So, $45 of direct materials, which is less than 10% of what I charge. Lets say a one wall treatment, where the wall has to be floated, sanded, primed and wallpaper hung, Im only spending $10 on mud, $5 on sanding screens, half a gallon (If that) of Gardz for primer ($10 worth, MAYBE), $10 worth of paste and blades, and maybe a roller cover or two $10. For example, and this is a totally different trade here, but when I wallpaper, I have hardly any material expense. Production work is more material intensive, fine detail work is more labor intensive. I guess it depends on what your doing though really. Im easing into this myself.Īs far as material percentage, I think 25-30% is about right. This is okay when you're first starting, but eventually should to take overhead into account, or you will THINK you're making that money, when actually, a good portion goes back into the company, so in reality, you may have actually only made 400. Actual business models are like what Mike said. From that $600 you have to buy tools, maintanence, pay your expenses, etc. With that model, you dont have actual profit. If you only charge your customer what you pay yourself, then you really make $20/hr.Ĭlick to expand. When you pay yourself $30 you need to charge the customer $45 to cover your taxes and insurance. Let's say you worked 20hrs and pay yourself $30, that's $600 minus the material $250, that leaves 15% to pay your overhead. I would take another look at your example and deduct the wage you pay yourself times the hours worked on that particular job. My net profit was 40% (my wages come from this amount, then I pay my taxes and self employed tax from this as well) My direct labor was 30% (subs, payroll, taxes, comp), then expenses were 10% of sales. Last year my direct materials was 15% of sales, material overhead 25% of direct materials (tools, sprayer repair, sundries, water, etc.). Make sure you are using some accounting program, I use Quickbooks, that will allow you to look at P&L and job costing. My example would look something like this $1000 - $150(dm) - $500(dl) = $350īut just looking at a particular job does not tell the whole picture. Meaning job sales - direct material purchased - direct labor (employee plus me). When I look at one particular job, I like to realize a 30-40% margin.
0 Comments
Leave a Reply. |