Pricing By The Sq. Ft./lin. Ft./unit

 
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Old 09-05-2011, 04:43 PM   #1
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Pricing By The Sq. Ft./lin. Ft./unit


There have been alot of threads here lately asking about pricing by the sq. ft./ lin. ft./ and/or unit price. I will attempt to shed light on the topic.

Many of you are probably at least partially confused by three things:

1, construction estimating software that breaks jobs into unit pricing,

2, hearing other contractors talk about unit pricing or square foot pricing, and

3, confusing trades that regularly use a square foot price such as drywall or painting.

For those trades, the material is sold, installed, and finished by the square foot. The same does not hold true for wall framing, plumbing fixtures, wiring a house, or even building a deck.

I will give a couple of examples.

A drywall Contractor could say "I install wallboard up to 8' high and finished to a level five for x dollars per square foot. Cieling board up to 10' is x price per square foot, and 10'-14' cielings are x price per square foot."

A metal stud framing Contractor, who does nothing but interior remodels for J.C.Penney, after doing several dozen such remodels, could, if he has diligently kept detailed records, probably bid by the square footage of the entire store, and be close enough to be profitable.

A bathroom remodeler, after spending his entire life remodeling bathrooms, will only be able to say something like, "A typical bathroom remodel generally cost anywhere from 85 to 300 dollars a square foot, depending on your design."

Plumbing Contractors, when working on subdivisions, often give a per fixture price to the General Contractor. Electricians often do the same, giving a per device price.

The reason that this works is,
1, they've done many hundreds of nearly identical homes, (notice that I said homes, it's a whole different ballgame with commercial),

2, they have kept records of labor costs, and there is not a tremendous amount of variables in this type of work.

For example, they have never been asked to plumb 30 toilets into a 2000sf house. You generally have two toilets, one kitchen, two tub/showers, two lavs, and so on. So a fixture price works, IF YOU HAVE THE PERSONAL DATA FOR YOUR OWN COMPANY. In this situation, all national estimating books will tell you is the national average, which is pretty useless for determining if YOUR company is profitable.

The important thing to remember is, until you have personal data for your company, universal unit pricing is meaningless. Materials+Labor+Overhead+Profit is what you must know before you can bid a job. Once you have done many jobs nearly identical, if you keep detailed records, you will begin to develop a useful estimating tool for your company. You might be able to say, "I can build a home for 72 dollars a square foot," but you would never use that to estimate a clients job. You might be able to say, "I can frame single story walls at X linear feet per day with a X person crew," and from there figure out how much it costs per foot to frame single story walls, then build your estimate off of that. But that takes many months or years of framing, and keeping records.

There is a big difference in knowing your company's costs per unit or sq. ft., and "bidding" by the square foot. If a client asks "how much per square foot to build an addition", there is no possible way to answer that question. You will have to look at the job, the plans, the specs, and so forth, write a proposal, and then if you wish, you can break it down anyway they want; linear foot, square foot, cubic foot, by the day, by the hour, by the second, whatever. But that wouldn't be how you would arrive at your price.
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Last edited by Seven-Delta-FortyOne; 04-11-2013 at 12:03 AM.
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Old 09-05-2011, 04:48 PM   #2
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Re: Pricing By The Sq. Ft./lin. Ft./unit


I bid everything by the pound. Needless to say my concrete and steel prices are a bit higher then others.

All kidding aside, nice/informative post there ATC

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Old 09-05-2011, 05:02 PM   #3
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Re: Pricing By The Sq. Ft./lin. Ft./unit


Bidding can be one of the hardest, yet most rewarding parts of the job. I like to say that money is either made or lost in the bidding stage. The actual physical work takes what it takes.
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Old 09-05-2011, 05:23 PM   #4
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Re: Pricing By The Sq. Ft./lin. Ft./unit


Very well put A.T.C.
Thanks for taking the time to put that together.

