Whats the average overhead

Discussion in 'Business Operations' started by rescuedlawn, Feb 16, 2014.

  1. rescuedlawn

    rescuedlawn LawnSite Member
    Messages: 82

    This may be a little personal but what is the average overhead on the lawn mowing side of the business? I know how to calculate but I don have enough to go on at the moment. Im just looking for an average % rate after fuel and insurance and all the right stuff.

    I understand that is all depends on the routes and effeciency. Im charging an average of $65 per hr of me being on property. This does not include travel. Is that reasonable?
  2. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,269

    You mention taking out insurance? Insurance is part of your overhead.

    You might want to clarify your question.
  3. Cadzilla

    Cadzilla LawnSite Senior Member
    Messages: 903

    Run legitimately I suppose a 50% profit margin is fair if you are a solo operator.

    If you have employees you can watch your PM sink like a stone.
  4. clydebusa

    clydebusa Inactive
    Messages: 1,660

    I make mine 67%.
  5. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,269

    First - the OP was asking about overhead as a %, not net profit.

    Second - profit is after all expenses, including a fair market wage for yourself. 50% is not attainable if you are figuring a fmw for yourself.

    Third - are you speaking from experience, or guessing, on profit with employees?
  6. TPendagast

    TPendagast LawnSite Fanatic
    Messages: 11,099

    overhead are fixed costs and not a percentage of anything

    Travel time is not part of overhead and wouldn't get figured into your hourly rate as a result.

    Direct costs are different than overhead, and are subtracted from the gross profit to get a net profit.

    The directs costs will vary depending on crews, routes, efficiency etc.

    Overhead is like the cost of the building rent, the light bill, insurance and don't fluctuate (or at least not as volatile as direct costs.)

    The percentage you are talking about is Gross Profit Margin and Net Profit?

    GPM can vary heavily from company to company.
    Some guy who lives at home with his parents and doesn't pay rent and runs his company out of their garage vs. Grunder Landscaping with a world headquarters you can see from space.

    It's going to be different…so there is no 'average'.
    This can only be calculated on a case by case basis.

    $65/hr for a solo operator is however, in my humble opinion, extremely high… what equipment are you running a 72" jet powered monster drinking fuel through a holley four barrel?
  7. snomaha

    snomaha LawnSite Bronze Member
    from midwest
    Messages: 1,269

    TP - why aren't overhead costs a percentage of revenue? I think it's a relevant number. Fixed costs don't change often, but when they do, it tends to be dramatic - moving to a new shop, hiring an office admin, hiring a management position....

    Direct costs are subtracted from total revenue to get GP - overhead is subtracted from GP to get net profit.

    If posting in the business management section, I would assume we aren't talking about the 16 year old living with his parents.

    OP - do some research online to get industry benchmarking. Planet and lawn & landscape would be a good start.
  8. Efficiency

    Efficiency LawnSite Bronze Member
    from zone 6
    Messages: 1,857

    TP doesn't often give good advice. Just let it and him go.
    Posted via Mobile Device
  9. LandFakers

    LandFakers LawnSite Fanatic
    from CT
    Messages: 6,309

    Hourly wages are not the same around the country and are greatly dependent on where you live and how much you do but I do actually bill out at 65/hour. I have the equipment and overhead to justify it. I wouldn't be able to get a rate like that pushing a 21" mower around though, heck even if I only had my 36 I wouldn't be competitive in the market. I think your hr rate it perfectly fine as long as you are able to efficiently do the job.
  10. TPendagast

    TPendagast LawnSite Fanatic
    Messages: 11,099

    I think you're in the minority with that opinion.

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