operating cost???

[Colorado Digger]

we do not charge for time the machine is on the job but not working. sometimes it is 2-4 hours. othertimes 11 hours. but if the same operater runs dozer, dump truck and skid steer his hours will add up to the total amongst the 3 tractors. if he is doing hand work or supervision he gets billed as a super or foreman.
having a full time mechanic gives a large advantage of not needing new stuff. i am fine running current but high hour iron. i would rather pay for maintenance and parts than have fat payments.

 

[DrJim]

:cool2

. . .. Since all my equpment is paid for I have very little overhead compared to rental companies and those who have much higher operating costs. .

Like CM1995 says, even if your equipment is paid for, you have most of the same costs as anyone else. Depreciation is not just a concept for your tax return--it is a real expense. My wife thinks my house is an investment 'cause it's paid for. What I see is gradual deterioration and the need for maintenance, repair or replacement increasing every day. Don't worry too much about what you think others are charging--they ain't all all that smart. Many, many small businesses make little or nothing. You have to charge enough to build an equipment replacement fund or you aren't making anything. The Bobcat 773 Turbo that I bought w/ 166 hrs on it for $ 12,500 might cost $ 30k to replace.

In my primary occupation, I find myself with worn out furninshings, worn out carpet, worn out equipment, settling concrete, an 18 year old roof that might be good for 7-10 more years--you get the picture. My panoramic x-ray is obsolete, with some key components no longer available. Yes, it's paid for. It cost me $ 9,500. To replace it now, I need $35-50,000. If I make the leap to 3-D imaging, that will cost me $100-120k. The darn little x-ray sensors that your dentist might now be using for x-rays cost $ 7-10k _each_. I need to shell out $200-250 K or more just to keep doing what I'm doing--and try to pay for it out of revenue that is pretty much flat. Looking back, I've paid my bills and lived a decent lifestyle, but I've been living off the "depreciation" that I haven't stuck in the bank to pay for replacements.

If you work for "the other man", you might have medical and dental insurance and some sort of pension contribution. You need to charge enough to fund those things yourself. That and the cost of your equipment (well, say 75% of your equip cost, after tax breaks) comes from your after tax income--after the 15% SE tax, any state income tax, and Fed income tax. There aren't many of us charging enough for what we do, no matter what our occupation.

As a customer I sometimes puckered at the delivery or move to a site, but I also found it to be fair. It costs money and time to move, especially for a one-day job. Whatever, charge $ 25-75 to move to the job, and maybe more if the job is a fur piece out in the county.:cool2

My health insurance doesn't cover optical, and I'm having a tough time finding anyone to fit me with glasses. . . .

 

[CM1995]

There aren't many of us charging enough for what we do, no matter what our occupation.

I think that statement goes a very, very long way.

It's disheartening to see that regardless of our professions or field of expertise, that the same struggles are there, rearing their ugly heads. It's getting harder and harder for the small businessman to make ends meet, something has got to change...

 

[DrJim]

:usa CM1995, I'm getting tired. It's gonna be midnight soon here in Tennessee, I just don't know what day. . . .

Here's a link to what I've been studying on. Like the equip discussed on HEF, this stuff comes in all shapes and sizes. The stuff is pricey. In all fairness, some of it is truely amazing. The problem or changing standard that dentists face is this: Probably 1/2 or 2/3 of what's happening around the roots or in the jaws is hidden by other structures when imaged by 2-D ( traditional dental x-ray). So here's some of the logic: Take a 2-D film, and if you see something suspicious, take a 3-D film (if you happen to have a cone-beam CT sitting there depreciating 40% per year due to the lightening-speed that technology changes), or refer the patient out to somebody who has the CBCT-3D.

But wait: Duh. If the developing problems are hidden, masked on the 2D films, you ain't gonna see 'em, so you won't see the need to take the 3D film. Is that so difficult to understand? The problem is that a) the machines cost $ 100 K and up and b) patients and insurance companies want you to justify the need for the 3D image based on something else you see ( See 1st sentence in this paragraph.)

It gets worse. If a patient has something wrong, and we don't find it, we're "liable" unless we can prove otherwise. The patients and the insurance companies have all the rights, we have the responsibilities.

Before I drop for the night, consider this: Heard of the American's with Disabilities Act? Sure you have. My favorite roadbuilder cuts the curb and sidewalk at every corner when they repave the city streets, installing handicap ramps. The act is a good thing--it helps a lot of people move about and function to the maximum extent possible.

The Feds have long held that dental offices are "places of public accommodation, regardless of whether my office is a "private" clinic or not. So, those ( you pick the descriptor ) have declared that--you ain't ready for this--that a dental office's web site is an "extension" of the accomodations and services provided, and thus the feds have declared that our websites will have to be fully accessible to folks with disabilities.

