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Pricing, Estimating, And Success

 
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Old 10-16-2007, 10:38 AM   #21
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Re: Pricing, Estimating, And Success


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Originally Posted by Brian View Post

Since 99% of the contractors starting business today won't last 10 years, and since most of them aren't charging enough, I'm not sure why knowing the "going rate" will be helpful. The "going rate" is really the "going broke rate".
Brian,

I have used almost that exact phrase when I occassionally have to deal with an insurance adjuster saying that the prices they offer are the average going rate in the industry.

I do not desire to be compared to the 90 % + of all contractors or small businesses who can not sustain their business operations.

Once again, great initial post.

Ed
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Old 10-16-2007, 06:23 PM   #22
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Re: Pricing, Estimating, And Success


Since estimates have been fewer and the competition is getting cheaper I think I will go out and buy some expensive toys. New trucks, and equipment and then invest in a large advertisement campaign. Then I could hire a group of guys on salary to try and convince 1 out of ten customers that paying my outrages overhead ensures them a better job than the small guy who puts on his tools and personally does the job. I have heard a client say more than once that they were getting 3 estimates, so to say there is no going rate is ridiculous. Everyone needs to know thier own bottom line over head going in a bid period but know matter what kind of dog and pony show you put on at the sale --its no sale if your cost is way over theirs. The more people slow down the more people are roaming into other types of work to stay busy. It should be no such a mystery that people as inquiry about cost others are getting. You also have no idea how many HO are going on line price checking thier own jobs.
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Old 10-16-2007, 06:51 PM   #23
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Re: Pricing, Estimating, And Success


I for one love to know the going rate, of company's that have been in my market for well over 10 years, their are plenty of them. I collect their estimate packages, and learn from them. most of them around for twenty.
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Old 10-16-2007, 08:35 PM   #24
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Re: Pricing, Estimating, And Success


Brian,

Great Post! I've been in the dog and pony show for awhile now and if most guys would just take their time, they will pick up on things that will tell them how to price the job they are looking at. If they would know the numbers like you said and then it will fall into place. Great post.
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Old 10-17-2007, 11:29 AM   #25
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Re: Pricing, Estimating, And Success


Is it that 99% fail because they dont charge the correct price???

I wonder, their has to be other reasons they fail.

whear did you get 99% buisness fail??

thanks
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Old 10-17-2007, 12:37 PM   #26
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Re: Pricing, Estimating, And Success


I have read from DOL statistics of all small businesses.

80 % fail withinf 1st 5 years.

Of the remaining 20 %, 80 % of them go 0ut of business in the next 5 years.

That would leave 4 % of the originals at the beginning of the 10 year period.

There are many other reasons to go out of business, but money in should be greater than money out, would have to be a high ranking one.

Ed
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Old 10-17-2007, 01:50 PM   #27
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Re: Pricing, Estimating, And Success


I concur with Ed's numbers above which seem to be in line with everything I have read.

Why do "I" think so many businesses go out of business? I can think of lots of reasons. Money problem is probably the #1 reason. However I would say tailing in a close second are those businesses who's strategy it is to fold and re-open under another name to skirt lawsuites and warranty issues would be very common for the construction/remodeling industry.

A 3rd very common reason is that it's the easy thing to do when things get tough, especially if you are a one man shop. Having a bad day? It's easy to get the attitude that you're going to close up and do something else.

I know I closed up my web design/hosting company years ago because I got bored of it and got a new girl friend whom I have since married. It was really easy to do since I was the only employee. I just deiced one day to stop, and I did. I sold it and bought some furniture for my new condo. That was the end of that chapter of my life, just made the decision to do so one afternoon probably after a few drinks.

I'd say those are the #3 most common reasons that businesses fail. In my opinion of coarse.
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Old 10-18-2007, 10:41 PM   #28
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Re: Pricing, Estimating, And Success


The only way you can get accuracy in your bid is to be scientific about your work. You need to keep track of the time it takes to do different aspects of your job. If you think it takes 2 hours to hang and trim a door, but your on site experience is 4 hours - then 4 hours is what's got to go into you bidding form. (What do most amatauers forget to include in their bid? setup, material handling, layout, cleanup, and the all important "misc, labor", the catchall for all those little unique oddities that show up in every job.)

