New contractor advice

[Atxrl1983]

So I finally have my masters, insurance, and contractor license. Now I need advice on how to price work. I want to start in residential. Does anyone have any good advice. Should I bid by square ft for new homes? What about remodels, square ft or t&m? What is the deal with arc faults? Should the whole panel be arc faults? Left me know what you guys think

 

[JFletcher]

So I finally have my masters, insurance, and contractor license. Now I need advice on how to price work. I want to start in residential. Does anyone have any good advice. Should I bid by square ft for new homes? What about remodels, square ft or t&m? What is the deal with arc faults? Should the whole panel be arc faults? Left me know what you guys think

Tract housing can be done by the sq ft, higher end/custom homes not so much. Remodels are bid or t&m; one kitchen may require twice as much work than another. AFCI requirements vary by location and what code cycle you are on. If you are on the 2014 NEC, most 120V circuits require them, as opposed to here (VA - 2012 IRC) where only bedroom outlets require them. afaik, no 240V loads require AFCI at this time no matter what code cycle/type (NEC or building code) you are on.

There is much much more to this than what I've typed above. and if you search thru the forum, you can probably find other similar topics that have a wealth of information already listed. Good luck and gratz on getting your masters.

 

[69gp]

simply rule for resi. if its not Arc Fault its ground fault. This is not the case always just a way of looking at it.

As for advice starting out know the code so you don't make costly mistakes. You can learn from your mistakes.

if your working for somebody right now keep track of how much time it takes to do certain tasks and what material you use.

examples

How long to install and wire a 100 amp service
200 amp service
how long to rough a room
a kitchen
fish in and install a recessed light, a plug and a switch.

An estimate is just that an estimate of how much its going to take you to do a job. As long as you cover the material and the labor to do a job this is an example of what happens if you screw up.

you bid on a job that consists of wiring a new 2 car garage with a family room above.

total cost is $6,500.00
of that $3,500.00 is material
you figure 50 hrs @60 per hour $3,000

you do the job the material stays the same but one of the recessed lights was broken and its cost you 2 hrs labor to swap one out at the supply house. After you complete the job the homeowner calls you and says a dimmer switch is not working. you pick up a dimer and change it out. this kills 4 hours in the morning so you know need to add 6 hours labor to what you estimated it cost to do the job.

you cannot charge the customer for the extra labor so this is how it works out.

take your $3,000.00 labor and now divide it by 56 hours that it now took to do the job. ends up you now only made $53.53 per hour.

 

[Ponchik]

I think you need to take a basic business class and among other things learn how to calculate your total operating cost and do as close guess as you can. Of course as years go by you learn more from your mistakes.

But charging the client $xx per hour plus material is the wrong way. IMO. As a starter don't get into new construction or tract homes, these two are cut throat business. Stay with remodels and service. Also, take sales classes and continue expanding your sales sides of the business.

 

[Sierrasparky]

Don't forget profit. You are in business to make profit.

 

[Atxrl1983]

Changes

Changes

Thanks for the advice! So I'm here in Austin. A lot of work around. The 2014 next was adopted last year. So every house has to comply. I priced a homeline nema3r full of arc faults. $900! I remember getting a nema3r with breakers for $200. I still have to price tamper resistant receptacles. I'm sure that will be a lot. So I guess the prices adapt to the latest code edition. So do these new arc faults work with disposal, refrig, dish washers, hot tubs? No more 12/3 for disposal and dish washer. It's been about 6 years since I've done residential. A lot has changed

 

[GoldDigger]

You can still use MWBCs with two pole AFCIs. The receptacle GFCIs are less flexible.

 

[James L]

So I finally have my masters, insurance, and contractor license. Now I need advice on how to price work. I want to start in residential. Does anyone have any good advice. Should I bid by square ft for new homes? What about remodels, square ft or t&m? What is the deal with arc faults? Should the whole panel be arc faults? Left me know what you guys think

I sure hope I don't come across as cruel or anything similar, but I've gotta tell you that what you've posted is chock full of conflict. So much conflict that I'm pretty sure you've got no business trying to start a business....at least yet. Let me explain:

You've got a licence...finally.
Does that mean you flunked the test a half dozen times or that you waited a long time to take it? That really makes a difference, and here's why

You said you want to go into residential, then bombard the post with questions about how to do and price residential. That indicates that you don't know it. And if you don't know it, and only crammed for the test, then you aren't qualified. That means you'll probably fail miserably and not know why.

Why do you want to start in residential? Are you figuring it's easier? Faster? You might get paid faster?

I would suggest some soul searching. You probably ought to ask yourself:

Why are you so eager to open for business before you know the business?

Are you hoping to be an electrician or a businessman? Those aren't easily joined together because most construction workers would rather work with a hammer. But maybe you have a wife who would double as an office manager?

Do you really love the trade? Enough to learn on your own just for your self? Like codes updates, new products and tools? Nifty tricks?

Have you got a few months worth of living expenses in the bank? Or good line of credit? Or both? I'm guessing you're not gonna have enough "paid today" work to suffice, so you need cash or credit to get you thru til payday comes. Which can be months. Right now I've got 6 invoices outstanding, and the oldest is from last August. Fortunately, it's only $165.00
But there's one from December for $2500.00 and 2 from a month ago for several thousand each.

Do you know where to get steady work? And help for when you have so much work that you can't see straight?

Brother, there's a whole lot more to this than getting credentials and some pricing advice. And I'll reiterate - I hope you don't think I just want to be negative. There's a reason 50% of all businesses fail in the first year, and 95% fail within 5 years. My guess is that most people have no idea what they're getting into.

