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CALCULATING MY COSTS... an excercise.

Discussion in 'Bidding & Estimating' started by BeastMaster, Nov 19, 2010.

  1. I have used the book from Profits Unlimited, De-Icing and Snow Removal, Don't Let Your Profits Melt Away to caculate my labor, plow and truck costs, to know what my actual costs are.

    The three totaled, I find I have to charge $88 per hr. for plowing (1998, 3/4 ton Dodge, 8' Boss Super Duty). This is not a break even cost, but rather what the bohow you how to calculate your true costs, along w/ whatever labor rate you wish to put in.

    I took my hourly labor rate (not counting the cost of running the truck and plow) from area self-employed types, such as HVAC men, plumbers, Union Boilermakers etc.

    Anyway, if a lot takes me 1/2 hr. to clear (plowing only), I should charge no less than $44.00. I was charging this much and more all along when using just my ATV plow. So...I was close already. Now, the 8' blade will allow me to clear these same drives and lots quicker, yet keep my same rates, as I don't intend to lower my rate. Why, when the customer is already accustomed to paying an established price.

    This approach falls under selling the value of your service, not selling your price alone.

    I did not see a lot on how to charge for de-icing, X% over the pice paid for the "salt" plus labor time and equipment ? Is this how it is done ?

    I'd like to hear pricing ideas and formulas for de-icing if you all would chime in.

  2. I goofed the above...I hit some key that I can't find and couldn't type as I wanted. Anyway, you can get the jist.
  3. buddy4781

    buddy4781 Senior Member
    Messages: 114

    I'm hearing prices from $12-$25 per 50# bag with bagged salt $4-$5 per bsg. Need to include storage and handling cost.
  4. I don't really like salt on concrete driveways as I've noticed a fair about of chipping the last few seasons.
  5. TPC Services

    TPC Services Senior Member
    Messages: 875

    If applied within reason an depending on the condition of the concrete we you should n't really be having problems. heck over applying Pot/ cal will make the concrete pop to. therre are alot of concrete contractors on here that can explain it better then I can. need to know your product and the proper appling about per sqft.
  6. pongow26

    pongow26 Senior Member
    Messages: 153

    Ive posted this in other threads but here ya go. Take your lbs amount times 16 (16 ounces in a lbs)to get your total ounces. Take "your cost" for the de-icing material and divide that by the total ounces and you will get a per ounce amount. Multiply the per ounce amount by 3 and you will get the cost per ounce you need to charge. For example say you you have 2000 lbs of salt for $500. Thats $500/32000ounces = .015 (round it to .02). so it costs you .02 cents per ounce and .06 an ounce is what you charge. so if you apply 50lbs to one location thats $48 - $16(your cost) = $32 above and beyond what you paid to cover other expenses. If you apply this method to your total inventory of salt you will make $1420 off the entire inventory of salt. I know it seems lengthy but its fairly accurate and some places will use a X4 multiple instead of X3
  7. Advantage

    Advantage Senior Member
    Messages: 766

    Why would you ever want to convert it to ounces?

    NFDDJS Member
    from USA, NH
    Messages: 92

    I know a bunch of my friends that do some salting for me on some of my jobs and other jobs do a 100% make up.... So if the parking lot takes one ton and they buy it at $90 a ton they would charge $180.
  9. Brant'sLawnCare

    Brant'sLawnCare PlowSite.com Addict
    Messages: 1,756

    It really just depends on knowing how competitive I have to be. If it's a job where I am going to spread around 100lbs per app, then I need to be fairly expensive per pound in order to make it worth it. I usually just give a per app price for little salting jobs. For big jobs, I give a per pound price, usually about 2-3x what I pay for the salt. Depends on the simplicity of the job.
  10. pongow26

    pongow26 Senior Member
    Messages: 153

    By doing so you get a very accurate per cost price. Although I will admit this method is used in restarunts more than here but it works the same. When I am pricing a menu item at work I have to account for the product cost, the labor to prep that product, the wear and tear on equipment to prep the product, the labor to cook the product. It is the same process here, we have several things to factor in that determines what price to charge and this is a very accurate way to determine that. Plus, once you have the conversion done, it makes no difference if your salting a large commercial acct or a small residential acct. your price stays the same your just dealing with bigger or smaller numbers. If I know what my per ounce cost is I can use that to determine if I am getting the best use of my product, how much waste I have such as salt that gets damaged cause of ice or salt the spreader throws off target. if you use lbs do determine this then how will you get accurate numbers unless you have a waste avg of a lbs at a time
  11. pongow26

    pongow26 Senior Member
    Messages: 153

    They should be getting about $320 per ton with the the numbers you are giving
  12. cretebaby

    cretebaby PlowSite Veteran
    Messages: 4,162

    How many ounces are in a ton again? :laughing:
  13. TCLA

    TCLA 2000 Club Member
    Messages: 2,707

    Not sure...I do know there are 16 oz's in a lb though.

