How to Properly Bid Jobs

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JMV 6 Electric said:
Hello All,

I just recently passed my CR-11 licenseing exams am trying to find the best methods/ practices to competitively bid jobs. Any suggestions or recommendations would be greatly appreciated. Thank in advance!
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Open up a note on an iPad or a word document or excel spreadsheet and start listing a price for each thing. This might sound crazy but I have spent the last 5 years itemizing every single ”unit” I install and charging each individually. So an outlet is a unit, a device box is a unit, a foot of wire is a unit. For a service I charge per foot of service cable, flat rate for utility connections, mounting the meter base, mounting the panel, each breaker, per foot of ground wire, each ground rod, etc. The problem with this method is if you only put in one unit you don’t make much and if you put in a hundred units that are very easy you charge too much. So on the low end, I charge a minimum rate to stop me from doing a one outlet job and only getting paid the unit cost for one outlet and on the high end I developed a price reduction ratio that once a certain threshold is passed i reduce the price by a certain percentage. As the price goes up I have different thresholds and the higher they get the more percentage I take off (up to my max reduction). I’d be happy to send you the chart I made. Good luck, I had a very hard time with this subject in the beginning.
 
If you don't have a book or estimating program for labor rates, then beware the labor you assign. I was told early on, to double the time I thought it would take to do anything. Now, if you are used to figuring time first and then checking yourself for accuracy, your brain starts to work differently and you add that time by instinct. So, assuming you aren't in that practice, think about it. Take a simple task like installing receptacles. I am going to bet you would say, 10-12 minutes per receptacle and another 1 minute for the plate. That is true in a perfect world with everything there and a stop watch that says go. However, add the time to go tot the bathroom, hunt for the missing screw, get more wire nuts, find the other screw you dropped drink some water, order the right number, color and size of receptacles, etc. etc. etc. getting 32-36 done in a day is much closer to the truth.
 
My 2 cents.

If you are getting everything you bid, you are probably too low.

Customer trust a higher bid before they trust a lower bid (assuming the higher is not a blow off number). The customers that chase the low bid are customer you don't want anyway.

Don't forget to charge for your vacation time, holiday time, and FUND YOUR RETIREMENT!!!

Making good money is not a sin.

The customer is not always right, but the customer is always the customer.

Sometimes the best job is the one you didn't get.

Don't load yourself up with cheap work or you won't have time to do the high margin got to have it now project that comes around.

It's okay to take a job for cheap, as long as you know it (like if you need work desperately). I suggest you don't give a low number, but give a price and a discount for an immediate start (assuming you really are hungry). You don't want to be known as the cheapest guy, you want to be known as the best value guy.

When times are good, SAVE! Live below your means, and have a years worth of living expenses saveds ASAP.

And, don't forget to fund your retirement.

Did I mention you need to fund your retirement? :)
 
Doc13067 said:
Open up a note on an iPad or a word document or excel spreadsheet and start listing a price for each thing. This might sound crazy but I have spent the last 5 years itemizing every single ”unit” I install and charging each individually. So an outlet is a unit, a device box is a unit, a foot of wire is a unit. For a service I charge per foot of service cable, flat rate for utility connections, mounting the meter base, mounting the panel, each breaker, per foot of ground wire, each ground rod, etc. The problem with this method is if you only put in one unit you don’t make much and if you put in a hundred units that are very easy you charge too much. So on the low end, I charge a minimum rate to stop me from doing a one outlet job and only getting paid the unit cost for one outlet and on the high end I developed a price reduction ratio that once a certain threshold is passed i reduce the price by a certain percentage. As the price goes up I have different thresholds and the higher they get the more percentage I take off (up to my max reduction). I’d be happy to send you the chart I made. Good luck, I had a very hard time with this subject in the beginning.
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Thank you for your input. I'd love to look at the chart you made.
 
oldsparky52 said:
My 2 cents.

If you are getting everything you bid, you are probably too low.

