Are you working all the time, but it doesn't seem like you can get ahead or just enough money to pay the bills but not any leftover to pay yourself? You are not alone; countless business owners struggle and don't know why. They work really hard, but it just isn't paying off. Stephen has been where you've been, but he made the leap from surviving to thriving, and you can too! In this episode, Stephen gives you the nuts and bolts of figuring out what's my break-even cost, how much should I charge?
Three different business costs categories
Fixed costs (examples)
Owner's salary, rent/mortgage, utilities, debt payments, advertising, marketing, administrative payroll, taxes, insurance, office supplies, business education, trade organization fees
Variable costs (examples)
Vehicle repairs/maintenance, fuel, tires, registration, consumables- grinding disks, welding gas, saw blades
Direct costs (examples)
Materials, supplies, labor, equipment rental, dumpster rental, subcontractors, freight
2 types of hours
Billable hours- hours billable to a job
Nonbillable hours- billed to overhead
Example*
Fixed costs + variable costs = $15,000 per month overhead
3 Feild employees work 40 hours per week
3x40= 120 x 4 weeks= 480 + owner's hours 120 per month= 600
$15,000 overhead ÷ 600 total billable hours = $25 per hour
3 Field employees paid $15 per hour x 480 hours per month = $7200
Overhead $15,000+$7,200 field employees=$22,200 ÷ 600= $37 per hour break even
*This is only an example your's could be more or less
#3 Where do I start? Start Here
Rabbi Daniel Lapin
1 Timothy 5:18
“You shall not muzzle the ox while it is treading out the grain [to keep it from eating],” and, “The worker is worthy of his wages [he deserves fair compensation].”
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