Estimating Help

 
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Old 01-02-2018, 11:32 PM   #1
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Estimating Help


Hey, guys new to the group.I've been in the industry for about 25 years now and just now starting my own contractor company.I've done about everything there is to do with residential and some small commercial.The problem I'm having is that when estimating I feel like sometimes my bids are too much.I bid out a job for residing a 3500 square feet house, including sofit, trim facia, removal window install, fixing up a deck and reflashing fascia and roof and a special cement fiberboard that the owner wanted, which was about $4 a sqft. I came out to $65,000 with labor.what do you guys think ? was it too much or too little, the contractor that asked for a bid said it was too high? just wanted some input.thanks in advance, and also what kind of programs or ways do you guys use to estimate.
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Old 01-03-2018, 07:38 AM   #2
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Re: Estimating Help


Figure out all your expenses and how much you want to make.

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Old 01-03-2018, 09:13 AM   #3
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Re: Estimating Help


You probably won't get a direct answer to your question. My rule of thumb is if you get everything that you bid; you're too low. If you don't get anything you bid you're too high.
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Old 01-03-2018, 03:17 PM   #4
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Re: Estimating Help


I have no idea if you are high or low, but I donít find your number shocking, based on the scope of work.
The contractor that wanted your bid doesnít care if you make money and go broke.


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Old 01-03-2018, 04:05 PM   #5
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Re: Estimating Help


Don't let potential customers tell you where to set your price. Keep in mind that there are a whole lot of idiot competitors out there just trading dollars, not making any money, driving junk, hiring low pay help and basically just working for wages.

You need to do better than that when you are running a business; pay yourself well, your employees well, replace equipment, put some money away for hard times, etc. Figure out what your true cost of doing business is, then price accordingly.

Don't beat your head against the wall competing only on price with a bunch of competitors. Learn to sell better service, better housekeeping, better safety, higher quality products and value added things so price isn't the only consideration.
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Old 01-03-2018, 04:14 PM   #6
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Re: Estimating Help


The briefcase builder that said it was "too high" actually means he can't put a 20 percent markup on it and still hope to sell it. You can bet he is shopping around for somebody who will do it on the cheap.





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Old 01-03-2018, 05:45 PM   #7
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Re: Estimating Help


If you really aren't pretty darn sure what the job is going to cost you, then you are lucky you didnt' get it. You need to do a real estimate of your costs, including your time, and then add on for profit and overhead and PITA. Its pretty black and white once you do that. If you can't make any money then you are better off working for another contractor and letting them take the risks financially.
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Old 01-03-2018, 08:27 PM   #8
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Re: Estimating Help


God forbid you end up ahead at the end of the day.....
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Old 01-04-2018, 12:03 AM   #9
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Re: Estimating Help


thanks for the advice, I have a basic understanding of what my cost is, it's just that I'm new to the whole owner thing and have had two clients tell me my prices are too high and it kinda bugs and makes me over think my prices.
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Old 01-04-2018, 06:18 AM   #10
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Re: Estimating Help


Quote:
Originally Posted by Vicente231 View Post
thanks for the advice, I have a basic understanding of what my cost is, it's just that I'm new to the whole owner thing and have had two clients tell me my prices are too high and it kinda bugs and makes me over think my prices.
Welcome to ownership.
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Old 01-04-2018, 11:56 AM   #11
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Re: Estimating Help


The standard answer here is LMOP. I've been a GC since 2006 - been in the business much longer - just not for myself. I've tried several programs, subscribed to Xactimate, and developed several excel spreadsheets trying to figure out standardized pricing for things... still haven't figured it out.

The job I am on now is a customer we did a roof and gutters for who had T1-11 siding on his home that was in bad shape. I encouraged him to search around and find someone to fix it for him, as I figured someone who did siding every day would give him a better quote than I, and he had referred me to so many jobs that I wanted him taken care of. He got 3 estimates... $16500, $48,600, and $52,400... then called me for advice and help. After looking at the quotes he received, I discovered that they were all pricing different things and none of them were "solid"... they all insinuated that there would be additional charges.

In the end, I offered to do the job for him for $55000 but I gave him a firm price that he could rely on. He was so excited! He had wanted me to do the work all along...

