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  #11  
Old 06-27-2013, 01:03 PM
contractorleo contractorleo is offline
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Quote:
Originally Posted by seabee24 View Post
Just doing some math. Without going into a ton of details, if you figure labor and labor burden, direct fuel, equipment maintenance, repair, and depredation/replacement, vehicle maintenance/repair/depredation/insurance. What's your total direct percentage? Mine seems really high to me.

After you then add in overhead costs, it seems like I would be better investing money in other areas when comparing the liability and potential profit

I need to figure out if my sales numbers are low or our expenses are too high. I feel I'm charging a fair price, could be higher, but I'm not mowing for cheap either
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Only labor, labor burden, and direct fuel is a direct cost. Equipment maintenance, repair, depreciation, insurance, etc is an overhead cost for the company. When you bid on the job, you should always cover the direct cost and overhead. You overhead could increase/decrease depending on the size/kind/frequency of projects.
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  #12  
Old 06-27-2013, 02:13 PM
seabee24 seabee24 is offline
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I'm not aurguing with that, and I'm sure accountants will have different views in what costs are direct vs over head.

I do disagree however.

A 10,000 mower that has a useable life span of 2000 hours costs you $5.00 per hour in depredation, to replace that unit.... Plus maintenance costs during its life span.

If I didn't mow today, that mower would loose very little value sitting at the shop today. So in my mind, if we are mowing a house that take an hour, $5. Is the direct cost towards replacement

Insurance for the crews truck is the same. No need for a crew truck, no need for insurance on it. Granted its a fixed monthly payment, but if I decided to cut and eliminate the whole crew, we would also cut the insurance, as well as the cell phone for that crew and many other things

I guess parts of that are overhead, but I try and factor each job and crew seperatly. The landscape crew should have to pay for a new snow plow. The snow shouldn't have to pay for a new mower. Each crew, each division should cover its own expenses it uses. If not eliminate that part
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  #13  
Old 06-28-2013, 02:18 PM
seabee24 seabee24 is offline
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I'm actually surprised more having posted. Maybe everyone doesn't know their numbers that well or are scared of the truth
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  #14  
Old 06-28-2013, 02:48 PM
grassmasterswilson grassmasterswilson is online now
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Well if you take out your direct expenses then profit would be what's left over. If your talking residential then around 35-40%. If your talking commercial work then closer to 15-25%
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  #15  
Old 06-28-2013, 04:52 PM
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McFarland_Lawn_Care McFarland_Lawn_Care is offline
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Keep in mind....some of these figure profits as part of their own paychecks. True profits should be figured by subtracting out the cost of someone to replace you if you are in the field.
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  #16  
Old 06-28-2013, 06:51 PM
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Efficiency Efficiency is offline
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Quote:
Originally Posted by grassmasterswilson View Post
Well if you take out your direct expenses then profit would be what's left over. If your talking residential then around 35-40%. If your talking commercial work then closer to 15-25%
Gross profit (absolute number) gross margin (percentage) is technically whats left after direct costs.
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