Overhead Cost questions

[OK Sparky 93]

For you EC’s that have been at this a while and even some fresh starts. How do you guys figure an overhead cost for tools?
And is it per job per truck or other?
And what about for truck/vehicle. Do you use miles that you put on a truck(s) for said job, or do you have a set dollar figure?
Currently I as an employee avg 8-10000 miles a year. I would expect when I leave the nest, those miles may go up. At .55/mile that would be approximately $5000
Do you break that down by the hour for the year?? What if you are trying get another truck on the road, do you make allowances for that? What’s the right way?
Thanks Mike

 

[gadfly56]

For you EC’s that have been at this a while and even some fresh starts. How do you guys figure an overhead cost for tools?
And is it per job per truck or other?
And what about for truck/vehicle. Do you use miles that you put on a truck(s) for said job, or do you have a set dollar figure?
Currently I as an employee avg 8-10000 miles a year. I would expect when I leave the nest, those miles may go up. At .55/mile that would be approximately $5000
Do you break that down by the hour for the year?? What if you are trying get another truck on the road, do you make allowances for that? What’s the right way?
Thanks Mike

Overhead costs come in two varieties, fixed and variable. Fixed would be the rent, insurance, truck payments, etc. Variable will be tool costs, miles per year on vehicles, anything that might be more or less within a year. Overhead costs must be covered in all cases. Once you have the costs figured out, you spread those costs over your billable hours. Notice I said billable hours, not total available work hours per year. For a 40-hour work week, that's 2,080 gross hours per year, not counting any holidays or vacation or sick time. You need to discount those hours to cover days you don't work, time spent making estimates (if you don't charge), running to the supply house (for fixed price jobs) etc. I've never been in business for myself, so I have no idea what discount should be applied. Others with experience can help out.

 

[brantmacga]

I use a set percentage value on every job for tools; for me it’s a fraction of a percent. I know what revenue is going to be, I know what tools are going to cost, so I’m able to calculate that number based on those factors.

For trucks I calculate actual miles for each project at $0.85/mi. I run about 60k miles per year, most trucks in the fleet average 30k/mi per year.


Sent from my iPhone using Tapatalk

 

[James L]

As a general rule, you want to pay out to a worker no more than 50% of what you charge. That includes any bonuses, vaction pay, erc

The other 50% is to cover administrative costs, vehicles, tools, taxes, etc....and even warranty costs

Whether you are the worker, or someone else is the worker, it needs to be figured the same.

How you break down the non-work 50% is rather fluid. Sometimes you'll spend more on tools. Sometimes you'll have vehicle repairs. Etc, etc, etc

 

[blueheels2]

I use a set percentage value on every job for tools; for me it’s a fraction of a percent. I know what revenue is going to be, I know what tools are going to cost, so I’m able to calculate that number based on those factors.

For trucks I calculate actual miles for each project at $0.85/mi. I run about 60k miles per year, most trucks in the fleet average 30k/mi per year.


Sent from my iPhone using Tapatalk

Yeah I’m a single man shop and I have averaged about 22,000 miles a year. But I budget for the gas and maintenance that would take place with 30,000 miles a year. Gives me a little cushion. I like cushion.

 

[brantmacga]

Yeah I’m a single man shop and I have averaged about 22,000 miles a year. But I budget for the gas and maintenance that would take place with 30,000 miles a year. Gives me a little cushion. I like cushion.

As a single man shop, that’s how you’ll have to do it. What I’m doing is charging to each job the life of the vehicle that project will consume. A 3/mo project is going to get charged 3/mo of vehicle usage and so forth.


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[petersonra]

I don't think there's any perfect answer to these kind of questions. You have to charge enough that you don't go bankrupt, and not charge so much that nobody will buy from you. Some people are pretty good at selling their services at a higher rate than others for essentially the same work.

There are other people that work for almost nothing compared to what they might be able to get if they were better salesman.

There is a plumbing service company in town that is huge compared to the other plumbers in town, and they charge a lot more than the other plumbers in town do for effectively the same work but somehow they manage to convince plenty of people to pay that rate.

 

[readydave8]

Some people think that if something costs more, it must be better

And sometimes that's true

 

[electrofelon]

For you EC’s that have been at this a while and even some fresh starts. How do you guys figure an overhead cost for tools?
And is it per job per truck or other?
And what about for truck/vehicle. Do you use miles that you put on a truck(s) for said job, or do you have a set dollar figure?
Currently I as an employee avg 8-10000 miles a year. I would expect when I leave the nest, those miles may go up. At .55/mile that would be approximately $5000
Do you break that down by the hour for the year?? What if you are trying get another truck on the road, do you make allowances for that? What’s the right way?
Thanks Mike

my vehicle is actually owned by my LLC. I think it works out much better (for me anyway) then owning it personally and claiming a deduction for mileage. I qualify my LLC in Montana, and I can register vehicles there. I got so fed up with all the NYS DMV BS, bureaucracy, and sticker games. In Montana, there is no inspection, and vehicles over 10 years old and all trailers and all motorcycles can be registered PERMANENTLY. It will take a lot of stress and hassle out of your life I guarantee it. There is also no sales tax, although your state probably has use tax rules where you are supposed to claim it, but like internet sales not many people do. To top it all off, The plates are a very pretty blue!