Calculating and Recovering Overhead Cost in the Lawn Care

Industry

Recovering Overhead

Cost in the Lawn Care

and LandscapeIndustry

Of the many methods used to estimate and recover overhead cost in the lawn care

and landscape industry, the most popular is

Multiple Overhead Recovery (MOR).

Using MOR, you calculate your overhead based on the component

parts of the job, not just on the dollar volume.

The MOR method allows You to better associate your incurred overhead expenses

to your actual job costs.

Let’s say you have two jobs:

Let’s say you have two jobs:

JOB A and JOB B.

Let’s say you have two jobs:

JOB A and JOB B.Each will generate

$100k.

JOB A is labor driven.

JOB A is labor driven. • Digging holes, laying pipe,

mowing lawns…

JOB A is labor driven. • Digging holes, laying pipe,

mowing lawns…• Almost all the $100k will be generated by selling employees’

time.

JOB B is mostly materials.

JOB B is mostly materials. • $10k is estimated for labor.

JOB B is mostly materials. • $10k is estimated for labor. • The other $90k is all parts and

materials.

Both jobs will gross you $100k, but which will cost you more?

Both jobs will gross you $100k, but which will cost you more?

In other words, for which job should you recover more overhead?

It’s a mistake to apply template estimates to both jobs.

Every component of a job has overhead levels specific to your company’s size and situation.

Calculating and Recovering Overhead Cost in the Lawn Care

Industry

That’s where the

MOR method

comes in.

Employee labor Requires far more overhead than

materials do.

JOB A will therefore be more costly for you than JOB B.

Once you’ve estimated the overhead cost of a job per $1 of revenue, you can set an accurate overhead recovery percentage.

Of the many methods used to estimate and recover overhead cost in the lawn care industry, the most popular and effective is

Multiple Overhead Recovery (MOR).

DO NOT apply template percentages to your jobs.

Of the many methods used to estimate and recover overhead cost in the lawn care industry, the most popular and effective is

Multiple Overhead Recovery (MOR).

Instead, use consultants and accountants to figure out costs and percentages specific to you and your jobs.

Using MOR correctly will help ensure your jobs are truly profitable.

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