Labor pricing question

Discussion in 'Business Operations' started by nobagger, Mar 24, 2005.

  1. nobagger

    nobagger LawnSite Gold Member
    from Pa
    Posts: 3,065

    I am now to the point where I have to hire some help with bigger jobs and wondering how to price labor. Say our labor rate is $30.00 and I have 3 guys on that site do I charge $30.00 for each employee I have there or should I give a little price break?
     
  2. Premo Services

    Premo Services LawnSite Bronze Member
    Posts: 1,516

    We do not give breaks in general, it would be 30.00 per a man hour.
     
  3. John from OH

    John from OH LawnSite Member
    Posts: 144

    nobagger, do yourself a real big favor, get an accountant to sit down with you and figger out what your labor, equipment, and overhead is really costing you. With those numbers in hand, you will know exactly what you can charge to break even, then add your desired profit. Anything else is just a guess, usually with bad results. Without knowing exactly what your costs are, none of us can tell whether you can afford to give a discount.
     
  4. Let it Grow

    Let it Grow LawnSite Senior Member
    Posts: 476

    You don't even need an accountant, just sit down and list every expense you have (including your salary), then from that figure out how much you need to charge to offset those expenses, and that is your rate.
     
  5. lawnlubber

    lawnlubber LawnSite Member
    Posts: 186

    Your 30/hr rate seems a little low for yourself once you add the responsibilities of supervising other people. I think your labor should be more valuable than your employees - reflecting your additional care, knowledge and experience as the business owner. So maybe 100/hr for a 3man crew or 70-75 for 2.
     
  6. Mower For Less

    Mower For Less LawnSite Senior Member
    Posts: 823

    I have figured out that I have to charge at least $35 per hour for the first man to be profitable. But I can add a 2nd man for $25 and still be profitable. I had to figure expenses seperately for each to arrive at my figures. Such as man 1 has all of the mower and truck operating costs under his $35, but man 2 only has to cover labor, taxes, ins, weed whip, gas, etc... but no mower or truck since he never touches them, and was in the same truck covered by man #1.

    I know this is unconventional, and goes against industry "norms" and everything taught in accounting classes, but it was something I needed to figure out to remain competitive in the cutthroat market that exists in the Metro Detroit area (example: Guy in paper advertising lawns starting at $13). Thats not to say thats all I charge, I have some hours of the day where I am making $65+ for a 2 man crew, but I charge at LEAST $60 for them minimum, usually to get in the door, then raise prices next year.

    Kevin
     

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