This video will guide you through the process of setting up your equipment for estimating. This screen will help you calculate the hourly or daily cost of your equipment, then LMN will add your overhead recovery and profit to determine the hourly or daily price you should charge when using equipment on a job.
In this video you will learn:
- How to add equipment (for estimating) to your equipment catalog
- How to calculate the cost and price per hour (or per day) for your equipment
- How to calculate your billable hours on equipment
- How to recover fuel and repair costs in your equipment pricing
- How to recover depreciation / cost of ownership in your equipment pricing
- How to recover overhead on your equipment
- How to set a custom price or custom profit margin for your equipment when estimating
Setting Up the Equipment Catalog
The purpose of this article is just to give you a quick overview of the Equipment Catalog within your Item Catalog.
Equipment Catalog Information
- The equipment catalog is used to calculate hourly or daily rates to recover the costs of the equipment that you entered in your Equipment Budget.
- This calculation will include all costs as well as your overhead recovery markup and profit margin from your budget.
- Your Default Budget, Overhead Recovery % and Profit Margin will be featured at the top of the page.
Frequent Question: "Didn't I already enter my equipment? Where is it?"
The Answer: "You did enter your equipment, but you entered it in your budget. All your budget did was calculate how much, per year, you need to budget for equipment. The equipment catalog has a lot more information to calculate what you need to charge, for estimating, for your equipment.
- Similar to how you set up your equipment in your budget, you will be setting your equipment up by type (ie. Crew Truck - 3/4 Ton), not by make/model/year. We assume that during the estimation phase, you may not know exactly which of your three crew trucks is going onsite for the work.
- To create a new piece of equipment, click +New.
- Name: Enter a name for your equipment (e.g. Crew Truck - 3/4 ton, Skid Steer, Mini-Excavator, etc.).
- Type: Choose either Vehicle or Equipment.
- Units: Choose either Hours or Days. (Hint: we recommend you use hours for equipment that works in maintenance/service, and days for equipment that works in construction/install).
- Description: Optional. Displayed on customer proposals if equipment details are shown.
- Internal notes: Optional. Displayed on estimate job planners.
- Sales Tax: This will be pre-populated from your Default Tax selections. If you have not already setup your Default Taxes, we highly recommend you do this before proceeding with Estimating. Please click HERE for more information.
Cost + Breakeven Calculator
- Depending on whether you selected Units: Hours or Units: Days above, you will see a green calculator beside either Cost Per Hour or Cost Per Day. Click this calculator to continue.
- Forecast Billable Hrs/Yr: Enter the number of hours per year you will include on estimates this year. This number is critical for arriving at the right cost/price. For more information on considering this number, click HERE.
- # hrs in a typical work day: Enter the number of hours in a typical work day.
- Click the Import from Budget button to pull your numbers directly from your budget.
- Select the item from your budget from the list provided and click OK.
- This will populate the Purchase Price, Market Finance Rate, Expected Life and Resale Value from your budget, leaving an Acquisition Value as shown below.
- Annual Maintenance: Total estimated costs of parts and repair per vehicle/equipment, per year.
- Annual Insurance: Total cost for vehicle/equipment insurance per year.
- Annual License: Total cost to license the vehicle each year (maybe $0 for equipment).
- Average Fuel Price: Enter the average price per gallon (or per litre) for fuel. Hint: be pessimistic. Fuel prices are more likely to rise than fall.
- Average Fuel Consumed Per Day: The average number of gallons or litres consumed per day. (Hint: Estimate how many gallons/litres consumed per week, then divide by 5 (or the number of working days in your week).
- Once you've added information into each field provided, you will be left with an Hourly Cost and a Daily Cost. A reminder that these costs are before Overhead and Profit have been added.
- Ensure all fields have accurate costs in them and click OK.
Cost + Breakeven Calculator
- Hours Per Day: Average # of estimated hours per day.
- Overhead Markup: This number comes direct from the budget you are using and will change as you switch your default budgets. This number is how LMN needs to markup your labor costs to recover labor's share of your company's overhead. For more information on Overhead Recovery, click HERE! This may be indicated as 0% if you're using the Field Labor Hour overhead recovery method.
- Breakeven: This rate covers the costs of equipment, plus overhead.
The price calculator has three different settings you can use to calculate the billable rate you need to charge for equipment.
- Use Profit Margin from Budget: This is the default setting. LMN will use the budget you've selected and pull the desired net profit margin from the budget. This is the rate that's designed to help you hit the sales goal you set in your budget.
- Set a Custom Profit Margin: Select this option if you want to force LMN to ignore your budget and use a custom profit margin. Please note: if you are unhappy with the Profit Margin indicated in your budget, it would be easier to adjust it in the budget then to set a Custom Profit Margin for each item in your catalog. For more information on increasing your Profit Margin, click HERE.
- Set a Custom Price: Select this option if you want to force LMN to use a specific billable rate per hour. Once you customize your billing rate, LMN will automatically calculate, and show you, what your net profit margin is a that rate.