Your cost per hour

Discussion in 'Business Operations' started by johndeereguy, Dec 13, 2006.

  1. johndeereguy

    johndeereguy LawnSite Member
    from Iowa
    Posts: 220

    After going through my quickbooks for the year and seeing what I spend and made I was doing some figuring. I was wondering how many of you guys know what is costs you per hour to operate. How many of you know this figure? How much is it? Just kind of curious I guess how many guys know this amount, since you should base what you charge off of this.
     
  2. meets1

    meets1 LawnSite Gold Member
    Posts: 3,787

    Hey sent you a pm - just wondering where in the great state of IOWA your at??
     
  3. Total Landscape Solutions

    Total Landscape Solutions LawnSite Member
    Posts: 190

    Great topic!
    It has to be the most important number in a service based business IMO. I heard a generic name for it once, but have since forgotten what the name was.
    I find it interesting every time I bring it up while networking or just shootin the breeze with other service based business owners how many have no clue what I am talking about. Some blow it off and insist the are making money, yet a few years later they are no-where to be found.
    I hope business owners that haven't figured it out before take this opportunity to learn what it is, why it's important, and how the number can help them.
    JohnDeere I'd hate to steal your fire, since you started it I'll let you explain it :).
     
  4. Picture Perfect Landscape

    Picture Perfect Landscape LawnSite Member
    Posts: 176

    In for more info. I have never broken it all the way down to an hourly cost but would be interested to what some the veterans have to say.
     
  5. Josh.S

    Josh.S LawnSite Bronze Member
    Posts: 1,085

    Mower cost $7.50 per hour (including depreciation, gas, and matenience)
    I cost $20 per hour
    Helper cost $8 per hour (if needed or on job)

    But there is A TON of other stuff that needs to be factored in like fixed expences, the truck (repairs, gas, depreciation),

    I would say if I pay myself $20 per hour (which I don't, but I base everything on this figure anyhow), that my cost per hour for me and another helper (including driving around and everything) is at least $45.
     
  6. YardPro

    YardPro LawnSite Gold Member
    Posts: 3,563


    you should....
    this is the single most important tool for pricing jobs and running your business you can have....

    our overhead per hour is about $13.00/hr....

    this puts my cost per hour at $23.00-$33.00/hr for our guys....

    when we send a crew out, we use crew averages.
     
  7. VO Landscape Design

    VO Landscape Design LawnSite Senior Member
    Posts: 358

    Being new I just know what I have read so far and heard. You need to know the cost per hour of everything and one you use. Makes it so much easier to bid correctly and for your profit. Then its just plug in your hourly costs after you figure out what you need. The job takes 4 hours labor, 6 hours for mulching, 3 hours mowing, plug in your numbers and you should be close. Remember this is just what I have read, no expert by any means (not yet LOL)
    VO
     
  8. johndeereguy

    johndeereguy LawnSite Member
    from Iowa
    Posts: 220

    it is amaizing to me as well how many businesses out here have no clue what thier accual cost to operate per hour is. And remember that cost per hour has to be figured at per billing hour. Sharpining blades and doing books is NOT included. Thsi is total cost of all vehicles, tractors, mowers, and the depriciatiuon of this equipmet. Also ads, supplies, payroll, ins., and all of expenses. This does not include what you are paying yourself. I know in the past I have not put it to an exact amount, but know I should have. I am not done yet with year end nook work, but I think my cost per billable hour to operate is going to end up around $25 to $30 an hour. What is your cost?
     
  9. Fantasy Lawns

    Fantasy Lawns LawnSite Bronze Member
    Posts: 1,913

    This should clear things up ... from one of my old business notes ....but still holds true today

    DIRECT COST: those expenses that happen because labor was applied, equipment and vehicles were put into action, materials were used and work was done.

    Direct costs are usually easy to document and predict when you know how much time a project will take and what equipment and materials will be needed.

    INDIRECT COST: costs that follow with direct labor
    · Payroll taxes
    · Employee benefits & Insurance
    · Fuel consumption
    · Depreciation
    · Repairs and other on-the-job costs.

    Payroll taxes, benefits and insurance can be easily estimated
    Indirect costs related to equipment are tougher to predict.
    Fuel consumption can vary greatly & Repairs are often unexpected.

    OVERHEAD COST: expenses that support the operation of a business.
    · Rent for facilities, utilities, advertising, property taxes, storage, insurance on buildings, office expenses and other "behind the scenes" costs that in some cases take place simply because time went by.
    · Take place even when no work was done.

    Summary: Direct costs happen when work is done and labor is applied. The workers come in to work, and as soon as they turn the key in the ignition, direct costs and indirect costs follow them and stay with them all day. Overhead items of expense that support the operation.


    ANALYZING JOB COSTS. Labor and indirect costs represent the bulk of expense for most contractors and dwarf true overhead costs by comparison.

    ALL cost .... n yes this DOES include the cost of sharpening blades & paper work .....it has to .... to make it in the long run .... it's part of In-direct cost ... with QB it's ssooo easy ....but more important is the heart beat of any business

    When I bid .... I use my previous yearly cost as a bench-mark ... measure point .... fore me it's been from $27.32 in 2001 to $26.67 in 2005 ...

    This number includes my total labor in hours ....which includes the time driving between jobs ..... shop work ...all the hours total .... divided into all cost total .... from postage stamps ....fuel .... uniforms or what have you
     
  10. Josh.S

    Josh.S LawnSite Bronze Member
    Posts: 1,085

    What is your cost per hour for a 2 man crew? That is what my cost is off of, what am I missing?
     

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