macmikeman
Senior Member
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- Planet macmikeman
I agree, outstandinng post.
what to charge
- Thread starter Ed Carr
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ElectroMagnetism
Member
Thank you for the kind words.Ed Carr said:
Learning how to sell the "value" of your company by what it offers in design, proper installation and pride in workmanship is the road to overcoming that "fear".
Customers will buy value. You, as a contractor, just have to show them / lead them to that decision.
Last edited:
ElectroMagnetism
Member
Thank you.peter d said:That was an outstanding first post.Keep them coming.
As time permits I will try.
ElectroMagnetism
Member
I hope all who read it get something out of it.macmikeman said:
ElectroMagnetism
Member
When the tradesman can get the public to "value" our skills at the same level as doctors and lawyers, then and only then will the trades be able to make the same amount of money, and how you do that is charge what you need to charge to operate and run a successful business.Rewire said:
tryinghard
Senior Member
- Location
- California
emahler said:
Our recaps (actual) reveal about 40% labor and 30% material of gross receipt. This is for contract construction $20K-$200K public works and non-public works.
It is important to use your companies recap evaluations to know where your labor and material average - per particular market. There is not industry standard, just the one that pays your costs and appropriate profit for the risk you take. You'll know if you are out of market if it's no longer viable or your profit is not enough according to the level of risk or worse, it's gone!
Ed Carr said:
That fear is overcome real quick, once you can't pay your bills, and your liabilities are not paid, your supplier shuts you off, and your wife is on the way out the door.
It's not being to pricy, it's charging eniough to meet your overhead, and your basic operating expensies, once you find your break even price, never go under that number, if you do, your only fooling yourself, the debt will build until it can no longer be managed.
The guys that get sucked into the trap of taking work at less then cost, dreaming they will make it up later, soon learn how things can turn bad.
tyha
Senior Member
- Location
- central nc
when bidding commercial project (which is all we do). we unit price the recp, lights, switches, j-boxes, dedicated circuits, ahu, hp,and water heater. we do a take off for the service and anything over 60 amps and labor it according to our labor rate with burden oh and 20% mark. we mark all subs at 15% and mark all gear and lighting quotes @ 25% - 15% if the total quote is over 50 grand. add all job cost and equipment with 15% mark and add 15% to the total for our bid price. for service its just a straight double our normal labor rate plus burden and mark for one man and 80% of that number for each additional man.
tryinghard
Senior Member
- Location
- California
emahler said:
Our recaps (actual) reveal about 40% labor and 30% material, these are for construction contracts $20K-$400K +/-. Your right about more overhead for service it will be more for low volume as well because large volume contractors can disperse their overhead easier.
There really is no standard overhead/mark-up it is based off your recap evaluations. You'll know if your out of market if it's no longer viable or your profit is too low for the level or risk, or worse you have no profit! Be careful exploring new markets and be thorough in the ones your in.
ElectroMagnetism
Member
Correction
Correction
I multiplied to get the NET instead of dividing to obtain the profit margin. It is what I get for working and writing at the same time.
It only changed the gross by $3,300 and the per billable hour by $2.00, but I wanted to make the correction so others would know the correct way.
Correction
Above are corrections in ?BOLD? to my #17 post.ElectroMagnetism said:
I multiplied to get the NET instead of dividing to obtain the profit margin. It is what I get for working and writing at the same time.
It only changed the gross by $3,300 and the per billable hour by $2.00, but I wanted to make the correction so others would know the correct way.
adamants
Member
- Location
- new zealand
owners
owners
i am all for a manager/owner forum just to discuss business ideas closed off to the public. i'd like to be in that:smile:
owners
i am all for a manager/owner forum just to discuss business ideas closed off to the public. i'd like to be in that:smile:
gra electric
Member
- Location
- whitney point, NY
adamants said:
I second that. Business owners need to unite and bring our industry back to the forefront as far as pricing. Like others have said figure out your break even price and NEVER! go below it, ever. You will not make that up ever. I know, it has happened to me.
Electro- that was a great post, very informative, and I will def. take a page out of your book. I too get scared of charging too much, because my business is still in the infancy stages. That is starting to change though, and I will make it a point to evaluate my billable hourly rate.
thanks for the info!!!!
