Replies

1. 
   EricPaulson | Apr 09, 2009 03:30am | #1

   I think in good times you'd be cutting it close but these days you should be ok.

   Brighter minds will chime in.

    

2. 
   maverick | Apr 09, 2009 03:33am | #2

   you cant give it away. gotta make something

3. 
   davidmeiland | Apr 09, 2009 03:52am | #3

   In a favorable situation I would be cutting back on markup a little bit right now. Favorable = good established customer, project I want, good location, few unknowns, etc. Whether or not your 10-15% is enough, who knows? You need to be able to project your revenue and expenses thru the project period, and know if you will be OK after it all shakes out. If you can put together a forecast that shows exactly what will be paid out of that $100,000--and what will be leftover afterwards, then you might choose to go for it.

   I used to PM for a guy who always told us not to go in with a price like $101,000... he'd say find a way to get it down to 99 and change. Less of a mental barrier for the buyer. Notice how lots of stuff costs 4.95 or 49.95 or 99.95.

4. 
   Piffin | Apr 09, 2009 04:12am | #4

   Know what your negotiable numbers are before you go in to negotiate the job and sell it.

   IOW, let's say you have 30K for subs in this job. You nortmally mark up 15% so that is about $4500, but you think you can do ten percent this time and still cover overhead and make a penny or two on that portion, so you have $1500 negotiable. And say you have another $800 you can sweeze elsewhere. You know you can trim/negotiate a $2300 discount.

   Don't just give it to them.

   Show them that your price for this job comes in at 100K but you can trim it for him with a $2300 discount IF he does #### for you. He will work hard to be sure you get the job instead of someone else, because instead of focusing on that 100K outlay, he is focusing on getting 2300 back into his pocket. Maybe it is a cash rebate and he is financing the job at the bank.

   So what can he do for you? Keep every bill paid in advance? Some way to key the discount at end of job to "If each draw is paid within three days of presenting the bill/invoice"?

   Maybe let you party in his den every weekend?

   Whatever - make it something that binds the two of you together and motivates him your way at the same time that it saves him some money.

    

    

   Welcome to the
   Taunton University of Knowledge FHB Campus at Breaktime.
    where ...
   Excellence is its own reward!

1. 
   Ted W. | Apr 09, 2009 02:46pm | #11

   Now that's some smart thinking there. =)~ Ted W ~

   Cheap Tools! - MyToolbox.netSee my work - TedsCarpentry.com

5. 
   MikeSmith | Apr 09, 2009 05:02am | #5

   10  & 15 is ok.....

   if you're charging your time at $100.......

   if you're charging your time at $25....  you'd come out further ahead if you just give the homeowner $10,000.... and take a job stocking shelves at Lowes

   risk  = reward........no reward ?..... then don't get involved in the risk

   you  have not convinced me that you have a clue as to how much the job is really going to cost YOU

   Mike Hussein Smith Rhode Island : Design / Build / Repair / Restore
1. 
   andybuildz | Apr 09, 2009 08:10am | #6

   I'll tell ya Mike..one thing that baffles me a little in all the numbers is how much we pay ourselves first. Where does that number come from? What the market bares I suppose.

   I hired a guy for a while last week to help me with a bathroom. Paid him $150 a day cash. He said he usually gets $200 but that he'd work with me and did it for the $150. He does nice work too but needed some fill in work being work is slow for a lot of guys.

   I just wonder what the going rate is about now for guys like us paying ourselves and for A-B-C type carpenters/helpers. I think thats the big question to ask yourself.

   I don't mean off the books either......ok..that too. Some situations vary.

   I'm guessing the pay rate is about the same in your neck of the woods as it is in mine.

   What do you and others pay......if ya don't mind me asking : )

    

    

    

   http://www.cliffordrenovations.com

   http://www.ramdass.org

    

1. 
   MikeSmith | Apr 09, 2009 01:33pm | #8

   i pay myself twice what i pay my carpenters, so they get my rate for 40 hours and i get my rate for 80 hoursand no one gets paid cash, all money goes thru the books, which we all appreciated when we took a two month layoff and collecteda lot of their friends can't collect, since they never paid unemployment tax
   so, i'm just another employee of our giant corporationMike Hussein Smith Rhode Island : Design / Build / Repair / Restore

2. 
   FlyingContractor | Apr 09, 2009 08:30am | #7

   Mike, is $100/hr your going rate right now?  I have been at $85/hr here in the SF Bay Area, but getting squeezed really badly lately.  Guys are doing "high quality" work for $65!

1. 
   Piffin | Apr 09, 2009 01:34pm | #9

   lot of subs here suddenly think they are GCs at $35 

    

   Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!

2. 
   MikeSmith | Apr 09, 2009 01:37pm | #10

   no.... our rate is half that, and that is the burdened and marked up rate.. the pay rate is a lot less than thatmy point to the poster is that he's just throwing stones in the water if he asks how much to mark up materials and subs.... who knows ?UNLESS we get an idea as to how he's covering his own pay, and his overhead and profitif his rate is high enough, he can afford to not mark up the materials and subs much at all
   BUT i find that a lot of the risk is in the subcontracts, managing sucontracts will come back and bite more than direct laborMike Hussein Smith Rhode Island : Design / Build / Repair / Restore

6. 
   FlyingContractor | Apr 09, 2009 08:24pm | #12

   I have to be careful out here (Calif), as if I markup materials, I have to pay sales tax (which thanks to our idiotic legislature, is now 10.75%!). As a result, I have been marking subs and not marking up materials but adding 'handling time' instead.

