Learning About Pricing

NewGuy · 03-11-2005, 03:32 PM

Hello -
I've been a siding guy for a company for just over 10 years. I recently started my own business. Though I know how to install different types of siding, I do not know how to price them all. I know what it cost to purchase the siding though I do not know how to price per square to install cedar impression siding. I recently landed a descent size job for installing cedar impression siding and don't want to blow it by pricing it wrong.
If anyone could help me with this I would appreciate it.

Thank you!

Grumpy · 03-11-2005, 07:05 PM

Where ya from?

NewGuy · 03-11-2005, 11:11 PM

Quote:

Originally Posted by Grumpy

Where ya from?

I'm from New Jersey.

DBS01 · 03-12-2005, 12:19 PM

as you know most everything there is to know about doing your work, now the hard part pricing it. i think you would save yourself (or not leave any on the table) thousands of dollars to purchase and read --> Markup and Profit. you can get the book here --> http://www.markupandprofit.com/book/MPBook.htm it will tell you exactly how to figure out how much to charge. i know you want the quick answer but the best answer is in the book. so here is my summation of the book. you should determin how many hours you will take to complete the work. take that times the average going rate for a "sider" in your area. take that time 1.25 ( this will cover for insur/ work comp / fica/medicare) PLUS take the cost of your materials, all the taxes and freight add that on and any other item that if you do this job it will cost you out of your pocket add them all together and take that number times (1.25 - 1.45) to cover overhead and profit. Beings your just starting out a 1.25 markup will probably cover just fine. and after you read the markup and profit book you may change that.

DO NOT let yourself reduce your price because it sounds too high. YOU are worth your customer spending whatever that price ends up. and when you go in to "close" your customer make sure you are convinced that price is the "fair" price for your work. i would assume that you take pride in your work and that you do excellent work. (And you should always try to be the BEST in the business not the cheapest) you can always sell quality. What makes an Astin Martin worth $300-$400,000 its not that they have that much in them its that they are the best at what they do and they deserve it.

GOOD LUCK and make much Dinero

:Thumbs:

Grumpy · 03-12-2005, 03:25 PM

I'll give ya a summary of what that book is gonna tell ya...

Pricing a project is basically a combination of 4 factors. Labor + Materials + Profit = price. WRONG. Many Many contractors forget the all important Overhead. Overhead is the variable that can make and break a company and all successful companies have a strong understanding of their own overhead.

What is overhead? Your phones, tools, gasoline, advertising, office rental, iunsurance; any cost that arises in doing business which can not be directly billed to one specific job is overhead.

How do you figure your overhead? Well that's hard for new companies to do. You just can't predict a years worth of overhead spending accurately unless your modeling your business structure after an existing business structure. Really only YOU and maybe your accountant know what YOUR overhead is.

Here's how I figure my overhead... I have predicted my overhead and added 10% for error. I then didivded that number by 200 assuming there are 200 working days in the year. Let's say it costs me $100 a day to keep my business alive. When I price a job I figure out how many days it will take to complete and I multiple that by my overhead variable, which in this case is $100.

Let's say a 2 day job would cost $500 in materials and $1000 in labor. My cost to complete that job without losing a penny would be $200 + $500 + $1000 = $1,700.

When figuring profit there is a risk reward ratio. The riskier the job the more profit you should mark into a job. Currently I mark up my window jobs 100% and there are guys out there who charge more than I do! I mark up about 50% on my siding and roofing and gutters.

Basing your pricing on the pricing of your competitor's is a great way to fail in business. It's good to know what they are charging, but never think that you should lower your price because youa re bidding against someone with a lower price. Being the lowest bidder isn't sales, it a formula for bankruptcy.

timntools · 03-12-2005, 04:03 PM

Quote:

Originally Posted by Grumpy

I'll give ya a summary of what that book is gonna tell ya...

Pricing a project is basically a combination of 4 factors. Labor + Materials + Profit = price. WRONG. Many Many contractors forget the all important Overhead. Overhead is the variable that can make and break a company and all successful companies have a strong understanding of their own overhead.

What is overhead? Your phones, tools, gasoline, advertising, office rental, iunsurance; any cost that arises in doing business which can not be directly billed to one specific job is overhead.

How do you figure your overhead? Well that's hard for new companies to do. You just can't predict a years worth of overhead spending accurately unless your modeling your business structure after an existing business structure. Really only YOU and maybe your accountant know what YOUR overhead is.

