Operational Costs

Discussion in 'Starting a Lawn Care Business' started by SLC LLC, Jan 19, 2006.

  1. SLC  LLC

    SLC LLC LawnSite Senior Member
    Posts: 668

    Reading a thread from earlier about minimum costs to drop the gate at a house. Someone mentioned determining your operational costs. Is there a formula anyone uses to determine this? Basically meaning amount of fuel on avergae per lawn... what to set for equipment use per lawn, etc.???
     
  2. RyanD

    RyanD LawnSite Member
    Posts: 178

    Good question, if you look in my profile you can view other threads I have psoted in. some lately have been to do with costs. You might want to take a look. to answer your question, I don't think there is one formula that we could all use. What I did is figure how much gas my mower used in an hour. I can burn 1.5 gallons and at 2.15/gallon that equals $3.23/hour. I did this for all of my equipment. This is but one of many costs that you need to count. The above is a cost that accrues per hour but some costs come around whether you mowed this week or not like insurance and cell phone bill, etc. The way I handle these to take the amount of $412 for my insurance divided by the amount of hours I thought i would work. I just started last year and I figured I would mow about 200 hours. $412/200 = $2.06 in expense for insurance every hour I mow. You can use the same exquation to figure out your costs for all other fixed expenses as well. pm me if you have specific questions.
     
  3. out4now

    out4now LawnSite Bronze Member
    from AZ
    Posts: 1,796

    Your operational costs are reflected in everything that it takes to get you there. You need to know what it costs to run your machines per hour, add in your insurance costs, your fuel to drive there, 2 stroke mix, trimmer line, everything. It's not really an easy process. I think it was Muddstomper (can't recall one or 2 D'd in his name) that did some really good threads about costs in the past. I'll giv eyou some basic numbers and an idea of how it works but its a lot of typing to ge tinto the whole thing. This formula comes form a book by the guy on Gophers Podcast and it goes something like this:

    formula goes something like this to get those numbers:
    1.(purchase price)-(what its salvage value is)=your net cost
    2.(net cost)/(number of years the equipment will last) =cost per year
    3.(cost per year + annual maint. cost )/(estimated number of hours you will run the equipment)= hourly rate for the equipment
     
  4. PMLAWN

    PMLAWN LawnSite Gold Member
    Posts: 3,535

    Not trying to be smart with this answer but there are some good posts on this so do a search, Use - COSTS, PRICING, OVERHEAD, EQUIPMENT LIFE. This will get you started.
     
  5. ooo

    ooo LawnSite Member
    Posts: 235

    Try to use something like the following link. Im sure theres a few costs every person on here could adjust up or down, but it will give you a general idea what to try for. Just fill in the three gray boxes to get your results. A few things may be a bit on the high side, but its better then low side.

    http://www.ashleylandscaping.com/costs.htm
     
  6. ooo

    ooo LawnSite Member
    Posts: 235

    Oh yeah....this was based on my first 2 years, so EQUIP cost is a bit high.
     

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