Hmmm. I ain't as smart as I look in my picture. I can't figure this out. We supposed to make our webpages talk, for those with vision impairment? Ah, but a patient pointed out, suppose the person is blind? Some kind of touch-pad braille output device would work--there are some of those out there. <http://www.engadget.com/2004/06/08/rotating-text-to-braille-converter/>. All we have to do is convert our websites to translate and stream all the features of the website out in a format that the touch device can interpret. But suppose the handicapped person is blind, deaf, and has mashed their fingers off trying to help Atco?

The gov'ment doesn't really care how we do it, it's the law, they say, and we gotta do it. Now who you reckon is gonna pay for that? Did you ever here anyone is Washington fuss about the cost of health care in the US? Horse pucky, I don't spend 1/2 my time actually delivering health care anymore, it's all the other stuff that has been shoved upon us.

If your Flash Player works (mine did, but it doesn't now--the darn auto-updaters update it to Flash 10.1 or 10.2, which is not compatible with the 64-bit Win 7. . . and there is no going back!) , take a look at the stuff on this site. It will take a few years, but eventually every dentist will have or have access to some variant of this machine. <http://www.prexion.com/dental/guidedtour.html>

But they won't all have skid-steers, grapple buckets, 4 in 1's, and trenchers! :cool2

Nighty night .:usa

 

[SKM Excavation]

I work in construction but doing electrical work and own a skid steer you see in my avitar. My question is how much can you charge to run your equipment and be fair to the person your working for but still make money and cover maintance cost for the machine. I dont expect to get rich but it would be nice to pay the bills if you know where I am coming from.

Heres how i figured out my skid steer cost of operation hope it helps (this is in canadian funds)

Fuel burns average of 4L per hour x $1.19L = $4.76 per hour fuel
25% of gross job before any exspense is put into a maintenance/replace account
Example. $1200 x %25 = $300.00 then deduct fuel and your wage from $900.00
14hrs X $85hr = $1200
Maint acct $1200 X .25 = $300.00
Fuel $4.76hr X 14hrs = $66.64
My wage = $28 X 14 = $392.00

$1200 - $300 - $66.64 - $392.00 = $441.36 Profit

 

[87silvert]

It sure is hard to work by the hour. First off, if you are doing skid steer work with a skid steer, you can get a helluva lot done in a couple hours. Like kill the job. And who really wants to work slower, it just seems to make me tired. So I recommend bidding the jobs. Then have in your own mind when looking at the job if it is a half day or whole day, and come up with those rates depending on what the market will bear and maybe a teeny bit more. Then you can stop for coffee and not wonder if the homeowner is looking out the window thinking about the $2 a minute your costing them. If I wanted to worry about that nonsense, I would get a w-2 at the end of the year.
As for operating costs, boy, these days they go up every day, but with a skid steer they are minimal compared to what you should be getting for the machine. A large machine does not get paid as well as a skid or a mini in relative terms so operating costs are a much larger percentage and really need to be looked at. With a skid steer, the rear in the seat is costing A LOT more than the machine. I despise running my 300 size excavator.
But, just for fun, figure tires are $1.50 /hr, fuel is $8.00 /hr, cutting edge $ .50 hr, oils and grease $1.50 /hr, replacement cost $8.00 /hr or so. So that is $19.50 /hr and I bet that is pretty close.(for me anyway) Buy a machine new for an average of $35,000, put 3000 hours on it and sell it for $9,000. You shouldn't have crazy repairs in 3000 hours if you not an animal.
Now for the big number. An operator good enough to be trusted to go on a job alone and get something done safely and not say or do anything to get into trouble is worth $25.00 per hour. You should triple that figure to cover taxes and insurance on your employee and your business. So that is $75 an hour.
So you are at $94.50 without really making any money at all. I know what people are thinking, but I am an owner operator, I don't need to pay anyone. That is just crazy. You need to price it like you do or you are cheating yourself, and on top of that you will never be able to grow your business.
One final thought on the pricing. YOU are the only person who will make sure you get enough money to do a job. The customer does not care if you make enough or not, except for a VERY rare occasion. Get as much as you can fairly get for your services in your area and spend a little extra doing an exceptional job. My theory is two-fold. First, you will make more money. Secondly, and more importantly, you will get referals based on the quality of your work. There is a large number of customers who really will pay more for a contractor they can trust and does a great job. You will slowly build a network of quality customers who want your quality work, and have friends who do to. Birds of a feather. Believe me, I started out with nothing and thought I needed to work cheap. That is not the answer, you end up with the wrong customers. Not all customers are worth having, some need to be fired at the first meeting.
This is just my opinion. Hope this helps.

 

[KSSS]

I agree with about everything in your statement. Bidding almost always makes more money than does working by the hour. Only when I have a customer who doesn't know for sure what he wants or a job with numerous other issues that prevent bidding do I go the hourly route. By bidding you actually get paid for your productivity, and experience as opposed to penalized in someways for it when working by the hour.

