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Old 06-02-2009, 09:08 PM
Bryn Bryn is offline
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How much you need to Charge for Fert/Squirt <ANSWER>

This question gets asked a lot, how much to charge for a service. I donít have a complete answer, but I hope this is a start. This is an imaginary Fert & Squirt company. In this company you work 40hours/week, 52weeks of the year, so a total of 2080 hours are worked

Iím sure there are some things I have forgotten to include, so some of your guys who have been in business a while can chime in. This is not perfect, and is very conservative.

Lets start with your investment. Whether you borrow the money from a bank, friend or rich relative, or loan it from your own savings, you need start up money. Lets start with $20,000 which will buy you the following.

Truck $10,000
Spreader(Lesco) $500
Backpack $150
200g Tank $3,000

Total of $13,650, but you need to add a computer $400, Fax/Copier $400, Stationary $500, advertisements $2,050 for a total of $17,000. You have $3,000 to spend on Fert/Herb supplies. You have spent your initial investment of $20,000. Now my father always said that the first year of business you lose money, the second you break even, and the third you make money, lets hope he is right.

Lets look at the $20,000 investment. If you borrowed the money, the bank will want interest, as well as principal payment each month over maybe 5 years. For simplicity, we are going to assume you have a line of credit, or you borrowed it from yourself. If you borrowed the money from yourself, you have now changed that moneys income stream, to your ability as an entrepreneur to generate income. If you had left it in the mutual fund, it could have returned 10% interest, so each year that initial investment is not making you $2,000, so you should consider adding that to your cost per hour. I will explain. If you borrowed as a line of credit at 10%, then you need to pay the bank $2,000/year interest, so why not pay yourself.
That truck and equipment also needs to be replaced in the future, so now is a good time to start putting something away. Your accountant can help you on the depreciation of equipment for tax purposes, but for us, we will just consider that the life of the equipment is 5years, so in 5 years we will need to spend another $20,000. I know the equipment expense was only $13,650 but we do have inflation, and you want a nicer truck next time around. So we need to find $4,000/year to put away. Also this can be used in a true emergency such as a truck motor or transmission replacement. Remember it has to be paid back, and should only be used in an emergency.

So straight away we have to find $2,000 interest, and $4,000 savings per year, which equates to $6,000 total, or $2.89/hr. That is $6,000/2080.

Lets look at truck expense: You drive you truck 100 miles/day, at 15miles/gallon which equals 6.66 gallons of fuel/day with a gallon of fuel at $2.50/gallon. So total yearly driven miles is 26,000 miles/year which is $16.67/day in gas, or $2.08/hr. Oil change every 6,000miles, at total mileage driven 26,000miles, equates to 4.3 oil changes, at $30/oil change, equals $130/yr, or $0.06/hr. Donít forget tires at $400/yr, or $0.20/hr, and transmission & other maintenance of $530/yr, or $0.25/hr. Insurance is $1000.

Ins $0.48/hr
Milage $2.08/hr
Oil $0.06
Tires $0.20
Main $0.25

Lets look at wages. Working 2080hrs/year at $10/hr, you are going to make $20,800, a lot of America live at this level, but it is difficult, and generally you need a partner to supplement that income. So we are going to make life a little easier, and say $13/hr, which is $27,040/yr. Donít forget to take out 6.2% for Social Security, and 1.45% Medicare, as well as your federal take, lets say !0%. so you have $1,676SS, $392.08MC and $2704Tax, and just for a kick in the teeth for trying to go it alone, the government will ask you to add an extra SS and MC for being self employed. See if you are an employer, you have to match your employees SS & MC, and as you employ yourself, they expect you to do the same. So Take home Pay is $27,040 - $1,676 - $392.08 - $2704 = $22267.44, or $10.71/hr take home. If you live in a state with State Income tax, this might be even lower.

Now the you have paid yourself, lets look at how much it cost you. $27,040, + $1,676 + $392.08 = $29,108.08 or $13.99/hr. Now you also might need to add State and Federal unemployment taxes, and other state taxes. So lets be on the safe side and say that your total liability for wages is $20/hr.
Business liability Insurance Iím going to say is $1,000/yr, which is $0.48/hr
Cell phone expense is $100/month, $1,200/yr, or $0.58/hr

Lets add this all up.
Investment $2.89/hr
Ins Truck $0.48/hr
Gas Truck $2.08/hr
Oil $0.06/hr
Tires $0.20/hr
Maintenance $0.25/hr
Wages $20.00/hr
Liability Ins $0.48/hr
Cell Phone $0.58/hr
TOTAL = $27.02/hr

So before you even start, you need to be making $27.02/hr. Which means you need $56,201.60/yr. Removing your investment, you still need $50,190.40, which means you need $24.13/hr. This is all before you start adding cost of Fert/Squirt, and other costs.

Lets assume you have a six step program that costs you $1.96/1000sqft. This program has dimension, herb three times, granular fert . And you can apply at 1000sqft/min, wages are $20/hr, travel time is 10mins, with ten mins load/unload, and five mins paper work for a toal time of 25minutes, so using this equation gives us the cost/1000sqft.

((sqft/1000)*1.96)+((20/60)*((sqft/1000)+25))

If you enter 5000sqft, you should get a cost of $19.80, with a $10 for wages. Total time is 30mins. If you do one 5000sqft property/hr, you will need to charge a minimum of $27.02 + $9.80 = $36.82

This does not include any gloves, uniforms, postage, envelopes, advertising for next year, truck lettering, discounts for the elderly, retreats etc.

