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labor cost - include yourself or not?

Discussion in 'Business Operations' started by grassmasterswilson, Feb 7, 2012.

  1. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,548

    When figuring commercial properties do you guys figure yourself in the labor cost with an hourly wage or do you just take the profit as payment?

    Posts: 1,343

    You have to figure yourself as labor into every job and keep your profit separate. The definition of profit being monies left after all expenses are accounted for. Good luck.
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  3. djagusch

    djagusch LawnSite Platinum Member
    from MN
    Posts: 4,231

    Yes you should include a good wage for your labor. When you grow enough for employees how could afford to have them on the job? Consider profit to pay for the investment of your biz. Your labor cost (if you are doing the labor) to pay for you to live. Part of your overhead figure is to pay for office labor also.

    To figure your wage just off of profit would be a good way to fail to build a biz.
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  4. crazymike

    crazymike LawnSite Senior Member
    from Ontario
    Posts: 454

    Profit is not payment for doing the job. It's payment for the responsibilities and troubles of running a business.

    If you're cutting grass, etc... you HAVE to pay yourself.
  5. nepatsfan

    nepatsfan LawnSite Gold Member
    Posts: 3,142

    My labor rate is based on per man hr. If I'm working on the job I should be paid. Otherwise the people who worked on the job are the ones I'm figuring on. If I'm not actually on the job then I only profit from my employees.
  6. Same here.
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  7. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,548

    thanks guys. I usually figure myself in with the hourly labor rate, but I've been successful at getting residential lawns, but not good at commercial. I think I need to re-evaluate my labor rate and my employees rate. Maybe i'm asking too much for myself and am too high on what I want to make on the employee.
  8. crazymike

    crazymike LawnSite Senior Member
    from Ontario
    Posts: 454

    The key to any good business is knowing your costs.

    Not just how much you pay an hour or your truck payments. Your actual cost to run the business, every penny. From trimmer, to fuel for weed eater, to the water bottles you supply your guys. You take your average hours worked for the season and divide that into your costs to give you operating costs per hour.

    You figure out your cost per hour + labor burden and times that by your estimated time to do the job. Then you add your profits %.

    The profit % is the only number you should really change to make a job cheaper.

    Whether you are working or not,

    What if you broke your arm tomorrow and couldn't work. Then you had to hire someone to labor in your place. That would then come out of your profits. Now you're not making money to support yourself.

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