Here's how I figure my overhead... I have predicted my overhead and added 10% for error. I then didivded that number by 200 assuming there are 200 working days in the year. Let's say it costs me $100 a day to keep my business alive. When I price a job I figure out how many days it will take to complete and I multiple that by my overhead variable, which in this case is $100.

Let's say a 2 day job would cost $500 in materials and $1000 in labor. My cost to complete that job without losing a penny would be $200 + $500 + $1000 = $1,700.

When figuring profit there is a risk reward ratio. The riskier the job the more profit you should mark into a job. Currently I mark up my window jobs 100% and there are guys out there who charge more than I do! I mark up about 50% on my siding and roofing and gutters.

Basing your pricing on the pricing of your competitor's is a great way to fail in business. It's good to know what they are charging, but never think that you should lower your price because youa re bidding against someone with a lower price. Being the lowest bidder isn't sales, it a formula for bankruptcy.

this was all great info. like he said, "total cost" to you, plus what you want to make=price. If what you 'need' to make to pay your bills and your total costs puts you higher than everyone else so that you can't get the jobs, then working for yourself might not be the way to go.

But if you are getting more than enough work that way, then you can start raising your price to add to your savings/capital. Do this until you reach an equalibrium of supply and demand. When your work starts dropping off, then its time to lower the price again...and vice versa.

Grumpy · 03-12-2005, 04:27 PM

Quote:

Originally Posted by timntools

If what you 'need' to make to pay your bills and your total costs puts you higher than everyone else so that you can't get the jobs, then working for yourself might not be the way to go.

Then it's time to learn how to sell or hire someone who does, and stop selling on low price.

all vinyl · 03-12-2005, 07:16 PM

burlington county around 575 per sq midelsex 500 per sq monmouth 450 per sq ocean county 400 per sq this is any thing that has decent runs . I have found the best way for me is material plus manpower plus profit plus overhead.it's all trial and eror and depends on how good and fast you are
speed + quality = profit

DBS01 · 03-13-2005, 01:43 PM

Quote:

Originally Posted by Grumpy

I'll give ya a summary of what that book is gonna tell ya...

Pricing a project is basically a combination of 4 factors. Labor + Materials + Profit = price. WRONG.

Grumpy -

You speak of this book as if you have read it. have you? Now in your almighty wisdom you may THINK you know more than everyone else here but I doubt that is true. I don't know why your intent is to prove that your (male chicken) is larger than every one else's. If you need to stroke your ego so bad that your intent is to prove every one else wrong then go ahead. personally I feel this is a great venue for people to exchange information, and if you are posting (as it appears to me by most of your posts) just to stroke your ego. than I am NOT going to participate and NOT going to refer anyone else to visit this site. who ever owns this site made a poor choice for someone to act as administrator.

Every bit of information you recieve is worth as much as you pay for it. And i would take it for just that FREE ADVICE. I would suggest to anyone using advice from this site to use it a one piece of evidence for their file and not base their decisions SOLEY on this info. Do your homework if you are lazy enough to just get information on this site and use it go ahead, your bankrupcy attorney will appreciate your effort.

WE ARE PROFFESSIONALS, most of you PREACH how you would ALWAYS reccomend someone hire a proffessional to roof their house, etc. but yet are cheap skates when it comes to your own money. don't you think hiring an attorney, or accountant, or paying for a twenty dollar book for someone who has gotten the info, is infinetly more reliable than some schmuck who you don't even know thier real name's post on a website??

arrrrghhhhhhhhhhh!!

JUST THINK ABOUT IT.

Glasshousebltr · 03-13-2005, 02:00 PM

Hey! if anybody's going to stroke thier own chicken around here that would be me!

Bob

**ProWallGuy** · 03-13-2005, 03:04 PM

Quote:

You speak of this book as if you have read it. have you? Now in your almighty wisdom you may THINK you know more than everyone else here but I doubt that is true. I don't know why your intent is to prove that your (male chicken) is larger than every one else's. If you need to stroke your ego so bad that your intent is to prove every one else wrong then go ahead. personally I feel this is a great venue for people to exchange information, and if you are posting (as it appears to me by most of your posts) just to stroke your ego.

