how much a year is 'acceptable' to pay for a work vehicle?

[huggytree]

I just sold my old van yesterday.....i drove it for 5 years and the cost average w/ repairs was $3,000 a year (i probably under paid for it by $5,000 when i bought it, so the real # would have been $4,000 a year)

my new van(which i plan to keep for 7 years) will most likely cost me $5,000 a year

is $5,000 a year too much? i think its probably on the high end, but still acceptable

the good news is i should save $1000-2000 in gasoline a year w/ the new one (i typically spend $10,000 a year in gasoline)

i was thinking of reducing my hourly rate to make up for the gasoline cost savings, but when i saw the cost of owner ship being $3000 vs $5000 i decided im right where i need to be...

anyone know what a fleet vehicle should cost an average business per year?

[lucas.bowser]

Well, first your hourly rate should be market driven, not based on your cost. You need to disconnect the two. Your rate needs to cover your fixed costs, but should not necessarily be dictated by them. In the past, I believe you indicated that you spend about 1200 hours a year in the field doing the work people pay for. Then the cost for the van in your hourly bill rate, including fuel, is about $12.50 and hour. If you changed your rate because of the lower total cost of ownership, it wouldn't be by more than a couple dollars per hour. Hardly an amount that will drive more business to you or make a difference to most of your customers.

As far as does it cost too much? I think you're in the ball park. That seems to be about what we pay for our fleet of delivery vans each year where I work. But when you look at it, the decision for you should be about vehicle dependability. When you can't get to a job site, that's work you don't get paid for. Your cost for the van is cheap when compared with what you likely bill in a day.

[huggytree]

i did not count all the days my old van was out of commission....i typically make $1,000-$3,000 a day in sales

i calculate my ACTUAL costs and then add 20%...thats how i come up with my hourly rate.....i dont keep track of the market anymore...im happy with what im able to charge

[lucas.bowser]

Does that mean your hourly rate varies by job? Or do you periodically re-calculate your hourly rate based on actual period costs, add 20% and divide by hours in field? This is more a point of curiosity. Pricing is always an interesting topic to me.

[huggytree]

i have (2) hourly rates...one for new homes (cost) and one for remodels (20% over cost)....i also make markup on parts (20-40%) and fixtures (20%)

on new homes my profit is all in fixtures and parts....i make 10%-15% typically

on remodels i make 20-40%....i have more room to play here, so it varies...on projects with very high end fixtures i typically cut my labor rate a bit....i dont need to make 50% and potentially loose customers due to extreme profits...

i have a job coming up with $8,000 in fixture profit alone....its a 3 bath remodel....its incredible the dollar amount they are putting into this house in fixtures alone...if you saw the house you'd understand....it looks like a mini-castle

there are some projects i dont even use an hourly rate factor in...bath tub replacement for instance...the market is $1,000.....so i charge $1,000....i make $300+ per hour typically..basement bathrooms is another...market is $2000-3000 and i can get them done in a day or less(do the math)..i dont know why the market is overpriced for certain tasks....but it is and i love it.....water heaters are just the opposite....many plumbers do it at or below costs to get their foot in the door....ive seen some advertise for $100 over the cost of the heater....i charge what i need to charge for it...i make a decent profit on them, but im above the market on this....

[MyITGuy]

Just something I picked up on while reading this thread.

In your second post, you stated "i calculate my ACTUAL costs and then add 20%...thats how i come up with my hourly rate.....i dont keep track of the market anymore...im happy with what im able to charge"

In your third post, you stated "there are some projects i dont even use an hourly rate factor in...bath tub replacement for instance...the market is $1,000.....so i charge $1,000....i make $300+ per hour typically..basement bathrooms is another...market is $2000-3000 and i can get them done in a day or less(do the math)..i dont know why the market is overpriced for certain tasks....but it is and i love it"

So if the market is overpriced and you love it, then why are you not keeping track of what the market is charging and use this to your advantage?
If you don't want to charge the market rate, then at least factor this into your pricing so you're not loosing out.

If your actual costs + 20% comes out to $102/hour, but the market is charging $150, then why don't you bump your price up to $125 to $140? This would still keep your pricing competitive, but would allow you more flexibility in your budget so you don't have to ask if spending $5K on a vehicle lease/loan is acceptable (Which BTW I think it is)...

[huggytree]

the market over all has gone down (not up)....i havent kept track in years...i admitt it....i do ask around and im at the upper end price wise....winning bids tells me all i need to know....if i win a referral bid it doesnt mean as much about the market as if i am winning a cold call/internet bid....and i am winning 50% of those cold call type jobs....so i know my prices are where they need to be....

once you know the market dont you always know the market? as long as i calculate my costs the same i assume im in the same market position....everyone is in the union around here...so when the union wage goes up..everyone's prices go up.

i am very comfortable with my prices right now....i wouldnt consider raising them beyond the normal raises....i wish i could get $140 per hour....i do know of someone who charges $175 per hour.....but most of the market is in the $90-120 range...im at $107.........there are alot of new companies right now and guys are charging in the $70's....so if someone wants cheap im not even close to competitive

i should have my wife shop prices though..just to check........the reaction to my bids is the indicator i use on a daily basis though