Profit for new residential work

[stevenje]

I just opened an electrical contracting business. I am bidding a residential project that could keep me busy for a while. I was plugging in all the numbers last night and would like to know what percentage of profit do most EC's try and make on a residential project. Any help on this would be greatly appreciated. Thanks.

 

[cdslotz]

I'm not a resi contractor, but from what I see in pricing on everything else, what you try or want to make, and what the going rate is, are two different things.

 

[SBuck]

I have worked in different parts of the country and every area works for different percentages. Northwest Indiana is 7-20% for commercial, San Antonio all the contractors I worked for will not touch it for less than 30%.

In the end you will have to throw %s at jobs until you find that sweet spot that you are happy with.

 

[iwire]

If it is open residential bidding figure out your true total costs, divide that by two and you might be allowed to pay to do the job.

 

[bullheimer]

i just spent 1/2 HOUR OF MY LIFE writing a post and then hit a mystery button and AWAY went six paragraphs.

bottom line. just lost a bid on a house someone else just bid at $2.25/sq ft.i bid $3. bye

 

[Sparky555]

If it is open residential bidding figure out your true total costs, divide that by two and you might be allowed to pay to do the job.

Due to the ignorance of many electrical contractors who don't figure their true total costs...they bid below cost. This works well for the general contractors, who are more than happy to pocket the profit that should be going to the electrical contractors. What iwire and I are trying to tell you in plain language is...there is no profit in residential new construction.

There is a lot of work if you bid low enough. If working 3000 hours per year to earn the pay you used to make in 2000 hours is attractive to you...go for it. You might consider taking a raise and work for someone else at minimum wage and be able to collect unemployment if it doesn't work out.

 

[cowboyjwc]

If it is open residential bidding figure out your true total costs, divide that by two and you might be allowed to pay to do the job.

:grin: That's exactly what I was thinking.

Like they say, the best way to make a small fortune in contracting is to start with a large fortune.:roll:

 

[ceb58]

Even though the previous post have there own merits, you can make money in the residential market. BUT there are things you need to learn real quick. IF you want to make money stay away from tract builders. They want the fastest,cheapest one they can find and as soon as they find one cheaper out you go. IF you can find a reputable contractor who dose custom homes and can get in with him you can make money. Do your take offs and give a fair price. Have a solid contract with your scope of work and don't be afraid of charging for change orders. And just like any thing if you do good work,in a timely manner the GC will not as be picky on price but it is only if he can count on you to come through.
But do not put all of your eggs in one basket always keep you eye open for commercial work.

 

[laketime]

Even though the previous post have there own merits, you can make money in the residential market. BUT there are things you need to learn real quick. IF you want to make money stay away from tract builders. They want the fastest,cheapest one they can find and as soon as they find one cheaper out you go. IF you can find a reputable contractor who dose custom homes and can get in with him you can make money. Do your take offs and give a fair price. Have a solid contract with your scope of work and don't be afraid of charging for change orders. And just like any thing if you do good work,in a timely manner the GC will not as be picky on price but it is only if he can count on you to come through.
But do not put all of your eggs in one basket always keep you eye open for commercial work.

I agree 100%!

 

[rodneee]

results from november 2007 read before entering "the tract home zone"

results from november 2007 read before entering "the tract home zone"

i just spent 1/2 HOUR OF MY LIFE writing a post and then hit a mystery button and AWAY went six paragraphs.

bottom line. just lost a bid on a house someone else just bid at $2.25/sq ft.i bid $3. bye

from the archives
november 2007 (wire was priced: 14/2 $145.m, 12/2 $225.m, & 14/3 $215.m)
29 units
each unit 2,500 sq ft
bid price $4,750. or $1.90 sq ft
projected min sales $4,750. X 29 units =$137,750
actual gross sales $287,366. divided by 29 units = $9909. per unit
total square footage: 29 units X 2,500 sq ft = 72,500 sq ft
$287,366. divideded by 72,500 sq ft =$3.96 per sq ft

lowest unit sale price $4750.
highest unit sale price $16,981.
avg unit sale price $9,909.

final tally for the month nov 2007

sales $ 287,366.
labor <$ 74,759.>
labor burden <$ 23,503.>
material <$ 143,188.>
office <$ 13,000.+/->
admin <$ 18,000. +/->

moral of the story: this is new home construction for me (tract style) in the trenches day in day out....note: the base bid is a loser and we all know it... you can get hurt...but for years you hear people say how can they do that for that number?? the answer is they can't and they were never planning to...part of the reason i always advocate never sign contracts...$1.90 per sq ft could sink anyone...you sign and options do not come, its over...

 

[stew]

Why do you think that on most projects you find an entire rough in crew that speaks no english? Its sad that thats what has to be done to make any money on resi.

 

[nafis]

trying to understand

trying to understand

i just spent 1/2 HOUR OF MY LIFE writing a post and then hit a mystery button and AWAY went six paragraphs.

bottom line. just lost a bid on a house someone else just bid at $2.25/sq ft.i bid $3. bye

You mentioned you bid $ 3 sq.ft. Can you please verify what is included in your estimate and what is not included? Things, like wire, main panel, breaker, can lights, fixtures and temporary service.
Is the square footage measured based on the all footage or you take the Ac footage?
Thank you,