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subcontracting breaking even

Discussion in 'Introduce Yourself to the Community' started by ConnerM, Nov 25, 2011.

  1. ConnerM

    ConnerM Member
    Messages: 62

    Im thinking of getting a plow and sub-contracting this year im in minnesota. Im thinking of spending 10k on a truck probably f250 or f350 and then 3-5k on plow and im not sure the going rate in minnesota for subs but im estimating

    $50 and hour
    -15 an hr for gas
    $35 an hour
    -5 an hour for insurance ( idk how accurate this is but i rather )
    ( over estimate then underestimate )
    $30 an hour
    -5+ an hour (wear and tear on vehicle and )
    (plow and depresation of value)

    $25- and hour
    -5 an hour (for maintenance and hopefully reserve )
    (for when truck breaks down)
    $20 an hour (13-15k invested)

    So after all of this im only getting $20 an hour which is around what i make plowing for someyone else not to mention overtime pay (1.5). Oh and I dont have to invest any money when i plow for someyone else.
    My question: Are my estimates wrong?
    Why subcontract at 50 an hr with your own equipment only to make $20 an hour which is what you get paid plowing for someyone else in there equipment?
    is $50 an hour fair?
    Am i missing any other expenses?

    Im trying make decent money while making enough to hopefully purchase another plow in a couple of years and just continue to grow the buissness but when i put in on paper it doesnt seem to make sense any advice or help is appreacaisted.
  2. erkoehler

    erkoehler PlowSite Veteran
    Messages: 3,252

    $15 an hour for fuel seems high.....but I guess it varies by truck.
  3. danielboone

    danielboone Junior Member
    Messages: 24

  4. kimber750

    kimber750 PlowSite Veteran
    Messages: 3,152

    I average between $7-10 in fuel per hour with my diesel. Really depends on hard I have to work the truck.
  5. ConnerM

    ConnerM Member
    Messages: 62

    ya it seems more like its around $6-10 a hour for gas but still thats only $5 dollar difference and 9 if im lucky which at $29 an hour im making an extra $9 an hour of a 10k investment might be ok but id like to be at least making $30 an hour if i have my own equipment and not $30 an hour at my best $30 an hour at my worst. (if that makes sense to you)
  6. ConnerM

    ConnerM Member
    Messages: 62

    im counting
    $10 gas
    $5 insurance
    $5 maintenance
    $5 deprecation
    $20 opportunity cost (plowing for someyone else)
    -$45 in exspenses
    +$50 in pay
    +$5 an hour for investing roughly 10k (truck has to last 2,000 hours to make 10k back)
  7. RLM

    RLM PlowSite.com Addict
    Messages: 1,270

    What is "opportunity cost", most of my subs (all p/u's) have done it on there own, solicting work, taking calls,etc & work for me because it is easier, in the end they figure they make about the same or better once they figure the stuff they don't get paid for (estimates, writing contracts & service calls) If there is a problem they call me, if someone comes out to complain they say "call the office", there is something to be said for having a "larger company" behind you not that we are huge or anything. In addition they don't beat their trucks nearly as much, if somthing needs stacking, is to nasty, etc. I just send something bigger in.
  8. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Guess another what's it cost an hour thing. Take your insurance,lets say for truck and GL for a year its 3650.00 so its 10 bucks a day.Or about 40 cents an hour. But everyone wants to have it paid for the first hour they go out. A lot of expenses should be spread through out the year.
  9. Matson Snow

    Matson Snow PlowSite.com Addict
    Messages: 1,985

    Plus if you are going to be legit.......Expenses,Fuel, Insurance, Truck Depreciation, Etc....Can be written off,....payup
  10. jklawn&Plow

    jklawn&Plow Senior Member
    Messages: 469

    Doing all drives , about 6/hr in gas. $1600 gas , 288 hours including stake installation an removal.
  11. ConnerM

    ConnerM Member
    Messages: 62

    Im just wondering what other subs who get $50 an hour for calculate you make an hour after expenses
  12. Stuffdeer

    Stuffdeer Senior Member
    Messages: 606

    Subbing must go cheap by you...

    I pay a guy with a F250 and an 8ft straight blade 65/hr.
  13. bleacher43

    bleacher43 Member
    from MA
    Messages: 44

    Does anyone work by percentage? If so, what is your percentage?
  14. ConnerM

    ConnerM Member
    Messages: 62

    well are you till making at leat $25 an hour profit if u sub at 50 or does it need to be higher
  15. pohouse

    pohouse Senior Member
    Messages: 322

    I think where you want to be in a few years is key to this discussion. If you want to build your own business and get your own accounts, buy the truck and plow. Deduct them. May not be profitable the first year, but you will have the equip when your ready to start your own show. If plowing snow is just a seasonal gig, stick with using their equipment.
  16. kimber750

    kimber750 PlowSite Veteran
    Messages: 3,152

    I look at it as someone else is paying for something I want. This is the same thing I do with my rental properties. Not making a huge profit but someone else is paying for the property. I have some properties that don't make me any money but my expenses are around $1200 a year on a $140,000 property. I always try to look at the big picture.

    This year plowing will cover my new plow and most my insurance, unless we have a heavy winter then I should break even at least. Next year I will not have the new plow expense to worry about. I am being paid a percentage of the seasonal contracts, so I already know how much I get for the season. Only way I get more is if annual snow fall goes over the cap.
  17. mustangman02232

    mustangman02232 Senior Member
    Messages: 148

    my truck wont move for any thing less, cash only
  18. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Of course you put all that cash on your income taxes.
  19. mustangman02232

    mustangman02232 Senior Member
    Messages: 148

    of course I do i just dont want to deal with bounced checks:)
  20. grandview

    grandview PlowSite Fanatic
    Messages: 14,609

    Good for you!