View Full Version : Hourly Rate Calculation
07-15-2006, 01:43 AM
How do you guys come up with your hourly rate you charge out and hour and are you sure it covers your cost?
07-15-2006, 03:38 AM
Well, I can't say much about trucks, but maybe my experience with equipment can help you out. I break down everything that costs me money while operating the machine, the operator, amount of fuel consumed per hour, etc. I got technical enough to break down component costs per hour, say the average lifespan in hours of a bucket and it's replacement cost. From there, I could find out how much it's costing me per hour to run that bucket. For me, I don't have substantial records to look back on and guesstiamate how long that bucket will last, but it's a start. While this is all extremely technical and sometimes isn't 100% accurate, the best way to figure out what to charge is find out what the market will bear. Talk to some folks and see what they're charging.
07-15-2006, 01:54 PM
Mine is figured a little different.
I put a lifespan on everything of 3 years unless I know it will have to be replaced before then. Brake it down to a 20 hour work week 6 months out of the year. Figure in maintance, (oil, lube, tires, and fuel). figure in wage and profit. figure in costs for support help (bookkeeping, insurance, advertising, estimating time for the job, and anything else I can add) . add it all up then through it out the window and charge $150 per hour for any equipment I have.. This has worked for me for 22 years and I am happy with it.
07-15-2006, 02:05 PM
I hope your rate has changed in the last 22 years.
I basically do it the same way. Bottom line is that is what the customer wants to know. I have heard numerous people say to make all the calculations for rate but if you are not competitive then you won't get jobs. I try to stay in the middle of rates here. Some I am higher and some lower. Some I make more money on then others, that's just the way it is.
Case in point, did two landscape walls this year that used about the same material. One was low and long the other shorter and taller. I know the long low one cost me more to do in labor because I had to level a lot more of sirst course. The taller one I was able to just stack once I got leveled in and build faster. I charged a bit more to do teh low long wall but if I figured it I am sure I made less money on it then the taller wall. Bother customers are happy though and I continue to work for them.
07-15-2006, 11:10 PM
I'm still fairly inexperienced in calculating dumptruck hourly rates, but for my semi I've managed to get it close through alot of record keeping, to find my cost per mile to operate.
I do this by: 1 year truck payments+1 year insurance (truck,health,disability)+total yearly license cost+mainenance cost(currently @ .05/mile x average yearly miles)+fuel cost b4 surcharge (average yearly miles/6.25 x 1.20)+ misc. other expenses ( est. self employment tax, HUT, cell phones, accountant/tax prep. fees,ROTH IRA, etc./ year)= X
Then I figure my personal income + personal taxes = Y
X+Y/ estimated yearly miles = Z
Then figure the fuel surcharge: Reported weekly national average-1.20/6.25= Q
( 6.25 = my trucks average fuel mileage, 1.20 = base price for fuel surcharge)
Then Z+Q= P (trucks cost/mile to operate on any particular week.Rate flucuates by changes in fuel $ nat. ave.) As long as the Gross load pay/total miles involved in a load (Deadhead+Loaded miles) exceeds P, then I'm making profit.
At the start there was alot of guessing on some figures, but now I've been able to use previous years #'s to get the figures more accurate. I haven't figured in the trucks depreciation, which should be done. I just don't know how too. Also my method doesn't account for a vehicle that's paid for. (it still needs some work)
07-16-2006, 12:28 AM
The one thing is you need to have a minimum charge for a hour then charge a hourly rate for a job that continues on past a hour. For dump trucks its 79-80 per hour. For my F-450 I charge 50 dollars per hour plus my labour rate on top of that so thats another 20 per hour. Usually if its one of those jobs that is hard to deal with usually tell the customer 100 dollars.
Not all customers are the same if its a regular customer or its a customer that is on a fixed income like a retired resident then I adjust my prices. If its a one shot deal and I won't see anymore work from the customer then its charge charge charge :bouncegri
If you live in a smaller area like I do word spreads around pretty quick that your a price gouger then your SOL.
07-16-2006, 07:36 PM
This is by no means the only tool to use, but at least knowing your costs helps. This Excel Spreadsheet is from constructionequipment.com a few years back. You can save it and substitute your own numbers to get an idea of cost per hour to run a machine. Click Here to Download (http://www.geocities.com/foody590/Rate_Calculation_0304.xls)
07-16-2006, 09:51 PM
I guess I should add to my post.
No that is not the price I started with 22 years ago.
When I get to much work and it starts backing up I rase my price.
I have a problem of not knowing when to say no so I let my price control the amount of work I have. It doesn't matter that my bobcats have been paid for for 20 years they still command the same price. All the equipment I have has paid for itself in less then 3 years, some in less then 1 year.
Know your compitition and there pricing, Show up on the job when you say you will, do the job to the best of your ability and always through in a little extra and you will never be out of work as long as there is work in your area.
One thing you have to understand is I live in the richest state in the union by capita, and this is the capitol which get a little share from every thing that goes on in this state. There are people here that have paid me to weed there flower beds with a backhoe (no kidding). They want a good looking yard but don't want to get there hands dirty.
Just remember to charge enough to pay your bills, pay yourself a wage, and make a profit. otherwise it is not worth been in business for your self.
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