All,
Some of you who “know” me on here know that I’m a computer programmer who wants to change careers and be in home improvement. Why? Long story, but suffice it to say I discovered I was a late bloomer, I like doing the trades work, using my hands and improving peoples homes. The rewards far exceed that of my IT career.
Anyways, I just been laid off, AGAIN, 3rd time in 3.5 yrs and I”m sick of living this way. They keep giving my job to some foreigner overseas or in Brazil. For some reason companies think these people can code and speak English to communicate with Americans. Hah hah hah…Sorry, I need to stop laughing.
Anyways, third times the charm right? I’m not focusing on IT now. I been SLOWLY growing my business and last year I had my first backlog I couldn’t catch up on. The future continues to look bright. So I am using the job loss as the springboard to finally 100% focus on my business.
However, I have a dilemma, how do you set prices? Like for drywall, I hear by the board prices, by the hour, or $70/hr, or $40/hr, I heard some that say their price includes materials like mud and tape, etc. or electrical, a 200amp upgrade goes anywhere from $800 to $1400 here, or if I get a call to add a receptacle somewhere where one is desired, I heard $35 and that’s it on up to $120.
I realize what is good for someone else may not be good for me. I’m a small, my overhead small whereas bigger guys have bigger overhead and higher costs as a result.
How would you suggest is the best route for me to learn what is a good and fair price to charge for my services…to pay for min van insurance, GL, and take into account taxes and oh yes, the more minor thing, a PROFIT??
Replies
WELCOME TO THE DARK SIDE!
pricing depends on what your going to be doing...remod or new const? The cost of hanging drywall in a new house is much different than patching in a handfull of sheets in an older house and matching it up to existing plaster....
one way to judge the going rate in your area is to go to your local Home Depot and see what services the offer for installation. I know my big box has quite a bit of "We Now Install Tile/Carpet/Decks/Garage Doors/Windows/Doors/Wood Floors/etc..." signs all over. And the folks they got working for them (in my experience anyway) are usually small guys. I know I've used their install pricing against them to satisfy a customer. She had me install a new screen door when I was done trimming out her basement. I told her it would be $165, and she was kinda hesitant about my price, expecting me to do an hourly rate as I did on the trim (only reason I did was to use it as a fill job, I usually try and secure a bid for the whole job). She figgerd it would take about an hour to switch the door out (she was right) and was wanting to pay me my hourly rate ($55 for this job). I tell her to go to the Depot, pick out a door, and ask them to install it for less than that. She did, and came back to tell me my rate was about the same as what they charged to do it, and I would be done today...not in 2-3 weeks.
anyway, this would give you an idea on several different jobs and what they would cost.
What you need to do is figure what you need to pay yourself and your business for a week/month, estimate how long the job will take, add 25% to that time table (jobs never go as quickly as you think they will) and shoot for that amount. Over time, you will learn to know how jobs will go, and what to charge. Thats how I started out anyway...
12 years later, every morning waking up with numb hands, a bad knee, poor hearing and coming home every night with aching feet and shoulders....ahhhh what a life!!
Good Luck!
"knowledge without experience is just information." Mark Twain
Pyro,
Sorry to hear about your job.
If you also count the single lines as a paragraph, take a look at Charlies 5th paragraph.
Its all about you. It takes time to figure all this stuff, because your most important source is you, in the field. Thats why its best to charge hourly, if you can, until you can see what your time structure is. You can get to a point where you can look at a job, write a few notes and know how long it will take, and about what the material will cost.
These different structures are all your choice, and you have to figure out how long it will take you, and about what its worth in your area so you can keep getting work. On the other hand I know guys here that are busy constantly because they undercut everyone.
As for profit, I think that comes in time as well and you can bump it up. I try to raise my rate yearly because I dont feel that I make what I am worth yet. The more I study the larger that gap becomes.
Another great tool that I use is how many bids Im nailing down. When I started bidding, I heard an excavator say if they werent loosing 20% of their bids they werent charging enough. When I came to breaktime a framer said that the good jobs are loosing 66%. I try to keep my structure at 50%. Meaning if I bid on 50 jobs Ill only get 25.
