How to find out your per man hour

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

  1. kemco

    kemco LawnSite Silver Member
    Messages: 2,309

    Especially when you have your "talkative" customers. I have had to explain multiple times I'd love to chat but I can't afford to. You see those 3 guys in my truck, well it is costing me a dollar every minute we stand here and talk. I may need to raise your price (I a light-hearted manner so they hopefully get the picture). If they continue I drop them.
     
  2. OP
    OP
    Elite Lawn Pros

    Elite Lawn Pros LawnSite Member
    Messages: 83

    I have a spreed sheet built to check jobs to see if they are profitable if you would like it. I’d have to email it unless someone knows how I can attach it. Says it doesn’t have an allowed extension
     
  3. kemco

    kemco LawnSite Silver Member
    Messages: 2,309

    Fyi service autopilot does this for you if you're in need of a system. No I'm not a rep just wanted to throw that out there. I can immediately tell what my profitable yards are and those we are not hitting in the budgeted time frame.
     
  4. m_ice

    m_ice LawnSite Member
    from IL
    Messages: 212

    Only pay taxes on profits
     
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  5. OP
    OP
    Elite Lawn Pros

    Elite Lawn Pros LawnSite Member
    Messages: 83

    Here is the spread sheet. Very helpful to see if you need to keep a customer, raise the price or its already a profit job.
     

    Attached Files:

  6. TYTILIDIE

    TYTILIDIE LawnSite Member
    Messages: 97

    The big dogs do it slightly differently.

    It goes like this;

    You are looking to figure out your H.A.W.S. "Hourly Average Wages". In my opinion, pricing a job based on your needs is dead wrong for a big reason. You are basically saying screw the customer and the industry. Reason why is because if your service is apples to apples compared to the next guy, why should you charge less because you don't need the money or, charge more (a lot more) because you need the money.

    Let me explain. If you are a one man show, you merely need to know your H.A.W.s. This how you'll be completely fair. Now, you have to simply imagine you had helpers. Figure you pay two guys, one $18/hr and one at $14. 18+14=32$/hr. Now divide by 2 and you get $16 and add 25-30% (for burden, this is taxes and insurance only). At 25% burden, your hourly average wage becomes $20/hr. So now, you know what one guy costs per hour. That is going to be national average, or at least should be.

    What you have just done is put your cost into a different bracket, a sensible one. Knowing your cost is always top priority. I calculate H.A.W.s monthly and utilize changes annually. Most companies shoot for 40% gross margin. I shoot for 50%. I think 50% is the magic number for proper growth. Gross Margin for bigger companies that have systems in place that work is Revenue - Labor (including burden) - Direct costs (this is pretty much just chemicals if you apply them, or sub them out). Everything else INCLUDING FUEL is overhead!!

    Some people are going to say they operate at 65% and that's great but, it's an unrealistic number for pricing purposes. Always price as if you have at least 2 guys in a truck. Seems $40 per mow is about right these days, the numbers don't lie.
     
  7. OP
    OP
    Elite Lawn Pros

    Elite Lawn Pros LawnSite Member
    Messages: 83

    So I actually lucked out and befriended a guy that runs about 2.5 million a year/ 6 full time crews plus owns a Scag dealership (Gross & includes spraying) He really opened my eyes but what he came to helping me was the same thing I did. We just came to it a different way. I’m around $65 a man hour and solo around $1.08 a min. 2 of us (15hr for the worker) then I’m at $1.50 a min. Where I was going wrong was not having everything in overhead instead fuel, drive time and equipment depreciation was actually in my direct cost. Basically unless it pertains to that job specifically then it’s overhead. I was confused at first but once it was written down a light in my head went off lol
     
  8. TYTILIDIE

    TYTILIDIE LawnSite Member
    Messages: 97

    BINGO! It took me YEARS to get this and I have a consultant working with me. He probably explained to me 10 times but one day it just finally clicked. This is a guy who worked for Valley Crest for 34 years. Smart smart guy. He has done me wonders.

    As far as my math goes, we can all get to the same place in different ways, the way I explained it is simple. Looking at cost per minute in my opinion is wasting time, what do you really gain from that? Really just taking another step. People (including myself) spend way too much time on the science. The formula exists and it is really simple. I know a guy who runs a 3.5m company. Nice guy, real smart. He knows what it costs to run a truck per year, a guy per year, a string trimmer per year. He bases everything on what to bill out for those expenses. I say what the hell for? If your costs are inline and your margin is legitimate to the industry, you can't go wrong. Of course, you should always know your costs but what I am saying is, breaking it down to atoms is a little silly.

    I can remember before I had my consultant always breaking everything down scientifically and would spend hours on this crap. I spend that time doing more important things now. The system works. Sometimes I like to think I did all that just to see how "smart" I am lol.
     
    Last edited: Jul 3, 2019
  9. TYTILIDIE

    TYTILIDIE LawnSite Member
    Messages: 97

    Can't figure out how to delete a post.
     
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  10. Mattmowsgrass

    Mattmowsgrass LawnSite Member
    Messages: 139

    right, when I do taxes and write offs. I dont pay taxes on expenses.
     
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