It can be a very difficult task trying to figure out what your actual operating costs are per hour. So many variables are involved with this process. With such complexities, it is no wonder that many new business owners fail to ever find a consistent price they need to charge per hour to cover all their expenses. However, even though this process may seem complex, it can be accomplished if you just take some time to think it out. Here is a great example from the Gopher Lawn Care Business Forum that steps you through the process for one piece of equipment.
One lawn care business owner wrote “to accurately price your lawn care estimates so that you make a consistent profit each and every time, you need to know your expenses. Now sure you have probably heard that before, but if you were asked how much it is costing you to operate something simple throughout the year like a line trimmer, would you know? If you don’t know the cost for that, there is a good chance you are missing out on the costs of a lot of other expenses as well.
Let’s look into how a landscaper would figure out this simple cost. I would suggest the first thing you do is find out from your dealer what kind of life expectancy your line trimmer has. There are a few other variables that are important when determining the machine cost as well.
- How many hours per year do you expect to use it?
- How much are the yearly maintenance costs?
- How much is your yearly fuel costs?
By knowing how many hours your machine is expected to last and by knowing how many hours per year you anticipate your line trimmer to run, you can get a better idea of how much the machine will cost you per year.
Example: Say the original cost for a trimmer is $350. The expected fuel cost per year is about $155.40. The yearly maintenance cost, including a yearly tune-up is approximately $125. Misc costs (string, heads, etc) $25.
Now let’s say you expect to use the trimmer 600 hours per year and expect the trimmer to last for 1,800 hours total (3 years), you figure the costs like this:
$350 base cost divided by 3 years (1,800 hours life expectancy, 600 hours use expected per year) = yearly base cost of $116.67 + $155.40 (fuel) + $125 (misc costs) + $25 (string) = $422.07 is your yearly cost. Since you expect to use the trimmer 600 hours per year, you have to divide the $422.07 by 600 hours to find the cost per hour to operate = $0.7034 cost per hour.
If you can take this knowledge of how to break down landscape equipment costs per year, you can do this with your truck, trailer, mower, blower etc. Add them all up to find your cost is per job, add the profit per hour you need and then you get to see a truer picture of what you need to charge per hour to make a profit.
I know it looks complicated but if you sit down and do this once, you can apply it all year long.”
Order the bookÂ 90% Of Lawn Care Businesses Fail In Their First Year. Learn How To Survive With These Tips! today.
Use these lawn care and snow plow estimators for your Android phone.