Am I Calculating This Correctly?

 
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Old 10-29-2017, 10:32 PM   #61
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Re: Am I Calculating This Correctly?


Sounds like a good set up , now that you have the formulas, you're good to go.
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Old 10-29-2017, 10:50 PM   #62
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Re: Am I Calculating This Correctly?


Watch this. And learn it.

It applies to any business.


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Old 10-29-2017, 10:57 PM   #63
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Re: Am I Calculating This Correctly?


Quote:
Originally Posted by Zkmconstruction View Post
We would never pay $500 or more for a water heater install, so why would we charge that amount?
This is a terrible argument.

Last month, I paid a painter $1,600.00 to replace a couple sheets of rock, re-texture my ceiling, and paint a bedroom. I am sure he never would have paid someone that much to do it.

I paid it, and gave his help a $50 tip, and will refer his company. They did a great job, showed up and finished when promised, and left my house clean.

While they were working, I was able to do jobs I know, and make money.

Everyone was happy, and profitable.
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Old 10-29-2017, 11:35 PM   #64
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Re: Am I Calculating This Correctly?


What I'm starting to see from this thread is I need to move to where you are.

I could dial back work greatly to get to 50 Grand and you say I can live comfortably?

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Old 10-30-2017, 10:10 AM   #65
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Re: Am I Calculating This Correctly?


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Yes, please post. I would love to read it! Also, as of right now, my expenses are in order. We have little as the business is ran out of my house. We have our Insurance, WC and llc and the licenses we need. Accounting software, business banking open, office supplies, credit card used for materials, not much else since it's ran out of home... I assume we already pay our house and utilitys, no reason to add that In. And I do not get paid. I do this for my husband, bc his split of the 60% includes him doing booking also. Since he is gone alot, I just do it for him.

My husband and I have the house, 2 vehicles (truck and car) and the financial means. At the beginning, we purchased a new desktop, a work trailer, paid for LLC and state registration, basically anything start up cost. He specializes in Electrical, but also has knowledge in all areas of construction (worked on various government jobs doing all areas). With the tools needed for all iobs, plus some specialty equipment available for his use when needed. We can also pay out of pocket for materials that were missed during bids (customers usually buy materials).

The partner, started in with us broke, basic hand tools and some drills. He has a lengthy electrical background and experience and some general knowledge in other areas. Not 100% financially stable, no credit. He is the kind to go out on weekends and network and put our name out there.

We do not go out and network, my husband works late, (stays longer than partner when needed bc of kids or other things) and if he isn't not physically working late, we are homebodies, and usually doing the paperwork aspect of the company. (Bids they do about 50% together), banking, invoicing, bookkeeping.) There is also the part that 75% of the time, my husband loads and unloads vehicle before and after a job.


Does a 60/40 split seem fair with the given information?
With the prices you are charging your partner will always be broke. You writing compares and justifies your personal expenses with your lifestyle. Instead, check out the competition's prices and jack up your prices, or you will not be in business long. Don't compare with handymen who always have prices that are too low. You mentioned $4,000 for a kitchen while a cheap kitchen in this area starts at $40,000. We pay our plumbers to install a water heater about the same as your total charge for labor and it takes 1 plumber no more than 2 hours from the time he gets the call to completion.

Personally, I don't like the 60/40 split and I don't like to have a partnership where partners always think one does more than the other. The $24 you paid your partner for installing the water heater probably comes out to about $8 per hour and less than minimum wage and even your husband made less than minimum wage since you say me puts in much more time.
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Old 10-30-2017, 01:50 PM   #66
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Re: Am I Calculating This Correctly?


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There are many million dollar companies that have relationships and repeat customers.

You shouldn't sell yourself short.

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Quote:
Originally Posted by Zkmconstruction View Post
We live VERY comfortable on $50k a year. So we can afford to be cheaper. The water heater we installed, ended up with a follow up job of light installs costing $4000. So I think its worth it. We base our prices on how much we think is reasonable.
Then if that's the case, why did you start a thread asking if you calculated it correctly...


Quote:
Originally Posted by Zkmconstruction View Post
We would never pay $500 or more for a water heater install, so why would we charge that amount?
Because as it stands now, YOU are getting paid nothing for the work you do, and you're on here asking if you're doing it correctly...

Not understanding pricing doesn't mean you SHOULDN'T charge $500 if that's what is needed to be charged to support your business, and targeting the customers needed to accomplish that goal...

No need to be defensive, we're trying to illustrate for you a common problem... if you didn't have an issue, you wouldn't be posting asking...

But to provide you a little outside perspective, which is what you're looking for in posting... You're looking at the $500 as just a number with no meaning and not giving it the context of long-term and depth as part of operating a business... Consider... You have a partnership... You are self-employed.. You're not being paid... you have fixed and variable costs, down-time, potential losses to absorb, etc...

