Very new need help.

[DMlandscaping]

Originally Posted by Dave does lawns

Something is wrong with this math, or I am confused. If I am paying myself $15/hour how can I charge $9.33?

You're grossing $15 per hour, but only netting $9.33. The wording was confusing, but I think that's what he was saying.

[fastguebo]

thanks every body for all your help. every day i learn something new here im recommending this forum to every new guy out there.

[USMC1153]

Originally Posted by Dave does lawns

Something is wrong with this math, or I am confused. If I am paying myself $15/hour how can I charge $9.33?

Dave,
Good call! I am grateful that you questioned my math...you are right, my calculations are wrong. I apologize to all who have read my post with the errors. I will redo the example below with the correct steps. (just so you all know what I did wrong, was when I got to step #4 and got to $746.43 that is the weekly rate, I then divided it by 4 for four weeks in a month...this is where I went wrong....I typed that real late last night, but I am sorry. So for clarification here is the right example below..

To calculate your break-even point.
1)This is where you add all your fixed costs like monthly insurance premium, telephone, utilitites, rent, any loan payments that you have if any on your equipment, storage unit rental, etc.. Figure on an average of 28 weeks in a season (at least in the chicago area thats what we have). So for example if your monthly fixed costs are $1,000 then put that into 28 weeks that means your seasonal fixed costs are $7,000

2) Now you have to try to determine your variable costs. Such as how much fuel do you expect to consume in a month, employee payroll expenses (e.g. John Smith worked 40 hours this week, but 60 hours last week). So lets say your variable costs are $500 per month. So now your variable costs are $5,500 for 28 weeks.

3) Now calculate how much you want to make. Say you want to start simple and work 20 hours a week, and pay yourself $15.00 per hour That gives you $1,200 per month, and $8,400 for the season. (again these are just random numbers, you need to find your numbers).

4) Then add your fixed, variable, and your pay costs together. So in our example we have $7,000 fixed + $5,500 variable + $8,400 for you = $20,900.

So with this example continued. You need to make $20,900 for the year to cover all your expenses to break even, and your payroll. So what do you do with this number? Now you take $20,900 and divide it by 28 weeks. You'll get $746.43. So you need to make $746.43 per week to stay in business.

5) Finally, you're already determined that you want to start slow by working 20 hours per week. so take $746.43 and divde it by 20 hours per week and the CORRECT answer is $37.32 per hour you need to charge to stay in business.

A quick way to check your math to make sure you are right is to see that you work 20 hours per week, and you based it on 28 weeks so take 20 hours per week X 28 weeks and you get a total of 560 hours. Then take your hourly rate of $37.32 X 560 hours = $20,900 (and this is the same answer as what you calculated in step 4.

Again I apologize to everyone for the confusion. I hope this formula will help.

Cheers,
Mark

[Dave does lawns]

Originally Posted by USMC1153

Dave,
Good call! I am grateful that you questioned my math...you are right, my calculations are wrong. I apologize to all who have read my post with the errors. I will redo the example below with the correct steps. (just so you all know what I did wrong, was when I got to step #4 and got to $746.43 that is the weekly rate, I then divided it by 4 for four weeks in a month...this is where I went wrong....I typed that real late last night, but I am sorry. So for clarification here is the right example below..

To calculate your break-even point.
1)This is where you add all your fixed costs like monthly insurance premium, telephone, utilitites, rent, any loan payments that you have if any on your equipment, storage unit rental, etc.. Figure on an average of 28 weeks in a season (at least in the chicago area thats what we have). So for example if your monthly fixed costs are $1,000 then put that into 28 weeks that means your seasonal fixed costs are $7,000

2) Now you have to try to determine your variable costs. Such as how much fuel do you expect to consume in a month, employee payroll expenses (e.g. John Smith worked 40 hours this week, but 60 hours last week). So lets say your variable costs are $500 per month. So now your variable costs are $5,500 for 28 weeks.

3) Now calculate how much you want to make. Say you want to start simple and work 20 hours a week, and pay yourself $15.00 per hour That gives you $1,200 per month, and $8,400 for the season. (again these are just random numbers, you need to find your numbers).

4) Then add your fixed, variable, and your pay costs together. So in our example we have $7,000 fixed + $5,500 variable + $8,400 for you = $20,900.

So with this example continued. You need to make $20,900 for the year to cover all your expenses to break even, and your payroll. So what do you do with this number? Now you take $20,900 and divide it by 28 weeks. You'll get $746.43. So you need to make $746.43 per week to stay in business.

5) Finally, you're already determined that you want to start slow by working 20 hours per week. so take $746.43 and divde it by 20 hours per week and the CORRECT answer is $37.32 per hour you need to charge to stay in business.

A quick way to check your math to make sure you are right is to see that you work 20 hours per week, and you based it on 28 weeks so take 20 hours per week X 28 weeks and you get a total of 560 hours. Then take your hourly rate of $37.32 X 560 hours = $20,900 (and this is the same answer as what you calculated in step 4.

Again I apologize to everyone for the confusion. I hope this formula will help.

Cheers,
Mark

Thanks mark for this great post. I was drunk and that is why I could not find the error myself. Very good information for a new guy.

[fastguebo]

ok so that give an ideal of my hourly rate. thanks

[mjlcare2]

Here is another tip.. don't drink while your making invoices or paying them. Looks like it won't end up real pretty for you. Lol
Posted via Mobile Device

[Dave does lawns]

Originally Posted by mjlcare2

Here is another tip.. don't drink while your making invoices or paying them. Looks like it won't end up real pretty for you. Lol
Posted via Mobile Device

wise guy!