Customer trust a higher bid before they trust a lower bid (assuming the higher is not a blow off number). The customers that chase the low bid are customer you don't want anyway.

Don't forget to charge for your vacation time, holiday time, and FUND YOUR RETIREMENT!!!

Making good money is not a sin.

The customer is not always right, but the customer is always the customer.

Sometimes the best job is the one you didn't get.

Don't load yourself up with cheap work or you won't have time to do the high margin got to have it now project that comes around.

It's okay to take a job for cheap, as long as you know it (like if you need work desperately). I suggest you don't give a low number, but give a price and a discount for an immediate start (assuming you really are hungry). You don't want to be known as the cheapest guy, you want to be known as the best value guy.

When times are good, SAVE! Live below your means, and have a years worth of living expenses saveds ASAP.

And, don't forget to fund your retirement.

Did I mention you need to fund your retirement? :)
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Thank you for your input. I value everything you said.
 
Strathead said:
If you don't have a book or estimating program for labor rates, then beware the labor you assign. I was told early on, to double the time I thought it would take to do anything. Now, if you are used to figuring time first and then checking yourself for accuracy, your brain starts to work differently and you add that time by instinct. So, assuming you aren't in that practice, think about it. Take a simple task like installing receptacles. I am going to bet you would say, 10-12 minutes per receptacle and another 1 minute for the plate. That is true in a perfect world with everything there and a stop watch that says go. However, add the time to go tot the bathroom, hunt for the missing screw, get more wire nuts, find the other screw you dropped drink some water, order the right number, color and size of receptacles, etc. etc. etc. getting 32-36 done in a day is much closer to the truth.
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Thank you for your advice. I appreciate and value it.
 
ramsy said:
With such subjective bid practices, imagine how confusing it is for anyone to choose a builder, much less a sub-contractor.

My state license board web site recommends a minimum of 3 bids, before filtering out the 99% lacking workman's Comp.

License board advice for project management cleans up the leftovers, by recommending an escrow payment service based on lien releases tied to each project phase, among other things.

I would add to that short list, an armchair investigation for reports at glassdoor.com, corporate name changes, license & credit history, with criminal or civil background checks.
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Thank you for your input/ advice. I appreciate and value it.
 
Rdcowart said:
You have to make sure you are charging enough to run your company and have the extra coming in to grow it as well. Don’t worry about the other companies some of those guys are under cutting so bad that they are barely getting by and wandering why they can’t get ahead. When you do quality work and have great customer service you will have an abundance of work. I have come to learn not every customer is right for my company and my company is not right for every customer.
What I did was added up all my expenses for the quarter, insurance, car note, any overhead that I had for the business. Then I knew I wanted to make a salary of 100k a year. I need To make 25k per quarter for salary and added my overhead per quarter. There are around 62 working days per quarter on average . So what you do multiply 62 x 8 hours a day, that equals 496 hours. Then you take your quarter expenses example 31,500 divided by 496 hour, equals 63.50. Then you multiply 63.50 x 3, because on average you should be billing at least 3 sold hours a day. Then you take that number 190.52 and divid it by .50 which equals 381.04 . The reason why you want to double the 190.52 is that you want to make as close as you can to a 50% gross profit. Thats how you get an hourly rate of $381.04. Then I mark all material up 25%.
I’m flat rate so take the average time it takes to change a breaker say 15 minutes = 95.26+ my breaker cost+ mark up 25%
95.26+(54/.75)= $167.26 To change an Afci/gfci breaker.
Make sure that you have a clear scope of work for each job and if there is anything that changes or is not in that scope charge for it.
Make sure you get 30% down on a job if it is a large one, then you get 30% halfway through, and then you get final payment when job is finished.
Don’t let a builder or contractor keep you behind in payments if they don’t pay stop all jobs with them until they do.


There is a guy on YouTube you might want to check out his channel is The contractor fight and he has a lot of great information.
I wish you the best of luck.
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Thank you very much for your input. I value and appreciate it.
 
brantmacga said:
Step 1 is to figure out what your actual costs are. Go buy all the Ellen Rohr books to start with.