Now this is a fictional company, but with some real numbers.

Hope it helps.

Bryn
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  #2  
Old 06-03-2009, 04:17 PM
snking1 snking1 is offline
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Bryn: How much you need to charge for fert/squirt

I don't chime in often but I felt compelled to respond to Bryn's post. It is good to hear a response that is very intelligent and even more so very helpful to someone who is looking for it. So often when I read posts on Lawnsite I see a lot of responses that try to prop up the person responding without giving out helpful info. We all are trying to learn a little more daily and because the green industry is changing and growing there's is always something new to learn. Your post helped me a lot and I've been doing this fert/squirt for about three years now. Not a lot of time compared to some, but I comfortably support my family. Thanks for your help Bryn and anyone else giving out helpful information.

sk
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Old 06-03-2009, 05:41 PM
mdlwn1 mdlwn1 is offline
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This absolutely deserves post of the year! One of the most intelligent and straight forward posts Ive seen on here. To the newbies....thats at $13 per hour in pay. In most parts of the country, you will need to triple that to have a reasonable shot in life!
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Old 06-04-2009, 01:30 PM
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terrapro terrapro is offline
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Fantastic! I didnt see anything about licensing in there though which here in MI costs time and money per year.
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Old 06-04-2009, 02:10 PM
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ffemtmcd ffemtmcd is offline
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awesome post - thanks
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Old 06-04-2009, 05:58 PM
grassmasterswilson grassmasterswilson is online now
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That is a great post!! Did you figure anything on the square footage covered per round? I would love to break you numbers down to cost per 1000 sq. ft.
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Old 06-05-2009, 05:01 AM
greendoctor greendoctor is online now
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Great post. I do not have my operation broken down to the last cent. But it spells out what I instinctively figured had to be my base charge. I never mention hourly rates with a prospective client. It does not look good if I were to charge X per hour and I sprayed their lawn or shrubs in about 15 minutes.
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Old 06-05-2009, 10:18 AM
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Ric Ric is offline
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Quote:
Originally Posted by greendoctor View Post
Great post. I do not have my operation broken down to the last cent. But it spells out what I instinctively figured had to be my base charge. I never mention hourly rates with a prospective client. It does not look good if I were to charge X per hour and I sprayed their lawn or shrubs in about 15 minutes.
Greendoctor

I am with you on the last cent. I miss accounting for the small equipment maintenance costs that I pay cash for as one example. Unexpected break downs and accidents might not be covered by my maintenance reserve etc. Bryn did a great job of explaining cost plus pricing. I have been a long time preacher of Cost Plus Pricing as a win win situation. Even if you don't get that job, you win because you didn't lose money by under bidding. Remember you should get a return on your Business investment above and be on your salary and benefits that should be equal to or higher than working for the man.

Now there is Estimated Cost and Actual cost. We might be able to guess our costs pretty good. But only after the Fish is Caught, Cleaned, Cooked, Eaten and Paid for, do we know our true costs. I use the formula method of pricing that is based on past performance. However in a Product Cost Changing economy we have now, I must always stay on top of my current costs.
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Old 06-05-2009, 10:45 AM
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The only thing is, is that with all these costs that were mentioned, nothing was even mentioned about a shop to store all the product and equipment in, and the utility bill(s) related to that, - let alone the prop taxes if it is owned. Nothing was mentioned about 3 gal. of gas a day to run the sprayer, either...which a today's prices would run another $180 a month based on a 20 day work month.
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Old 06-05-2009, 12:21 PM
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Originally Posted by Runner View Post
The only thing is, is that with all these costs that were mentioned, nothing was even mentioned about a shop to store all the product and equipment in, and the utility bill(s) related to that, - let alone the prop taxes if it is owned. Nothing was mentioned about 3 gal. of gas a day to run the sprayer, either...which a today's prices would run another $180 a month based on a 20 day work month.
Runner


Good point, most members here are more than likely operating out of their home and don't realize that shop expense. Almost two year ago I down sized my living arrangement. My first concern when buying an other home was Shop and Well water. Code enforcement was also a concern in the fact the last place I want to live is in a deed restricted area. My first rule in any business is Location, Location, Location. I ended up in a very working class Nieghborhood two miles from the interstate exit. I don't complain about my Neighbors Chickens, Ducks and Goats and they don't complain about my lettered up commercial trucks or the 18 wheeler that makes chemical deliveries. BTW I find the people in a working class neighborhood to be a lot more friendly than my many years in the High Class neighborhoods. I Ant kill many of my neighbor now and in some case as a trade out deal for lawn mowing and house cleaning etc. I don't consider these people good friends just good neighbors. But my point here is keeping expense down. When I had the Big Show I also lived where I stored my equipment. Not having to travel to a shop and having everthing in one location is a great way to run an operation IMHO. But as you said account for that expense in your price and take every Deduction you can off your taxes. BTW Don't forget Education expense like CEU. As officers of the corporation my children had a lot of education expense.
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"TG doesn't give a rats ass about being "Responsible" as long as sales/production quotas are met. That's it in a nutshell. A recipe for disaster IMO." Ted Putnam 2/28/14

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"As Americans you have the right to be stupid." John Kerry

"Life is tough, but it's tougher when you're stupid.Ē John Wayne.
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