Podcast Summary: Green Industry Podcast with Paul Jamison
Episode: Stop Guessing Your Numbers: Direct vs. Indirect Costs Explained
Date: April 6, 2026
Host: Paul Jamison
Episode Overview
This episode is a masterclass on understanding and calculating direct versus indirect costs (aka overhead) in your lawn care or landscaping business. Paul Jamison walks through real-world numbers for a typical two-person crew, revealing the true break-even point for such an operation. The episode emphasizes the importance of clean financial separation, careful record-keeping, knowing your numbers, and properly pricing your services so your business is not just scraping by, but generating real profit.
Key Discussion Points & Insights
1. Why Knowing Your Numbers is Critical
- Paul’s Wake-Up Call: Paul shares how finally crunching his business's numbers gave him a “wake-up call” about how much revenue was needed just to break even.
“I was like, whoa, that’s a lot more than I realized. And that lit a fire under my rear end to get out there and make sure that I’m working hard enough not just to break even, but to get into the profit area…” (01:00)
- Emphasizes that many skilled field workers (grass cutters/barbers/etc.) don’t understand the full scope of business costs.
2. Personal vs. Business Finances
- Essential to keep all business and personal finances strictly separate.
- Paul describes using different banks for business and personal money.
“I use a whole different bank for my personal, just so there's no... I want them to be so disconnected.” (05:50)
- Tip: Do not pay for personal items from your business account.
3. Definitions – Direct vs. Indirect Costs
- Direct Costs: Expenses directly tied to doing the job (labor, fuel, consumables, dump fees).
- If you’re working a yard, any expense that only occurs because of that job—wages, gas, mower blades, etc.—is a direct cost.
- Indirect Costs (Overhead): Expenses incurred regardless of whether you’re working (insurance, software, subscriptions, vehicle payments, storage, shop rent, etc.).
- Must be paid even if it rains all week and no yards are mowed!
“Overhead are what the, I guess the official word in business school is indirect cost.” (09:40)
4. Real-World Example: Two-Man Crew Math
Overhead/Indirect Cost Breakdown (examples, per month):
- Truck/Mower Payments: $1,400
- Insurance (auto, liability): $400
- Software/Phone/CRM: $250
- Marketing (Footbridge, CallRail): $300
- Bookkeeper/CPA: $350
- Storage/Shop: $400
- Total Indirect/Overhead: $3,100 (22:15)
Direct Cost Breakdown (per month):
- Employee wage: $20/hr ≈ $4,000/mo
- Owner wage (if working in crew): $30/hr ≈ $6,000/mo
- Fuel/materials/dump fees: $1,400
- Total Direct Cost: $11,000 (21:35)
Grand Total Monthly Operating Cost:
$14,100 (calculated for a two-person crew, running conservatively, legal/legit, using fair market wages and basic services) (24:00)
5. Calculating Your True Break-Even Rate
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Billable Hours:
- Out of 40 total hours/week per person, only ~30 hours/week are billable (actual mowing/trimming/blowing).
- For two people: 120 hours each x 2 = 240 billable man hours per month (25:35)
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Break-even Calculation:
- $14,100/month ÷ 240 billable man hours = $58.75 per man hour
- If two crew members spend 1 hour at a property (2 man-hours): it costs business $117.50 just to break even.
“If you’re charging your customer a hundred dollars and it takes you one hour for two guys… you’re losing money. You’re basically paying the client to cut their grass.” (26:45)
6. Pricing Recommendations
- National industry minimums:
- Baseline: $75–$85 per man hour.
- Depending on your market, could be higher.
- This ensures both break-even and profit, not just scraping by.
“If by all means your market allows it, charge more.” (38:55)
7. How to Track and Analyze Your Numbers
- Use digital tools/software (QuickBooks, Jobber, etc.) and bookkeepers.
- Write down EVERY recurring expense—don’t guess.
- Include your own labor in your direct cost calculation.
- Regularly meet with financial professionals to analyze and optimize spending/pricing.
- Keep numbers “squeaky clean” for honest analysis and growth.
"You can dissect what's truly going on in our businesses if the numbers are accurate." (06:40)
Notable Quotes & Memorable Moments
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On Indirect Costs:
“The insurance company is not going to call you and say, hey, did you guys mow any yards this week? … No, you still gotta pay them.” (12:15)
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On Owner Compensation:
“You own the company, you’re still a laborer. If you’re not already paying yourself [fairly], you’re gonna have a wake up call of all wake up calls when you have to start paying someone else that and you realize I don’t have the money to pay this person because you haven’t been paying yourself that.” (20:25)
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The Yellow Pad Math:
“This is on a yellow pad. See, Mr. Producer, that’s me hitting my yellow pad on my microphone. You like that?” (36:25)
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On Profit vs. Breaking Even:
“We ain’t in the business of breaking even. We’re in the business of making profit, running a profitable, successful business.” (29:05)
Key Segment Timestamps
| Topic | Timestamp | |-----------|--------------| | Episode intro and overview | 00:40 | | Why break-even awareness matters | 01:00 | | Keeping personal and business finances separate | 05:40 | | Defining direct vs. indirect costs | 09:40 | | Typical overhead costs itemized | 11:20 | | Direct costs explained | 17:05 | | Real-world two-man crew break-even math | 21:35 | | Calculating billable hours | 25:35 | | Break-even math per man-hour | 26:45 | | Pricing recommendations | 30:30 | | Market differences in pricing | 38:10 | | Steps to track, calculate, and optimize your numbers | 39:40 |
Takeaways for Listeners
- Do not guess your numbers. Use actual costs, tracked meticulously.
- Separate all finances and use software to keep everything organized and auditable.
- Charge based on your numbers, not local trends alone. Don’t underprice yourself based on what you see on social media.
- Regularly analyze your financials with professionals to ensure you are running profitably, not just breaking even.
- Minimum pricing must cover both direct and indirect costs, plus sufficient margin for growth and resilience.
Resources Mentioned
- Software & Tools: Jobber (CRM & billing), QuickBooks, CallRail, Footbridge Media, Landscaping Bookkeeper
- Professional Advisors: John Pajak, Joey & Megan Koberly, Kevin Salters
Final Word
“It costs a lot more to run a business than we realize. And when we’re out there quoting work, we need to make sure we understand this math … We need to recoup all of that and make sure that we’re not just breaking even, but we’re profitable.” (41:25)
Paul closes by urging everyone to take a hard look at their expenses, get their prices in line with real costs, and consult professionals if needed—because the goal is not just to stay in business, but to thrive.