In my spreadsheet, every aspect or phase of the job includes these 5 items. And whenever I run into something I didn't think of before, or a new wrinkle, I add it to my spreadsheet template. After 30 years it's massive. But I won't forget anything!

You've simply got to keep a timecard for yourself. It's a habit. Then, overtime, you'll see your bids being more and more accurate. You'll also notice that your bids are probably more expensive than some others - but that means you're really accounting for all that's involved - and you won't be working, working, working - and wondeing why your not making enough money. You'll also have longevity as a builder. That adds to your credibility as well as your bottom line.

For those great "sales" people who just sell themselves but don't have the goods to back it up, they're a flash in the pan. Not even worth thinking about.

Last edited by Chip_Block; 10-18-2007 at 10:45 PM.
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Old 10-19-2007, 08:08 AM   #29
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Re: Pricing, Estimating, And Success


Quote:
For those great "sales" people who just sell themselves but don't have the goods to back it up, they're a flash in the pan. Not even worth thinking about.
Well...I am a salesperson with 5 years of laborer experience
and know how much time you need to set and trim the door
but still can sell 5k for 10k
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Old 10-19-2007, 08:25 AM   #30
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Re: Pricing, Estimating, And Success


Quote:
Originally Posted by Chip_Block View Post
The only way you can get accuracy in your bid is to be scientific about your work. You need to keep track of the time it takes to do different aspects of your job. If you think it takes 2 hours to hang and trim a door, but your on site experience is 4 hours - then 4 hours is what's got to go into you bidding form. (What do most amatauers forget to include in their bid? setup, material handling, layout, cleanup, and the all important "misc, labor", the catchall for all those little unique oddities that show up in every job.)

In my spreadsheet, every aspect or phase of the job includes these 5 items. And whenever I run into something I didn't think of before, or a new wrinkle, I add it to my spreadsheet template. After 30 years it's massive. But I won't forget anything!

You've simply got to keep a timecard for yourself. It's a habit. Then, overtime, you'll see your bids being more and more accurate. You'll also notice that your bids are probably more expensive than some others - but that means you're really accounting for all that's involved - and you won't be working, working, working - and wondeing why your not making enough money. You'll also have longevity as a builder. That adds to your credibility as well as your bottom line.

For those great "sales" people who just sell themselves but don't have the goods to back it up, they're a flash in the pan. Not even worth thinking about.

On your spread sheet do you have a coulmn you list the item or work done, then in the row you list the time and condition it takes, is their any more to it?? thanks

dave mac
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Old 10-19-2007, 11:01 AM   #31
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Re: Pricing, Estimating, And Success


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Originally Posted by arturjhawk View Post
Well...I am a salesperson with 5 years of laborer experience
and know how much time you need to set and trim the door
but still can sell 5k for 10k
The question is, are you enough of a rip-off to do it?
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Old 10-19-2007, 11:48 AM   #32
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Re: Pricing, Estimating, And Success


Why in the world would you consider the price that is agreed to by both parties for the inherent value supplied to be a rip-off?

Maybe, it is all of the other contractors who "ONLY" charge $ 5,000 for the job that is the problem.

That could be a major reason why 80 % of all small businesses, including contractors, go out of business after 5 years and 96 % of the original group go out of business after 10 years.

Ed

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Old 10-19-2007, 11:52 AM   #33
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Re: Pricing, Estimating, And Success


Quote:
Originally Posted by True North View Post
The question is, are you enough of a rip-off to do it?
Why is that a rip off?
Doesn't the customer see the price up-front and wants to pay that price?

You,
the custodians of the customers money are welcome to change careers
and become financial advisors,
or talk to them out of their Lexus and make them buy a Camry
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Old 10-19-2007, 04:36 PM   #34
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Re: Pricing, Estimating, And Success


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Originally Posted by Ed the Roofer View Post
Why in the world would you consider the price that is agreed to by both parties for the inherent value supplied to be a rip-off?

Maybe, it is all of the other contractors who "ONLY" charge $ 5,000 for the job that is the problem.