So as a self-employed partnership, who's happy making $50K gross/year, do you have health insurance? Do you have savings? Do you have plans for you to be compensated for the work you do or are you going to be satisfied working for free forever? Do you have a retirement fund? Do you have 3-6 months of Capital Reserves / Emergency Fund? The list goes on... This is for a minimum of TWO partners BTW...

If you can say you have all that in place, then there you go, congrats...

But if not, that $500 takes on a whole new context doesn't it?... encompassing all the costs of doing business, as well as you being compensated as you should be (if you weren't doing it, they would have to pay someone correct?) will by definition RAISE your prices to cover these costs...


Quote:
Originally Posted by 480sparky View Post
Apparently it's not getting through to you.

You base your price on YOUR COSTS.
NOT what the others charge.
Hopefully, the bolded font helped it get through...
Quote:
Originally Posted by TxElectrician View Post
Quote:
Originally Posted by Zkmconstruction View Post
We would never pay $500 or more for a water heater install, so why would we charge that amount?
This is a terrible argument.

Last month, I paid a painter $1,600.00 to replace a couple sheets of rock, re-texture my ceiling, and paint a bedroom. I am sure he never would have paid someone that much to do it.

I paid it, and gave his help a $50 tip, and will refer his company. They did a great job, showed up and finished when promised, and left my house clean.

While they were working, I was able to do jobs I know, and make money.

Everyone was happy, and profitable.
Wow! I told my husband that and he almost crapped his pants! We charge $150 for painting a room (12x12 standard room sizes in this area), Stomping a ceiling is $100 And we charge $85 per sheet of drywall. Includes hanging, mudding and sanding. That's no materials included.
Quote:
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What I'm starting to see from this thread is I need to move to where you are.

I could dial back work greatly to get to 50 Grand and you say I can live comfortably?

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Depending on HOW comfortably you cushion yourself, we feel like 50K a year is perfect. We do not live above our means.
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Old 10-30-2017, 03:34 PM   #67
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Re: Am I Calculating This Correctly?


$150 for a 12x12 paint job? Walls, trim, ceiling all different paint? 1 coat or 2?
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Old 10-30-2017, 03:40 PM   #68
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Re: Am I Calculating This Correctly?


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$150 for a 12x12 paint job? Walls, trim, ceiling all different paint? 1 coat or 2?
Yes. Walls, base, ceilings. 1 coat. We did have 1 job last month where we charged $200 for same job, But the walls were dark maroon and she wanted white. And it took 3 coats. We figured no reason to charge alot more, because they were already there doing other work.
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Old 10-30-2017, 03:50 PM   #69
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Re: Am I Calculating This Correctly?


Please do not take offense to this, but your mentality is what hurts this industry. You are not charging enough and it doesn't matter if you think the pricing is in line...it isn't. Charge more! You can not think of labor like an employee. "Making" 20 bucks an hour costs much more than $20 an hour.
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Old 10-30-2017, 04:24 PM   #70
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Re: Am I Calculating This Correctly?


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Yes. Walls, base, ceilings. 1 coat. We did have 1 job last month where we charged $200 for same job, But the walls were dark maroon and she wanted white. And it took 3 coats. We figured no reason to charge alot more, because they were already there doing other work.
That's insane. 200 dollars is not enough to pull off of a profitable part of the job to do a non profitable part. Though, honestly, it doesn't sound like many parts are profitable yet.

You can't charge people what you think is fair, or makes them happy. The cost is the cost. Believe me, this is the hardest thing to realize. But when you are broke and wonder why your husband is working so many long hours and not getting ahead, you will understand.

It is easy to give breaks and discounts, it gets easier to not.

Try a few jobs at a fair, but higher rate and see what happens. Work less, make more. That is the point.

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Old 10-30-2017, 04:44 PM   #71
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Re: Am I Calculating This Correctly?


Folks: It's obvious we're conversing with someone who is either fantastically wealthy and making a profit to live on is not an issue, or just does not care to hear the truth and refuses to accept facts.

If it is the former, then let's congratulate them for either being lucky enough to have the financial means to live out their lives in relative ease on $50k a year. Working for less-than-minimum wages means they can already afford the steak and lobster. It's just the jobs they're doing means the difference between a cheap bottle of domestic wine and a bottle of the good stuff.

If it's the latter, we are wasting our time here. I say we move on.
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Old 10-30-2017, 04:56 PM   #72
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Re: Am I Calculating This Correctly?


Quote:
Originally Posted by Zkmconstruction View Post
Wow! I told my husband that and he almost crapped his pants! We charge $150 for painting a room (12x12 standard room sizes in this area), Stomping a ceiling is $100 And we charge $85 per sheet of drywall. Includes hanging, mudding and sanding. That's no materials included.


Depending on HOW comfortably you cushion yourself, we feel like 50K a year is perfect. We do not live above our means.
First off, you are to be commended for trying to educate yourself on business matters, as well as staying part of this thread where it could seem as if everyone is jumping on you. You are receiving some solid advice.

If you want to be a business, you must calculate all the costs associated with being a business, which means you have to know those costs.

