Pricing, Estimating, And Success

Oldcarpenter

Great Post.
Thanks Brian.

gj2802

When you position yourself as an expert in your industry, your customers will come to you in their droves and price is immaterial.

I have a contracting business in the UK and we clearly state that we are not the cheapest, in fact we purposely position ourselves above everyone else.. but we will deliver the BEST result..Guaranteed.

I don't even look at competitors prices, it's of no interest. When you posture yourself and your business higher than others..you have to deliver.

Graham

Alphabuilder422

My father has been in business for over 20 years. His success in keeping the business success and alive was mainly in part in keeping a relation with the community and the giving to church/ temple / and community. This kept him busy 6 days a week and he never stop what worked for him. Todays business is a little more advance and that the challenge now is being completive and creditable to the client. Website, professional business card and letterhead makes a different. or do they... My father's business never needed a website. now that i think about it.

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brutis

in this case one of the best , of this forum would be null, personally

i would like to thank every one on here that dose help with priceing and keep it up,

most owners as you all know try to keep priceing in the dark for installers

but come on now to the original post, at some point you ask or peak on a paper to find things out in the begining so why not ask it here? so at least you did the research on your own not from your employer to build or start or exspand unless you got in from daddy's bess. and had everything handed to ya !!!!!!!!!!!!!!

i found this site just to find out if my priceing was inline for hardie board i was close to the average but a little low

as far as pricing if you ask here your not going to get a pefect answer but thanks to the good people you can get enough information to help you figuire out what you need \


keep helping each other , it will come back to you six fold

brutis

[quote=Oldcarpenter;429603]Great Post.
Thanks Brian.[/quote

Kaabi

That's a great description of how estimates work. There are so many factors that go into pricing, that one little number doesn't do justice to how much thought goes into the final price decision.

pscinteriors

Oky guys, so I have a friend who started a fencing company a few years ago.he started with no experience in the industry and learned it all from his brother .He is now the sole owner of his company, and recently has been trying to expand to tile,remodeling, and flooring but he knows nothing about it.
I have owned my business for allmost 5 years now and have had to learn estimating by learning from my mistakes, and lots of research.I also track all my jobs and my estimating is alot more accurate now than it was when I started as it is with most of you I'm sure.
Now problem is that Ive been friends for tis guy for like 10 years, and he keeps calling me to ask how bid certain jobs.Asking things like"how long" "what would I charge per foot for tile" etc.He is bidding lots of jobs and keeping a crew of 10 busy, but not making ny money. Also ive seen some of his jobs and his estimates for them.Just cause Ive had to fix some his guys shoddy work. He is definitely a low-baller and his work shows it.But I think it is due to his lack of knowing better.
I dont want my name any where near his work! And I am getting tired of the "how do I estimate this calls" ? How do I tell a friend with tact that hes needs to figure it out on his own?
Thank You,
Nick

welovepainting

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welovepainting

www.costestimator.com may help

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aikenback

Brian, will you be my dad?

Sarah9910

I'm Baaack.....you drew me in with this one. Good thread. I try not to impose on your chat room for contractors but I do interject when I can speak from experience and when I think it may be a benefit for you. So from my experience...

Equipment is an important element in the estimate as well as in the job cost. Somewhere in this thread tom referrred to equipment as the "toys" of the contractor and where they like to spend their money. Very true, all the more reason to estimate the equipment usage along with the material and labor to the jobs. Tracking the cost recovery of your equipment which many software programs now-a-days does will tell you if you are spending more on your equipment than it's making you. What I often see is that the cost of the equipment usage never gets recorded to the cost of the job. The job ends and the company reviews the job reports vs the estimate and say "oh look, how well we did, we came in under budget". But..when you look closely, the cost of the equipment was never applied to the job.

Also, as someone else mentioned, Scheduling is so important. Every day the job is extended costs $$$$.

I was on line with a contractor recently and they insisted in posting the cost of notices and liens of a job to admin expenses. I advised them that it was in their best interest to post anything that is attributable to the job to job cost and not admin, this way they would see the true cost of the job. If they lost money on the job, they need to see that so they don't make the mistake again. Their answer was "but we've always done it this way so we are going to continue". Since they just met me a month ago and apparently I hadn't developed a "relationship" with this particular employee, I recommended that they discuss this with their CPA. Point here is that "always doing it like you did it" isn't always the right answer. It may be a reason why contractors go out of business.

Another reason contractors go out of business, and i have left working as an employee for contractors for this specific reason is: paying personal expenses out of the business. This drains the business funds and before you know it, the contractor is not paying bills on a job when they are paid for a job from the owner or GC. When this happens, it's usually a downward spiral. Pay yourself consistently so you don't pull money out unexpectedly from the business and live within your means personally like we all should do. If you need more money, get more jobs that make money so you can give yourself a raise.

That's my two cents. Great thread. I enjoyed it, but I must say, I didn't read all 111 responses!

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jmgrahamjr

I also have a friend who always underbids his jobs. He always has to cut into his profits leaving none at all... Never sell yourself short.

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MattCoops

I don't really have much care for underbidders, lowballers, toestompers, whatever you want to call them.
Fact is they may know how to win jobs, by drastically reducing their prices.
But they don't know how to sustain a business.

These, you'll find, are the same ones who call you in September or November looking for work to hold them through the winter.

They don't stay in business. And there will be new generations of others to come. You just have to work through it.

It's like working in a house with no A/C in the heat of the summer.
You just keep your tools clanging and your grumbles to a minimum.

Pesty ants pile there mounds high. But a bit of rain, or even a hose, will rid their selves of a place.

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lavish

HomeTech Cost Estimator is a good website with a lot of very useful information for the new contractor.

From that link (thanks!), I found a collection of articles at hometechonline.com/gorman

stone21

Your writing is so well . Good job

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Double-A

Nick, the best way you can tell this friend is to show him his work and ask him how he made out on the job. You know he's losing money, or at best just churning money, but does he? Is he tracking his expenses associated with these projects?

If you don't measure, you don't know. Ask any carpenter what length of wood he might need of a specific spot, and unless he's working from very detailed plans on the perfect project, his answer will be something like, "its about this much, but I'll have to measure to find out for sure."

And this is the golden rule of pricing. If you don't measure your costs, by getting quotes on material, and supplies, figure your labor costs by your actual production numbers, then you're just guessing and guessing means you don't know. Step back, and look at what you have done, and what you really wanted to do. See that gap in the dollars? That's ignorance. That's the stupid gap. That's EGO talking the talk, but failing to walk the walk.

Tell him to wake up and smell the coffee! Quit dreaming of making money on jobs and start doing his own homework so he can teach himself how to EARN more money on these jobs. You can only be a Jackass for so long before someone wants to hitch a plow to your ass. How long does he want to be a Jackass?

And that is what I would tell him.

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CaptainAmerica

Also tell him that judging from the last job you'd seen of his, you'd have no idea what to charge for something like that. And to call you when you could be of more use to him, after he found some higher skilled people for his crew.

losdad

How do you handle a situation where you give an estimate, let's say for a roof, and the price for shingles goes up after the estimate has been given. Do you have some specific wording that you put on the estimate to cover yourself from losing money?

GregS

What's the time between the estimate and contract signing?

You can put things into the estimate such as "Estimate valid for 15 days" or something and hope nothing changes within that time. Depending on how embedded you are in your industry, you should be able to smell price hikes coming.

Ed the Roofer

Either use an escalation clause or price allowances.

I posted thread topics on those subjects earlier this past spring when I saw this coming, which have a good deal of information and language in them.

Ed

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