1. 
   EricPaulson | Apr 10, 2009 04:18am | #13

   here (Calif), as if I markup materials, I have to pay sales tax

   I find that remarkable and question if perhaps I am ignorant about such a scheme in NY.

   You buy the materials and pay the required sales tax. You mark them up and you are required to pay sales tax on the difference?

   How do they propose that you make a profit or cover your OH on the materials? 

    

   "When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking." — Sherlock Holmes, 1896

1. 
   FlyingContractor | Apr 10, 2009 05:35am | #14

   Well, being in NY, I think you and I are in the same boat, they DON'T seem to want us to make a profit, or at least want to take it all! 

   It's a crazy system, but esentially you are correct, if I buy material at the lumber yard and pay the tax at the register (was 8.25% until Apr. 1 when it went to 9.25%...10.25% in some counties), and I markup those materials 15%, I am required to collect and pay tax on the 15% (I've already paid the tax on the original transaction).  So essentially to make 15% in profit on that material, I need to bill the client 24.25%.  It's only charged on materials (essentially physical items, lumber, pipe, wire, cabinets, etc.) but not on labor, so if I add an amount of labor equivalent to a 15% markup, no sales tax.  Crazy system, but what would you expect!  LOL

   It gets even weirder on some details too.  For example, my cabinet shop, if they install the cabinets they built for me, even if it takes them 10 minutes on $10k worth of cabinets, no tax, BUT if I do the install, there is tax on the $10k!

2. 
   frammer52 | Apr 11, 2009 05:45pm | #18

    

   here (Calif), as if I markup materials, I have to pay sales tax

   I find that remarkable and question if perhaps I am ignorant about such a scheme in NY.>>>>>>>>>>>>>>.

   Yes Eric, you are supposed to collect sales tax if you mark up material.  Just do like everyone else and add it to the labor line after you figure what you want. 

7. 
   ponytl | Apr 10, 2009 03:34pm | #15

   I didn't read all the posts...so someone might have already said this...

   chances are your subs have cut their bid in hopes of getting the work in these times...  maybe even the suppliers have cut some try'n to generate some cash flow...

   if this is so... then you sure don't want to get greedy and queer the deal when others have done their part to help you and them get the work...

   these days sometimes it's better to make a living do good work and hope it comes back in spades vs try'n to make a large profit on one job...

   keep your markup within reason.... get the job... then with contract in hand you might be able to get a few percent discount on materials that you didn't plan on... I wouldn't squeeze the subs... but if you cut your part to the bone it's worth asking them if they can cut a few percent...  that way you make a little profit (vs just a living) and everyone has work...

   bids are often a little higher when it's just a bid... vs Bottom line if i give you the work today price...

   P:)  good luck...

   pigs get fat.... hogs get slaughered

8. 
   renosteinke | Apr 11, 2009 03:30am | #16

   It's a matter of degree .... and, of course, customer perception.

   Let's take an imaginary job, where your books tell you that your parts are $10, your labor (wages paid) are $20, and the cost of operating the business is another $50. You see this, and know the job has to bill at $80, just to cover expenses.

   Now, the customer gets a bill. Perhaps you start off with "service call" at $65, and charge $15 for the materials.

   Some customers will object to parts mark-up: "I can get that at Lowes for $5," they will say.

   Others will latch on to the service call fee: "You were only here 15 minutes!"

   Others will use an incremental tally: so much for the new tire, more to take off the old tire, more to mount the new, more to balance the new, more to dispose of the old tire, and so on ...... this, naturally upsets the customer when the $30 tire you advertise turns into a $90 invoice.

   In this regard, the less said to the customer, the better. Far better, at the start, to say "I will do this job for $80." Amount agreed upon, job completed, bill presented, everyone is happy.

   Key to all this is that you must KNOW your costs. Then, assess your risks: will you be paid promptly? Are you likely to encounter complications? Will you ever see the guy again?

   Last January, when it was simply DEAD, one clever sort offered me work at what was perhaps 1/3 of my usual rate. Naturally, there was the promise of 'lots more work.' (HA!)   The gent actually seemd surprised when I plainly told him: If I'm going to go broke, I'll do it at home, in comfort. I'm not about to subsidize him!

   Yet, that's where you have to make your stand. Here's your price, and it's a good price. Let the customer do the 'wiggling.'

1. 
   EricPaulson | Apr 11, 2009 04:24am | #17

   http://forums.taunton.com/n/mb/message.asp?webtag=tp-breaktime&msg=118818.1

   You should read my thread. 

    

   "When the spirits are low, when the day appears dark, when work becomes monotonous, when hope hardly seems worth having, just mount a bicycle and go out for a spin down the road, without thought on anything but the ride you are taking." — Sherlock Holmes, 1896