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somewhat new

Discussion in 'Ice Management' started by mike838, Nov 6, 2008.

  1. mike838

    mike838 Junior Member
    Messages: 4

    hey guys,
    had a couple of q's for you I'm somewhat new,most of the questions that are being asked in the new guys forum didn't apply as I have been researching and reading various articles for about 4 whole months now so I figured I would just jump in and take it on the chin.started a snow removal company here in Co. with a focus on anti & de-icing no one around here is doing it(maybe for good reasonTBD) so the question is when I have broken down my OH cost and now I know how much to charge should I tack on a 5% cost of materials or figure out about how much I think in the first month of operation I would spend on chemical and break it down to an hourly like my OH cost.The other question is sales tax do I only charge the cust. when I am applying at an gal. rate seems like I would get hosed that way don't want to lose my biz but don't want to lose contracts either. any opinion would help.Thanks Mike (Nov 6th and still no snow thank god for second jobs and smart hard working wifes.)
  2. hickslawns

    hickslawns Senior Member
    Messages: 627

    I'll jump in to get the ball of help rolling. Pretty hard to follow your posting. Not bashing, but grammar and punctuation might help me to figure out what you are asking. So, I will start asking and see what you are trying to figure out. Do you have any contracts? If so, how are you invoicing? It depends upon how you are billing. I would think a trip charge, plus an applied rate would be fairly normal. Markup on product is up to you. If you bill a trip charge, plus figure in how much you want to make to apply the product per gallon i don't see what you are asking. Say your product costs $2 per gallon and you want a 25% markup, then you are going to need to bill $2.50 per gallon. Then add on what you need to apply it whether it is a certain cost per gallon applied, or trip charge plus applied rate, etc. Just not quite following you.

    In regards to sales tax, every state is different. Our counties have different rates. We are forced to collect on snow if your dollar amount is over $6k annually. Go figure. Our sales tax is added onto the invoice at the bottom. We collect on all goods and services. Okay, I told on myself. Yes guys, I DO plow over $6k per season. Don't tell anyone. I don't want to look like I am tooting my own horn. lol
  3. Superior L & L

    Superior L & L PlowSite Veteran
    from MI
    Messages: 3,041

    Thats funny Phil, because i typed about half a page on "stuff" about job costing etc and then deleted it since i really don't know what he was asking.

    Mike, you have our attention. maybe reword what your asking and we can help
  4. mike838

    mike838 Junior Member
    Messages: 4


    Hey guys,
    Thanks for your replys. I am a rambler, I get that a lot, sorry for the confusion I guess what I am getting at is:
    No contracts yet waiting for my funding to come through, my sprayer is built and waiting.
    I know I'm late in getting into this.Did not want to set up something and not follow through.

    I am concerned about double dipping.When I set up mt overhead, I took all my projected costs I.E. gas, insurance, phone,ETC and broke it down to cost per day,even down to the hour so now I have a base cost of operation Right? so my question is:should I then add projected cost of liquid into that original figure for the first mo. or so of operation just so I don't get in trouble or am I better off charging a mark up on the chemical.

    next: to my understanding the only time I charge sales tax is when I set up a per gallon rate with the customer(great on big lots but not good on small lots) I hope this helps clear up my cofusion.again thanks for all of your help. Mike
  5. hickslawns

    hickslawns Senior Member
    Messages: 627

    Mike- There are many ways to setup costs or overhead. Anyone can tweak the numbers to look like they are making money or not. Bottom line is the bottom line. Here it is: Your costs are the actual money you have out of pocket to do the job. Maybe this will help. I am just throwing numbers out there for easy math, so don't get excited if you paid more for your equipment or less. I am just giving examples.

    Equipment- Initial cost, divided by how many seasons you get out of it. Say you have $1500 in a startup spray unit. You estimate you will get "X" years out of it. Say 4 years. Your cost per season is $375 for sprayer equipment.
    Did you buy a truck dedicated for this use only? If so, then do the same on the truck and any other capital investments dedicated for spraying de-icer.

    Repairs/maintenance- Say you have $200 per year in maintenance, (hoses, fittings, car wash money to clean it out, etc) This is your cost per season.

    Materials- Simple enough. Whatever you are applying. I would not worry about this other than for bidding. Figure on minimum quantity purchase price for your bids. If later you buy in volume, then your bids are based upon a higher cost and you actually profit more later when you are buying cheaper.


    Phone- if you have an additional line or phone for this then figure your annual cost for the bill into the equation.

    Fuel- I don't know how much you will go thru. Probably more events than we get. Blind guess on my part to tell you the truth. You are on your own here.

    Don't forget about labor, taxes, license plates, and other expenses I am just throwing out some general stuff. I didn't even mention advertisements.

    Go down the line and take any cost associated with this business for the season. Add them up. Divide them by the number of applications you will make on an average season. Total estimated spray applications is 20 then divide total costs by 20, etc.

    This figures your costs. Now that you know what your cost per application is then add on an acceptable profit margin. If you want to mark up the material to retail pricing and add on your profit margin for the labor go ahead. If your customer wants to do it themselves, they will have most all the same costs as you minus profit, labor, taxes, and probably spending a bit more on material. This is why they hire us. Not worth it for many to buy equipment to handle these needs on their own many times.

    In regards to sales tax, you are on your own. I have no idea about CO. Just remember any licenses/permits/etc are also costs to figure into your equation.

    Sorry, I can ramble too.

    Clear as mud?
  6. Superior L & L

    Superior L & L PlowSite Veteran
    from MI
    Messages: 3,041

    Well said. There are lots of numbers that you have to figure out or make a educated guess.
  7. mike838

    mike838 Junior Member
    Messages: 4


    Thanks gentlemen,
    I really do appreciate the help,there is def. some things that I had left out when putting those costs together,it make more sense to break it down over a few seasons than to break it down over one.I was looking to pay off everything the first year I probably need to settle down a little.This economy is a little scary right now to be starting a small business but what hell we'll give it a whirl. Thanks again.

    Mike Lenihan,Member
    Eko-Tek Solutions LLC
    Castle Rock, Co
    Plowing & De-icing
    Last edited: Nov 8, 2008
  8. hickslawns

    hickslawns Senior Member
    Messages: 627

    Mike- You already have the spray unit ordered? Just figure your cost of equipment spread out over the expected life of the equipment. Labor/fuel/materials/etc annually, and this will help to figure your pricing. You can still profit enough to pay the equipment off in a season (or less hopefully) but you need to figure equipment into the equation because it will wear out and you will have to replace it. Therefore, for bidding jobs, equipment costs or equipment replacement costs for equipment you already own need to be figured into your costs. Good luck. Phil
  9. mike838

    mike838 Junior Member
    Messages: 4

    Sprayer ordered

    I think I get the just of it,I'm sure that there will be some trial and error involved,as long as I take my time and don't forget anything major.The sprayer is ordered and waiting for my financing to go through should have it all set up today.I went through a company called Mcgregor in washington for the sprayer the guy there was very helpful and built the sprayer to my specs.Most of the other company's sprayers would not fit in my truck as I have a short bed.one more question for you,I am leasing my personal truck to my company, the payment is due today,is it as simple as drawing up a doc. for a lease agreement or should I go through my lawyer and make it all professional? just wondering if I should pay it personally or if it's okay to pay it out of the company?
    Last edited: Nov 10, 2008