Do you know your true cost per hour?

[John Olson]

Here is an exercise and i'd like to see some answers.
What is yoru true cost per machine hour?
I have been having the guys here locally run these numbers and it has been surprising (to them)
I had them figure their average machine run time at 5 hours, 9-10 hour day minus driving and set up.
Now take all your company expenses for the year and figure our how much per day then per hour.

The numbers have been running between 55-75 per hour TRUE cost. :shock:

Lets here some numbers from you guys.

P.S. these numbers usually didn't include putting money away for equipment replacement :shock:

 

[Desk Jockey]

Are you talking about TM costs?
We went through the exercise in SFS and it came out under $12.00 an hour

That's for a $25,000.00 TM, putting 800-hours a year and 5-years of $1,000 yearly maintenance and fuel at $3.00.

Or
Overhead broke up into hours?

 

[John Olson]

:shock: :shock: DO you have $3 per hour Illegals running your trucks? Do you not have insurance on your vehicles? Do you ever put new brakes on? How about tires? Do you insure your illegals?

Edited to ask how do you get the truck to the job? Do you have a "transporter" and some super fuel to run the TM? Just getting it to the Job Site and running it will cost at least $6 in fuel

Edited again to see that we where ot on the same page. I am talking true operating cost. What it cost you to be in buisness based on hours on the TM.

 

[Desk Jockey]

Ok so you're not talking TM costs.

No, no wetbacks, yes insurance, insurance and taxes are our two biggest overhead items other than payroll.

Brakes and tires....dude last month several thousand, replaced 2-sets of tires on two trucks and still need a complete set on a Pickup next month.

Brakes too but tires add up faster.

 

[Out of Character - 0]

There is no true hard # if your volume, ad costs, and labor varies (o.t).

I have a few formats that I look at when measuring our cost. If my partner and I quit working and payed for everything we do now, then our cost would average out to be about $120hr at the job site including everything from chems to equipment replacement. I use time at the job site instead of tm hours because we track the vans and can easily look at the total time on location.

Our cost is extremely high for a few reasons.
-We only have 2 tms for a large service areas and end up with inefficient routes. We have never been able to book our schedule in advance. We enter each week with about 20% of our capacity booked and the rest has to be made up, that makes it hard to schedule efficiently. We usually have 2 guys payed hourly in the van on these long commutes.

-Our advertising costs are out of control. We are not a long established carpet cleaner and haven't finished learning (the hard way) what ad sources are a waste.

-We are in a tough market, and have a hard time meeting our volume requirements without occasionally charging less than we are worth. The customers we tend to get are pitas and reschedule, cancel, and don't prepare far more than I think is reasonable.

-My techs are not selling. It's my fault though and I'll get it fixed eventually.

 

[John Olson]

If you want to make excuse to not figure it out ok :roll: But if you want to get an idea then sit down and do the math. Doesn't matter if it is a little high or a little low but getting a NUMBER will help you figure out if you have a JOB or a BUSINESS. Thats the whole purpose of this exercise

 

[Chris A]

Mines about $45/Hr, not counting Steph and I's salaries

 

[renegade_cowboy]

I am trying to think, where I saw this topic at. Seems so familiar. It'll come to me.

 

[John Olson]

Not sure what your getting at Brent but I am sure someone somewhere at sometime or another has tried to get the BDCC's to do this. I am making no claim as to it being MY IDEA....

 

[Mike Draper]

It's a simple formula for carpet cleaners... restoration may be different, but here it is.

1. Take all your overhead for last year? (example $50,000)
2. How many hours did the truck run last year? " you track this don't you" :roll: (example 1000)
3. Divide $50,000.00 by 1000 hours and you get your operating cost per hour.

= $50.00 per hour

You could also add in an extra 10grand (per year) to the equation for TM replacement every 5-6 years.

now your hourly operating cost would be $60.00 an hour.

 

[Able 1]

I am trying to think, where I saw this topic at. Seems so familiar. It'll come to me.

No, the other way around. The topics seem to always start here, and then go there... It's kind of funny, must not have an original thought in his head. I mean there are threads copied like every day, kind of a joke if you ask me... :roll: If he stopped reading here so much he might actually think of something hisowndamnself.... Just saying! No offence Rob, but it is kind of silly.

EDIT: you knew that anyway... What did they edit?

 

[Jim Williams]

If I go by machine hours I was at $25.55 per hour in costs for 2008. Every year it gets lower because my fixed expenses stay the same but I do more hours each year. This does not include van replacement. I think $10,000 per year for van and TM is a little high. I came up with a van and TM every 6 years at $35,000 which would add around $5800 per year. That would put me at $31.99 per TM hour expenses.

