't too confusing. Thanks in advance

Rick

Guido
08-28-2000, 03:22 PM
Rixtag, when somebody says its not worth them dropping their gate for say $15.00 what they mean is their overhead is so high (not a bad thing always) that they will not make any profit off of the job after they figure in their expenses.

You have to figure for all of your overhead expenses (expenses that are not directly needed to perform the actual service)

examples:

Telephone Bill
Garage rent
marketing/advertising
insurance
uniforms


Than you have to figure out how much each piece of equipment costs you per hour to run it.


I'll use BS numbers to make it easier to understand.

Say you buy a trimmer for $500.00. Say the manufacturer says you can run it for 500 hours before it $hits the bed. In those 500 hours, you'll have to refuel it x amount of times, change the plug x amount of time, replace the filter x amount of times, etc. Add all those up and it will cost you say another $100 to keep it running.

Now at the end of this trimmers life you will have say $600.00 into it total. Divide that by the 500 hours that you will be able to run it and you get $1.20.

So it ends up costing you $1.20 per hour top run your trimmer.

You can use the same formula for all your equipment.

This way you can see how much it costs you per hour per piece of equipment plus add in to recover your overhead and you have X dollars that it COSTS YOU to do the job.

Now add your hourly rate for profit into that and you have your estimate!

Sounds complicated but its pretty easy once you grasp the concept.

I hope this helped a little bit, but if not, feel free to e-mail me if I can try to answer your question better. (Guido1@surf1.de)


Whew! I'm outta breath! :)

EarthWorks
08-28-2000, 10:41 PM
Nice job Guido. Don't forget overhead things like insurance, vehicle maint (oil changes, tires, etc), down time in winter (you still gotta eat). Someone has to pay for these items and it should not be you. This is where I think a lot of new guys miss the boat. You must have money available to replace equipment when it wears out. Helps to sit down with the numbers. It can be almost scary if you look at it day by day.