 

[Atxrl1983]

You are right and wrong some what

You are right and wrong some what

It has been a while since I've done residential. It'd actually where I started electrical after I got out of the military. A lot has changed with the code. I admit I did not pay attention when I was a green apprentice as much as I should have. I new the basics and the lead guy did the panels. I did it for a year and a half. I have done commercial ever since.

I've been in the trade 9 years. I am currently working for a large company as a superintendent. I am at the start of a medium size job. 18 story office building. Nothing to do with residential. . I have done service for 2 years and I enjoy that type of work. I don't get to work with my tool very often anymore. I enjoy talking to customers and giving them what they want. I like quick jobs that are completed 100% in a week or 2. While I was doing service I did do quotes. I just never did an entire home start to finish myself. I have never pulled a permit either. The good thing is I have good interaction with the city inspectors that can guide me through that process.

As as for my wife, yes she has a bachelor degree in business. She currently has her own career going and is successful. We have talked about opening a business and she is on board 100%. She is the one that has helped me get a DBA and tax id. You are right I am not business savvy. But I have her to lean on.

I do not plan on quitting my job anytime soon. I have 2 years left at this site and might do another one for this company. I do plan on doing outside work to build a network and buy tools, and a van without asking for a business loan. My company knows what I do and are ok with it because they do not do residential and any small jobs. Me and my wife have plenty in the bank for rainy days and hard times.

I thank you for your questions and advice. If you have anymore feel free to share. I guess I mis lead everyone by making it seem I was going to quit my job today and start a business tomorrow. I definitely understand it is hard a running a business. This is why I am reaching out to people who have done it before. Learn from experienced electrical contractors. Learn about bidding and code changes in other areas. So I ask that you have patience with me

I sure hope I don't come across as cruel or anything similar, but I've gotta tell you that what you've posted is chock full of conflict. So much conflict that I'm pretty sure you've got no business trying to start a business....at least yet. Let me explain:

You've got a licence...finally.
Does that mean you flunked the test a half dozen times or that you waited a long time to take it? That really makes a difference, and here's why

You said you want to go into residential, then bombard the post with questions about how to do and price residential. That indicates that you don't know it. And if you don't know it, and only crammed for the test, then you aren't qualified. That means you'll probably fail miserably and not know why.

Why do you want to start in residential? Are you figuring it's easier? Faster? You might get paid faster?

I would suggest some soul searching. You probably ought to ask yourself:

Why are you so eager to open for business before you know the business?

Are you hoping to be an electrician or a businessman? Those aren't easily joined together because most construction workers would rather work with a hammer. But maybe you have a wife who would double as an office manager?

Do you really love the trade? Enough to learn on your own just for your self? Like codes updates, new products and tools? Nifty tricks?

Have you got a few months worth of living expenses in the bank? Or good line of credit? Or both? I'm guessing you're not gonna have enough "paid today" work to suffice, so you need cash or credit to get you thru til payday comes. Which can be months. Right now I've got 6 invoices outstanding, and the oldest is from last August. Fortunately, it's only $165.00
But there's one from December for $2500.00 and 2 from a month ago for several thousand each.

Do you know where to get steady work? And help for when you have so much work that you can't see straight?

Brother, there's a whole lot more to this than getting credentials and some pricing advice. And I'll reiterate - I hope you don't think I just want to be negative. There's a reason 50% of all businesses fail in the first year, and 95% fail within 5 years. My guess is that most people have no idea what they're getting into.

 

[kwired]

simply rule for resi. if its not Arc Fault its ground fault. This is not the case always just a way of looking at it.

That unwritten rule worked a lot of the time if 2011 NEC applied. Doesn't work as well with 2014, and in 2017 sounds like AFCI will be necessary on nearly every 15/20 amp 120 volt circuit. GFCI requirements are still mostly the same and are not dependent on whether AFCI is required.

 

[Ponchik]

Knowing about the electrical code is not the deal breaker. You learn about it as you work in the field and will learn as you grow your business.

IMO, in order for a business to grow you need to learn about the sales process and sales psychology.

 

[James L]

...I've been in the trade 9 years. I am currently working for a large company as a superintendent..... I like quick jobs that are completed 100% in a week or 2. While I was doing service I did do quotes. I just never did an entire home start to finish myself....

As as for my wife, yes she has a bachelor degree in business.....

I do not plan on quitting my job anytime soon. I have 2 years left at this site and might do another one for this company...... Me and my wife have plenty in the bank for rainy days and hard times.

I thank you for your questions and advice. If you have anymore feel free to share.... So I ask that you have patience with me

For real, man, I was glad to read this entire post from you. Too many guys think they're just going to jump off a cliff right into a pile of money, but many find out there's a rope around their neck.

Your wife will likely be your greatest asset in your venture, because she believes in you. And she can run your admin.

Given your current work load, you may want to just delve into hourly service work and small add-ons. That's something you can do evenings and weekends.

As for pricing, every penny has a place to be allocated. And the price ought to accurately reflect that allocation. Here are things you'll have to bankroll out of your labor prices:

Your wages
health insurance
FICA taxes
vehicle
vehicle insurance
gasoline
vehicle repairs
tools
time spent giving estimates

Now, in a world of free estimates that last one may seem strange. But free is only free until they say yes.

Then everyone who says yes needs to help pay for all the time you spend with everyone who says no.

You'll likely have to go and ride the proverbial bike before you know how to balance.

As far as being patient with you, we all need a little patience from time to time