How to find out your per man hour

Discussion in 'Bidding, Estimating and Pricing' started by Elite Lawn Pros, Jun 15, 2019.

  1. Elite Lawn Pros

    Elite Lawn Pros LawnSite Member
    Messages: 83

    I’ve talked to some people and reading up on forms here has helped a bunch but I haven’t seen an actual break down. My issue is I have a steady income so number crunching wasn’t in my view, it should have been. While I’m guessing for pricing, I’m still around the market price in my area. I wouldn’t unload for less than $40-$45. Well now I’m wanting to go full time and I’m needing help with the break down of the per hour (man hour rate). So this is what I’ve come up with and I’d like to know thoughts on it (See form below). My issue is some people tell me take my pay, helpers (Add to theirs,I pay them 12hr but charge 14hr for them) add that together and that’s my labor rate. Then I’ve been told do $1 per min for me $1.20-$1.50 for two of us and $2 for 3 of us.

    Second thing is I’m wanting to learn to bid buy square footage because it’s more accurate. 1st I need my per man hour then...... we’ll im not sure how to bid by square footage. Any help is greatly appreciated!

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  2. Mattmowsgrass

    Mattmowsgrass LawnSite Member
    Messages: 139

    To determine your hourly rate, first decide how much you'd like to make profit, let's say $45.
    then determine your hourly operating expenses, let's say it $10. add them together, that's $55 and hour, but that does not include taxes, that's about 30%, so divide $55 by 70%, the equals $78.57. That's your hourly rate. If you have a helper double that. Because if a job would take you 8hrs by yourself, you would make, $628.56,before taxes, your helper should in theory, cut your time in half, if you charge 14 for your helper, now your making, $360.28((78.57×4)+ 14×4) before all expenses associated with your employee. you helper should make you money not cost you. So why charge 14 for your employee when you could make much more. Charge $78.57 for both yourself and your employee. That's $157.14 together. Now, your still making the same in 4 hrs with two as you would by yourself in 8, yes some of that cost pays for the employee, but your done in half the time, now imagine you went to another 4 hr job. Thats how I do it.
     
    Last edited: Jun 19, 2019
  3. Mattmowsgrass

    Mattmowsgrass LawnSite Member
    Messages: 139

    I also forgot to mention your hourly expenses should not include, employee cost because your charging your customer per man hr to cover them. and if you take your gross income of $628.56 and subtract 70%, what's left is your taxes, $188.57. This is the simplest way to determine you man hr. and you made 45 profit per hr. This does not include, what you put into your business savings, and you should put some into your business savings. This also assumes you taxes are 30%. I do this but I do it at 33%. and I work by myself, and have low overhead, it's hard to actually make a per man hr that high, especially when mowing.
    I'm not a cpa, or accountant, and this isn't advise, I'm just sharing what works for me. good luck.
     
    Last edited: Jun 19, 2019
  4. Chadjoh

    Chadjoh LawnSite Member
    Messages: 21

    I agree with Mattmowsgrass. You should charge the same per man hour whether it is you or your employee doing the work. I tend to charge a little less for an employee when figuring for a job I really want. However that is just another way of undercutting competition and driving the mowing price down in your area. This eventually hurts everyone.
     
  5. kemco

    kemco LawnSite Silver Member
    Messages: 2,322

    I need to do an update on the same. I think it was about 3 years ago I calculated all the man hours worked and divided by the gross take to get an hour and minute cost per man hour. An invaluable tool. At the time it was a buck a minute almost exactly for a 3 man crew. That's cost has nothing to do with profit. I was at the time wanting to know what I spent on a job as well as sitting at a rail road crossing for 10 minutes. But to do that you've got to know you and your crews hours for the year.
     
  6. Mattmowsgrass

    Mattmowsgrass LawnSite Member
    Messages: 139

    My overhead is typically around $5 an hr. I want to make $35an hr, and save 33% for taxes. That's simple, 40÷66%=60 and some change.
    So I charge at 60 per hr, When I quote a yard, I determine this looks like it will take me about 40 minutes, Charge $40.
    Often though, I'll charge 35, or so, thinking it will take me about 35 minutes. and it may take me around 40, so I dont always make my 35 per hr. but I try.
    I dont bag anything, But I would for an extra charge.
    If I do a job that cost for materials. I double retail price and add that to my quote. If I use coupons or my military discount at Lowes etc, those are my discounts and dont get passed to the customer. So a $5 dollar bag of mulch, I charge $10 for use my discount, I paid $4 for, customer pays $10 still.
    Factor, the price of mulch in to the quote, because if I charge as a separate line item. I need a sales permit, and charge sales tax here.
     
  7. OP
    OP
    Elite Lawn Pros

    Elite Lawn Pros LawnSite Member
    Messages: 83

    I’m around $63 a man hour BUT I try to recover my unbillable hours, estimated 20%, so that puts me at $75. Now with that said that’s only pushing out 1500 billable hours. Starting in the spring I’ll track every billable hour to hopefully get that number down. I’m at $12.63 an hour to break even. Hopefully I have the work to get to $4.21-$5 (4500hrs). T

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  8. OP
    OP
    Elite Lawn Pros

    Elite Lawn Pros LawnSite Member
    Messages: 83

    Also I assume you add your windshield time and fuel in to the price. I think solo I’m at $1.03 a minute.
     
  9. Mattmowsgrass

    Mattmowsgrass LawnSite Member
    Messages: 139

    I factor my windshield time and fuel into my overhead every house I service is about 3 mins or less from another, so not alot of windshield. as far as invoicing, maintenance etc. unkillable time, i cant always recoup that. but I only spend maybe an extra hr or so a week doing "behind the scenes" work. however, quotes I make nothing from and only cost me, but I'm planning to get a new customer.
     
  10. Chadjoh

    Chadjoh LawnSite Member
    Messages: 21

    Wow! This discussion is really helpful for me. I kind of fly by the seat of my pants on figuring overhead and hourly rates. My profit margin has been disappointing. I now see that I have not been charging enough. I try for about $60 per hour but fall short on a few jobs. Along with not having figured in all my driving time I am averaging more like $45 to $50 per hour. Might have to see if I can adjust prices start of next season or let my worst paying jobs go.
     

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