I have always found that I get paid better for digging small holes than big ones. Case in point, here the rate for digging a typical 2000 square foot foundation is about $1.00 a square foot or less. I use a 160 for such jobs and all the costs that go with that. Put a 1000 or 1500 square foot addition with a full basement in an area that wont support a fullsize excavator and now I can make twice as much with less cost by using a 50+ sized mini ex. I own a 160 because I have to but $ for $ the smaller iron makes me a better return.

I also agree with the fact that some customers are not worth having. I read a great article on the topic in a landscape magazine. Regardless of what you do for a living the fact pattern is the same. We all have customers that cost us money. Like mentioned for me most of these guys are those that I have allowed to take the money out of a job, or you worked cheap once and now your stuck. Some customers want it all and they want it for free. Those are the customers who are better off hiring the "other guy".

 

[87silvert]

well said

We all have customers that cost us money. Like mentioned for me most of these guys are those that I have allowed to take the money out of a job, or you worked cheap once and now your stuck. Some customers want it all and they want it for free. Those are the customers who are better off hiring the "other guy".

Very well put. I have had customers take a little part of the work and the appropriate(seemingly) money out of a job and you don't realize how bad that little bit hurts till you do the job. Some people are very talented. Oh, yeah and we are creatures of habit. You give something once and it is expected.
The way I control myself from working cheap when I really want a job is to think of all the people that I work for that treat me well. If I do a job for any less than I would work for them I am cheating them. I know it happens all the time in business, but I won't do it.
I have bought a lot of machines from one dealer. I do not negotiate with them. I like to believe they treat me fair and make the money they need to make to keep the doors open. Now they get a customer who comes in, beats the hell out of them for a sale, they get concessions from the manufacturer, cut their profit to hell, and get this guy a machine $5,000 cheaper than I bought mine. A good loyal customer gets the shaft, not right.:Banghead

 

[DrJim]

:bash

. . . Once you are buying your machines with cash (not financing them anymore) then you will be very competative as you will no longer have to add the payments into the cost of doing business.

We've covered this topic pretty well--I have enjoyed the comments. Tonight I read DGODGR's comments again, and want to clarify something: When you build up your equipment replacement fund and shop with cash, you have a slight advantage cost-wise. You don't really save "the payments", as the principle part, you pay anyway with cash up front. You are saving by reducing or eliminating interest costs, and you may have more flexibility or bargaining power when you buy. But your overall, total costs will not be greatly reduced.

I own my equipment and building in my primary business. My problem is that I don't "pay" myself for all the administrative functions, continuing education time, nights and weekends, mowing the grass, fixing the plumbing, fixing the computers:bash, business planning, meeting with the accountant. . . it goes on and on. If I count all of my time, I might make more working as a door greeter at Wally-World. Anymore I think I work one (maybe 2! ) free hours for every hour I'm actually "producing" income--the joys of being self-employed.

And I get very little for "bidding" my jobs--the examinations, treatment planning, letters and consulting with other doctors, meeting with the patients to explain their needs, attempting to make financial arrangements, etc.--and handling insurance claims costs me nearly $ 800 per week. That all comes out of "my part", after I pay everyone else.

When you take time to talk to customer on the phone, go view the job site, talk it over with the primary contractor, locate utilities, etc, and give "free estimates", you are providing a valuable service--a consulting service of sorts that is valuable because of your years of training, efforts, and experience. You're doing it for "free" and you should recoup that in the price of the job.

In my profession, the most valuable thing I do is the overall exam, treatment planning, and explanation of treatment options. It's the thing I get paid the least for--by far.

I ain't rich but unlike some of you, at least I still got my Daddy's good looks. . .

For most of us, whatever we're charging, it's usually not enough.

"I should have learned. . to play the guitar, I should have learned. . to play d'em drums. Maybe get a blister on your little finger, maybe get a blister on your thumb. . . "

 

[KSSS]

Very well put. I have had customers take a little part of the work and the appropriate(seemingly) money out of a job and you don't realize how bad that little bit hurts till you do the job. Some people are very talented. Oh, yeah and we are creatures of habit. You give something once and it is expected.
The way I control myself from working cheap when I really want a job is to think of all the people that I work for that treat me well. If I do a job for any less than I would work for them I am cheating them. I know it happens all the time in business, but I won't do it.
I have bought a lot of machines from one dealer. I do not negotiate with them. I like to believe they treat me fair and make the money they need to make to keep the doors open. Now they get a customer who comes in, beats the hell out of them for a sale, they get concessions from the manufacturer, cut their profit to hell, and get this guy a machine $5,000 cheaper than I bought mine. A good loyal customer gets the shaft, not right.:Banghead

And to add further insult to that your likely competing against him and his severely discounted machine.

I have also bought all my machines from one dealer. I do periodically shop their numbers and I tell them so. That is enough to keep them honest as I have not been surprised by finding a better deal and it also gives me some piece of mind in knowing my loyalty is not being taken advantage of.

 

[DrJim]

For those of you interested in the psychology of this subject, see TGIF "Story Time".

"I'm a hard workin' man. . . " http://www.youtube.com/watch?v=VcXg8RrylII