0:00

you ask user groups uh Patrick wants to

0:02

know how are you coming up with your

0:04

hourly man rate when services are priced

0:07

per thousand in the rate matrices inside

0:09

the software would you just figure

0:11

expense plus product plus labor divided

0:14

by Machine hours question mark or do you

0:16

prefer paid hours

0:18

I have a huge difference in my job hours

0:21

and my clocked in and clocked out hours

0:23

so uh Patrick great question uh love

0:26

your approach on this uh might be a

0:28

little bit different approach than I

0:29

would take on it here so I’m going to

0:30

break down how we would tackle this here

0:32

uh for the business for job costing

0:34

accountability and budgeted time so uh

0:37

really looking at it uh to summarize

0:39

that question again how do you come up

0:40

your man rate

0:42

um for fertilization

0:43

when a price Matrix is based on uh per

0:46

thousand square feet so what I’m going

0:48

to do is open up the simple growth

0:50

blueprint here and I’m actually going to

0:52

tackle the pricing matrices first and

0:56

then I’m going to dive in how do you

0:57

actually come up with that hourly rate

0:58

but really uh there’s two parts of it

1:00

you need to come up with that hourly

1:02

rate of what are you charging per hour

1:04

and your Breakeven fully loaded uh labor

1:07

labor burden all your expenses and the

1:09

difference between your hourly rate and

1:11

your Breakeven is your profit and uh

1:14

with the fertilization If the product

1:15

cost of product markup if there’s any uh

1:17

so really we’ve got almost two questions

1:19

in one uh so I’m going to actually show

1:21

you how to tackle a price break matrices

1:23

for fertilization with a budgeted or a

1:26

desired Revenue permanent on a break

1:27

even with product costs

1:29

and then I’ll dive into how to show you

1:31

how to actually set up and come to do a

1:33

break even uh Revenue number so the

1:36

first part we’re going to do here is

1:37

we’re going to dive into the simple

1:39

growth blueprint here so no matter the

Simple Growth Blueprint
1:41

software you’re using this is where

1:42

we’re going to start we’re going to

1:43

blueprint it and then we’re going to

1:45

build it in your software so what we’ve

1:47

got here is our round number one for

1:49

fertilization and our custom field is

1:52

sure square footage that’s where we’re

1:53

measuring uh the Ariana satellite image

1:55

and then we’re going to go out and

1:57

actually uh estimate that so the first

1:59

thing we want to do Patrick is we want

2:01

to go in per service

2:03

or all the rounds probably and average

2:05

them together so I’m going to keep this

2:06

really basic and we’ll assume that we’re

2:09

just doing it for round one uh so let’s

2:11

assume round one

2:13

um or maybe round two has a uh a

2:16

granular product as well as a liquid so

2:19

if we’re uh going in and prescribing the

2:21

IPM integrated Pest Management we may be

2:23

doing a a broadcast of the fertilizer

2:25

fertilizer but doing a spot spray for

2:27

the areas we need treated for post

2:29

emergent uh so the first thing here is

2:31

we would go and get our chemical costs

2:33

or fertilizer cost of the year so our

2:35

cost per bag let’s say is 28 bucks it’s

2:37

a 50 pound bag

2:39

and that bag is going to cover 12 000

2:41

square feet

2:43

traditionally we are not marking the

2:45

product up occasionally we do an essay

2:46

setup or deep dive some clients like to

2:48

mark that up so I have that here but

2:50

really what is going on here is our

2:52

calculations of product hours our cost

2:53

for that bagged product is two dollars

2:56

and 33 cents per thousand square feet

2:58

now the question is if we’re doing a

3:00

post-emergent uh weed control but it’s

3:02

not a blanket application how do we

3:04

figure that out how do we actually get

3:06

that job costing in there well folks I’m

3:08

here to tell you it’s not going to be

3:09

100 perfect but we’re going to grab an

3:11

average and that’s going to work out on

3:13

average based on historical data so

3:14

let’s say we’ve got a jug of 120 dollars

3:19

and uh we could plug in the ounces but

3:23

let’s say that jug coverage now is going

3:25

to cover 110

3:28

000 square feet

3:29

and once we go in here

3:33

we have the ability to put in a coverage

3:36

so right now that’s zero dollars so if

3:38

it was a blanket application we could

3:39

put in 100 and it would be costing us a

3:41

dollar or nine but most of the time

3:43

we’re not doing a blanket application

