questions on overhead

Discussion in 'General Industry Discussions' started by jsf343, Feb 2, 2007.

  1. jsf343

    jsf343 LawnSite Bronze Member
    Messages: 1,785

    I am trying to get a more precise number for my overhead and what this years hourly rate should be. I am not very good at this stuff (trying to get better handle on expenses and what I should charge) and am looking for advice from those of you who are. here is what I have listed and I know it has been kind of broad brushed, keep in mind this is for a 2 man crew...
    * wage- $24.00/hr.
    * Workman's comp-$4.00/hr.
    *equipment cost-$6.00/hr.
    * Fuel-$3.00/hr.
    *savings-$4.00 /hr.
    *tax-4.00/hr. - Should I actually be including this? I think so
    * Other - $6.00/hr. - this covers anything missed I hope
    * I want a profit of at least $30.00/hr.
    total $85.00/hr.

    first question... do you see things that should not be in here, or things that should be?
    equipment, tax, savings, and other I estimated.
    The total seems a little high, or is it? I am curious about others overhead and hourly rate. Please share if you don't mind.


  2. Allure

    Allure LawnSite Senior Member
    Messages: 426

    here is a list of overhead costs from a course i just took in estimating

    overhead costs.jpg
  3. Total.Lawn.Care

    Total.Lawn.Care LawnSite Senior Member
    Messages: 840

    First, you need to know your per hour cost of these items and you need to know the difference between Fixed and Variable Costs.

    Fixed Costs would be Ins, Equipment, Advertising, etc. You pay this, either the same amount every month or one amount for the year. Divide this by the total, workable hours in a given time frame and determine what these fixed costs are.

    Variable costs will be your fuel, wages, WC Ins, etc. You determine this by the about of workable hours that you will utilize. The more you work, the more these costs will be, however they should be consistant on a per hour basis.

    Now, set a plan for your workabel hours, apply the Fixed and Variable Costs and then adjust your rate to the desired profit per hour. Remember this as well. You want to charge your per hour time as "Per Man Hour". Meaning that if you have a 2 Man Crew, and you bill at $50 per hour, that would be per man hour, or in total $100 per hour. Because some of your costs you only pay once per hour (equipment, ins, etc.), then you profit more form the labor of the second man.

    That is the beauty of owning a business. The more "productive" man hours you can bill, the more profit you will make.

    Now, in your model, take out the Profit and savings. Lets assume your advertising is covered in the Other and everything else works out okay. Yoru costs for the first man is about $30 per hour. If you charge $50 per man hour you profit $20. For your second man, you only add the wage and the WC Ins, making your second man cost about $15, you charge $50, profit $35. Now, you will profit $55 per hour, you can save $10 per hour and still clear $45 per hour.

    Now, you just need to figure out your numbers.
  4. topsites

    topsites LawnSite Fanatic
    Messages: 21,653

    As a rule, profit should be 10% or less.
    That would set you closer to $60 pmh, which, without experience or knowledge you will likely find rather difficult to close on quotes.
  5. jsf343

    jsf343 LawnSite Bronze Member
    Messages: 1,785

    actually this is based on per hour. I didn't do it per man hour though. Thanks for all the info.
  6. jsf343

    jsf343 LawnSite Bronze Member
    Messages: 1,785

    Well I did it by myself for 5 years, got in a pretty bad car wreck 2 years ago and have had to hire crews since that time. its not that I don't have the time in and experience but I only do maintenance and it is hard to charge prices that high. Not impossible just difficult.

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