How much to charge per hour.....already searched

[patrick_g]

Not to be overly pessimistic but... There always seems to be someone with a machine of one kind or another with no clue about how to operate it as a paying business. They frequently seriously underprice their hourly rate or the per job price. Eventually they may learn and adjust (not always) before they get so behind dollarwise that they just fade away.

There seems to be an endless supply of these people, some willing to lose money so long as they can maintain the illusion of doing stuff for pay. Unfortunately it makes it hard for someone in business to stay in business who is charging what it costs plus reasonable labor rates and a small margin for the unforseen equipment expenses WHICH ALWAYS HAPPEN. ONe of the illusion factors seen often is the guy with new equipment and low maint charging low rates but continuously taking value out of his equipment through wear and getting no compensation. Eventually he will have "given away" the machine.

Unfortunately the uninformed customer frequently has no other selection criteria but price and ends up soured on hiring work done if the "amature" can't git 'er done.

I was in this IGNORANT category (once again) for a period of time at the begining of my house build (CBN Oklahoma Farmhouse thread) I hired a dozer and after 2 days the dozer guy figured out what I had figured out. His dozer was way too small and his skill level was too low. I hired a guy with oodles of HEAVY equipment and an operator with 30 plus years experience on heavy equipment. I pay them top dollar and it is a bargain. 4 ft bucket track hoe/excavator or 11 ft blade dozer or extendahoe or ... The operator is an artist and is so efficient and productive that the $/unit work is less. I pay more per hour but less per job due to the right sized equipment and a whiz at the controls.

Short version: You can underprice yourself to ensure you get work but will you be wearing your equipment out with no $ for replacement? If it is to be a commercial operation you are supposed to come out ahead, not behind, not even to maintain an illusion that you are a commercial operation.

Pat

 

[RobertN]

Sounds to me like I would jump on that deal. You get a fair amount of run time (I bet that is a bit of a rough ride)

That is the nice thing about these ASV machines. Suspension! They use a torsion bar suspension to isolate the drive/track system from the rest of the unit. Rides like a Caddy At least, it;'s little brother, ASV RC30 does....

 

[john_bud]

Rutwad,

It does sound like you have a pretty good handle on what the going rate is. From your post it looks like $130 or so. If you can get that it should be good.

Here's the calculations and thoughts behind that statement.

Your machine costs $55k and it will need to be replaced in 3 years. Typical for this type of equipment. If the replacement cost will be 20% higher that means you have to save $66K in 3 years or $22K a year. There are 52 work weeks a year or 2080 hours at 40 hours/week. For this type of work, you may only be able to get paying hours half the time or about 1000 hours per year. If you budget things out there will be about 1/3 of your income for expenses, 1/4 for savings to replace the machine 1/4 for you to live on. The remaining 17% should be for emergencies and other unplanned expenses. You should set things up with the bank so that checks get split into 4 separate accounts. If you charge $100 per hour and work 1000 hours a year that would put $25k in the kitty for your new machine. It only gives you $25k to live on, so that may be a problem depending on your lifestyle. You may want to think about minimizing your lifestyle for the next 2-3 years to make that work -- even if you can get $130 or so per hour. It's better to live like a pauper and have a cushion in the bank than to hit a rough spot and lose everything. Naturally, all that needs to be evaluated as you learn more about your business, its cycles, the machine and operational expenses.

If you take the 40 hour job at $100 (and I think you should) you will learn a lot about the machine's clearing rate and will be better able to estimate jobs in the future. A strategy on that job would be to negotiate for the ability to use pictures of the job before, during and after for advertising. Also to have that person as a reference. You should invoice for $130 per hour and then have a line item discount for those things. That way you set your price for future jobs, give him a "bargain" and set things up as a win-win for everyone.

Just my 0.02

jb

 

[AlanB]

I guess I am picturing that mulching grinding head on the front just shaking the whole machine at some point.

Maybe not.