3:45

for post-emergent weed control it’s a

3:47

spot spray scenario so every thousand

3:49

square feet what percentage are we

3:50

actually doing a post-emergent spray so

3:54

let’s say on average on the high side

3:55

we’re covering 30 percent of that

3:57

thousand square feet so what we’ve got

3:58

now is our blanket application of 233

4:01

per thousand and 33 cents per thousand

4:04

for our post immersion spot Sprint uh

4:06

add them together we get 266 is our cost

4:09

per thousand so what we’re going to do

Base Price
4:11

is really go in and say hey Patrick as

4:13

we’re building this out with you or

4:14

you’re building yourself uh what is your

4:16

base price to show up and Patrick says

4:18

you know Mike my price is uh 55 bucks we

4:21

plug that in and we say okay well how

4:24

many square feet does that actually

4:25

cover Patrick’s well maybe that covers

4:26

four thousand so we plug that in and

4:29

what happens here is if sheet starts to

4:31

actually calculate the the price

4:34

all the way up to almost an acre here a

4:36

little over an acre down here and we can

4:39

stretch this all the way out to two

4:40

acres if we need B now I would say for

4:43

most folks we would probably want to cut

4:45

this off and actually go up to about an

4:48

acre so that would be somewhere right

4:49

around this area here

4:53

and if we went in we could delete that

4:56

out

4:58

or actually just hide it

5:02

and we can say every

5:06

foreign

5:10

over 42 000 square feet is x amount of

5:14

more dollars time and cost so Patrick to

Dollar Per Hour
5:17

answer your question we really need to

5:18

have this dollar per hour in expense per

5:21

hour so I’m going to get into this in

5:23

the second part of the video but let’s

5:24

just say we know our Revenue per hour is

5:26

110 that is our goal per man hour for

5:29

the the licensed fertilizing technician

5:32

and let’s say that our Breakeven is

5:34

about 49 per man hour so after doing

5:37

several hundred of these a year uh

5:39

that’s probably where I’m seeing

5:40

ballpark in the average of the country

5:42

now we don’t want to base it on other

5:43

people second half of the video I’m

5:45

going to show you how we come up with

5:46

that break even in the hourly Revenue

5:47

goal but once we have that we figured

5:50

out our calculations for the product

5:51

based on the bag product 100 coverage

5:54

and our liquid post emerging at 30

5:56

percent coverage for spot Springer IPM

5:58

now we’ve set our base price at 55 and

6:01

that covers up to 4 000 square feet and

6:04

what we’ve done here is I’ve set a

6:05

production rate of 0.047 so maybe that

6:08

is going to cover our production for the

6:09

first four thousand square feet

6:11

for hose and reel push spreader or some

6:15

extra added time for unloading loading

6:18

in that dashboard time now in addition

6:20

we can do is go in and say hey if I’m

6:22

using a write-on spreader we’re probably

6:23

going to be closer to a 0.02 or maybe

6:26

somewhere in the middle of a 0.035

6:29

that’s our production rate per thousand

6:32

and you can see what the sheet has done

6:34

automatically says hey I’m based on this

6:35

base price that Patrick potentially gave

6:37

us we’re charging 13.75 per thousand and

6:41

what we’ve done is built a methodology

6:43

into the sheet here where we can

6:44

literally plug this in and say baits at

6:47

7.50 this is what we would charge based

6:50

on these price breaks but if we went in

6:52

and say Hey you know at ten thousand at

6:53

100 bucks it’s a little bit High not

6:55

where I want to be let’s plug that in at

6:57

seven and now the sheet drops it down to

6:59

97. so we’ve done is give me the ability

7:01

to to alter your production rates per

7:03

thousand and your charge per square feet

7:05

all the way down here now what happens

7:08

is when we go into service autopilot or

7:12

any other pricing softwares that you may

7:14

be using that we could uh build out with

7:16

you

7:17

you want the ability to actually go in

7:19

and take this so this is really your

7:21

blueprint

7:23

um good news is now none of the other

7:25

software that I know of actually give

7:27

you a profit and profit percentage

7:29

projection okay so if we go in and pull

7:33

up a product like service autopilot this

7:35

is going to be our blueprint this is

7:37

what we do with hundreds of businesses a

7:39

year uh we go in

7:41

we go into our services

7:44

and then we go in

7:47

and we pull up or create a fertilization

7:50

service

7:54

