Labor Rates In Missouri Am I Too Cheap Or Too High?

egettys

two years ago i raised my rates. i charge 24.5 for myself 21.5 for my lead 20 each for two other guys and 17 for another which brings my crew rate for 5 guys to 103 per hour. then for most cost plus jobs i negociate a percentage of 6 to 8 percent of the total cost of the project to cover my overhead and profit. we have a reputation of being a top builder in the area and are well known for our fine craftsmanship. we have many clients who are repeat customers and they are always very pleased with us. but we just completed a new home and the home owner complained non stop from beginning to end about what we charge, "too expensive" finally one day i asked if he had ever compared our price to anyone else he replied "no but i know your high but worth it". the only problem now is that he is a very important figure in my town and he has told other people that we're expensive he even said that to some potential clients! so i was hoping someone could give me there opinion on this matter and share what they feel it would be appropriate to charge for rural missouri. i would like to pay my guys more cause they truly deserve it but now i'm not sure

Burby

You & only you can determine your prices. After the 1st year in business you should know if acceptable, to high, or way to low. 3 to 5 to how ever many guys you hire with any experience should give you an idea of local pricing.
Those prices, if you can work charging them, that is great and is reason why you would remain busy. Myself I could not work for a charity at them prices. Just guessing, charging 21.5 for your lead guy, you cannot be paying him more than 10 per hr. Or you pay him 12 per hr and the others at 20 they get 8 pr hr & you make up the diff there.
I'm not from that area, but prices from around the country don;t seem to vary that much. Taxes & all Ins needed or should have are the beginning of dictating prices & something we all would like to see be an option ,
But taxes & ins well they just are what they are.
Don;t let your guys read the papers, watch tv & God forbid they have internet, cause they will see they can get the prices you charge as their hrly pay elsewheres.
Guys to "hold" up a broom want $17 pr hr around here and what is bad is they get it.. hahahaha

__________________
Proud to help make a house your Home

Never judge another by one's own intelligence

TigerFan

How do you handle insurance and workers comp in your pricing? There's no way it can be in your 6-8% for OH.

I would make DAMN SURE to explain to your customer that the guy you pay $15 an hour to really costs you $30 an hour because framing WC is about a .7 multi on his hourly wage, plus fed taxes and soft expense.

HO's want everything on the up and up, then they have to be educated about the true costs of building.

That education is our responsibility.

__________________

http://www.bayoucontracting.com

DavidC

When a customer tells me we're expensive I take it as a compliment, especially if it's followed up with 'but your worth it'.

Unless there are some vast differences in our two areas, you are not expensive. In fact you are probably undercutting yourself. When you add the labor burden to the pay scale I count on a $20/hr. employee to cost $30/hr. to break even. Since my goal is not breaking even, I add overhead recoupment and profit to the labor rate.

We also charge the same rate for everyone. The guys that cost less generate a little more $$ which is normally dissapated by ommissions in the estimate or other derivatives of Murphey's law. It also allows room to give the deserving a raise without recalculating everything again.

Try searching this topic, there is a lot of info here already.

Good Luck
Dave

__________________
www.CookContractingLLC.com

egettys

i pay my lead 14.25 and the other two 13 and another guy who gets 10. i also offer 5 paid holidays. my work comp is really reasonable since its been years since we've had any accidents. what i charge for my guys takes care of the taxes and some overhead so my percentage takes care of the rest and leaves some profit sometimes. i work full time with the crew so i work along side my lead and take care of most of the leads duties. our average gross income yearly is around 500,000 to 750,000 for labor and materials total, and i usually pocket around 50,000 to 70,000. the thing that makes it tough is that i run a legit business and a lot of others in this area pay less to their employees, cut corners, or they dont pay taxes or insurance. i know of several contractors who bill out their employees for 14, 17, 19 for carpenters and 20 for a lead and they pay there guys exactly that then at tax time they 1099 the employees so that they are responsible for the taxes and they are responsible for insurace. this looks good cause the h/o gets charged less and the people get paid more but in reality my guys get more cause i take care of taxes, insurance, and i provide alot of tools too.

rbsremodeling

You seem to be on the up and up and a good guy at that. So my little .2 cents

If your not doing these already start

1. Start branding your company and create an image that you are the best or better than your competition

2. Make sure you and your guys where uniforms and the trucks are clean and branded with company info.

3. Find a niche and corner it. Kitchen remodeling, Bathroom remodeling etc. Make that your bread and butter and be know for whatever suits your company the best.

