True labor cost

Discussion in 'Business Operations' started by grassmasterswilson, Jun 12, 2012.

  1. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Messages: 7,961

    medical /dental at 6% ? is that through a payroll service cause I am getting no where near that. Maybe I am just not paying my guys enough :laugh:
  2. DuallyVette

    DuallyVette LawnSite Gold Member
    Messages: 3,961

    I was thinking in terms of what it actually costs me each hour for an employee to be working at a customers property. I understand that this "cost" doesn't include equipment use. example: In a 40 hour week, my employees will be standing on a customers property 32 hours. The rest of the time, they wiill be riding in the truck, or maybe washing the truck or loading equipment and getting ready to go to a customers property. You can break it down into as many tiny pieces as you want, but roughly...a $10 an hour worker costs me $20 for every hour he is standing on a customers property. Plus the cost of equipment, etc.
  3. muddywater

    muddywater LawnSite Bronze Member
    Messages: 1,813

    I would be interested to see your breakdown, but i guess everyone's cost is different.
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  4. Manorscape

    Manorscape LawnSite Member
    from PA
    Messages: 123

    Slightly old thread I came across.

    Hopefully you determined your actual cost per hour for an employee. As a general rule I bill out at 3x what I pay a guy, or 2x what his actual cost to me is. I know many guys charging 3x actual cost of the employee, but that really drives up your estimates. As an example, a basic laborer going at $10 an hour bills at $30 (duh), but another guy I work around often bills out $45 for that same laborer. To me, that laborers limited abilities dont warrant billing an extra $15/hr., and my estimates are always lower. I also don't bill out premium time for long drive times, just a travel rate so to speak. This is just a no brainer to me because sometimes good work is a distance away, and I want it. I don't want to punish a client for living far from me. I've found I use a set of truck tires every 2 years regardless. Trying to justify these wear and tear expenses is nickle and diming people. One exception I had to this rule was a guy who wanted his vacation home landscaped. He knew ahead of time there would be a travel cost to get materials way out there. He also let us stay there 3 of the 5 nights to save us time, and that was sweet. Fully stocked bar etc...anyway I digress. This would be about the only exception to the "dont nickel and dime" rule. I charge for drive time, but not a premium rate.

    I may bill out 33.33% less on laborers than the competitor I mentioned above, but I am doing nearly 3 times the work and not eating any of the work like a lowballer would fairly often.

    I am OK with making a 100% return on my cost plus then premium rate for myself - which varies depending on task and season. I keep my personal rate a little lower for example in July/August when its hard to get any gardening work, and keep it maxed out when time is a premium (April-June then again Sept.- November).

    EDIT: Also, doing quality work for the right price will get you far more work. Nickel and diming and/or billing out too much for laborers that a customer can see aren't worth their rate is a sure fire way to get no repeat business or referrals.
    Last edited: Sep 21, 2012
  5. Duekster

    Duekster LawnSite Fanatic
    from DFW, TX
    Messages: 7,961

    I agree that these numbers should work.

    There are Labor cost
    OH cost

    You have to reflect the OH cost in your labor cost. Even in construction or installs, the OH should still be mostly part of the labor.

    Maintenance cost on equipment does add up.

    Calculating these cost is the second step after figuring labor cost.

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