and see if we have on this test account

7:55

if not I can show you so we’ve got a

7:57

fertilization of weed control maybe

7:58

early summer treatment

8:01

and when we pull it in we go to the rate

8:03

matrices and the idea here is the the

8:06

top five lines here we’re going to line

8:08

up two

8:10

the top five lines here in this sheet

8:13

and we continue to add the lines all the

8:15

way down price breaking and say ten

8:17

thousand twenty thousand thirty thousand

8:20

wherever those breaks are where you want

8:21

and that every thousand over the last 42

8:24

000 is an additional 350.02 time and

8:27

it’s costing us 364. so based on the

8:30

cost that material we’re actually losing

8:32

money if we’re at 350. so we need to

8:34

adjust that and that’s something that’s

8:36

very very common because when we deal

8:38

with companies and work with them

8:40

they’re throwing numbers against the

8:42

wall and hoping they stick and they’re

8:43

assuming that they’re making money so

8:46

this is a non-emotional way um this is a

8:48

great example so I’m glad I added in the

8:50

post-emergent in there because this is

8:51

where folks get into trouble

8:53

um that 350 is not covering 3.64 cents

8:56

per thousand cost and a one minute

8:58

production rate per thousand so they

9:00

have to be charging at least three

9:02

dollars and 64 cents per thousand after

9:04

the first acre to at least break even so

9:07

this would probably have to be a

9:08

significantly uh jump so we’re at 450

9:10

that’s making sense this here is

9:13

probably got to be closer to four four

9:16

dollars and 25 cents on average to make

9:19

sense on your price per thousand so the

9:21

idea is we can now check our math of our

9:23

profit and profit percentage our hourly

9:26

wage that Patrick asked about that we’re

9:27

going to get into in a minute in the

9:29

hourly uh in the expense for manner so

Answer
9:31

to Patrick to answer your question

9:32

exactly

9:33

um the matrices does not

9:36

um determine your dollar per man hour

9:38

Revenue goal we need to have a dollar

9:41

per minute hour Revenue goal

9:43

um

9:44

determined and they break even number

9:46

would it cost you power to break even

9:47

before we ever go into the matrices so

9:50

we need a revenue hour a revenue per man

9:52

hour goal and a break even we need your

9:54

non-emotional product cost per thousand

9:56

with the coverage and once we bring the

9:58

revenue permanent hour the Breakeven and

10:00

the product with product costs and

10:02

coverage it all comes together into the

10:04

blueprint and then your top five cells

10:06

here are going to go into the top five

10:09

cells here and then you would continue

10:11

to add matrices and lines as we build

10:14

that out and we literally copy and paste

10:16

them in that’s then when you plug into a

10:18

square footage it’s going to calculate

10:20

the exact price so that is the way we

10:23

are going to tackle a price break model

10:26

in any software

10:27

um and if you’re using service autopilot

10:29

you take the top five lines and transfer

10:31

them in here we want to set our

10:33

calculation and our custom field to

10:35

probably per square footage so to answer

10:38

your question uh Patrick needed we need

10:40

to develop your charge per man hour and

10:42

a break even and we need to include your

10:44

product costs in the rate matrices in

10:46

service autopilot service autopilot

10:48

question second question is how do we

How to figure out your man hour rate
10:50

actually figure out what Patrick needs

10:52

to charge per hour and what’s it costing

10:54

him so the idea here is we’re going to

10:56

go into simple growth

10:58

um

11:01

average wage and overhead recovery

11:04

template so this is where we can use a

11:06

more system multiple overhead recovery

11:08

system to build out and figure out what

11:10

your cost per hour is and how to get

11:12

that cost per hour and desired Revenue

11:15

hour man hour in the matrices in

11:17

addition when we go out to schedule

11:19

those jobs on a fertilizing technician

11:21

in my company we’re running 12 to 1300 a

11:24

day for one technician so how how do you

11:26

know what to charge for that technician

11:28

so what we’ve done here is we go into

11:30

setup say Patrick’s fertilization

11:32

Division and we may not have tax and

11:36

crew leads

11:37

um but we may have

11:39

a series of technicians and they could

11:42

be making anywhere let’s say from 28

11:45

29 and maybe we got a couple veteran

11:48

guys at 38 and 34.

