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Old 11-17-2007, 11:33 PM
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This is where alot of guys can go wrong in buisness. everyones rate has to be different based on where they live and their overhead. If the prevailing rate where i live is $45 per hour and I start a buisness and begin basing all my estimates on $45.00 per hour. What is my profit? It is not 45 per hour. What if my overhead ends up being $55 per hour because i dont work everyday, or have all sorts of stuff financed. If i have the ability to work 40 50 hour weeks I have the ability to work 2000 hours of which not all are billable. So lets say I can bill 80 percent of my time 1600 hours for the season. If i had a 900 a morgage a 400 a month truckpayment, 200 a month phone bill, a 100 month advertising, 100 cell phone, 400 month equipment loan, utilities 300 per month. insurance 300 month $2700 per month or $32,400 in fixed expenses that you would need to pay whether you worked or not $20.25 per hour in fixed exp. Variable expenses things that change from month to month would be gas, supplies labor etc. So add your labor cost say you pay yourself $20.00 per hour and you use $40 per day or $5.00 per hour in gas thats adds another $25.00 in variable costs bringing your over head up to $45.25. now lets say for the month of may you worked 160 hours (4 weeks at 40 hours that you could bill). You ran over a piece of metal causing a flat tire on your truck $150.oo you had to replace oil, filter and 3 blades on your mower $60.00 , you put a rock thru someones window $200.00 , the shrub you bought for 40.00
This adds an additional $2.81 per man hour this month so if your prevailing rate was set at $45.00 your per hour rate would be too low. See what i mean people need to know their exp and how many hours they can bill per year to find that.
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