The original poster asked for advice. This is exactly what he got, advice. I personally think it was spot-on advice. BTW, great reposnse Grumpy. He didn't down anyone, just gave his take on the situation. My advice given on this forum has been trumped and chumped many times, and I don't take it personally. I either learn from it or walk away. Don't be a hater if you were trumped or chumped.

Quote:

than I am NOT going to participate and NOT going to refer anyone else to visit this site. who ever owns this site made a poor choice for someone to act as administrator.

I'm sure you will be missed

Quote:

Hey! if anybody's going to stroke thier own chicken around here that would be me!

Bob, you need to go to your won jack yard and back off.

Glasshousebltr · 03-13-2005, 03:44 PM

Won Jack yard?......What the hell is that?

Ah........a yard full of jacking wons........sorry for the visual.

Bob

**ProWallGuy** · 03-13-2005, 03:47 PM

LOL that should have been your own jack yard.

BKFRAMING · 03-13-2005, 04:06 PM

When I price a job for a deck,garage,house ect. I never supply materials, so I can't price this into my job. But is there any advantage to supplying your own materials? or should I be buying the materials then including them into my price, rather than do a take off from the projects and have the customer get the materials?If I get the materials myself should I be marking up the cost a little? If so how much is fair?

DBS01 · 03-13-2005, 05:10 PM

OK, I MAY HAVE BEEN A LITTLE HARSH, I JUST HAVE A VERY STRONG OPINION ABOUT THIS SUBJECT, MY BUSINESS WAS RUN BY "SHIRT TAIL" ADVICE FOR A LONG TIME, BUT UNTIL I PAID FOR ADVICE, THE ADVICE I WAS GETTING WAS WORTH AS MUCH AS I RELIED UPON IT. THIS ADVICE WAS COSTING ME A FORTUNE AND ALMOST MY BUSINESS.

SO SOME ONE TELLING A POSTER THAT THEY CAN KNOW ALL THERE IS TO KNOW BY READING A THREE PARAGRAPH POST INSTEAD OF A BOOK ON THE SUBJECT IS SOME HORRIBLE ADVICE.

THAT IS MY BEEF

DBS01 · 03-13-2005, 05:19 PM

Quote:

Originally Posted by BKFRAMING

When I price a job for a deck,garage,house ect. I never supply materials, so I can't price this into my job. But is there any advantage to supplying your own materials? or should I be buying the materials then including them into my price, rather than do a take off from the projects and have the customer get the materials?If I get the materials myself should I be marking up the cost a little? If so how much is fair?

As long as you are making NET 8-10% profit OVER your "wages" you can do it either way. Now this means if you can hire someone to do your job for ?? $30,000 ?? per year you should make THAT - PLUS 8-10% of your total sales for the year. If you are only going to work for a wage, why do you want the headache of running a business, taking customer calls, weekends, nights, early mornings etc. If you are only going to work for a wage Home Depot offers benefits.

Most contractors find charging a lower price per "hour" and making a % of all materials is an easier way to do it. That would be my reccomendation. (along with reading the book that I suggested earlier in this post)

GOOD LUCK

MAKE MUCH DINERO :Thumbs:

Glasshousebltr · 03-13-2005, 05:19 PM

BK, I normally mark material up 20%, this covers my cost on putting it all together.

Advantage?........ I think it's a more attractive package if the homeowner see's a bottom line dollar. That helps the sale as well as weeds out some of the penny pinchers trying to take your kids food off the table.

Bob

DBS01 · 03-13-2005, 05:35 PM

Quote:

Originally Posted by Glasshousebltr

Advantage?........ I think it's a more attractive package if the homeowner see's a bottom line dollar. That helps the sale as well as weeds out some of the penny pinchers trying to take your kids food off the table.

Bob

This is a good point you wont be left at the end with a customer with a bill higher that they can pay. One bottom line price is a great suggestion. Then there is no fighting at the end over money. I HATE that.

Great advice Glasshousebltr

:Thumbs: :Thumbs: :Thumbs:

NewGuy · 03-13-2005, 08:04 PM

Thank you all for sharing your advice with me. It is much appreciated. If I ever have some advice or any more questions I will be sure and speak up (type up)
Thanx Again!!!

BKFRAMING · 03-13-2005, 09:38 PM

Thanx for the advice I think thats all that I needed to here.