11:51

and if you’re in my market Upstate New

11:53

York you’re going to be running about

11:54

1800

11:56

1700 hours a year so we put the

11:58

projected hours in here and the Sheet’s

12:00

going to say hey we got 5400 hours of

12:02

projected payroll based on those wages

12:04

it’s going to cost you 182 857 and let’s

12:09

say that uh five percent of their

12:11

payroll time is in overtime so the

12:14

average wage now across all those

12:15

technicians is 33.86 we’d want to go to

12:19

our payroll company and get our labor

12:21

burden is a percentage of the dollar and

12:23

then each technician as we go in we

12:26

would plug their hourly wage so if the

12:28

gentleman that is making 34 bucks an

12:30

hour we plug that in

12:33

and that is our hourly wage with burden

12:35

and OT with burden those are budgetary

12:38

numbers that we need so that’s the first

12:39

step we figured out average wage and

12:40

labor and next step

12:42

we’re going in and building out our

12:45

truck and tank or truck and trailer

12:47

whatever that looks like in your company

12:49

uh so in this basic example we’ve got a

12:52

2500 pickup uh purchase price here’s

12:55

Finance interest rate years of use

12:57

salvage value what are we selling it for

12:58

work days per year and uh hours per day

13:03

licensing and miles per gallon uh fuel

13:08

cost

13:09

oil changes oil change interview oil

13:11

change cost tire change interval entire

13:14

change cost and additional maintenance

13:16

so that truck if we were running a 2500

13:19

say GMC or Chevy truck it would be

13:22

costing us 7.78 per hour

13:25

in a yearly or monthly budget there uh

13:28

in that example we probably do not have

13:30

a trailer but we may have a machine so

13:33

we may have instead of a 60 inch laser

13:35

we may have a perma-green or an X marker

13:38

Toro ride at same idea uh we’re going in

13:41

the finance Years Years used insurance

13:46

um maybe that set of blades but

13:48

different uh swapping out of

13:50

preventative maintenance on that machine

13:52

oil changes cost of fuel and then we get

13:55

an hourly operating cost so we could

13:57

have the truck we could have the right

13:59

on machine and then we would probably

14:02

have somewhere over here a tank that we

14:05

were actually holding the materials in

14:06

but the idea is we’re going in and

14:08

driving in all those costs for the

14:11

fertilizing I’ll show you a mowing

14:12

example because I’ve already had it

14:13

pre-built but that’s the idea that we

14:15

want to build out all the divisions and

14:17

all the equipment here uh maintenance

14:19

package is going to be more for

14:21

maintenance or design build but it’s

14:22

your weed whacker stick out your blower

14:24

and one crew put the total cost of that

14:26

all in there and we run it over

14:28

and lump it together so that we don’t

14:30

get lost in the minutia but that’s also

14:32

going to give you an hourly cost as well

14:34

so once we’ve got all your equipment

14:36

we’re going to go in and let’s say we

14:38

have five of those 2500 pickups with the

14:41

tanks in the back and the spreaders on

14:43

the back we put in the purchase price

14:45

the quantity equipment type original

14:47

cost hours per year hours per day hourly

14:49

rate cost per year all from the previous

14:51

sheet and then it’s going to get you a

14:52

cost for all five of those trucks the

14:55

whole entire year and as you scroll down

14:56

to the bottom we’ll have a total

14:58

equipment cost so this is the idea that

15:00

if we are serving

15:04

um

15:05

Debt Service such as equipment payment

15:07

things like that that don’t show up on

15:09

profit loss we are covering it in this

15:11

process as a Debt Service because a lot

15:14

of companies will look really nice and

15:15

good on the profit and loss but in the

15:17

balance sheet they’re forgetting about

15:19

all the debt service so this Pro this

15:21

process will pull that Debt Service in

15:24

so we actually have a relative number to

15:26

recover that Debt Service as well so if

15:28

you are uh have long-term payables such

15:30

as loans for your trucks or equipment

15:31

that needs to be figured in when we

15:33

figure out some of these hourly recovery

15:35

rates uh next thing we’re doing is we’re

15:37

going to build an actual budget here

15:39

General administrative costs across the

15:42

top for overhead

15:44

plugging those all in

15:47

and we’re going to go in and put our

15:48

gross sales our material including tax

15:52

our labor with scheduled hours and

15:53

