Sean, I'm in this game to win, so please feel free to correct me. I bought your book in 09' when i first started and it's been big help. I follow your fixed and variable cost structure to help me every winter in determining pricing for the upcoming season. In your example you gave, it doesn't include employee payroll or payroll taxes, so i simply put them on my "fixed income" chart. With 1 employee, an office manager and all other expenses i need to make $27.83 per billable hour to cover cost, working 250 days per season at 9 billable hours per day. Included in my fixed costs is the salary that i will start paying myself this year (first time trying it). It's very meager, only $500/week plus monthly bonus dependent on what the business profited that month. So to cover expenses (including myself and employees, I need to be making $27.83/hr with mark up to $60 and hour making profit $32.17 that goes back to the business. This, in theory should put me at $135k gross income in 2013, roughly. Am I on the right path so far?
Since this year will be my first year with a part time employee (my retired father helps out for free roughly 3 days per week, per his desire.This really helps save me money, he's a great worker too), first year paying myself a salary, does it sound like i have my billable amount per hour correct (without looking at all my number)?
Secondly, since I've calculated my salary and my employees wages and payroll tax into my fixed expenses, and I'm charging $60/man hour, if a lawn takes us 1 hr to mow should i be charging $60 or $120? I guess i don't understand "per man hour" perfectly. I get that 4 guys working at $60/hr, it takes 1 hour to complete project but total would be $240.
I hope i haven't confused you. I've put my scenario out there because I don't mind being shown if I'm wrong-I like to make progress. Thanks Sean.