 

[cu]

money for replacement

YOU FOOL I HAVE A JUDSON...not a prochem

 

[John Olson]

ROFLMFAO Brent you seriously didn't think I got that from ® did you? That has been around way longer then any message board it is the same for any buisness. I thought you would say Covey or Carnige or one of those guys. I seriously laughing my f'n ass off that you would think®. Hell i've been banned from
there since the second week I think.

 

[renegade_cowboy]

John Olson" data-source="" class="bbCodeBlock bbCodeBlock--expandable bbCodeBlock--quote js-expandWatch">

ROFLMFAO Brent you seriously didn't think I got that from ® did you? That has been around way longer then any message board it is the same for any buisness. I thought you would say Covey or Carnige or one of those guys. I seriously laughing my f'n ass off that you would think®. Hell i've been banned from
there since the second week I think.

John laughing is good for the heart. I saw you post it here first and then I saw the same question show up again, hours after yours somewhere else. Its just a popular question today.

 

[Mike Draper]

I would post my hourly cost but there are some hacks in my town who I'm sure read my comments on here so they can learn how I make my money.

 

[renegade_cowboy]

I would post my hourly cost but there are some hacks in my town who I'm sure read my comments on here so they can learn how I make my money.

Why would the hacks in your town care what your costs are? Lowest overhead as possible for higher profits.

 

[Ron Werner]

Gee, did sort of a rough calc, mine was coming to $82/hr, but thats incl a $1300/mth lease payment
without that it drops to $50/hr

pretty eye opening!

 

[John Olson]

my sincere apologies Brent. I took that wrong. That exercise can be applied to any buisness. It is not any "new" concept. Like any exersise it nee to be done often to be of any value.

 

[Desk Jockey]

Years before Jon Don & SFS, we had Chuck Violand come in and do some consulting for us.
It was one of those "you want to know, but you really didn't want to know" moments.

We had to make some critical decisions, raise prices and focus on those areas that were more profitable for us if we wanted to stay in business and make a reasonable living.

 

[Brian R]

I don't track van times...none of my business.

I have as many hours in the day that I need.

 

[Hoody]

I'd like to take this opportunity to take some credit in the reasoning for John's posting. I was trying to figure out our production per hour, and it definitely wasn't what I thought it was. :shock: :|

He showed me the light.

 

[Desk Jockey]

bout time someone did!

:wink:

 

[Steve in Omaha]

getting a NUMBER will help you figure out if you have a JOB or a BUSINESS.

What is the difference if you are an oo? Is netting high 5 into six figures working 9 months a job or biz?

 

[WANDMASTER3]

No, no wetbacks


DAMN DIDNT KNOW THIS WAS A MINUTEMEN WEBSITE

 

[Jack May]

Usually most years when I get my books back from the accountant, I'll got through them and come up with numbers for the past year.

Because we have such a diverse range of services, if I worked it out on TM hours, we'd be running like $200/hr :shock: (guess)

So what I do is work it out to a 'work day rate'. I want to know what the averge sales a tech should achieve BEFORE I break even on any given day.

Back last year (two years ago based on actual figures) it was $450 a day from memory.

I've got my books back just last month but haven't got around to working out the new figures. I do know that we've had out profitablity shoot up from a bit of close scrutiny at various areas, combined with at least two items coming off their HP which frees up cash flow so I'm expecting that number to drop a bit.

This way isn't fool proof as I also have temps coming is as well so it's hard to find a good balance. Throw in equipment rental charges on floods etc and that'll really boost the numbers, yet is hard to value when considering a day's sales.

At ehe end of the day, it doesn't matter what or how you measure, the most important thing is to actually measure SOMETHING so that you have a line in the sand to aim for and exceed.

John

 

[Brian R]

I just figured my cost per day and average company income per day.
From Jan 1st to July 25th
I think I am making less than minimum wage.

I need to make more money.

I'll have to check it for the last couple of months to see if I am doing any better.

 

[Desk Jockey]

Not to worry Brian, your company is not over paying you, you're worth at least minimum wage!

 

[The Preacher]

I closed Dannys Free Carpet Cleaning Company the first time i got the CODB sheet from Chuck V many years ago!

i'm ashamed to post my # since i'm a bonnet cleaner now!!! :shock:

 

[Brian R]

Not to worry Brian, your company is not over paying you, you're worth at least minimum wage!

Thanks