# adding overhead and profit to labor



## treeguy (Mar 19, 2009)

I recently passed a contractor's exam for tree service. My license should be issued shortly, but in the meantime I am trying to figure out what and how to charge for labor. 
I pay my guys $15 per hour. I don't yet know what this will cost me once I pay fica, state of ca and worker's comp. So here is my question. Do I add all of those additional charges for labor into my overhead and charge my customers $15 per hour for labor? Or should I figure out what 1 hour of labor costs me and then add overhead and profit to that figure?
For example.. If I pay my worker $15 per hour and then with all of the additional fees (taxes and insurance) it comes out to about $30 per hour, do I then add overhead and profit to $30 per hour? Does this sound as confusing to anyone else as it does to me? I know I would add general liability ins to overhead, but should I add workers comp and taxes to that as well?


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## FJRFencer (Apr 16, 2009)

If you don't figure in ALL your costs. you will lose money.

Example 1 hour of work you don't figure it right based on 1 guy working and job complete. you figure $50 you pay your man $15 and you clear $35 right? 

Just guessing your tax rate and workers comp.

your $15 is prob closer to $22
Did you drive out one time to bid the job. Fuel cost/distance traveled.
Did you get the job and go back? Fuel cost/distance traveled
Payed said labor while he was sitting in the truck on the drive $$
Overhead = monthly advertising expense as well. Phone book, direct mail, website hosting, etc. all play a part in the bottom line.
Gen liability you mentioned as well.
Truck payment?
Truck insurance?
What if you have equipment failure? got a cushion for that?

Once said and done you prob clear $5 (If that)

Think you underbid?


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## Dylan G (Apr 3, 2016)

Tell him birmingham I agree


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## TNTRenovate (Aug 19, 2010)

treeguy said:


> I recently passed a contractor's exam for tree service. My license should be issued shortly, but in the meantime I am trying to figure out what and how to charge for labor.
> I pay my guys $15 per hour. I don't yet know what this will cost me once I pay fica, state of ca and worker's comp. So here is my question. Do I add all of those additional charges for labor into my overhead and charge my customers $15 per hour for labor? Or should I figure out what 1 hour of labor costs me and then add overhead and profit to that figure?
> For example.. If I pay my worker $15 per hour and then with all of the additional fees (taxes and insurance) it comes out to about $30 per hour, do I then add overhead and profit to $30 per hour? Does this sound as confusing to anyone else as it does to me? I know I would add general liability ins to overhead, but should I add workers comp and taxes to that as well?


You need to determine your costs then add overhead and profit. It may take some time to determine your overhead, but you should be able to find a starting number and then adjust as you go and grow.


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## VinylHanger (Jul 14, 2011)

Hopefully he's figured it out by now. :laughing:


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## TNTRenovate (Aug 19, 2010)

VinylHanger said:


> Hopefully he's figured it out by now. :laughing:


Good catch. I usually catch it when someone brings up an old thread, but missed this one.


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## TimberlineMD (Jan 15, 2008)

with only 7 posts, he's out of business.


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