    An ounce is a lot....takes a while to go through it. Therefore I advocate converting to something more reasonable such as a dram, as there are 16 drams per ounce. This number ~ 16 ~ it's easy to remember, as there are always 16 oz's per each pound.

    16 drams x 16 ounces = 256 drams per pound. 256 drams x 2000 lbs (ton) = 512,000 drams in each ton of salt.

    Our Canadian friends use tonnes. So for them to understand all this, they must use a constant of 564,383.3912 drams per tonne of salt.

    Unfortunately there are not a lot of UK snow fighters on here.....but there are a few. For those blokes to understand this, they must use a constant of 573,440 drams per long (UK) ton.

    So ~ Let's say one of your guys spreads 126,782.69 drams of salt on his first stop. Divide 126,782.69 by 16 (remember, this is an easy number to recall) to find the number of ounces you will need to bill your customer. The answer is 7,923.92 ounces of salt went down on this site.

    Pongow has already well established that salt costs .02 cents per ounce. Therefore, multiple .02 cents x 7,923.92 (the amount of drams of salt that was applied on your first lot) and you will quickly find that your material cost for this one lot comes to $158.48.

    I agree that 3x you material cost is the most scientific way to capture your handling costs and profit margins. Now we're ready to see how much we are charging for this work........

    .06 x 7,923.92 (drams of salt that went down) = $475.44 to bill the customer.

    If you really want to sharpen your pencil, use dekagrams as your measure. There are 2.8349523125 dekagrams per each ounce of salt. Which brings us back to the commonly know fact that there are 16 ounces in each pound.

    Hope this helps!
    Last edited: Nov 21, 2010
  14. buddy4781

    buddy4781 Senior Member
    Messages: 114

    Now Im confused, how much does a bag of salt cost me?
  15. cretebaby

    cretebaby PlowSite Veteran
    Messages: 4,162

    I just fell out of my chair. :laughing::nod::laughing::laughing:
  16. pongow26

    pongow26 Senior Member
    Messages: 153

    2000 lbs per ton
    16 oz per lbs
    2000 x 16 = 32,000
    $90 / 32000 = .0028 (round up to .003)
    .003 x 3 = .01
    32,000 x .01 = 320 or .16 per lbs

    Any restraunt you go to, and grocery or department store you go to or any place that sells a product that is shipped in will use this method to price their products. You can laugh all you want but I consider my service a business and will treat as such. Just look at the post that says he knows a person that charges 180 per ton. Why charge only 180 when you can get twice that based on the same math that your local grocery store uses.My point of all this is this, people in your area already pay a 3X mark up for everything else so by using this your price will be inline with your other area services
  17. TCLA

    TCLA 2000 Club Member
    Messages: 2,707

    You've just proved my point...see how many times this number appears?
  18. Matson Snow

    Matson Snow PlowSite.com Addict
    Messages: 1,985

    Wait a Minute...I missed somthing...Can you go over this one more time....Im almost back asleep...This is better than a sleeping pill.....Thanks for the lesson....:sleeping::sleeping:
  19. TCLA

    TCLA 2000 Club Member
    Messages: 2,707

    Sorry to bore you...

    It's the quickest way I know to find 3 times your material costs.
  20. cretebaby

    cretebaby PlowSite Veteran
    Messages: 4,162

    Why break it down to the ounce instead of just the pound? Your math would be mulch more accurate by the pound. The excessive rounding skews your numbers.

    $90 divide by 2000 = 0.045

    0.045 x 3 = 0.135 per pound you came up with 0.16.

    Do you charge the same per pound for a 100 pound job as a 4000 pound job?

    ps The local gracery store is not tripling their cost on a gallon of milk.
    Last edited: Nov 21, 2010