Start with your husband's and his partners yearly desired salary, add all overhead expenses (which 480 provided a good list) and your profit margin. Remember profit is not extra money, it's a necessity. Divide that number by the hours that will be billable. Dont forget to figure in holidays and vacation time. For me, I deduct 6 holidays and 2 weeks vacation, plus in an 8 hour day, only 5.5 hours are actually "billable".

Best of luck to yall.

As far as your husband nearly crapping his pants, I do not like to waste money, but I would sooner pay someone what I did than hire someone that had quoted me your price. I had a good feel for the amout of time they would spend on site, and a knowledge of the costs and time off site. A happy and profitable company is more likely to perform to my standards than someone who was worried they weren't making any money.
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Old 10-30-2017, 04:59 PM   #73
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Re: Am I Calculating This Correctly?


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Folks: It's obvious we're conversing with someone who is either fantastically wealthy and making a profit to live on is not an issue, or just does not care to hear the truth and refuses to accept facts.

If it is the former, then let's congratulate them for either being lucky enough to have the financial means to live out their lives in relative ease on $50k a year. Working for less-than-minimum wages means they can already afford the steak and lobster. It's just the jobs they're doing means the difference between a cheap bottle of domestic wine and a bottle of the good stuff.

If it's the latter, we are wasting our time here. I say we move on.
I may be wrong but I think she may actually be trying to figure things out. It's difficult to quit looking at things from an employee perspective and realize the cost associated with operating a business.
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Old 10-30-2017, 05:04 PM   #74
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Re: Am I Calculating This Correctly?


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I may be wrong but I think she may actually be trying to figure things out. It's difficult to quit looking at things from an employee perspective and realize the cost associated with operating a business.
I get that. But every time someone suggests the 'proper' way to calculate a price, the OP comes back with 'we just want to be cheaper' and 'we are comfortable living on 50k a year' and 'we don't want to charge more than we would pay for the job'.

None are so blind as those who refuse to see.
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Old 10-30-2017, 05:57 PM   #75
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Re: Am I Calculating This Correctly?


Plus you need to be making $80K/yr to bring in $50K
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Old 10-30-2017, 07:11 PM   #76
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Re: Am I Calculating This Correctly?


I think there are a number of us here who starting thinking I can't possibly charge that much!

Then we came to the realization that yes we can. When I started never did I think I could bill out at $100/hour but now I do

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Old 10-30-2017, 07:13 PM   #77
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i think there are a number of us here who starting thinking i can't possibly charge that much!

Then we came to the realization that yes we have to. When i started never did i think i could bill out at $100/hour but now i do

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Old 10-30-2017, 08:21 PM   #78
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Wow! I told my husband that and he almost crapped his pants! We charge $150 for painting a room (12x12 standard room sizes in this area), Stomping a ceiling is $100 And we charge $85 per sheet of drywall. Includes hanging, mudding and sanding. That's no materials included.


Depending on HOW comfortably you cushion yourself, we feel like 50K a year is perfect. We do not live above our means.
Make you a deal that will demonstrate and most likely help you get beyond a retail mindset...

On your next three jobs, increase your prices 10% above what you normally would charge... here's the kicker... YOU personally get to keep the 10% for your efforts (a pittance in reality)...

Once you start to realize your time is worth money, transitioning to the mindset of an owner and being properly compensated for your efforts will hopefully start to grow and cultivate...
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Old 10-30-2017, 09:28 PM   #79
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Re: Am I Calculating This Correctly?


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Folks: It's obvious we're conversing with someone who is either fantastically wealthy and making a profit to live on is not an issue, or just does not care to hear the truth and refuses to accept facts.

If it is the former, then let's congratulate them for either being lucky enough to have the financial means to live out their lives in relative ease on $50k a year. Working for less-than-minimum wages means they can already afford the steak and lobster. It's just the jobs they're doing means the difference between a cheap bottle of domestic wine and a bottle of the good stuff.

If it's the latter, we are wasting our time here. I say we move on.
Well, that's a little rude. I'm trying to figure it out. I am in no way wealthy. We are 29 and 33 with 2 children, an 80k home just trying to make something for ourselves.

I have ran alot of the suggestion past my husband, and have a list of things to discuss with the partner.

The partner wants to raise costs. But we have the mindset that we don't want to charge alot more, because being a new business, if we do 3 bids a week and they are all too high and the customers pass, then we have zero Income. And now there is zero to pay expenses for the business, or our personal bills. We would rather get $500 in our pocket to support ourselves with cheap prices vs 0 because we charged "too much".
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Old 10-30-2017, 09:52 PM   #80
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Re: Am I Calculating This Correctly?


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Well, that's a little rude.
Actually, I think everyone is being pretty nice for 3 reasons - you're just starting out you're stuck trying to figure this out, and you're female. That all gets you the more detailed explanations and more gentle responses.

Keep in mind, a 6% bump in your price may only be a 4% bump in overall project cost. You're surviving on the marginals, but the customer isn't. They don't starve or go bankrupt just because of a few percent you charge.

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