Gerry
G.R.A. Electric
I'd just like to offer this thought, fwiw:
personally, there is nothing that brings a quick smile to my face, then an owner/agent/manager/homeowner telling me "your price is too high". In the instant that someone tells me that, they have generally conveyed to me some of the following: 1) I am not the low bidder 2) they are comfortable enough to talk to me, and having initiated the conversation are presumably interested in hiring me but would like the price lowered
I like being in this position. why ? because I now have more options than if I was, say, the low bidder. I can choose to lower my price (or if the job is tight, let it go). I can try to sell them on why the price is higher (quality, experience, time in business ('we stand behind our work"), speed, etc). In short, I can negotiate the terms. In addition, while negotiating I will learn more about the potential client. There are times when the client will make it clear that the price is all that matters - I will usually let them go, they are not what I want for a customer (unless the job was bid with a huge amount of fat and we can still make a good penny).
In short, I would much rather be told my price was high than "you are the low bidder, you got the job". That is the statement that I dread. I don't mind being in the middle, but if I am the low bidder I have to assume I screwed up and the job will be tight from beginning to end, and we will have to pray that we make money.
-just my stupid humble opinion
personally, there is nothing that brings a quick smile to my face, then an owner/agent/manager/homeowner telling me "your price is too high". In the instant that someone tells me that, they have generally conveyed to me some of the following: 1) I am not the low bidder 2) they are comfortable enough to talk to me, and having initiated the conversation are presumably interested in hiring me but would like the price lowered
I like being in this position. why ? because I now have more options than if I was, say, the low bidder. I can choose to lower my price (or if the job is tight, let it go). I can try to sell them on why the price is higher (quality, experience, time in business ('we stand behind our work"), speed, etc). In short, I can negotiate the terms. In addition, while negotiating I will learn more about the potential client. There are times when the client will make it clear that the price is all that matters - I will usually let them go, they are not what I want for a customer (unless the job was bid with a huge amount of fat and we can still make a good penny).
In short, I would much rather be told my price was high than "you are the low bidder, you got the job". That is the statement that I dread. I don't mind being in the middle, but if I am the low bidder I have to assume I screwed up and the job will be tight from beginning to end, and we will have to pray that we make money.
-just my stupid humble opinion
Rewire
Senior Member
- Location
- Lake of the Ozarks
I had a customer tell me that the people that installed his new pump were high in their quote to run a new circuit he asked my price and I quoted $500.00 he then said I guess they were not that high at $400.00,I got the job.nakulak said:
petersonra
Senior Member
- Location
- Northern illinois
- Occupation
- engineer
There is no magic number. Look at what your competition is charging. That is the going rate, and that is what you should be charging. Keep in mind only a few ECs in your area are your real competition. If you do residential construction work, then the guys doing commercial and industrial work are not your competition. If you do mostly residential remodeling, your competition is the other ECs that do mostly residential remodeling. You need to figure out what your niche is and charge the market rate for that niche.
macmikeman
Senior Member
- Location
- Planet macmikeman
petersonra said:
So based on this info, if the borders keep getting opened up and the current situation of how the "competition keeps lowering the prices based on their hiring practices, that means I should now be charging $5 per hour???
Rewire
Senior Member
- Location
- Lake of the Ozarks
The idea that you have to factor in what your competition is charging is lost on many on this forum.You can price yourself out of the market.Many will not have the same overhead as you I have a 60x60 building I rent for $500.00 a month many of my competitors work from home but I have the advantage of a business presence in the area as my building is on a high traffic street and I have large signs on it.If I have only one hour a day at $100.00 vs eight hours at $65.00 then I will go with the eight because that pays the bills.petersonra said:
macmikeman
Senior Member
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Rewire said:
Ya, well ok, but if I have only 4 hours a day at $235 I will go to the beach, and watch the competetors trucks drive past on the way to the $65 jobs while I surf, and still pay the bills.
Rewire said:
That is fine, as long as your break even number is $65, in my area $65 will not cover my break even, my comp insurance and tax liabilitles with an hours direct labor alone comes to more then $65, add in all my other overhead and operating expenses, I am up there.
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