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labor costs

Discussion in 'Business Operations' started by iowapride, Feb 9, 2003.

  1. iowapride

    iowapride LawnSite Member
    from Iowa
    Posts: 59

    One of the things I am really working on cutting down this year is labor cost. I felt like I paided way too much labor last year and was just wondering if anyone knew what there percentage of labor they payed was compared to there gross sales. Mine was pushing 30%, a little high I think.

  2. devildog

    devildog LawnSite Senior Member
    from sc
    Posts: 270

    Not knowing what form of landscaping work your company is doing...... can't say. 30% is within an acceptable range for the green industry and many other trades of design / construction and installation.

    This topic is one of those "dark holes" within the green industry, that many either don't recognize, don't care, don't want to know or won't share. Its a prevalent condition across the nation.

    Also, "bench marking" our numbers with others is difficult because of the uniqueness of every operation, we're not a one size fits all industry. However, your 30% labor factor (as long as its part of your expenses, aka as overhead) is within an acceptable range. with regards... devildog
  3. 1stclasslawns

    1stclasslawns LawnSite Senior Member
    Posts: 565

    My employee expenses are going to change, I am like you I figure 30% is about right. That is why from now on I don't pay hourly.

    I've had too many people ***** about what I paid hourly I try to explain to them about "windshield time" they don't care. I now pay commision thats how tgcl and most other big service companys pay. I have set my percentage with my one helper an I at 25% each. He and I have agreed that if we need any extra help which we shouldn't that we each will pay half of his on a daily basis.

    My tax guy thinks it is a good idea.

  4. scott's turf

    scott's turf LawnSite Senior Member
    from NH
    Posts: 949

    Commision is fine in theory but how do you account for down time due to equipment, weather, or other circumstances?
  5. HBFOXJr

    HBFOXJr LawnSite Bronze Member
    Posts: 1,712

    Last year was an ugly, herky jerky year in which we couldn't operate efficiently due to drought restrictions.

    Labor was 38.5% when historically it was high 20's to very low 30's. Consequently our idrect costs of labor, equipment and materials was an abysmal 65.9%. That is usually around 60% +/-.
    That percentage swing tanslates directly to profit being at least 6% less of sales.

    For me, labor costs are payroll, all payroll taxes and federal, state insurances, uniforms, help wanted advertising, health insurance, and my liability pkg and umbrella pkg and workmans comp since they are payroll driven.

    The numbers are for field personel only. My wife's pay check and associated expenses are attributed to office expense which is overhead.

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