Step 2 is to learn assembly based pricing. There are books out their on electrical estimating; buy one and learn it.

If I were starting over, knowing what I do now, i would’ve went straight to a software estimating program for new construction, and a flat-rate book for service. Although, I would still have picked up an estimating book and learned how to do it on pen and paper before using the software.

You’ve got to have a firm grasp as to what all of those numbers mean to be confident in your bids, and to not lose your shirt.

In my experience, when first starting out, I had to be the lowest price to get the job. But you’ve got to know exactly how low you can be without going in the hole. Once you’re established you can work on reputation.

I would also recommend you engross yourself in sales training tools. From 9/yrs old and up my dad was always giving me Zig Zigler tapes to listen to, and books to read on sales and finance. I wasn’t really interested back then but it stuck, and it’s paid off.

There’s a lot of work out there right now and as long as you keep your head above water this first year or two, you can be successful.


Sent from my iPhone using Tapatalk
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THIS ^^^^^^
 
James L said:
I don't have an across I don't have an across-the-board material markup. When I first started working for myself, I did service work, and charged by the hour for labor + double retail for materials.

It didn't take long to figure out that doesn't work in a lot of scenarios.

I rarely charge T & M anymore, because most people want a firm price before I start. So I charge per opening on most of the stuff I do. I can give it to you short on new construction and remodel wiring.

New construction, my total price works out to about triple the cost of materials : 1 part material, 2 parts labor. I get there by charging $30 per opening for labor, then adding the materials cost for each type of opening.

Or you can simplify it by just charging $45 per opening across the board. Count every opening separately, including doorbell button + chime, garage door lo-vo, each 240v receptacle, hood, etc. Everything you run a wire to counts as an opening. Then count every breaker space as an opening. Then you don't add anything for the service.

That gets me in the "above average" price range for most homes.

For residential remodel, my total price is about 5x the cost of materials. I break down each opening a bit different, but similar concept
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Ok so. I’m currently working on a bid for a 16 x 32 shed house. I just tried your $45 per opening and there’s a total of 40 openings so that comes to $1800. The stove will take 50 foot of 6/3 and the tankless water heater will take 50 foot of 6/3
That’s already $410 in 6/3.
Let’s say I can make 2 250ft rolls of 12/2 squeeze by that’s about $270. Dryer will take about 50 foot of 10/2 (from one end to the other plus about 12 foot for panel and down to floor length. That’s $50
7 cans at $8 a piece that’s roughly $56. Plus boxes, that’s another $20 give or take. About 50 foot of 12/3 that’s about $42. Two ceiling fan boxes that’s $14. GFI for bathroom two in kitchen 2 outside that’s about 12 a piece so $60. Dude that’s $942 for materials not even adding the 20 receptacle and the four way switch and 2 three ways and 6 single poles. And that’s not even adding the panel or the breakers....... so what do you have left for labor? $4?
Man I’d be busted before I walked on the job
 
Mitchell Electric said:
Ok so. I’m currently working on a bid for a 16 x 32 shed house..... there’s a total of 40 openings so that comes to $1800....... so what do you have left for labor? $4?
Man I’d be busted before I walked on the job
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Well, first thing:
it looks like you're ok at counting wire costs, but not so good at counting openings. I said everything you run wire to counts as an opening.
Range, dryer, water heater, air conditioner disconnect, condenser...there's 5 openings, PLUS I said to add for each breaker space, which would be 8 more. That's 13

Then you have listed 2 fans, 7 cans, 2 wp receps, at least 4 or 5 kitchen receps....that's 16 - plus how many breaker spaces?

