Replies

1. 
   Isamemon | Jul 29, 2005 01:32am | #1

   what do they pay you now

   could you totally survie on that including the extra time for paperwork, insurance , licence

   if so charge that for now to get up and running

   Im not trying to dicourage you

   I woked for a guy that became a friend, we had different directions both in business and from our lord

   he encouraged me to go on my own, and helped me for years

   I still screw up big time as many old salts here can testify too

   but if you have a supplier, contractor, cabinet shop , whatever, saying , go on your own, and you feel that they will honestly help you, then check out your new real costs, and if you can survive the start up years, a family that will understand you not being home , a truck needing no future repairs for a few mopnths, the tools to do the job, then

    then go go go

    

2. 
   RW | Jul 29, 2005 01:51am | #2

   First answer, use the search function, and you could spend an evening reading.

   Beyond that,

   Common mistakes - not knowing how to price your work, how to advertise, how to sell, how to warranty, how to improve, how to do accounting, how to manage time, how to spend . . . they're all common. Any one of them can get you in hot water. I suspect the one that gives people the most grief, because they are most aware of it, is pricing. Which is your next question.

   Most everyone here will tell you that the first don't is not to base what you do on what someone else does. If John sets cabinets for $15 a box, don't charge that just because he does. You don't know what goes into it, how he came up with that number, or anything. You have to decide what you want for your time. You also have to decide (which will be educated guesswork at first) what your overhead is, and factor that in. And how much "down" time - or non-billable but still working time you need to get paid for. Running errands, getting blades sharpened, picking up materials, meeting clients, figuring out bids . . . I know I was surprised to find the first year I tracked it all that out of all the time I put into things, I was only actually at a job something like 68% of the time.

   Do math. Every way that makes sense to you. Example. You say I want to net $20 an hour. I think overhead is $10 an hour. That's $30. And maybe you spend 30% of your available time doing other non-billable things. But you cant go broke those hours, so the remaining 70% has to pick up the slack. (This is just one way of thinking about it). So now you're billing at $42.86 to make up. And in setting cabinets, you say hey, I know that. I can do 20 boxes in an 8 hour day. Well, if your 8 hours is more or less $350, then your price per box is $17.50.

   "But Johnny only charges $15". So what. I don't care. You shouldn't either. One of two things is going to happen. You'll either sell people on the idea that you bring something to the table that's worth a couple of bucks extra per box, and perhaps more accurately you'll find the clientele who wants something extra, and you'll provide it for the greater fee, or you'll find only the clientele who wants bottom dollar and nothing else, at which point you'll be in a position of knowing that you aren't the guy who needs to do this for a living and you'll move on to something else, all the wiser for the experience. Or perhaps you'll say fine, cut the cost, cut corners, and install more boxes a day to meet your target.

    Mike Stone's Markup, Overhead, and Profit is an interesting read. I hated it when I first read it. I said what a screwy methodology. What a utopian, unrealistic construct. You might say the same. But my problem was that the delivery interfered with my ability to get the message. It's very sales-pitchy, and very "I am a genius on this and all you others need to learn from me". Once I filtered that out, he does make some very good, very relevant points about what you're asking. How to price, how to charge, how to find the clientele. I've played with his ideas some and the ones I feel pertain specifically to what I do I've used, and been the better for it. Which is kind of a sideways compliment to him. I still don't like the delivery style.

   Your best resource in pricing (not bidding) is you. Your gut is all you have to rely on until you have done work, documented what it takes you to do it, and developed your own data. Cost guides are out there, from $20 to $400. But be careful. The word "guide" is important. If you try to use one and don't understand the line item, what went into it, and how it was computed, you're in for a surprise. You'll either price yourself out of consideration or lose your shirt. So I think they are useful only in either understanding what goes into a specific task or, down the road, trying to give a sanity check to a bid by someone else who's subbing for you when you don't know heads or tails about their trade.

   Hanging out here. Seriously. No better resource. It's a forum, so there's a lot of opinions, a lot of everything. But there's gemstones to be found. You just have to hang around long enough to spot them as they go by.

   "If you pick up a starving dog and make him prosperous, he will not bite you. This is the principal difference between a dog and a man." - Mark Twain