It's not the number. It's the relationship that counts. In a bidding war, there will always be the low-baller and the hack trying to steal a job, I wouldn't lose much sleep on them. I have figured out that the ones who only want a low price aren't the right customers anyways. After much head scratching, frustration, and searching for a "fair" price myself, I have to say I agree with all the others here... Labor, Materials, Overhead, and Profit... charge a fair price and stick with it... build the relationship with the customer... in the end, you'll be happy that you didn't get the jobs you missed.
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Old 01-04-2018, 04:57 PM   #12
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Re: Estimating Help


The biggest challenge first is coming up with the base numbers... Squaring up Labor, Overhead, Material and Profit is not the difficult part... they define themselves on paper...

The challenge is how you determine how long a job will take, over-runs, profit-bleeds, inaccurate labor time estimates... still, most with just say "it'll take me ABOUT or ROUGHLY two weeks, or 80 hours so I'll multiply the hourly rate (made up of Labor & Overhead which should include what you pay yourself), add Materials, maybe a little extra and then calculate the Profit on top of it and wallah... instant price...."

At the end of the year though, the well laid out plan is missing something and for some reason you didn't make what you planned for... and it's for a variety of reasons...
1. Inaccurate Labor time estimate (happens to us all)
2. Too many Freebies (eats up billable hours)
3. Incomplete accounting for overhead, taxes, WC, etc. in developing your hourly rate (knowing your numbers intimately here is key)
4. You confuse "Profit" with you pay thinking that Profit is what you pay yourself with as opposed to your company so you have things like Capital Reserves, Emergency Fund, Equipment purchases
5. You're stuck in rob Peter to pay Paul cycles
6. You fell short on billable hours because...
a) Not enough work in the pipeline
b) Didn't account for estimating, driving, customers who don't buy, etc... the time STILL needs to be accounted for or it reduces what you actually made...
c) Your inaccurate Labor time estimates caused whole day(s) to be lost while you're expected to keep the price the same if it's fixed based pricing... if it can't be made up or adjusted for on remaining jobs for the year it can only come out of one place if
d) You don't have Capital Reserves / Emergency Fund to help absorb these issues
If you find yourself in the position of NOT making what you thought you would at the end of the year, while EVERYONE ELSE still gets paid, try the following:
1. Until you get fairly accurate, when calculating how many man-hours (1, 2, or 5 people) consider multiplying it by a factor of 1.25 before calculating your hourly rate (i.e. - Labor & Overhead) - should you choose, you can always refund any amount you didn't end up using but in most cases, you can't go back to ask for more
2. When calculating Material, be sure to add a separate mark up for material handling, delivery and refuse disposal
3. If you don't have it already, use the Profit (i.e. - what you pay your company) to develop a minimum of 3 months of Capital Reserves and/or Emergency fund to absorb shortfalls and ensure YOU are getting paid as you go along (big motivation drainer - working with no or little pay)
4. When you get deposits for materials, purchase ALL the materials (you don't have to pick them up or get them delivered all at once) - this one thing will go very far in avoiding most rob Peter to pay Paul cycles as it's not usually wanting to do the work but having the materials to do it with necessitating using money from the next job
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Old 01-05-2018, 11:01 AM   #13
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Re: Estimating Help


Don't worry about people telling you your price is too high.

Worry about how many leads you're getting. You need 4 points a day to stay in business. Each phone call is a point. Each meeting is two points.

You need a website, ppc campaign, business cards, and maybe supplement with lead gen until your other marketing efforts pay off.

Yesterday I had three meetings and 11 phone calls. HUGE DAY in the middle of January! It only took me 13 years to get here.
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Old 01-08-2018, 06:20 AM   #14
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Re: Estimating Help


There are always customers that want a cheaper price. Always. Truthfully, probably every customer wants a cheaper price.

Figure out your numbers and stick to them. There will always be someone cheaper. Do the best job you can and eventually it will pay off.

2 quick examples. My neighbor wanted a new concrete drive. Pretty big. My price $25,000. The guy he hired, $12,000.
That guy has no insurance, pays guys cash. Drives an old truck. Has very basic tools. Lives in a rental house. Has never had anything and at his prices, never will.
I didn't get the job. I don't care.

Had a long time customer. Caught me off guard and I gave him a price on handrails. My price to him, $650.00. The price should have been $900. I billed him the $650. I lost money. When he paid the bill, he complained my prices were too high.

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