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Cost of doing business

Discussion in 'Business Operations' started by meets1, Jan 26, 2006.

  1. meets1

    meets1 LawnSite Gold Member
    Messages: 3,855

    Yes, I run numbers etc but I was thinking if I buy this equipment this year - does that in return increase the cost of doing business since equipment is more money?

    And then do I need to figure that one piece of equipment everytime we do something with it or for it. Say we have 2 older z's running and one new. Does that new cost more NOW to run? Then what I top off all the tanks with gas - kinda hard to say if we put a gallon in or 3 gallons?

    Where do you start?
  2. Az Gardener

    Az Gardener LawnSite Gold Member
    Messages: 3,899

    I would say it depends on how tight your bidding needs to be. The estimating gods will tell you you need to estimate the # of years the piece will be in operation, how many hours per year,what maintenance and operating costs etc. Then you can get an hourly cost and use it on only the jobs That the equipment will be used. This method will assure you that only the clients using the equipment will pay for it. Therefore making your bid more accurate. For me thats too complicated to do on a job by job bid. I am not a low cost contractor so its not an issue for me. I just lump it all together and use that number throughout the year. I also add $$ for replacement costs too so when I need new equipment the $$$ is there.

    You bring up a good question, I have done all types of estimating through the years. I am into simplicity and quality of life right now and while I keep up on what others are charging I bid what it costs me, because I am lazy it costs all my clients a little more. I don't enjoy spending time crunching #'s I'm sure there is a easy way to do it with computers but I would rather spend my time on other things. I am fortunate to live where I do and have decades of experience so I can charge what I want.
  3. kc2006

    kc2006 LawnSite Silver Member
    Messages: 2,443

    Like az said, you need to figure the amount of years you'll have it, the hours it will be used per season, gas use per hour, maintenance costs and then you get your cost per hour of use.

    I had an issue of turf that showed how to do all this, I'll have to find it, I can tell you what issue it was then. They showed how to break down cost of a vehicle, and I believe they did small equipment.
  4. meets1

    meets1 LawnSite Gold Member
    Messages: 3,855

    I here & know the cost thing but at times I bid/price work according to mkt value.

    I also seem to always be updating equipment. I live in a rural area and farmers etc will ask about my Z's and b/.f you know I received a check. I think it works good for me - sold one with 800 - 1000 hours straight out - better deal than the dealer would give - go get a new one. Well let the games begin all over again.

    I did the same with a few of our trucks. Farmers - parents want a good used truck for work, driving to and from or from 16 yr old to take to school. It just seems that all this number stuff kinda off. I then have to reflect and say this mower only had 850 hours. So I re-figure and say it cost X new, / by hours and it actually cost me to operate than orginally figured. This scews the business plan, looks as if it reduces my profit margin and increases my operating expense.

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