ABSTRACT
This chapter helps us to gain an understanding of pricing components and their significance to price determination, the pricing formula's application to the landscape industry, overhead markup and how it is calculated for labor and materials, the dual overhead recovery method (DORM), and hourly rate determination for labor and equipment. Pricing is not as simple as assigning a dollar figure to a product or service. With labor as the predominant direct cost factor, the major portion of overhead costs are all labor related. Overhead recovery calculated individually for labor and materials is appropriate if the sales of a landscape company are dominated by either one or the other. The calculation of a dual overhead rate begins with establishing a materials to labor ratio based on direct costs projected in the company's income statement. Every piece of equipment has an hourly rate established by using the same pricing components.
