Charging For Equipment On A Cost Plus Bid

 
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Old 11-07-2017, 06:39 PM   #1
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Charging For Equipment On A Cost Plus Bid


We have a 7 ton Boom Lift truck that we use for setting large pieces of gear, etc. It's an older truck that is paid for and has a very low cost of ownership.
I'm trying to come up with a cost to charge a T&M customer when we have to Mob the truck out to lift something on-site. Any comparable trucks to rent are usually $500+/day and are much larger trucks than we have or need. Usually when we use the truck it's only for a few hours on-site to set a generator then it's just parked for the rest of the day.
If I were to charge the customer $500 for use of the truck they'd probably have a melt down.
So I'm wondering if I should come up with an hourly rate for use of the truck plus a mobilization cost to get it to the job site and avoid a daily cost? Or just to do a cheaper $100-150 per day regardless of how much it's used and cut the customer a break if the truck isn't used for a few days.
Thanks in advance for any responses.
Jason
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Old 11-07-2017, 07:16 PM   #2
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Re: Charging For Equipment On A Cost Plus Bid


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Originally Posted by Jason2017 View Post
We have a 7 ton Boom Lift truck that we use for setting large pieces of gear, etc. It's an older truck that is paid for and has a very low cost of ownership.
I'm trying to come up with a cost to charge a T&M customer when we have to Mob the truck out to lift something on-site. Any comparable trucks to rent are usually $500+/day and are much larger trucks than we have or need. Usually, when we use the truck it's only for a few hours on-site to set a generator then it's just parked for the rest of the day.
If I were to charge the customer $500 for use of the truck they'd probably have a meltdown.
So I'm wondering if I should come up with an hourly rate for use of the truck plus a mobilization cost to get it to the job site and avoid a daily cost? Or just to do a cheaper $100-150 per day regardless of how much it's used and cut the customer a break if the truck isn't used for a few days.
Thanks in advance for any responses.
Jason
It is your truck.

Any way you want to charge is just fine.

There may be some ideal scheme that is just right for your business that balances the cost to the customer versus ticking them off on price etc. but no one here can tell you what your sweet spot is. You have to determine that.

Andy.

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Old 11-07-2017, 07:25 PM   #3
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Re: Charging For Equipment On A Cost Plus Bid


Probably the "fair" thing to do is analyse the yearly cost of ownership vs the average amount it gets used each year, and come up with a rate based on that.

However, many would say you're leaving money on the table with that method (considering what everyone else who rents needs to charge). And when the old boy finally dies, you're suddenly going to have to charge a lot more for jobs of that type.

I think I'd probably try to come up with a rate somewhere between the two extremes.
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Old 11-07-2017, 08:21 PM   #4
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Re: Charging For Equipment On A Cost Plus Bid


Cost plus doesn't mean the direct cost of anything. Seems to be a severe misconception onhere with that. Its not T&M. Your lumberyard subs ect... all make a profit on their products and labor and so should you. I charge what rates I feel are appropriate for supervision, self performed work, In house labor whatever. When we take equipment or a dumpster we charge what feel.is appropriate. It is appropriate to make a profit for your equipment on top of overhead and wear & tear/replacement Then the jobs mark up is applied.

Now if you charge 100 dollars a day for equipment that the rental yard charges 69 for.... Labor you should charge what you feel your worth. We aren't doing anything for "going rate" rates. Labor rates, supervision, design ect... rates are in my contracts. Everything you charge for should be spelled out in the contract if you want it be clear and no issues
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Last edited by Jaws; 11-07-2017 at 08:27 PM.
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Old 11-07-2017, 08:22 PM   #5
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Re: Charging For Equipment On A Cost Plus Bid


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Originally Posted by Tinstaafl View Post
Probably the "fair" thing to do is analyse the yearly cost of ownership vs the average amount it gets used each year, and come up with a rate based on that.

However, many would say you're leaving money on the table with that method (considering what everyone else who rents needs to charge). And when the old boy finally dies, you're suddenly going to have to charge a lot more for jobs of that type.

I think I'd probably try to come up with a rate somewhere between the two extremes.
Id just sub it put if it was at cost. What's the point of owning it and operating it?
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Old 11-07-2017, 08:27 PM   #6
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Re: Charging For Equipment On A Cost Plus Bid


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Id just sub it put if it was at cost. What's the point of owning it and operating it?
Never said to charge just cost. You come up with a rate based on that cost.
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Old 11-07-2017, 08:30 PM   #7
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Re: Charging For Equipment On A Cost Plus Bid


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Never said to charge just cost. You come up with a rate based on that cost.


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Old 11-08-2017, 05:25 AM   #8
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Re: Charging For Equipment On A Cost Plus Bid


I would take the cost of a rental and use that as a baseline to determine my cost to the customer.
As said above, don't be higher than the rental yard. Unless you can justify it, ie: bigger machine, better working condition, easier accessibility.

