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  #31  
Old 03-24-2005, 10:27 AM
Precision Precision is offline
LawnSite Gold Member
 
Join Date: Feb 2004
Location: Cocoa Florida
Posts: 3,021
Get a handle on your costs.

example My GL insurance is 1080 per year. or +/- $5.50 per day. So call it $1 per billable hour. My vehicle insurance is $1200 per year. Call it $1 per hour. My equipment costs are $5 pr hour. My gas costs are $2.50 per hour. Maintenance costs are $1.50 per hour. On and on. So my costs to be in business are something like $16 per hour.
Then if you want to make a wage of $30 per hour. You need to charge $40 per hour for your billable hours to cover the paper work, estimates, maintenance time.
So say you want to make $30 per hour over 40 hours weekly or $60K annually with my costs, you need to be charging $56 per hour.

At $37 per hour with my (not real) above listed costs, you are pocketing something like $15 per hour. or $30K if you can bill 2000 hours.

A rather simple example, but this is how one must conquer billing/pricing.
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If you don't know your costs, you can't bid right. If you don't bid right, you can't make money, If you can't make money, become a Wal-mart greeter.
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  #32  
Old 03-24-2005, 10:56 AM
drmiller100 drmiller100 is offline
LawnSite Senior Member
 
Join Date: Jul 2004
Location: McCall Idaho
Posts: 564
Interesting approach.

I'm thinking about it a little different. I have fixed costs of doing business, and variable costs.

Fixed costs I pay no matter if I work or I don't. Liability, truck payments, mower payments, marketing, rent, electricity I pay no matter what.

Variable costs I pay when the mower is running. Fuel, maintenance, labor. My labor is right at 20 bucks an hour in costs. Compared to labor, the rest is mouse testicles.

So, I can bid a four hour a week job at 35 an hour and keep my guys busy and pay their wages and pay on the fixed costs as I build my business. Or I can pass on that business and not keep my guys busy so they have time to go find a different job with more hours per week......

Further, if I spend a little on equipment and arrange performance bonuses, maybe I can cut that 4 hour job down to a 3 hour job, in which case I am getting 47 bucks an hour. Not likely I know, but once you have the job it is easier to upgrade the customer or find efficiencies then if you are sitting at home watching tv.
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