 

[Gatorboy]

Here in massachusetts everything runs sky high in costs & overhead. We charge $42.50 per man hour for labor. $85. pr hr for a cat 416, $75. pr hr for a cat 277. $65. pr hr for the kubota B3030. 8 hour minimum on the cats, 4 hour minimum on the kubota. Those are the going rates here.

So for an 8-hour day with a CAT 416 would be $1020. But you would charge that same amount for a 3-hour mowing job (i.e. 20 acres)?

 

[bluetc30]

i charge 50 an hour two hour minimum up and above the job to cover travel and fuel and as always most people think that your equipment doesnt cost anything. one job was to dig out for a pad for a shed 10x14 he didnt like the idea of 50 an hour so he hired somone else at 3 times the amount that i was going to charge and he got his BRAND new paved driveway all tore up from the excavator, but he thought 200 bucks was too much to pay

 

[lawn_king]

So for an 8-hour day with a CAT 416 would be $1020. But you would charge that same amount for a 3-hour mowing job (i.e. 20 acres)?

I really dont know what your problem is gatorboy, why you are in my face? #1 mowing 20 acres is not a 3 hour job for a B3030, you already know that, so why post as you have? Are you just being arrogant?

 

[McDenny's]

I see allot of experienced people posting here and I DO NOT work in the construction or dirt business but I do have a little experience in the field. Me as a homeowner asking a contractor a price would somewhat have a idea of what it would cost. If a customer beats you up because he says its way to high, then I don't think I would waste my time. I think when you guys bid on a job, a bid for a complete job and not by the hour is best. You guys have to transport your equipment, fuel your equipment, get off one machine to do a little work, climb back onto another one, and if you have some larger equipment, pay to have it moved, which isn't cheap. I have moved equipment with a 50 ton Fontaine and the average was $150-$200 for across town. Homeowners have to realize this is your living and this is what you do. When you bid a job, say a price, listen to what he wants and get figures in your head, so when he asks don't him and haw about, and worse case, bid a little high. If the homeowners needs material hauled in and your not sure of the price for gravel or stone, and then add trucking to it, just tell them you need to check with some subs for current prices and availability before you give him your bid. I once saw a contractor bid on a job, it wasn't huge, just a 2 acre house lot and small road. He had more equipment there on one job then I ever saw, I asked him why and his comment way "I bid on time, the quicker I get this done, the sooner I get to my next job, I make the same money whether I am here 1 week or 1 month" point well taken for me.

Just my 2 cents worth,
Dennis

 

[DmansPadge]

I really dont know what your problem is gatorboy, why you are in my face? #1 mowing 20 acres is not a 3 hour job for a B3030, you already know that, so why post as you have? Are you just being arrogant?

If you think that is bad... ask him what he thinks about Craftsman.

 

[fishpick]

Here's another thought - in relation to this topic.
You should also be prepared for the customer that balks at your initial price and you never get to a deal with... it's how you handle the split and follow-up that will separate you from your competition. Always remember - people are their ego.
I had a guy down the street see me with my new tractor/BB. He asked if I could help him with a mess he made in his back yard with a skid steer... I quoted him $300 - his response was he could just get the skid again... so I politely said OK and walked back home... weeks passed - his back yard stayed a mess - so one day when he was out side I swung by - asked him how it was going... and l landed the job.
Follow-up... and after you do the work... follow-up again!

 

[john_bud]

If you think that is bad... ask him what he thinks about Craftsman.

Now that's funny!


Fishpick, I like your style. There is never a good reason to argue with a customer, paying or non-paying. A gracious acceptance that they will be getting the work done faster, better, cheaper with a hearty smile and a solid handshake. Often they will remember that very favorably. And as you say, they probably are not going to be getting the "great deal" they were imagining and may be more than willing to pay you later when the snit hits the proverbial fan.

jb

 

[AndyMA]

Get clear before you start, how "hours" are counted.

Clock hours from the clock on the wall or machine hours on the Hobbs meter.

I would never take a job based on "machine hours". With me you're paying for all time I'm on the job as well as moving costs.

As far as rates, I would think 85-95 for bucket work and 130-150 for mulcher work.