And you don't say how many switches, general receptacles, etc. I think you're not counting EVERY single item that has a wire run to it, AND every breaker space

But then, I also said it's generally 2 parts labor to 1 part material on new construction. So if you get a red flag on openings, you have more to factor in.

p.s. you might want to reconsider wire configuration. A tankless water heater yses 2-wiew, not 3

And a dryer uses 3-wire, not 2
 
James L said:
Well, first thing:
it looks like you're ok at counting wire costs, but not so good at counting openings. I said everything you run wire to counts as an opening.
Range, dryer, water heater, air conditioner disconnect, condenser...there's 5 openings, PLUS I said to add for each breaker space, which would be 8 more. That's 13

Then you have listed 2 fans, 7 cans, 2 wp receps, at least 4 or 5 kitchen receps....that's 16 - plus how many breaker spaces?

And you don't say how many switches, general receptacles, etc. I think you're not counting EVERY single item that has a wire run to it, AND every breaker space

But then, I also said it's generally 2 parts labor to 1 part material on new construction. So if you get a red flag on openings, you have more to factor in.

p.s. you might want to reconsider wire configuration. A tankless water heater yses 2-wiew, not 3

And a dryer uses 3-wire, not 2
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Here in New York we charge $100 per general lighting openings(switches,receptacles,smoke detectors etc)then you have to put in the contract the maximum price of supply fixtures,I use $25, 120V/15A or 20A dedicated line $2/foot of distance but minimum $100, 240V/40A $6/foot of distance but minimum $200.00.ceiling fan,chandelier etc you have to figure out because isn’t a fix charge they all are different.For normal service installation using PVC mast you can start at $15 per service amperage (100x$15-200x$15 etc) if you used RMC add $1.50 per service amperage
Hope that works for you or help you a little be
This is new construction price(GFCI,AFCI breakers)
NM-B(romex)
 
James L said:
I don't have an across I don't have an across-the-board material markup. When I first started working for myself, I did service work, and charged by the hour for labor + double retail for materials.

It didn't take long to figure out that doesn't work in a lot of scenarios.

I rarely charge T & M anymore, because most people want a firm price before I start. So I charge per opening on most of the stuff I do. I can give it to you short on new construction and remodel wiring.

New construction, my total price works out to about triple the cost of materials : 1 part material, 2 parts labor. I get there by charging $30 per opening for labor, then adding the materials cost for each type of opening.

Or you can simplify it by just charging $45 per opening across the board. Count every opening separately, including doorbell button + chime, garage door lo-vo, each 240v receptacle, hood, etc. Everything you run a wire to counts as an opening. Then count every breaker space as an opening. Then you don't add anything for the service.

That gets me in the "above average" price range for most homes.

For residential remodel, my total price is about 5x the cost of materials. I break down each opening a bit different, but similar concept
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Sounds like you're working for nearly free with pricing about half the cost of others. Can I subcontract to you?
 
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James L said:
Maybe I'm twice as fast as others 🤷‍♂️
That's been the case my whole career.

But please, do share details. I'm always an advocate of extracting as many funds as possible.
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For residential new-work, the per-opening cost should be $100 each (for wiring and labor), plus the cost of fixtures. If you're as fast as you say then at the end of the day you should be making yourself about $200 per hour on average, and more if you have help.
 
Frank Licata said:
For residential new-work, the per-opening cost should be $100 each (for wiring and labor), plus the cost of fixtures. If you're as fast as you say then at the end of the day you should be making yourself about $200 per hour on average, and more if you have help.
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You won't sell any work around here.

Service work? Sure.
Remodel work? Ideal.

New construction residential just doesn't pay that much. Too many people willing to work for only $40.00 per hour.
 
James L said:
You won't sell any work around here
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Thankfully I'm not there in the land of pricing undercutters then! Materials cost the same everywhere and have approximately doubled over the past year. In 30 years I've learned NOT to be the cheapest guy around, and I have always had more work than I can handle, in any economy.
 
I put in a bid for a new construction house wire about a month ago. I know at that time the GC was wondering how long his bid to the HO should be good for, given the instability in the price of lumber.

I’m going to have to touch base with him and let him know that the price of NM has recently increased by 2.5-3X and my price is going to have to increase as well.
I haven’t yet signed anything with him, only gave him a number at that time that he could use to compile his overall bid.
 
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