Percentage of direct expenses for mowing crew

Discussion in 'Business Operations' started by seabee24, Jun 26, 2013.

  1. contractorleo

    contractorleo LawnSite Member
    Posts: 1

    Only labor, labor burden, and direct fuel is a direct cost. Equipment maintenance, repair, depreciation, insurance, etc is an overhead cost for the company. When you bid on the job, you should always cover the direct cost and overhead. You overhead could increase/decrease depending on the size/kind/frequency of projects.
     
  2. seabee24

    seabee24 LawnSite Senior Member
    Posts: 619

    I'm not aurguing with that, and I'm sure accountants will have different views in what costs are direct vs over head.

    I do disagree however.

    A 10,000 mower that has a useable life span of 2000 hours costs you $5.00 per hour in depredation, to replace that unit.... Plus maintenance costs during its life span.

    If I didn't mow today, that mower would loose very little value sitting at the shop today. So in my mind, if we are mowing a house that take an hour, $5. Is the direct cost towards replacement

    Insurance for the crews truck is the same. No need for a crew truck, no need for insurance on it. Granted its a fixed monthly payment, but if I decided to cut and eliminate the whole crew, we would also cut the insurance, as well as the cell phone for that crew and many other things

    I guess parts of that are overhead, but I try and factor each job and crew seperatly. The landscape crew should have to pay for a new snow plow. The snow shouldn't have to pay for a new mower. Each crew, each division should cover its own expenses it uses. If not eliminate that part
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  3. seabee24

    seabee24 LawnSite Senior Member
    Posts: 619

    I'm actually surprised more having posted. Maybe everyone doesn't know their numbers that well or are scared of the truth
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  4. grassmasterswilson

    grassmasterswilson LawnSite Platinum Member
    from nc
    Posts: 4,589

    Well if you take out your direct expenses then profit would be what's left over. If your talking residential then around 35-40%. If your talking commercial work then closer to 15-25%
     
  5. McFarland_Lawn_Care

    McFarland_Lawn_Care LawnSite Bronze Member
    Posts: 1,412

    Keep in mind....some of these figure profits as part of their own paychecks. True profits should be figured by subtracting out the cost of someone to replace you if you are in the field.
     
  6. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Posts: 1,567

    Gross profit (absolute number) gross margin (percentage) is technically whats left after direct costs.
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