Do You Know Your Man-hour Rate?

Discussion in 'Starting a Lawn Care Business' started by g21, Apr 19, 2010.

  1. shooterm

    shooterm LawnSite Senior Member
    from Midwest
    Posts: 457

    Only thing I dont like how you break down the man-hour is the pricing for if your personely working. If your not working on lawns you should apply what you'd make on another job. I wouldnt price myself for less then what I make at my main trade. You might as well pack your bags if your not paying yourself outside of business profit.
     
  2. mcw615

    mcw615 LawnSite Senior Member
    Posts: 473

    BIG MISTAKES WHEN HE FACTORED THE OVERHEAD/EXPENSES. He said you and 1 full time employee are working 40 hours a week, a total of 80 man hours per week, 320 man hours per month. Take your 12 month expenses and make it 8 months, then divide by 320 hours for each month.

    Here is MY correction and fact. You are working 40 hours a week and we are trying to figure your hourly rate right? Well you are not working 40 billable hours a week, you have drive time, load equipment, unload etc. I would say on average 66% or a 1/3 of your time will be driving so you will only therefore be doing 30 billable hours per employee, total 60 billable hours. Your downtime/drivetime is not generating money, it is an expense, therefore you cant factor overhead recovery as downtime.
     
  3. mcw615

    mcw615 LawnSite Senior Member
    Posts: 473

    Also, constantly evaluating you 'evolving' man hour rate when you grow in business? I would change that to this. Establish an hourly budget breakdown, and work within that budget, every month generate a profit and loss sheet, if you are factoring your overhead too high, well then reduce it, chances are you overhead is going to stay about the same PER EMPLOYEE. When your adding volume your either having to pay OVERTIME or hire another employee which adds expenses, my advice on this topic is to create an overhead budget for each employee and work within it. Also when you grow in volume you will eventually need a supervisor for those employees to maintain quality control.

    This guy had some good points, here is my guide on hourly rates and learning about your business, probably will find a little more useful. http://www.lawnsite.com/showthread.php?p=3671594#post3671594
     
  4. TGM

    TGM LawnSite Senior Member
    Posts: 931

    how can you make a living on $4/hr profit?:hammerhead: i try to put my profit margin at 70%+
     

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