Adding Overhead And Profit To Labor

 
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Old 04-23-2009, 11:29 PM   #1
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Adding Overhead And Profit To Labor


I recently passed a contractor's exam for tree service. My license should be issued shortly, but in the meantime I am trying to figure out what and how to charge for labor.
I pay my guys $15 per hour. I don't yet know what this will cost me once I pay fica, state of ca and worker's comp. So here is my question. Do I add all of those additional charges for labor into my overhead and charge my customers $15 per hour for labor? Or should I figure out what 1 hour of labor costs me and then add overhead and profit to that figure?
For example.. If I pay my worker $15 per hour and then with all of the additional fees (taxes and insurance) it comes out to about $30 per hour, do I then add overhead and profit to $30 per hour? Does this sound as confusing to anyone else as it does to me? I know I would add general liability ins to overhead, but should I add workers comp and taxes to that as well?
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Old 04-23-2009, 11:44 PM   #2
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Re: Adding Overhead And Profit To Labor


If you don't figure in ALL your costs. you will lose money.

Example 1 hour of work you don't figure it right based on 1 guy working and job complete. you figure $50 you pay your man $15 and you clear $35 right?

Just guessing your tax rate and workers comp.

your $15 is prob closer to $22
Did you drive out one time to bid the job. Fuel cost/distance traveled.
Did you get the job and go back? Fuel cost/distance traveled
Payed said labor while he was sitting in the truck on the drive $$
Overhead = monthly advertising expense as well. Phone book, direct mail, website hosting, etc. all play a part in the bottom line.
Gen liability you mentioned as well.
Truck payment?
Truck insurance?
What if you have equipment failure? got a cushion for that?

Once said and done you prob clear $5 (If that)

Think you underbid?

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