Help On Pricing Remodel

Fuzzycram

I am pricing a remodel job. Its bigger than the normal one room at a time deal. I'm relatively new to owning my business(okay REALLY new). I need a little help on pricing. Basically I make out a step by step list of everything that needs to be done, along with all the problems there will be(that I can forsee). Them by every item, I put a price and a time figure. At the end I add up the prices and get a total, and then add up the time and multiply it by an hourly rate that I would be paying all my guys and whichever one is higher I take. The problem is that it ends up just being the cost of the job. Is there any other formulas out there that I can try to make a profit? After taxes, workers comp etc.. I don't really make any money. Is there a percentage to add on? I want to make money and stay fair, how do I do it?

doubleaction

You need to figure out what you need for a profit and overhead. I usaly do 10% profit, 10% overhead

tcleve4911

Hello Fuzz - sorry about the length of this...........
Honestly- pricing can be done many different ways. Piece by piece, unit pricing and of course....wild ass guessing. If you buy a book then you'll add " scientific wild ass guessing".
Being comfortable with your pricing method is the key.
You're on the right track with what you're doing but let me suggest some thoughts.
Overhead - You know what it costs to run your business. Auto,truck,insurance,rental or mortgage, tools, equipment,taxes etc. Add the yearly cost of these & divide by the time that job will take. That's overhead.
Profit- we work on 33% profit margin. That number is what any company needs to make money at the end of the year.
In your estimates add in slush days..........weather, wrong deliveries, just unforseen stuff. We add 1/2 day per week or 2 days per month.
Since you're new, every job should purchace a new tool for the company. Put a value to that ($250.00 or so) add that into your estimate.
Don't price jobs according to what other people are bidding. Yes, you want to be competitive but their OH & Profit may be different than yours. i.e. a guy whose dad was a carpenter and gave him a shop and a bunch of tools and he can just go out & play. His costs of doing business are going to be different than yours.
Good Luck and know your business. You'll do fine.
The two reasons people hire you by word of mouth - You are a great craftsman & they're willing to pay for it - or - You're in a bid war and you're a bargain !!!
Be a craftsman - there's not many of us left

__________________
Back in Maine
Dubbin' Around
Doin' good stuff ......

tcleve4911

Hey Fuzz
One last thing. Never guess!!!!!
If you don't know the real costs of something put an "allowance" to it. Explain this in your contract and do an "allowance reconciliation" at the time the costs are known. You should have a sheet that shows allowance credit & overruns. It's just a reasonable budget that puts that cost in the overall budget of the project. If the HO is not comfortable with that, make them responsible for it & put it in your contract as " not included ". LOL Happy New Year

__________________
Back in Maine
Dubbin' Around
Doin' good stuff ......

Fuzzycram

Thank you very much! I appreciate the advice. I enjoy learning about every aspect of the business end and work end!

tcleve4911

Yep there's a lot to it. The more you know, the more hats you have to wear.
What are you specializing in? and what part of the country?

__________________
Back in Maine
Dubbin' Around
Doin' good stuff ......

Fuzzycram

I've got most of my experience in framing in Jacksonville Florida. My partner is the remodeler. Kitchens and baths. check out our site sometime www dot AStepAheadConstruction dot com. Once again, I appreciate the advice! I'm ALWAYS trying to learn more about everything.