I typed this up to show potential clients in an effort to prevent confusion. what do you think, and do you think it would be appropriate to post this on my website?
Josh
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EXPLANATION OF RATE SCHEDULE
At WillowRidge Construction we take pride in providing our clients with a level of workmanship that is beyond the industry standard. This is only made possible by employing highly qualified and dedicated craftsmen, who deserve to earn a living proportional to their level of skill and dedication to their trade, As a result our rates may appear to be on the high end of the scale, but the old adage Âgyou get what you pay forÂh holds true. We have come to the conclusion that the value of a truly well done job far outweighs the short term set back of a slightly higher cost.
SAMPLE WAGE STRUCTURE
Journeyman Carpenter base wage———————– $30.00/hr.
Taxes paid by employer———————————– $3.39/hr.
Workers Compensation———————————– $7.50-10.50/hr.
General Liability Insurance (required by state)——– $2.55/hr.
Business Overhead—————————————– $4.50/hr.
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TOTAL—————————————————– $48.00 – $51.00/hr.
These are the actual costs tied directly to any given employee. Curing the invoicing stage we will add a percentage to all accrued expenses such as wages, materials, and sub-contractors. This percentage is what allows us to perpetuate our business and continue to grow as a successful company.
We hope this gives some insight into our billing process and assists in creating an open and more importantly, pleasant working relationship.
Thank you
Replies
My feeling is that your rate disclosure will only lead to questions from clients. I would not do it, and I would not post it on your website. Set the rates at the level you need to, and then stick to them. People will have confidence in you if you have it in yourself. I don't see what you gain by asking them to understand your business costs and overhead.
At the end you refer to a percentage you add. The amount is not stated. This should be stated somewhere, if you are doing T&M work. You don't need to lay out the components of the hourly charge, but you do need to lay out the percentage you add for profit, or overhead and profit.
If you go with fixed prices for your jobs, you don't have to talk to your clients about hourly rates or percentages at all. You simply have to sell them the job at the price you want. You have to do that with T&M too, but then you also have to justify it too. When is the last time you as a consumer bought anything where it was hourly with overhead and profit added? Probably almost never. People are used to buying things for a stated price.
That's a lot you pay for worker's comp. Sounds worse than CA.
I bid every job I can, but there a few that I just don't want to deal with, and cost plus can be fairly lucrative. The percentage is usually 15 to 20 but that would be spelled out in the contract. The reason for wanting to post it on the web would be to help weed out the tire kickers. Workers Comp. pretty much sucks, that's why I love subs.
I agree with David. Anything you show or throw into the conversation with a prospective customer is another decision they have to deal with. Get to many and they fold and go to someone who offers a less taxing situation.
It won't hurt to have it read to show if needed but I simply wouldn't offer it. DanT
Right on! Fellas.Do that, sunny, and the next question is:"You pay your guys that much?Followed by:That $4.50 per hour for OH seems high!Followed by:Everyone here can furnish a list of typical comments they will have.
too much info is too much.
can;t sell the sizzle when ya focus them on the steak ...
and a bunch of other sales crap.
I say better to put the focus on their wants and dreams ... the actual product.
not the pains of getting there.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
He one lucky fella.....my OH way higher than that.
As for laying that out. What Sonny said.
The more 'money' info they get, the more ammo they have to try and beat you down.
Theres enough tirekickers around wasting everyones time as it is without looking for more.
I told a couple of people once what my hourly was, they freaked out. Doesnt matter any more cos its higher now. :-)
Do up a quote for the job and its "when can you start?"
Same numbers, just they dont know the makeup.
Whatever it was.................I didnt do it.
Guys, if I wanted to really shock my customers and showed my OH, especially if my OH showed a line item, the one that stated "Medical Premiums" would be about $16,248 annually for my Blue Cross & Blue Shield and my co-pay medicines."WHAT! I'm paying for your medical stuff - TOO?""And that new truck?""And that annual trade show expense?""And the books and magazine subsriptions?""And your vacations and holdiays, and sick pay?""You're a rip off artist."
While I totally believe you that people would get upset by a line item list like that of your overhead, they would be ridiculous.
I'm not a contractor, but I would totally expect that what I pay you would cover those expenses. They don't cover themselves. Where do those people think their medical coverage, vacation & sick time comes from? Do they think their employer magically comes up with it out of thin air?
Of course if I hired you, I'd expect your fees to be enough to cover the costs of trade shows, magazines, etc. I'd be paying for your knowledge & expertise in the field, plus the tools you use to do the job. If I was simply paying for a body to do the work, I might as well do it myself.
You're right. On the occasion I have people question my price because "It will only take you a short time." or "Geez. How long can it take?" I immediately refer them to our local Manpower company, sayiing that it's obvious to me that they are more concerned with the "time" it takes than the skills being used, and how.Sometimes I even say something generic like "Caulking is o big deal, right?" (Just to set them up) When they agree, I then hand them my Geocel Sealant Manual (attached are all 5 sections) to show them the realities of knowing where to use, how to use it, and knowing the proper sealant to use. And that's just about 'caulking!" So much for the oft made comment: "Just caulk it."
The concept is good, but I would just show it as percentages. I don't think that you want to give out specific costs.
And mention the other cost that you have such as tools and vechicles.
And ask what they do and tell mention that their employeer also has similar cost such as buildings and offices.
I think its great that you have taken the time to establish all your costs , however I don't feel its any of their damm business what your costs are.
Client A calls me and wants a price for a job, if I give them a price they can either accept it or we can possibly negotiate the price with me knowing what my bottom line is. Now if they want to do T&M my labor rate is X. My gosh Mr. contractor that seems awfully high, well Mr & Mrs. A in order to give you the best possible service, provide you with qualified trades to do the job correctly, cover my overhead, insurance liabilities and tax burden this is what I have to charge you.
This cost ensures that I can stay in business, and continue to service past and present clients. You have to remember that you wear two hats Business and Hands on contractor.
Their is know way that I would ever break it down to a client, this is private info. for you only. Whose to say that they don't use but give your info to one of your competitors.
I understand your desire to justify your costs to your clients, I go through that also every day when eyebrows raise about an estimate. But I agree with everyone else, it's none of their business.
In general you probably will get more questions than if they don't know. I mean when I go to the store to buy something I just want to know what it costs, I may be shocked and too cheap a bastard to pay for it but I don't need to know why it cost what it does I just need to decide if I want it bad enough for that.
I also agree, sell your business and your services for what they are, ---worth every darn penny.
I would not be putting this information out for all to see. What will give you the success and growth you desire is satisfying clients . They tell two friends etcetera. Your tax man is the only one who needs to know the numbers.
Have a good day
Cliffy (H.B.Comm, certified carpenter)
Edited 7/31/2005 9:36 pm ET by cliffy