average wage from the labor sheet our

15:55

labor burden subcontractors equipment

15:57

that we just went through any rental

15:58

equipment and the total cost of sales

16:00

and it’s going to give us a gross profit

16:02

we’re going to take our detailed

16:03

overhead from the top and drop that in

16:05

here

16:06

and what that’s going to do at the end

16:08

is give us our total overhead to be

16:09

recovered as a percentage of sales our

16:11

net profit or loss and if we’re

16:14

recovering in a Moore’s overhead

16:15

recovery system we’re going to mark up

16:17

materials 10 equipment 25 and Subs at

16:20

five percent and what that’s going to do

16:22

when we plug that all in is going to

16:24

give us an overhead recovery labor

16:27

percentage and we’re going to drive that

16:29

into our hourly Bill rate per crew so

16:32

Patrick was talking about fertilizing

16:34

I’m going to use a mowing example same

16:36

idea a little more simplistic for

16:38

fertilizing we’re going to put the

16:40

number of people on the crew so in this

16:42

mowing crew it’s two how many hours a

16:44

day the average wage off the Labor uh

16:46

labor sheet is a labor burden the

16:49

overhead recovery is coming from our

16:51

labor recovery number down here on the

16:54

bottom

16:55

and now we know the labor on that crew

16:57

is 8 52 built in with a 20 profit margin

17:01

our truck and trailer for mowing crew

17:03

how many hours per day overhead

17:05

recovering profits a truck and trailers

17:07

cost us 152 a day uh we got the mowers

17:10

on the crew but this would be the

17:11

fertilizing machine on the truck how

17:14

many hours are we using it not curb time

17:16

time from shop to shop like we do the

17:18

trailer truck at 73 dollars

17:22

and our maintenance package our handheld

17:24

equipment so in this mowing example when

17:27

we run through this process for

17:28

Patrick’s question is we’re gonna have a

17:30

daily sales goal of eleven hundred

17:31

dollars

17:32

Breakeven is costing us 918 before May

17:35

profit and we need a budget 20 hours and

17:38

our break even is now 45.90 based on

17:42

that particular crew makeup and as

17:44

Patrick’s question exactly the hourly

17:47

Bill rate for that mowing crew is 55.

17:50

but if you went through the same exact

17:51

process for a fertilization technician

17:53

uh this would obviously be a bit higher

17:56

but I’m guessing your daily sales goals

17:58

are going to be between 15 uh 12 to 1300

18:01

it’s probably an eight to ten hour a day

18:03

and our bill right here is probably a

18:06

little over a hundred dollars and once

18:07

we get these non-emotional numbers

18:09

Patrick that’s what’s going to drive

18:11

right into the charge per hour and the

18:13

expense it’s not the matrices we need to

18:15

set our charge set our expense

18:18

figure out our average cost of materials

18:21

based on granular and liquid and whether

18:24

we’re covering 100 or percentage of spot

18:26

spraying and then build a minimum in the

18:30

price to show up so let’s say we’re at

18:32

60 bucks minimum and now that covers 5

18:34

000 square feet

18:35

the simple growth blueprint updates that

18:38

sets the price changes

18:41

and at that calculation hour 12 dollars

18:44

per thousand and we can adjust our

18:47

charge per thousand as we go down and

18:49

our production rate per thousand to

18:51

update the matrices and once this is all

18:53

set up we’d go in the service autopilot

18:56

or whatever software and take the top

18:58

five cells here

19:01

outside of the profit and profit

19:03

percentage so these guys here and

19:05

literally put them in the system the

19:07

problem with most software is they do

19:09

not give you the profit and profit

19:10

percentage projection so we want to

19:12

blueprint it confirm our projections and

19:14

then drive that into the software so

19:16

Patrick go out figure out your hourly

19:18

rate your break even put that into the

19:21

simple growth blueprint or something

19:22

similar figure out your product costs

19:24

across each round are averaged and then

19:26

drive your matrices with a production

19:28

rate that’s not emotional based on here

19:30

historical data or a conservative

19:32

industry average so Callahan’s corner

19:35

you ask the questions we had some live

19:36

right here on Facebook Patrick great

19:38

question please submit your question in

19:40

the comment or a couple of Facebook

19:41

groups are in and we’ll be answering

19:43

them pretty much on a daily basis

19:44

throughout the following months thanks a

19:47

lot Patrick for the question