How do you calculate equipment costs

Discussion in 'Starting a Lawn Care Business' started by Pingui, Dec 28, 2013.

  1. RSK Property Maintenance

    RSK Property Maintenance LawnSite Bronze Member
    Messages: 1,504

    what I did to calculate my costs is I added up all my expenses for the year and divided by the months worked then I broke it down to weeks, then days. its not an exact number but a rough idea, for me its 82 dollars every single day. that's not what it costs me hourly to do business but that's what I figured my daily overhead is for all 365 days of the year, and that number can and will go down, its includes about 20k in debt. spread out over a 4 small loans. which is spread out over 5 years. i guess if i divided that number but 8 hours or whatever then I would what it costs me per hour to do business. so i guess its about 10.25/hour does that sound possible?
  2. 32vld

    32vld LawnSite Gold Member
    Messages: 3,983

    Most landscapers do not work 40 hours a week 52 weeks a year. One day we can work 1 hour another 6. The next time 8 hours.

    So to say your costs per day is $82 is correct mathematically but is not truthful.

    You need to record all moneys spent and all hours worked. So you will have the true hourly rate.

    We estimate by the hour not the day.
  3. RSK Property Maintenance

    RSK Property Maintenance LawnSite Bronze Member
    Messages: 1,504

    you got that right. I did some rough math and I think it came out to me working 120 days a year maybe 150 if you wanna stretch it. but 150 days tops. hours I do not keep track of very much. its just me working no help, but there are a lot 7-10 hour days in there. july or august if its really hot i might only work 4-6 hours.

    I also don't estimate by the hour or the day, but by the job. no matter what it is, by the job. I have certain numbers I try to hit in my head while doing the estimating but I do everything by the job, and it seems to work out pretty good.
  4. peeklandscaping

    peeklandscaping LawnSite Senior Member
    from CT
    Messages: 306

    32vld, Question please. you said 'You work 40 hour week, for 35 weeks' does this mean for every piece of equipment it's 40 hours a week? Or do the hours per week vary for different equipment? Example, my truck would be 40 hours per week, 35 week per year, whereas a pole-saw would only be 1 or 2 hours per week, maybe 5 times per year. Just need some detail on that. Thanks for your help
  5. BandBLawncare

    BandBLawncare LawnSite Senior Member
    from Ohio
    Messages: 375

    I would love to see the spreadsheet
  6. 32vld

    32vld LawnSite Gold Member
    Messages: 3,983

    I do not 35 weeks for 40 hours a week. I was using figures to illustrate figuring costs.

    One can go into as much depth in figuring costs as one wants or needed.

    I do not need to figure out how much money I made using a pole saw. I know it saved me time. Faster then carrying and setting up, then climbing a ladder, and safer working on the ground then on a ladder. So I saved time which freed up more time to do more jobs. Not taking a ladder saved time not loading or unloading a ladder that day. No ladder, trailer load less so I saved fuel and wear and tear on the tow vehicle and trailer.

    Normally I would not break out the cost of a chain saw, hedge trimmer, edger. I see how much they are used. And, I know that I made money with them. I know that I did enough work to pay back the cost of the chain saw. Though it may not of brought in a lot of work. It keep competitors off my customers property. So as you can see it is not always dollars and cents but dollars and sense.

    I also will figure big ticket items such as trucks, mowers, trailers. Because if you need to make so much an hour to buy a $35,000 truck or $12,000 mower. You can not just take one weeks mowing's gross and go buy a major piece of equipment.

    As a small semi solo operation running one truck. I will not do the math to figure out the individual hourly cost for a line trimmer, edger, hedge trimmer, stick edger, chain saw, back pack blower.

    Example: that is 6 hand helds. Average price $400. Two will need to be replaced every year. Figure on buying three every year so I have a back up
    for each one. Also having backups could have me set up to add a second truck. Planning ahead I could expand and hot have to come up with the cash or debt to grow.

    That's a $1,200 a year cost. I would divide this by 1400 hours. You would get an hourly cost of $.86 hour.

    Now being your started out and you only worked 400 hours the hourly cost would be $3.

    When I did fall cleans up I know how much I spent on fuel, 2 stroke oil, leaf bags and total hours worked. I know how much I grossed per hour, labor costs per hour for help, and materials. I know how much it cost me per hour to do clean ups. Because of that I know my hourly profit to do this years clean ups. I was able to compare the hourly rate between different customers. I now know how to tweek my prices for next year to get the same hourly profit from each customer.

    I do not know or care to know how many bags per job or gallons of fuel per job.

    Now on a corporate scale of GM I would probably have to know the costs in greater detail. Though that size business will be able to afford the staff to collect and work those numbers.

    I remember a story in school. Some industrial giant on the likes of a Rockefeller. Walking through his factory observing a worker dropping melted lead to seal a can. He asked the worker how many drops. The worker responded when it looks done.

    "Rockefeller had his minion's find out exactly how many drops of lead where needed. He then had all the cans sealed with that exact number. It was on such a large scale that he saved a lot of money on material and time.

    My scale of business wasting a dozen leaf bags. Spilling 8 oz of fuel. Are numbers to small to matter.

    Though I want to know that if I used 10 boxes of leaf bags, 6 six packs of 2 stroke oil. That next year I will buy 10 boxes of bags and 6 six packs of oil because I do not want lose time, put on extra mileage to make multiple trips to buy supplies.
  7. peeklandscaping

    peeklandscaping LawnSite Senior Member
    from CT
    Messages: 306

    that makes sense
  8. 32vld

    32vld LawnSite Gold Member
    Messages: 3,983

    Every year there will always be small purchases.

    A shovel breaks. Need a new broom. Buy a pair of pruning shears, gas can, spool of line, edger blades.

    Who knows what will break or be needed next year. Though small items will be needed again. A pole saw would fit here.

    I do not itemize smalls individually. Though if I spend $200 on small items this year. Not adding a 2nd truck next year. It would be safe to guess that I will spend $200 on smalls again next year. So I would divide the cost by the hours worked and add that sum to my total hourly cost.
  9. XC skier

    XC skier LawnSite Member
    Messages: 216

    The answer to this question is very simple. Go to a rental center in your area and ask for a price list. The rental companies have already figured this out so there is no need spending hours reinventing the wheel. You can extrapolate the hourly equipment cost from their daily charge. The numbers will be far more accurate than if you were to try to figure them out on your own, just Consider that there is a profit margin built into their charge.
  10. Kelly's Landscaping

    Kelly's Landscaping LawnSite Platinum Member
    Messages: 4,725

    Hours vary majorly through out our season. Lawns start off easy in April then explode and for 6 weeks or so I put 30 hours a week on the mower I use on my crew. Then that drops off to about 20 hours a week this last for a month or two. Then August hits and one of two things happen we get drought and the hours drop to 15 a week. That has happened 2 times in the last 11 years. The other is its a second spring and we get a nor'easter that dumps a ton of rain and everything looks like May again. Then your right back to 25-30 hours a week on my mower. That has happened 9 times in the last 11 years. But the bottom line is 500-600 hours a season go on the mower and the cutting weeks vary from as few as 25 to as good as 30 weeks. We also use that mower from spring and fall clean ups but thats included in that 500-600 hour number. So it does that in a span of 40 weeks a year. So the math says 12.5-15 hours a week for the work season. Personally if rather just have annual hour numbers for each piece of equipment.

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