How would you actually go about estimating the time for a small job like this? Would you just take a guess at the time? Use software? Use a database you have compiled? Or gut feeling from experience?
You use a flat rate pricing system that is based on your numbers. The numbers come from your budget.
Your budget is based on your expenses, desired profit and your billable efficiency.
Use this formular:
Get the right price!
Here?s how to figure your selling price for a one truck operation (you in the truck, no employees): Copy and paste this into Word, Excel or program of choice.
Billable Hour: A billable hour is the actual time during the workday when income is produced. FACT: Your total billable hours for one year will not exceed 1,000 hours.
4 (hours a day) x 5 (days a week) x 50 (weeks) = 1,000 hours/yr.
Total Billable Hours/Year: 1,000 Hrs. Don?t make this higher, it very accurate.
Selling Price: This is the hourly amount you must charge as the labor component of your flat rate pricing. It does not include material. Include material in your flat rate pricing and mark it up whatever amount you desire (or not). Your really only selling your labor, so if you sell your parts & equipment at cost (including freight & taxes) it really doesn?t matter. What matters is selling your billable labor hour.
OVERHEAD ITEMS: Fill in amounts and total it on line 36.
1. Owner?s Salary __________________ (owners salary should not be less than
2. Advertising - YP ___________________$100,000, even in the first year of business)
3. Advertising ? Other ___________________
4. Answering Service ___________________
5. Bad Dept ___________________
6. Bank Charges ___________________
7. C.P.A. ___________________
8. Call Backs ___________________
9. Cellular Phone ___________________
10. Computer Expense ___________________
11. Credit Card Fees ___________________
12. Donations ___________________
13. Dues/Subscriptions ___________________
14. Educational Expense __________________
15. Gasoline Expense __________________
16. Health Insurance ___________________
17. Insurance ? Truck ___________________
18. Insurance ? Contractors ________________
19. Insurance ? Umbrella __________________
20. Insurance ? Workers Comp ______________
21. Legal Expense ___________________
22. Office Supplies ___________________
23. Payroll Company ___________________
24. Payroll Burden ___________________
25. Postage Expense __________________
26. Rent & Taxes ___________________
27. Retirement/401k ___________________
28. Telephone ___________________
29. Tool Repair/Replace ____________________
30. Travel & Entertain ____________________
31. Truck Expense ___________________
32. Truck Maintenance ____________________
33. Unforeseen Items ____________________
34. Uniform Service _____________________
35. Utilities _____________________
36. Total Yearly Expenses ___________________
37. Expenses Divided by 1,000 B/H = _____________ (This is your break even (B/E) price ?
NO PROFIT!
20% PROFIT ON TOP OF BREAK EVEN COST: This is a standard acceptable profit, please don?t short change yourself. Enter the breakeven number from above and divide by .80 to get your selling price.
__________________Divided by .80 = CORRECT Selling Price Of______________/hour
Enter break even number here
B/E Cost = 80% Of Selling Price
Now you have what your labor per hour in your flatraate system should be. You need to factor all your time in selling the job, staging and preping the job, doing the actual work, clean up and collecting your money.
This job could easily go for $1,200 to $1,500 depending on breakeven and desired profit. I'd sell it for closer to $1,500.
