It may work out to, say, $25 an hour that you need to make just to pay your bills. Here’s the bottom line: what you charge is NOT what you want to make.
So if you were hoping to make $30 an hour for your time and that was what you planned to charge your client..can see how that doesn’t work. Instead, that overhead burden number gets ADDED to what you'd like to earn for your time. What you charge covers your costs associated with running a business plus a portion of what you’d like to earn on top of that as a business.
Guess if you have to, but include a number for taxes!
All of these costs need to be annualized -- what it costs for a whole year - even if you only work 8 months.
My first job was working on weekends for a college buddy. We stuffed our tools, plants, bags of soil or mulch, and anything else we needed into our two cars and we made it work. ” We were strong, we were eager, we were happy and it didn't matter that we didn't have the tools and equipment that the bigger companies had. In fact, we were often chosen because we cost less than the “big-guys.” AND, we also had a niche! We still had so much ahead of us, so much to learn.
My second job was working for a gifted perennial gardener who was self-employed. We were operating 100% on our eagerness to learn and to do right by our clients. Often, we had the clients buy the materials outright.
A common strategy for landscape start-ups is to stay relatively small and flexible – a pick-up, a trailer, and a few small equipment selections to start. If there is no plan for how much money you will be spending on tools and equipment at the beginning of the year you can turn up at the end of the year having spent far too much and eroding your profits.
As you ID more and more needs you pick up the tools needed to address them. Or worse, finding you have no money left at all to pay your taxes!
You must understand your overhead burden and work that number into your labor rate.
In other words, what does it cost you to run your business for one day or even one hour?