-Paul
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Old 09-05-2011, 10:15 PM   #5
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Re: Pricing By The Sq. Ft./lin. Ft./unit


very well said. couldnt have said it better myself!
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Old 09-05-2011, 10:51 PM   #6
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Re: Pricing By The Sq. Ft./lin. Ft./unit


Sq Ft, linear, etc can be a PITA. When I was young and dumb I had a customer that asked me how much a typical installation cost. I said normally between $14-$22 depending on material chosen, mobilization cost, economy of scale, site access etc. She kept asking what type of material she should choose to only pay $14 a sq ft. I kept telling her that the cost was hypothetical and that I estimate each job individually because each job is unique. I explained in some cases (most) the larger the job gets the price per square foot goes down to a point etc. finally after 15 minutes of talking I finally politely moved on!

My father-in-law told me this story which I still enjoy, he used to do roofs, gutters, and siding. So a prospect calls and starts asking "how much do you charge per linear foot for seamless gutter", the father-in-law says "$7 a linear ft." the guy on the other end says "GREAT you're hired I need a 3ft gutter over my front door!"

I found this type of pricing/ etimating to be great for two thing:

1 to sanity check my estimates to make sure I wasn't leaving something major out.

2 to have a rough idea as to the amount of revenue the job might bring that is it.

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Old 09-05-2011, 10:55 PM   #7
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Re: Pricing By The Sq. Ft./lin. Ft./unit


Generally, I have found unit pricing works once the scope has been clearly identified, and doesn't change from job to job. Your example of track housing is a good example.

Change the scope, and the unit rate will change.

I would state that it unit rate pricing works best with an established client, and that it is business to business, not contractor to end user.

It's a good system, in the example of a builder to sub-contractor , so that the builder can use consistent numbers to budget and forecast future work.
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Old 09-05-2011, 10:58 PM   #8
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Re: Pricing By The Sq. Ft./lin. Ft./unit


Unit pricing works for some stuff, flooring, roofing, siding, but not others, kitchens, bathrooms, room additions.
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Old 02-09-2012, 09:16 AM   #9
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Re: Pricing By The Sq. Ft./lin. Ft./unit


I estimate the ROOFING job and then go back and figure the price "per sq"..........if I want to satisfy my curiosity
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Old 02-09-2012, 09:50 AM   #10
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Re: Pricing By The Sq. Ft./lin. Ft./unit


I break down all my estimating for everything except screws, nails, tie wire, etc...it gets the flat fee misc column. I estimate all man hours based on what the past shows.

When I'm done I divide out by the sq ft just to see where it's at and on residential I'm always with $ 0.10 from all the jobs I price...but I still break it down for two reasons

I am building the job in my head as I estimate and when the job is ready to go my material take off is already done
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Old 02-09-2012, 09:51 AM   #11
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Re: Pricing By The Sq. Ft./lin. Ft./unit


I get asked for a ft² about every week. I have yet to find out how many square feet a circuit breaker, roll of wire, case of nail-ons, etc. cover.
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Old 02-09-2012, 09:55 AM   #12
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Re: Pricing By The Sq. Ft./lin. Ft./unit


All good stuff... I would add one qualifier...

LF / SF / UNIT/ Etc... are all just formula's that are based on the actual numbers... They are just a measurement. A drywaller can just as easily use LF or SF, with the same 8' qualifier. I've even seen guys who charge per sheet (unit), with finished and unfinished.

They are just a unit of measurement for the final dollar. On our price list, we use it all... Electricians and Plumbers - unit price, tiling - SF, cabinetry - LF (which we also have a SF and Unit formula for), etc...

But your LOMP numbers must be accurate in the end... the rest is just a calculation for presentation...
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Old 02-09-2012, 12:13 PM   #13
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Re: Pricing By The Sq. Ft./lin. Ft./unit


If your a painter want to know your sq ft price pick up, Profit in the Painting Business by Len Fife a oldie but goodie...

Great post I've been to many seminars for my trade over the years that preach the same thing. The PDCA is a great source for painters to learn there is a way to arrive a sq ft price but! no one shoe fits all feet.

Great Post!
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Old 02-09-2012, 12:19 PM   #14
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Re: Pricing By The Sq. Ft./lin. Ft./unit


Quote:
Originally Posted by twill59 View Post
I estimate the ROOFING job and then go back and figure the price "per sq"..........if I want to satisfy my curiosity
I do all my jobs like that, then if I come across a similar job, I revert back to my "number" that works. It saves time on estimating.

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