Some use mark-up to pay for getting materials, some charge a straight rate to go and pick them up.
And as for the little guy vs. the big guy, I want to have a stronger company, so I charge a higher overhead so that it will grow and at some point Ill need it. You cant buy equipment or have an office if the money isnt coming in to pay for it. So I expect some cost. I had a GC test my rate, and I told him I have overhead charges. He said YOU DONT HAVE ANY OVERHEAD! Thats about when our relationship ended.
I know its a pain not to be able to look at a chart, but thats why working for yourself is so fun.
luck,
-zen
Edited 4/14/2005 10:23 am ET by zendo
An HO here
do a search here and look up the Proof System. this method essentially IIRC puts all your overhead and profit on labour and u charge materials at cost, remember IIRC. sometimes HOs think you are overcharging when you put overhead etc on materials.
alsp do a search on overhead, there have been several good threads on the topic.
bobl Volo, non valeo
Baloney detecter
Check out the business section of this forum for good info and references. You'll be surprised to find what you really need to charge to make money and cover all your costs.
When you are starting out the formula is easy if you get the jobs, then your pricing is acceptable to the costumer, if you make money for your efforts then the pricing is confirmed.
Sometimes the only way you can see if you are doing OK is at year end, you will not make money on all jobs but others will and it all seems to level out.
Just go at it, work hard.
Pricing is very personal and regionally dictated, so I wish I could help with some real numbers but can't.
I'm in my fourth year of this, after a decent career as a Creative Director for NYC ad agencies. Same deal as you... accounts kept shifting and as a result lots of us were continually losing our jobs Merry Christmas Thank You Now Get Out!
This is by far more rewarding. The decisions are yours. The mistakes are yours. And the successes are yours.
What I can offer is this advice: Get thee to class. Try a basic Residential Building Inspector course. You'll learn what the real inspectors are looking for, and will begin providing yourself an Out Path for when the knees and shoulders finally give out.
Read everything you can get your hands on. And learn what takes more time/effort/skill. Then read/practice good solid reasoning and communicating your point. Potential customers are so %^&&%&^* ready to say "Ah-Ha! Gotcha!" or are convinced that contractors are swindlers, that you really, really have to have patience and a good solid position when you tell them what things cost and why.
And even then, things can go frustratingly: My favorite "customer" last year was champagne-taste driven and labor-cost averse. Wanted the best Ipe hand-picked from the pile. Anodized aluminum spindles with Ipe rails, copper caps, two levels, the hot tub, the works! Saw the combined costs (M & L) and asked for a breakout. Gave him the materials at COST, and offered to let him simply pay me for the labor to order and handle the stuff, in addition to the labor to build. Bottom line: He couldn't understand why I wouldn't do the job for the difference between his budget and the cost of materials... which worked out to be $12 an hour GROSS. When I told him that Labor is Labor and fairly priced at that, he said "Those numbers just don't work for me."
What an attitude! But if you read into it, the real issue was he didn't have the cash to pull off Keeping Up With The Joneses.
Learn to read your customers. Body english. Minor inconsistencies of what they tell you. And lack of real commitment or decision are all flags that they might just be toying around with the project you are discussing.
Here's another tip: I can do some really great preliminary sketches. It helps me sell in to customers who "Can't visualize what that looks like." The ones that never get back to me are not a problem: Every quote I send out has the words Confidential: Do Not Show To Other Contractors emblazoned in light grey across the entire document. Of course it won't stop them from sharing it with Joe Schmoe, but at least it tips off Joe Schmoe that this customers is sneaky.
Sorry to be long-winded. THoroughly enjoy doing this. Just wish people would get their acts together and at least be polite enough to acknowledge receipt of the quote they asked for!
You'll do fine. Are you promoting yourself?
add up all your costs ... overhead.
figure out how much U wanna make ... salery.
stop thinking there are 2000 working hours in a year because U won't be working 2000 hours ... so shoot for something like 1500.
I use 1200 to be safe.
now .. add it all up and divide it all out.
and that's your hourly.
Now guess at how long the job is gonna take U. Turn that into hours.
Remember .. there is no such thing as a half day ... 4 hrs .. 6 hrs ... are all 8 hrs.
