Need Hourly Rate Help..

ecooke21

I am trying to figure this out, but I;m stuck..My company needs to "Make" atleast $5000 a week to pay our overhead, and a 40 hour work week for 4 employees..How much should I be billing for $125 an hour? or $31.25 per man + profit?

Double-A

ecooke, you're barking up the right tree, but I lost you at $125.00.

You need $31.25 per man (4 men) for 40 hours just to break even and cover your overhead, trouble is, can all 4 of you bill out 40 hours of work per week? If not, then you need to take 5k, divide it by 4, then by the number of hours you can bill per man, per week.

That will give you your true break even point on your overhead. Now, add to that your markup and profit and away you go..

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Teetorbilt

The national average is 27 billable hrs. per wk. Pretty sad, eh?

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rservices

27 hours national..
where did you get those number, I own a small service co. and my goal is 30 billable hour. I figured any more I would have to hire a helper..
(not to sound like a slaker) most of my work is mornings in restaurants. I need to be done by lunch

STUMPFOOT

Are we talking about any kind of contracting at 31.25 an hour? Or something specific?

Gordo

Lets do it this way.

What is your daily overhead?

How much do you pay your guys?

How much do you want to make a year working 240 days a year?

Answer these quetions and we can take it from there.

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rikanit

Is this for a specific service related industry or a multi industry average??

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Rick Hayden
www.haydenlandscaping.com

STUMPFOOT

Thats what I was asking.

ecooke21

1. $1000 (that included the payroll, for 4 guys)

2. $60,000-80,000

3. four employees total(Myself, Father, John, Nelson,)

My father handles the business end of thing (estimates, customers, etc.)

I run the job site, with two laborer/carpenters

we are about to hire a second carpenter to run a second "crew": (him and one laborer/carpenter) Me with one laborer/carpenter.
We have the volume of work, just not enough man power to get it done..thats why we are hiring Jeff.





Father: $50,000

Me: $50,000

John: $32,000

Nelson: $32,000


(Jeff: $37,500)

Trucks/insurances, etc: 6000 per month

Gordo

21,

I did some calculations. Based on your payroll (without new guy).

Your yearly=$164,000, so assuming 240 working days.....payroll will be

$683.00 a day....add in payroll taxes and it is ball park additional $140

so you have approx. $823.00 in overall payroll.

Then you have $6000 a month in trucks and insurances, so assuming 240 working days....your daily OH is $300.

$823 + $300 = $1123.00 (11% more than your original quote -WATCH THESE LITTLE MISTAKES THEY WILL KILL YOUR BUSINESS)


Based on these numbers you have given and my calculations(+/-)

You need to charge $1123.00 /day. Now the important part is ADD IN NET PROFIT. 30-40% is a good % to run a comfortable business that isn't wondering each month how it is going to meet payroll/surprise expenses.

$1123.00 + ($1123.00 X 40%) = $1572.20 a day

$1,572.20/day divided by 8 hours a day = $192.53 per hour

$192.53 divided by 4 people = $49.13 per hour per man.


There you have it. IMO based on what you have said concerning your work load it would be better for you to raise your rates ($49.13 man hour) to a higher level rather than hiring more employees. This way you will raise your net profits % even higher.

Most of my friends that have/had big companies always say they made more money when they were small.

They say stay small or go really big. It is that middle area that kills you.

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maj

I think we're still waitng for an explanation Teetor???

I too am confused with that number.

I bill or (get paid) form the time I leave my driveway in the morning to the time I get done at the end of the day. My help is usually 40 -45 hrs/wk, while I bill about 50-60/wk for myself.

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joasis

If we are working by the hour, my payroll and billing for that crew are equal numbers. If we are on bid jobs, I track the numbers, but keep on schedule and it works out.

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mdshunk

That's about right for my business. I've just adjusted the hourly rate to compensate for that. Out of an 8 hour day, at least 1 hour is spent doing non-billable tasks (loading the truck, fueling the truck, getting instructions, etc.). It doesn't really matter how many billable and non billable hours per day you have. As long as you know that ahead of time and have compensated the rate for it. I know that when I did HVAC work, there might have only been 5-1/2 to 6 billable hours per day, when you considered windshield time. That was recouped in the first hour charge.

maj

I'm just trying to figure out how the 27 or 30 billable hours per week work?

If you are paying your help for 40-45 hrs/wk, but only billing for 27, how does that work out? Perhaps that answers the question of how some contractors can charge $80-$120/hr?

Even bid jobs, such as a whole house, I am figuring 5 days/week @ 9 hrs/day = 45 hrs/wk. That would be crazy to only bill for 27 hours per week!!! I would have to figure %60 increase in hourly rate.

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maj

There's the difference..... See now, I bill the customer for that, or take it all into account when figuring a bid. If I need to load tools or the trailer with scaffolding because it is needed for a specific customers job, Why shouldn't they pay me for that time? Why should a person have to give away hours just because you are not ON the job. Time spent off the jobsite but FOR the job should still be figured into the price.

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Gordo

If your employee works on the job 40 hours and you are billing at 27 then your system is broke. Either you aren't providing the materials, directions, management that they need. This is for remodeling.

For service those unbillable hours need to be taken into account in your hrly charge.

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maj

That's my point!!!

So at least my system isn't broke!!!!!

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joasis

You make your guys work 9 hours a day? For shame! I bet you make them work Saturdays too? I am a nice guy...They work 40 and quit for the week...I am the only moron working 60 hours.

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maj

One of them worked 6 hours with me yesterday.

Well you know, when they only get paid minimum wage, they need all the hours they can get!!!!!

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joasis

I should have known you pay hack wages...if you were properly licensed, you would have to pay a decent living wage.....now, I hope my guys never hear about minimum wage...$4 an hour is plenty for hack laborers!

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