i am contracting and building my first home.i am well versed in the building part but in the past have only done business as a small remodeling deal.i will be physically building the structure and all woodwork of the house. the rest i will be contracting out(plumbing,elec.,HVAC,roofing,painting,foundation,ect.).I will be charging my hourly arte while i am actually building but i am not sure how to charge for the rest of the work(contracting,scheduling,payments).again, i am new at this and i am extremely determined to succeed.any suggestions in this field would be appreciated.Oh yeah, i would like to give the HO a break in price since it is my first house to contract .Is that fair for each?
Thanks RTC
Replies
RTC,
Check out the Journal of Light Construction bulliten board, they're more contractor-oriented and have a business-specific category.
Also, there have been a number of threads here on running a business and on pricing and markup. In a nutshell, you need to be charging more than your hourly rate when you're running a business, there are a lot of expenses that you have to cover in addition to just paying yourself a wage.
It may be hard, but figure out your costs, and decide what you want to make in terms of paying yourself a salary, and what profit you want to make. Don't give your time away. Thinking that you'll establish yourself on the first house is right; if you work cheap, you'll get a reputation for working cheap and no one will want to pay you for your expertise, hard work, and the risks you're taking as a contractor.
Soi I suggest that you check out the business threads here and at JLC, and if you want a book to start with, Michael Stone's book "Markup and Profit" is good. There are other good books on running a contracting biz, "The E-myth Contractor" is one.
Good luck.
Cliff
Oh yeah, i would like to give the HO a break in price since it is my first house to contract .Is that fair for each
No. It's not fair to you. If the housing market generally turns a 20% margin, you'll make less do to your inefficiency. if you give up half of your profit before you start, you might end up working for less than wages.
blue
see .. we can agree on something ever now and then.
I'd add ... it's not fair to either if there's no budget to actually finish the house if and when the missing cocts add up.
If the builder still feels generous at the very end ... let'm keep the final payment ...
IF ... there's actually any money left in the bank account.
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Thanks .what do you think a fair percentage to charge would be.i know there are a million options but just a ballpark would be nice.
RTC
Charge your regular rate for all your hours. Any time spent on the job whether pounding nails, talking on the phone, invoicing, supervising subs should be paid for. Make sure that your overhead and profit are included in your hourly rate. I say again, make sure your overhead and profit are included in your hourly rate. A fair profit percentage is 10% for a new business.