That could be a major reason why 80 % of all small businesses, including contractors, go out of business after 5 years and 96 % of the original group go out of business after 10 years.

Ed
So Ed, if some slick talking @sshole sold your 85 year mother something for double what it's worth, that would be okay by you?

You guys... *shakes head*
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Old 10-19-2007, 05:41 PM   #35
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Re: Pricing, Estimating, And Success


I guess you don't see the big picture and just want to focus on someone truly being taken advantage of.

If 96 % of all contractors are out of business by year 10, did they all just have a change of heart, or did they suffer from not earning enough from all of their hard work put forth.

If my Grandmothers were still alive and would want to buy a Cadillac instead of a Chevy, and received a sense of satisfaction from rewarding themselves, I would not attempt to prevent them from making their own decision?

Would You?

Is a better roofing system and the Peace Of Mind worthwhile for an elderly person? I think so. Many of my best customers have worked hard their entire lives and finally feel they deserve to reward themselves with upgrades they would have been too thrifty to choose years earlier.

I have to wonder, from what reference point do you come to the conclusion that a better and even pricier job is not merited?

Have you been burnt before or worked in a situation that actually did that to people? I earn every single dollar I charge for and then some.

Ed
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Old 10-19-2007, 06:21 PM   #36
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Re: Pricing, Estimating, And Success


Ed, first off, I truly believe you deliver a superior product, and secondly, when I see a post with your name on it, it's usually worth reading.

The part that I took issue with is the "sell $5000 for $10,000".

By making that statement the poster has already placed a value on "the product". That value is five grand. We're not talking about perceived value. We're talking about selling a Ford as a Lincoln.

I am all for selling a superior product for a higher price. That's how I make my living. I'm pretty sure that's how you make yours.

Am I totally off base here?
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Old 10-19-2007, 06:39 PM   #37
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Re: Pricing, Estimating, And Success


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but still can sell 5k for 10k
I take that to mean that what most other contractors would charge for is $5,000 versus that he believes the true costs of the total project, which Brian has stated succinctly, would really work out to be a $10,000 job.

Now, if the companys price list and included commission came up to around $ 5,000.00 and he knew he had some little old lady in the bag, and increased the price to $ 10,000.00 just because he felt he could get away with it, then that would be a different story.

I think we may both really be on the same page or at least heading there, but our interpretations of the posters intent difer.

Ed
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Old 10-19-2007, 07:46 PM   #38
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Re: Pricing, Estimating, And Success


Quote:
Originally Posted by Ed the Roofer View Post
...Now, if the companys price list and included commission came up to around $ 5,000.00 and he knew he had some little old lady in the bag, and increased the price to $ 10,000.00 just because he felt he could get away with it, then that would be a different story.

I think we may both really be on the same page or at least heading there, but our interpretations of the posters intent difer.

Ed
Okay, NOW we're on the same page. I guess I just interpreted his post differently.

I like that verse in the Bible that says "...the worker deserves his wages..." (Luke 10:7). It always makes me feel good to see a job well done with a fair payment in my pocket. My definition of fair may be a bit more than the infamous "going rate", but I'm confident that the work is better than the guys who charge the going rate.
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Old 10-19-2007, 08:41 PM   #39
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Re: Pricing, Estimating, And Success


Brian,

Many a trade mag would love to publish that, and SHOULD.

Are you PDCA? Their new mag, DECō would be a perfect venue.

I know another small publication that should have that in it's article bank .........
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Old 10-25-2007, 11:10 PM   #40
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Re: Pricing, Estimating, And Success


I agree wholeheartedly with you Brian. I have been guilty of not knowing my numbers before, and it almost pushed me into the 99%. I was more concerned with being the lowest bidder to ensure that I won the bid. Winning battles, but losing the war. After a few jobs where I barely made any profit, and one job where I lost money, I started factoring in my overhead and raised my labor. Now, my business is moving right along. I've been underbid before, and still won the job because of salesmanship. One thing I would add though when practicing salesmanship, don't trash another contractor. Customers don't want to hear why they shouldn't go with the other contractor... they want to hear why they should go with you instead.

Dan

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