Originally Posted by Mike Royce
I want to know what some of you guys charge for hourly rates for your work. I've heard a lot here about adding your cost of business, and things like that. But compitition is a big factor in this question. I can charge what I want, but if i'm above everyone else, guess what? I'll loose. So in general, what do you charge per man hour to do various work? Per man hour for leaf clean up, misc. work like bush trimming, mowing, etc. I'm a solo guy with 2 60" zero's, full blown leaf clean up set up, dumping bed in truck, in business for 10+ years. Just need advice. I'm solo because I hate employees. I've tried and tried and tried.
If you are solo and have been in business for 10 years then if shouldn't be that difficult to figure it out.
1. direct expense are your employee wages (you have none)
2. your indirect expenses
a. labor expenses ssi, ui, medicare, (these are a percentage, so can be added to wage cost to compute them easier.
b. I add my workers' comp here because it cost a percent of labor. its actually overhead.
3. Monthly overhead expenses
a. insurance (worker's comp, liability, vehicle insurance) monthly cost
b. fuel cost average per month
c. office/shop rent or mortgage payment.
d. utilities for office/shop
e. phone/computer expenses
f. office labor if any
g. equipment repair average. ( a big one for me)
h. equipment depreciation expense. (you have 2 mowers lets say 9000 each, if they last you 2500 hours and you mow 400 hours per year, then they should last 6.25 years. So your $9000 mower cost you 1440 per year/ 12 months per year and your cost is $120 per month per mower. You need to run these numbers for all your equipment.
i. business licenses and contractors license fees
j. shop materials, trash bags, 2 cycle oil, trimmer line, edger blades, grease, anything else you use on a recurring daily bases.
k. anyother expense you need to do your job.
4. Take the sum of 3 a -k. and divide it by your average monthly billable hours. Let's assume you work 30 billable hours average per week. So in a month you will work 120 billable hours. (time spent performing a service for your customer). For instance, 3 a-K are $1000 per month/120 = $8.33 per hour.
Since you have no wage expense you need to charge$8.33 per hour to break even.
If you want to earn $5, 000 per month and work 120 billable hours then 5000/120 =$41.67 + 8.33 per hour to make the income you desire. ($50 per hour)
Do the math and have confidence in what your charging and why. If your competitors are charging less then you may have to adjust the amount you want to earn per month remain competitive or provide a more valuable service than your competitors.