What's your break-even point?

Discussion in 'Business Operations' started by gpenny, Jan 24, 2009.

  1. gpenny

    gpenny LawnSite Member
    Messages: 26

    Just finished crunching the numbers for 2008 and have calculated what I need to charge per man/hr. to cover all expenses except my salary. I took my gross and subtracted all expenses (everything from A-Z!!) and then divided by the total man/hrs. worked. I have one full-time employee. My break even hourly rate is $17.56 per man/hr. Anything less than that and I am losing money ! Have any of you guys figured out what your "break-even" point is?
  2. Az Gardener

    Az Gardener LawnSite Gold Member
    Messages: 3,899

    You will find it changes based on how many employees you have. I don't work in the field so my number is high. With 6 men at a 82 % production rate it is 55 per hr. When I have 9 men at the same production rate it drops to 37 per hr. Now this is labor only it does not include $$ I make off parts or fertilizers etc.

    Its safe to say it is a moving target but at least you are doing the right thing looking at the numbers.

    Oh just a thought did you use your actual costs or did you plan to replace your equipment after so many hours and budget for that? Even though you might be working out of your house now do you have $$ budgeted for a shop and utilities? I could go on but I think you get the picture. Isn't ignorance bliss? :dancing: No offense ment. Glad you are looking at the numbers and sharing. You are asking the right questions.
  3. gpenny

    gpenny LawnSite Member
    Messages: 26

    Thanks for the reply. Yes it does include equipment replacement for a typical year. My shop is at my house and I kind of like it that way. What really surprised me when I calculated this number was how grossly I was undercharging on some yards that I assumed I was making a good profit. It was very enlightening to say the least! I have already made some changes to my pricing structure for this spring.
  4. Tyler7692

    Tyler7692 LawnSite Bronze Member
    Messages: 1,086

    gpenny, can you elaborate on your system for coming up with this number?

    I mean, for me, I have a maintenence side and a install side of the business, with some costs and equipment that are specific to one side or the other. How do you separate the costs?
  5. gpenny

    gpenny LawnSite Member
    Messages: 26

    To my shame this was the first year I had actually calculated this number. For 2008 I just combined everything for simplicity sake. Even as I was doing it I realized I should separate lawn maintenance from landscaping projects and even fert and squirt. However, the maintenance part of my biz is about 85% of the total with fert and squirt about 10%. I kept a log book all year with the exact times spent on every yard, so the man/hours part of the calculation was easy.

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