Guess at the materials needed. Add 20% to both because you'll be wrong!
and that's your job price.
then ... adjust accordingly.
also decide if U want to make your hourly or someone elses.
I charge the same whether I'm digging a ditch or running crown.
Some guys have a variable rate depending on the job.
What ever works for you, it's your business.
Some guys wanna price low and work consistantly.
Others would rather price high and sit at home instead of dropping the rates.
again ... what ever works for U.
Jeff
Buck Construction
Artistry in Carpentry
Pgh, PA
I recommend you get off the piecework pricing that has predominated the industry in recent decades, and charge by the hour with a small mark-up on materials gross cost. I use 5% on materials, and adjust my hourly rate annually indexed to the cost of a dozen eggs. No, really, that's how I actually do it. Everybody eats eggs, right?
So, when a dozen pullets were 80 cents, I was at $15 per hour. (Okay so that was quite a while ago.) Now I'm at $32.50 per hour, so figure out how much them cacklefruits are going for....
I charge the same for all the skilled trades I practice, but cut the rate for less skilled labour, whether it's me that does it or one of my guys. (90% of the time it's not me unless things are really dead and I just wanna keep busy....)
My situation allows me to charge this relatively low hourly rate; yours may not. You need to analyze both your income requirements and the going hourly rate in your area (even if you have to calculate it backward from a flat per-sq-ft price) before you decide how much to charge as your basic hourly rate. And you do have to adjust it according to how your speed and quality compare to the competition.
Dinosaur
'Y-a-tu de la justice dans ce maudit monde?
That could have been my post 2 years ago. Including the part about IT offshoring.
Unfortunately, I don't have any real wisdom to offer on how to set actual prices. I know how much I'd like to make per day. It's a number that earns me less than half of my former IT job, but it's enough to live on if I economize. I may not love my paycheck as much as I used to, but I love my job and I could never say that before. Anyway, as a handyman/painter/carpenter, here's what I do.
I have several ways of setting my prices. Some work is hourly, such as wallpaper stripping or when a customer needs me for "miscellaneous", but I do very little of that. I figure if I don't have a clue as to how long a job takes, I'll never be able to schedule ahead. For miscellaneous handyman work, I have 2 rates: hourly and daily. For hourly work, there's a 2-hour minimum. Those 2 hours are about 1/3 of my daily rate. I tell my customers my hourly/daily rate up front and encourage them to get enough work together to fill a day. It's cheaper for them and better for my scheduling. For customers who have already used me for a larger job and just need me to stop by and hang a picture or something, I'll forego my 2-hour minimum for a 1-hour minimum.
Most work is bid by the job. I have 3 daily rates depending of the kind of work: painting is tier 1, repair is tier 2 and carpentry is tier 3. I don't share these rates with my customers because I'm bidding the job. Generally, I'm looking at full days work, but I will break it down to 1/2 days if necessary. I won't really bid less than a 1/2 days work. At that point, I'll resort to my hourly rates.
I don't want to post actual numbers because they've been changing as I've gained experience. For example, the first time I went to a customers house to fix some holes left by the plumber, I asked for X dollars. It took me 3 visits to complete that work and I made very moderate money. I could probably do that same job now in 1 visit (2 at the most) for the same price and make very good money. In the beginning, my goal was to be an economical alternative. My goal now is to be someone who does outstanding work, but isn't necessarily cheap.
If all of this sounds like I've figured out how to charge, I've given the wrong impression. It's more of an ideal rather than something that works in practice. There's overhead which gets hard to figure. Like the time I spent figuring out how to make the shelf for the local pizza shop or buying professional quality tools to replace the HO quality tools that I started with or the constant repairs on my '92 van that had over 200k when I bought it, etc.
I did write down my rates and keep it in my job book. It's there to serve as a reminder to me, not really to be shared with anyone. I don't mind if my customers see it, but I don't want them to use it if they have questions about my price. All of my work is through referrals. I want to be chosen on the basis of my reputation, not on my price.
And so, after so much blather on my part, good luck to you,
-Don
Email Jerald.
Hes very happy to help with this stuff .
Ive got some questions for people like you . Ill start a new thread . Look fer it . LOL.
Tim