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Overhead charges

Discussion in 'Business Operations' started by Elks, Feb 2, 2009.

  1. Elks

    Elks LawnSite Member
    Messages: 167

    Do any of you charge an extra % for overhead. I need to talk to my accountant about it but i figured i would mention it to you all first. What do you all charge to recover overhead
  2. Flow Control

    Flow Control LawnSite Bronze Member
    Messages: 1,267

    Of course you have to charge to recover your overhead. The % will vary biz to biz depending on multiple factors.
  3. LB1234

    LB1234 LawnSite Gold Member
    Messages: 3,208

    I don't understand the question:dizzy:

    You definately need to charge to recover your overhead....I'm really confused about the % over part. There is no 'set' percentage to set for your profit. A lot depends on what you want to get, what you can get, how competitive you want to stay, etc. I yield a much higher profit on mulch installations than I do say a paver patio installation.

    I do for job materials...usually 10% for all materials except for plants. Plants with a warranty I get 150% over my cost. Example, it costs me 100 for a plant it costs the customer 150.
  4. Elks

    Elks LawnSite Member
    Messages: 167

    I believe that the workers comp and general liability insurance is charged based on a % of your profit and the # of employees you have or your payrole. There must be a simple formula for figuring your total insurance cost by a % of the total cost and also another % to charge for other overhead.Then add what % you expect for profit.
  5. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    this is better understood as saying NOT OVERHEAD CHARGES... BUT MY PRICE....

    some people have big fancy shops in the middle of town, they have to charge more to pay for that shop.
  6. Fiano Landscapes

    Fiano Landscapes LawnSite Member
    Messages: 69

    This is where most new business owners struggle the most, with direct and indirect costs. Each project or job that we do has both of these costs involved in the process. Direct costs are just as it says directly related to a job.

    Such as: You do a project at a customers house. It's a small mulch job needing 5 yds of mulch. Anything you buy that is specific to this job is a direct cost.

    Mulch, Snapshot, Fertilizer, etc.

    You wouldn't have had to buy these items unless you were to do this project. These are direct costs of this project. Now indirect costs are the things that aren't directly related to one specific job.

    Such as: Office supplies, Postage Stamps, Business Cards, Insurance, Workers Compensation, Tax filing, Office Equipment, Internet Service, Cell Phone Service, Owners Salary, Maintenance, Future Expenses, the list goes on and on.

    These such things are your indirect costs of doing business, or your overhead. The total of these things need to be broken down, and divided amungst your customers, or projects. Ours is broken down into a charge for each man hr of service. If your company is not doing this, that is a major problem.
  7. Flow Control

    Flow Control LawnSite Bronze Member
    Messages: 1,267

    NC may be different but in Ohio but both workers comp and gl insurance is based upon your payroll and nothing to do with ones profit.
  8. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    Same here in Texas, if ya give a guy a raise, you pay more insurance.

    and look out for government work....

    the insurance is out of site
  9. daveyo

    daveyo LawnSite Senior Member
    from N.J.
    Messages: 907

    Wouldn't that make the cost of your plant $250.00?
  10. bohiaa

    bohiaa LawnSite Fanatic
    Messages: 5,220

    I think he means like a auto shop does.... 35.00 shop fees....

    Took my truck to ford once they even charges me for shop cleaning after they done the work. trash fees. and yes there was a tape fee.

    they had to tape up some wires and then clean the shop up after.

    this only enraged me.

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