Hourly rate, how much to charge, TC40D

[fcchip]

I'm just about ready to start up a small business with my tractor and dump truck. Just wondering what everyone else is charging for an hourly rate?
I'm using a TC40D SS with loader, 757 backhoe, 6' roto tiller, grapple bucket, box blade, brush hog, etc. With a 89 F-Superduty 3 yard dump truck or 12' flat bed. Two trucks set up just depends on job or what I need to haul extra attachments.
I've been really amazed at some of the charges people are trying to get away with in my area. I just want to be as fair as possible and make a good living. I'm located in west central WI. Thanks for any help.

 

[beenthere]

What are the rates that you think are too high?

If you are going into business, then you should have a business plan. In that plan you will have the fixed expenses such as liability insurance, your labor cost, cost of CDL, overhead, and some cost of the equipment. Other costs such as storage and office space should be included as well, then the income tax for the business is easier to calculate.

To make money, the business plan will dictate what you will need to charge. That will be fair to you, and you are most important here, as it is your living that you want to "make". /forums/images/graemlins/wink.gif

 

[fcchip]

Just one example of what I think is a very high rate. Local company wants to charge $2400 to remove a tar driveway. New cement will be installed by someone else. Tar is 3-4 inches deep roughly 100-120 foot long. Old tar will be deposted of for free. Will need to be hauled about 5 miles one way.
My thought was $50 an hour. Maybe 10 hours max, more like 4-5 hours. I think $500 is a little high even. But $2400????
There are no other employees, just me. One man show. My trucks and trailer are under CDL limits. Insurance is less than $1000 per year. All equipment is paid for free and clear. Office is in my house, no storage or building fee's for my own property.
After looking at the driveway job I wasn't aware $250-$500 an hour was the going rate. I'll be reitred in the next couple years if it is.

 

[Dirthog]

The comment about the material will be disposed of for a fee is the first thing don't know about the laws where you are but here in Pa that would have to go to the landfill at about $50-60 a ton plus if you do not have a permit to dump into the landfill you will have costs for rolloff containters. I am redoing a septic system right know and will have 100-125 tons of material to dispose of this way so you can see where the price is comming from just to start

 

[jinman]

I think you are way low on your estimate of $50 per hour. I'd be looking at $50 per hour per piece of equipment on the job and another $30 to $40 for my work. You have to figure in long-term costs on the equipment and replacement costs. Also, you need to estimate the job in writing and fully describe what you are supposed to do in your estimate so later they can't complain that you didn't do everything agreed on.

I also suggest you consider liabilities and legal fees. Things can and will happen and you may have problems from the least expected sources. A good bookkeeper or accountant for tax advice is also needed. All these are part of a good long-term business plan and are often the first things overlooked.

I hope you have lots of luck with your business, but to make it first class, I think you need to raise your prices and your sights on how you will conduct business. Image is very important. You can do a great job for someone, but if you have dirty and ratty looking equipment, that's likely to be what they will remember. Ironic as it may seem.... /forums/images/graemlins/smirk.gif

 

[AlanB]

I think Jinman is pretty much right on target.

I believe you will find your prices going up as you get further into the business and gain more experience dealing with the customers.

I believe that even though your stuff is paid for, you need to be charging enough to replace it, or what it would cost to purchase it and operate it with a note. Otherwise, what will you do when it wears out.

I would suggest that you go outside your operating area a bit, and see if you can speak with someone who does a similar business with similar equipment that does not see you as competition and would be willing to share some experience with you.

I occasionally do this on the landscaping / lawncare forums and it helps sometimes (as you are doing here) to get an outside logic check. I am not sure if there are particular forums for the type work you are describing but I would think there would be.

While a business plan is great, excellent, needed whatever, I would first tell you that you need a "mission statement" or whatever you want to call it. It is really the heart of your business plan and it should basicly be something like,

I want this business too_______________________

maybe it is support you and the family, or maybe it is to grow to a million bucks or maybe to give you enough money to go to the ball games on the weekend. But that will give you an indication of how much you need to make.

Then start doing some math. A little backwards and forwards dividing by how many days you actually think you will have work, (and it will not be 20 days a month) then start figuring costs of your equipment (what it is worth if you had to replace it, not what you owe) and then add in what you need to make per month to support your standard of living or what your mission statement say's and I think you will see your prices go up considerably.

One of if not THE best pieces of advice I got when I started my first business was given too me by Chuck Shoop, a very experienced businessman that mentored me.

He said to always resist the temptation to start dropping your prices to get work in the shop. Especially if it get's to breaking even kind of stuff.

He said the difference was you can go to bed Tired, broke and Hungry, or just Broke and hungry. Why be tired if you are still Broke and Hungry?

Unfortunately I have not always heeded his advice and have gone to bed more than once, Tired, broke and hungry, not to mention having a sore leg for kicking myself in the butt....

The other tidbit I will also add, is when you walk in to that job and it just feel's wrong.... IT IS. Time to walk away. I don't know how many jobs we have done where we had a bad feeling about a customer and proceeded forward and wished we had stopped right up front later.

Good luck with your business, there is money to be made there.

 

[fcchip]

Just wanted to thank everyone for the help. Certainly gives me somethings to think about.

 

[jimmysisson]

In Mass. here, my excavator gets $100-$120/hour for a good size track machine, $90 for JD450 dozer, $65/hr for tri-axle. I think he works kind of cheap. I'd say this job would take him most of a day, for which he'd charge $900 for the excavator and maybe $500 for the truck. So, the $2,400 you heard is high.
On the other hand, think of the equipment you're using for this task. If this paving is already broken up you'll have a head start. If it's sound you'll beat your farm tractor pretty hard unless you saw the center line. So you are reducing the life of your machine doing a tough job like this. If the asphalt is bonded to the substrate in good shape you'll really have to work to keep your tonnage down as you'll get a lot of gravel in with the paving and binder.
So, yup, you can make money if you bid $1,500. Still, I'd guess that most of the work you get won't have that high priced competitor to help you inflate your bid. You may well be competing with someone else who would charge $1,000 for that job. That makes your retirement less imminent, I'd say.
This is not to discourage you from pursuing your business. If you were around here and a good operator, you'd stay busy during the good weather, because there aren't that many doing custom work. I think you just have to pick the jobs that will not ruin your equipment. Check out how many guys are doing this kind of work (the driveway demo) with a farm tractor. Tilling, yes, industrial type earthwork, not so much.

 

[Propertymaint]

FCChip, I hire out my TC40D with loader/backhoe at $80/hr with operator ($45/hr tractor, $35/hr operator). My prices are somewhat low but usually it's just me on a job and all the equipment is free and clear. I usually take on smaller jobs that know one else wants so as I don't scrub the full timers and make enemies, and yes I do get underbid from time to time. It's usually by the guy who low bids purposely and then tags for extras or never completes the work. It is very satisfying to be paid to clean up someone else's mess on a job you lost the original bid on. I usually leave the driveway tear outs to the guy's with the excavators. Tractors are just what they are - tractors and no match for what a 12,000 pound excavator can do. But they sure have their purpose. People with manicured lawns love how I can walk thru their back yards with my turf tires and dig an electrical trench to thier new shed without destroying the yard. I guess what I'm trying to say is if you stick to the smaller jobs that the machine is suited for you can put some extra money in your pocket but not enough to retire on. Getting your money is a nother story, plan on 35 to 45 days to get your money. Best of luck.