Charging / Estimating Help!!!

[venge]

Our operation consists of an Certeified Electrician and HVAC/gas fitter etc. (2 guys, 2 vans).

In our area (Central Canada) the trades are charging from the low end of $45/hr to $65/hr. A 1hr. drive from our small city can increase the rates to $75 and $100/hr. Our current rate is set at $55/hr. and it gets us a fair bit of work. Until recently it has not been marketted aggressively as the 2 guys had full time jobs eleswhere and needed to make some extra capital before making the move to full time Owner operators.

My questions is on bidding jobs. Our service is top notch / professional and clean. Yes there are alot of part time guys floating around and undercutting jobs but yes they all have an expiry date.

Now i know many do not believe in costing a job solely based on T&M but I need it explaind in the most simple of terms on how to making sure we are getting the jobs because of proper price and not just because it is the lowest.

An example is a wirng up a building, material cost is $2400 (no mark up yet), Labour is 45 hours @ 55/hr. The guys normally marked there product up 15% on most items and some more depending on price. Does one need to factor in a contigency factor like an additional 15-20% to cover for any unsuspecting issues/errors. Some say you need to factor in your cost to keep your doors open by factoring in your overhead/expenses. Yes I know you cannot get all the bids but I do not want to lose on many trying to figure what is the right factoring to get the various jobs and its not like the competition is going to share their formula.

We do a mix of residential work as well as some construction and a fair bit of wiring new home builds.


Any help would be appreciated as from all the reading there is no one correct way but it sure would help out if it could be narrowed down somewhat.

thanks in advance.

venge

 

[hardworkingstiff]

Your estimate needs to be a pretty accurate calculation of what your cost will be. Your selling price is a completely different animal.

Overhead recovery is the area most people will differ on how to price. This is the area most contractors miss and wind up not making the money they thought they were going to make. OHR (overhead recovery) should be charged to both labor and material. Any OH that is generated by labor alone should be charged to labor and anything that is generated by materials alone should be charged to materials. The rest of the OH should be charged to labor and materials based on the mix of a typical job. You need to keep a watch on this, because if you mix it up wrong, you could steer yourself to the wrong type job and not recover your OH.

I look at material markup a little differently than most I believe. Small stuff I use a 1.2 - 1.3 multiplier and big dollar items I use 1.1 - 1.15 multiplier. If I buy in extremely well, I usually keep the savings if I think the job will handle it. I also lower my prices if I see I'm runnig out of work and raise them if I have a good work load.

As far as the selling price, my theory is I need to lose some jobs to price to see where the ceiling is in the market. I want to be the guy bumping into that ceiling. You only get to do that if you keep customers happy, perform well, do good work on time.

I'll bet this didn't help you at all,

 

[electricguy]

In our area (Central Canada) the trades are charging from the low end of $45/hr to $65/hr. A 1hr. drive from our small city can increase the rates to $75 and $100/hr. Our current rate is set at $55/hr. and it gets us a fair bit of work

When I charged the "Going Rate" I was going down the drain rapidly. Mine you I hadnt done my costs calculations or figured out my costs per hour.


spend some time and put your last years data into this calculator. It is an eye opener.

http://www.masterplumbers.com/utilities/costcalc/ .

I dont even Quote an hourly rate anymore for Resi service work or remodel work.


Anyhow more guys will pipe in hear and a search of this forum will bring up hours of reading on What to charge.

 

[dnem]

As far as the selling price, my theory is I need to lose some jobs to price to see where the ceiling is in the market. I want to be the guy bumping into that ceiling.

I like that concept ! . That's a very good approach. . Why be in business if you're not going to make money ? . Leave the scratching and clawing to the less intelligent.

I want to be the guy bumping into that ceiling. You only get to do that if you keep customers happy, perform well, do good work on time.

It's alot nicer to be focused on quality than figuring out where you're going to get money for payroll that week. . The quality focus pays dividends as your reputation spreads. . But bidding jobs low leaves you in a never ending cycle of scraping to get by.

David

 

[satcom]

Why be in business if you're not going to make money ? . Leave the scratching and clawing to the less intelligent.

bidding jobs low leaves you in a never ending cycle of scraping to get by.

David

I have wondered for many years why they are in business, but they may need a place to hide from their hard working wife, that had to make up for the losses that piled up.

We had a few winners around that would hide in the local pub all day, and take on jobs at a loss, so they could have a show and tell for their hard working wife, most of them ended up comming home to a vacent house once the wife caught on.

If you know what it cost you to operate the business, and you have an idea of the profit you desire, you should have no problem setting rates, you may need some experience in estimating, which is offered in many CEU's.