Having done a lot of paid work and also having numerous $500 to $3000 repair bills I know that if you don't charge enough and also put away money for repairs you'll regret it. Many of the hobbists on this board do work for low prices and that is fine when your machine is new and doesn't break. You may actually get the impression that you are making money. When you truly consider all your costs including depreciation and maintaince you'll be suprised how much it costs just to run your machine for an hour. Remember you need to amertize the cost of the equipment over it's expected life time usage hours to get a true cost.

Andy

 

[fishpick]

To Andy's point - look at an equipment rental place... their machines get absolutely trashed, beat on, kicked around and filled with strange fluids... They charge by the wall clock... you rent it for half a day or a full day... regardless of the fact you may have only had it running 30 minutes... And they make money because billing that way ensures the machine pays for itself and clears a profit.
You go machine hours - you go broke.

 

[AlanB]

While I think you can operate it either way, and have seen it doen as both, and have rented equipment based on equipment hours as well, Yes, I agree, I would do it on time on site hours, and I would give them 15 minutes to 30 minutes on both sides of the 8 to insure them I was not trying to cheat them on a time job.

That said, my point was, and I am guessing from the questions that Rutwad is new at this, that I would make how the time is kept, very clear before the work started.

I would not like to see him in the situation where he worked his butt off all week, comes to the end of the week and feels he has done a fantastic job for this guy, tells the guy he has in his 40 hours, the guy walks over to the machine, looks at the meter and say's, Nope, you only have 25 hours since you started.

It is always better to identify potential problems before they are problems, then to get to the end.

As Fishpick I think it was said too, you will often run into folks that the job will not work out. Best thing to do is as stated, smile, move on, appreciate the chance to bid, hope you will consider us for your future work.

Other tidbits to the new business guy, when you get that feeling in your gut that this deal is not going well, don't get into it. Very seldom (I think never in our case) does it get better.

Set your price. Don't let the customer set it. Only you, and maybe your accountant, know what it is worth to you to do a particular job. If you start folding on your prices, and letting others dictate what they will pay, you will find yourself in financial trouble in the business pretty quick.

Gregg Whitstock the pond guy has a great way of dropping his prices (as people like to get a "deal")
Make sure you add in some extra's to the deal. Not sure what that would be in your instance, but say, in building a pond, an extra line would be night lighting. Then when folks go, oh, that is too expensive, you can offer to back the lighting out of the bid. Most times, they will go ahead and leave it in, but it shows the customer that you are willing to work with them on price, while not compromising your basic pricing structure.

 

[MikeD74T]

but sometimes the customer has me doing non-machine work. The planned job doesn't start out that way, but sometimes it happens. How much do you guys figure for "man hours"?

When one operator shows up with multiple machines I expect to pay only for the machines actually operated, each at it's appropriate rate. I won't pay all day for a dozer while the operator spends 1/2 the day trucking fill. By the same token, I don't expect a mans equipment to sit idle for free while the operator is doing non-operator work at my request.

If you're going to be an equipment operator - operate your equipment or make it clear that you still have payments to make & the customer will be billed for non-productive time. Most people accept that at face value. Equipment rentals that rent with hour meter limits do not offer discounts for unused hour meter time nor should you.

If you want to show your appreciation for a customer, make sure it's the ones that pay in full, on time, & use you right. MikeD74T

 

[RobertN]

As Fishpick I think it was said too, you will often run into folks that the job will not work out. Best thing to do is as stated, smile, move on, appreciate the chance to bid, hope you will consider us for your future work.

This is so true! We're in to Scouting; our fundraiser is selling popcorn. We do primarily preorder sales, but do some direct sales in front of a a video store and a supermarket.

On a number of occasions, one of thr guys will approach someone, who says no. When the scout says "OK, Thank You, have a nice day", even without a sale, people have been impressed, turned around, and bought popcorn.

 

[rutwad]

Sounds like much good advice. Thanks for all the replies and advice. The job is so close by (5min) travel time is no big deal. But if he wants to cut my hours, then I may ask for more money or at least let him supply the fuel. That alone could save me approx $75/day.