All large pieces of equipment get charged out.
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Old 11-08-2017, 06:57 AM   #9
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Re: Charging For Equipment On A Cost Plus Bid


I normally charge what it would cost to rent or sub it out.
Having your own equipment is a convenience for you, not your customer. At some point you will need to repair or replace the piece of equipment. I will have wanted to make some money off of it for reserve funds when that day comes.
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Old 11-08-2017, 05:14 PM   #10
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Re: Charging For Equipment On A Cost Plus Bid


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I normally charge what it would cost to rent or sub it out.
Having your own equipment is a convenience for you, not your customer. At some point you will need to repair or replace the piece of equipment. I will have wanted to make some money off of it for reserve funds when that day comes.
This. It doesn't matter if the rental is bigger or you don't use your truck all day long. The going rate is whatever it would cost you or anyone else to get the job done if you didn't have your truck. If the next company has to rent the 500 dollar per day truck to finish that job then that is what the going rate is. Just because you own the truck that means that the "profit" the rental company is making now stays in house. Basically you are your own rental company. You have maintenance, insurance, licenses, and whatever else into that truck. If it's paid for then great you keep a little extra money or save that money for a new truck when this one goes. Now, if you feel that your are too high or want to be nice to the customer then give them a discount, but not a 80 percent discount from 500 to 100 bucks a day. Maybe 400 bucks a day or something if the going rate is 500. That's still a 20 percent discount compared to someone renting a truck for a day.
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Old 11-08-2017, 06:07 PM   #11
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Re: Charging For Equipment On A Cost Plus Bid


I can relate, I have a 42ft lull. I went from doing bid work to t&m for a gc due to unclear work scope. He paid to ship the machine to and from but we never discussed what monthly rate is. I love the machine to keep the guys fresh and we have a 8ft basket that makes life great.

It was basically getting used for free for convenience. Now I charge the same as a rental yard $1,750 and if they don't like it they need figure how to get around it. If it's only needed for 1 month of a 2 month job I leave it for the guys and don't charge. It's worth it for the higher up stuff and would otherwise be sitting.

They either pay your rates or rent every time you need one. I can't see charging by the hour. Most times it gets used 5-10 min but saves hours of time.
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Old 11-08-2017, 06:25 PM   #12
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Re: Charging For Equipment On A Cost Plus Bid


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I can relate, I have a 42ft lull. I went from doing bid work to t&m for a gc due to unclear work scope. He paid to ship the machine to and from but we never discussed what monthly rate is. I love the machine to keep the guys fresh and we have a 8ft basket that makes life great.

It was basically getting used for free for convenience. Now I charge the same as a rental yard $1,750 and if they don't like it they need figure how to get around it. If it's only needed for 1 month of a 2 month job I leave it for the guys and don't charge. It's worth it for the higher up stuff and would otherwise be sitting.

They either pay your rates or rent every time you need one. I can't see charging by the hour. Most times it gets used 5-10 min but saves hours of time.
That is great to hear, and I completely relate to the having it on-site for convenience for the guys 5-10 mins, but not getting properly paid for that equipment. On the other hand we had a customer that would call us to pull pumps out of a lift station when they had troubles. The boom truck essentially got us the work because they knew we could lift the pump safely with it and from there we'd know how to fix it and they'd be up and running. However I started billing them an hourly rate for when the truck was running plus our operator costs. They got upset and bought their own lift truck so they could pull their pumps on their own and troubleshoot them. Feel like I priced myself out of the work. Just want make some income off the equipment and not alienate the customer. Hard to do on a T&M basis sometimes.
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Old 11-08-2017, 06:49 PM   #13
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Re: Charging For Equipment On A Cost Plus Bid


Three fiddy.
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Old 11-08-2017, 06:51 PM   #14
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Re: Charging For Equipment On A Cost Plus Bid


Shouldn't you figure the insurance to put it on the road and get it to the site? If it fails on site, and causes damage, which insurance covers it?
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Old 11-09-2017, 08:33 AM   #15
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Re: Charging For Equipment On A Cost Plus Bid


Tell the customer he needs a truck. Have a proposal from a rental yard in one hand and yours in the other and let him choose.
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Old 11-09-2017, 08:54 AM   #16
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Re: Charging For Equipment On A Cost Plus Bid


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Tell the customer he needs a truck. Have a proposal from a rental yard in one hand and yours in the other and let him choose.
Lmao is be damned if I own a truck and give the option to bring a truck I don't own on to the job site. Might as well bring a different framing crew before long you'll be telling you he goes to church with a good plumber...

Just take control of the situation and send a bill for a fair amount. Don't ever let your customers tell you what trades what subs or what resources you use on their projects. It doesn't work

OP just put your rates in your contract so that if you do need your boom truck it's in the contract.

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Old 11-09-2017, 09:45 AM   #17
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Re: Charging For Equipment On A Cost Plus Bid


When I rent a piece of equipment I charge 10% above of what it cost me.

I also have a tilt deck trailer and I (2) Scissor lifts. When I bring them out I charge about 10% below what the rentals cost. But it takes me only 15 minutes to hook up, load the lift, and off I go.

Sometimes depending on the job I don't add a rate because it can be done without a lift but the pure convenience of a lift saves me money from having to work on ladders, as well as safety.

And when osha restrictions or job site safety requires a lift because they won't let you use ladders, it is full rental charge! Even the transportation fee rolled in.

I'd charge 10-20% below what it would be to rent the equipment.
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Old 11-09-2017, 09:46 AM   #18
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Re: Charging For Equipment On A Cost Plus Bid


Why would you charge less if you don't mind my asking

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Old 11-09-2017, 11:53 AM   #19
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Re: Charging For Equipment On A Cost Plus Bid


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Why would you charge less if you don't mind my asking

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I would say generally it is not less, it would be actually more for a charge per machine rental but the delivery fee is where it is less.

I am going out to the job anyways, + the convenience of me having full control over my delivery and lift.

So if rental company will charge 112.00 a day + 150.00 for delivery + taxes and fees and I would charge 250.00 a day to bring mine out. I'm just a bit less but more convenient. Also I can put the cost of the rental in the installation and not list it as a line item.
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Old 11-13-2017, 08:41 AM   #20
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Re: Charging For Equipment On A Cost Plus Bid


A good rule of thumb is that equipment owned by you should be charged at rates "equal to or less than prevailing local rental rates". If you are a little under anything else they can rent locally, they have no room for disagreement.

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