4. Charge more. You might loose more jobs but the ones you have will be profitable.

5. Do exactly what you say you are going to do, on time and a little bit more if you can. make sure when you leave a customers job they think you can walk on water.

6. Start meeting with other contractors or groups of contractors to improve you business and contractor skill. Learn from other contractors who are doing better than you and adopt or improve on the methods they use to be successful.

7. Stop working in your business and start working on your business at the numbers you are grossing it is time to prepare to leave the field and start working on more important things. Advertising, marketing, systems for your guys, customer service, better training for selling jobs etc. Time to hang up the boots

__________________

BigSlick

Where abouts in Missouri? I'm an hour south of St.Louis. 14.75 is very low here for a lead guy ( if he is truely a lead) We start helpers with no exp. 11.00 an hour, no benefits, a guy with 1-3 years exp. he will get around 14.00 to 18.00 We only do remodeling no new construction. Hope this helps.

drive55cat

Looks like the same old story to me, HO beating up the contractor trying to get a break on the price. Didn't he sign a contract? You decide what to charge, if he don't like it finish the job and don't do any more work for that guy. You do not have to tell him why you don't want his work, you may be too busy or you could what a lot of other guys do, bid real high. Then he can go and ruin somebody elses living, instead of yours. d55c

wellbuilthome

Sounds cheep . You could try a x2 on your pricing.

Bodger

Sounds that way to me too, but I don't know your area and the prices there.

lawndart

He is your typical wannabe big shot. People like this can't help but bitch and complain. You could be charging half your rates now, and he would still complain. Don't let it bother you.

Looking at your gross sales, and what you said your putting in your pocket I cant believe your only walking away with 10%. Talk to any succsessful business owner in your area and they'll tell you, realistically that figure should be around 30-40%. How long have you been in business?

Cole82

I'm in IA to the north of you and that is way way cheap. I just opened my biz this year, but have been in the industry for 10 years. I charge $50 an hour for me, Then I have a older semi retired guy that I charge $30 an hour for him and he gets $20 an hour. He is also 1099, but isn't a full timer. That is all I am currently useing for help other than a couple subs.

matt grisham

A man with Tramel Crowl ask for a price for some ceiling work. 20 + 12 room . I said 400 dollars he said sounded good ,It took me 4 hrs, thats 100 dollars per hr . He ask me to come and work over the holliday by the hr i said my over time rate was 34 dollars per hr , He said that was to high ,and he had never paid that much Some times a price for the job is less pain full

PA woodbutcher

If I work by the hour, the very least that I charge for myself is $25.00 and that would be on a cost plus with an additional 15% of entire bill including material (I already get 10%) at the end of the job. If I am using a ton of tools you won't get me quite that cheap. My hourly rate depends on just that...how many tools I use, the skill requirement is for the job and size of the job. I have gone as high as $45 on jobs. Just me, (and I'll catch hell from someone on here), but how can I charge the same dollar amount for hanging and finishing drywall ($400.00 in tools) as I can for building a deck or rebuilding a porch ($4,500-$5,000 in tools). Tool replacement and maintenance is part of my overhead.

Since your working so cheap and people are still bitching, I'll go out on a limb and guess your working in a small, fairly depressed area with a ton of hacks and people willing to work for nothing. Join the club. Keep people happy, do good work and charge accordingly. If you have to get creative with your billing rates as I have done. If your crew has been working together for awhile and your estimating skills are good, go with firm bids and figure higher.

Thats just me though. I've only been in business for myself going on 3 years and am paying close attention to Dirt's lessons. Thanks Dirt.

__________________
'The trouble with our liberal friends is not that they're ignorant; it's just that they know so much that isn't so.' - Ronald Reagan