Becoming More Proficient at Bidding

Discussion in 'Business Operations' started by Jeremiah Dyke, Nov 25, 2011.

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  1. Jeremiah Dyke

    Jeremiah Dyke LawnSite Member
    Posts: 69

    My first year in business is coming to an end and I've truly learned a lot this year due in part to the blunt honesty within these forums. Open honesty is not something you find within my day job as an educator, we typically walk on egg shells when offering criticism. With this in mind, I want to become better at bidding this coming year and for this I've been really trying to tally up my costs. I got a working equation that I need an opinion on

    Cost = 8.50x + .39m + .28(p) + x/24(Daily Overhead)
    x = hours
    m = Total miles to and from job
    p = Payout of Job

    The 8.50 is my cost for running my Scag ProV per hour, The .39 is the national average for costs to run a vehicle per mile, .28 is my tax rate, Daily Overhead is simply adding up all expenses to run your company per year and dividing it by 365. I'm missing the costs to trim, edge, blow, etc.

    Thoughts?
     
  2. TriCityLawnCareLLC

    TriCityLawnCareLLC LawnSite Bronze Member
    from Ohio
    Posts: 1,024

    interesting idea.....are these for all types of jobs or landscape/hardscape only? I plugged in my numbers for regular mowing and it didn't quite work for me...
     
  3. Jeremiah Dyke

    Jeremiah Dyke LawnSite Member
    Posts: 69

    What would you consider the average costs to run a trimmer, blower or edger per hour under normal conditions? This will obviously depend on your specfic equipment, so what would your answer be for your specfic equipment? I've read elsewhere that it is about $3.oo per hour
     
  4. Jeremiah Dyke

    Jeremiah Dyke LawnSite Member
    Posts: 69

    You would need to adjust your equation per job. Some lawns I mow with my 21 and thus would need a new number to take the place of the $8.50, probably $2.50

    If i were doing some flowerbed work where no big equipment was used my costs formula would look something like,

    C = 39m + .28(p) + x/24(Daily Overhead)

    I'm sure with a little diligence you could create a decent equation for your most common scenarios. This way you need only know the time it will take you to finish a job and miles to a job to know your costs. Then, add the costs to your hourly rate and bid
     
  5. michael14

    michael14 LawnSite Member
    Posts: 57

    Are you an algebra teacher
    Posted via Mobile Device
     
  6. fastlane

    fastlane LawnSite Senior Member
    Posts: 347

    For mowing. I divide costs (including profit) into the number of workdays in a season. (26 weeks x 5 days =130 days) This tells me how much I must avarage per hour to make exspenses.
     
  7. CLARK LAWN

    CLARK LAWN LawnSite Silver Member
    Posts: 2,526

    What about taxes, insurance, licenses, etc...
     
  8. Jeremiah Dyke

    Jeremiah Dyke LawnSite Member
    Posts: 69

    Taxes are in the formula. See the .28 multiplied by the payout of the job. My insurance and license is factored into my Daily Overhead.

    An example: A job takes 1 hour to complete. 45 mins with my big mower and 15 mins with my trimmer/blower/edger. Daily Overhead is about $6 (roughly $2,200 a year in marketing, insurance, license, etc). The house is 10 miles round trip and I want $40 an hour profit.

    Cost = 8.50x +3x + .39m + .28(p) + x/24(Daily Overhead)
    x = 1
    m = 10
    p = $40

    Cost = 8.50(.75) +3(.15) + .39(10) + .28($40) + x/24($6)

    Cost = $6.38 + $.45 + $3.9 + $11.2 + $.25 = $22.18

    Bid = Cost + Hour Rate

    Bid =$22.18 + $40 =$62.18 (or roughly $63.00)

    There are some different ways to plug in the tax portion of the equation depending on how you do your accounting
     
  9. Jeremiah Dyke

    Jeremiah Dyke LawnSite Member
    Posts: 69

    Again, this is me toying around. None of this is formal. As you can see I'm plugging two separate values for x.
     
  10. Jeremiah Dyke

    Jeremiah Dyke LawnSite Member
    Posts: 69

    I teach various college maths
     

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