03-11-2005, 03:32 PM	#1
NewGuy View Profile NewGuy New Guy Send Message Follow Blogs (0) Threads (19) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity New Guy Join Date: Mar 2005 Posts: 19	Learning About Pricing Hello - I've been a siding guy for a company for just over 10 years. I recently started my own business. Though I know how to install different types of siding, I do not know how to price them all. I know what it cost to purchase the siding though I do not know how to price per square to install cedar impression siding. I recently landed a descent size job for installing cedar impression siding and don't want to blow it by pricing it wrong. If anyone could help me with this I would appreciate it. Thank you!

03-11-2005, 07:05 PM	#2
Grumpy View Profile Grumpy Bah Humbug! Send Message Follow Blogs (17) Threads (8,574) Photos (0) Reviews (49) Projects (12) Toolbox (43) View All Activity Bah Humbug! Trade: Roofing and Gutter Specialist Join Date: Oct 2003 Location: Chicago Posts: 8,574	Re: Learning About Pricing Where ya from?

03-12-2005, 12:19 PM	#4
DBS01 View Profile DBS01 Metal roofing specialist Send Message Follow Blogs (0) Threads (23) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Metal roofing specialist Join Date: Mar 2005 Location: Northwest Iowa Posts: 23	Re: Learning About Pricing as you know most everything there is to know about doing your work, now the hard part pricing it. i think you would save yourself (or not leave any on the table) thousands of dollars to purchase and read --> Markup and Profit. you can get the book here --> http://www.markupandprofit.com/book/MPBook.htm it will tell you exactly how to figure out how much to charge. i know you want the quick answer but the best answer is in the book. so here is my summation of the book. you should determin how many hours you will take to complete the work. take that times the average going rate for a "sider" in your area. take that time 1.25 ( this will cover for insur/ work comp / fica/medicare) PLUS take the cost of your materials, all the taxes and freight add that on and any other item that if you do this job it will cost you out of your pocket add them all together and take that number times (1.25 - 1.45) to cover overhead and profit. Beings your just starting out a 1.25 markup will probably cover just fine. and after you read the markup and profit book you may change that. DO NOT let yourself reduce your price because it sounds too high. YOU are worth your customer spending whatever that price ends up. and when you go in to "close" your customer make sure you are convinced that price is the "fair" price for your work. i would assume that you take pride in your work and that you do excellent work. (And you should always try to be the BEST in the business not the cheapest) you can always sell quality. What makes an Astin Martin worth $300-$400,000 its not that they have that much in them its that they are the best at what they do and they deserve it. GOOD LUCK and make much Dinero :Thumbs: __________________ Dbs01 - metal roofing Guru Diamond Building Systems

03-12-2005, 03:25 PM	#5
Grumpy View Profile Grumpy Bah Humbug! Send Message Follow Blogs (17) Threads (8,574) Photos (0) Reviews (49) Projects (12) Toolbox (43) View All Activity Bah Humbug! Trade: Roofing and Gutter Specialist Join Date: Oct 2003 Location: Chicago Posts: 8,574	Re: Learning About Pricing I'll give ya a summary of what that book is gonna tell ya... Pricing a project is basically a combination of 4 factors. Labor + Materials + Profit = price. WRONG. Many Many contractors forget the all important Overhead. Overhead is the variable that can make and break a company and all successful companies have a strong understanding of their own overhead. What is overhead? Your phones, tools, gasoline, advertising, office rental, iunsurance; any cost that arises in doing business which can not be directly billed to one specific job is overhead. How do you figure your overhead? Well that's hard for new companies to do. You just can't predict a years worth of overhead spending accurately unless your modeling your business structure after an existing business structure. Really only YOU and maybe your accountant know what YOUR overhead is. Here's how I figure my overhead... I have predicted my overhead and added 10% for error. I then didivded that number by 200 assuming there are 200 working days in the year. Let's say it costs me $100 a day to keep my business alive. When I price a job I figure out how many days it will take to complete and I multiple that by my overhead variable, which in this case is $100. Let's say a 2 day job would cost $500 in materials and $1000 in labor. My cost to complete that job without losing a penny would be $200 + $500 + $1000 = $1,700. When figuring profit there is a risk reward ratio. The riskier the job the more profit you should mark into a job. Currently I mark up my window jobs 100% and there are guys out there who charge more than I do! I mark up about 50% on my siding and roofing and gutters. Basing your pricing on the pricing of your competitor's is a great way to fail in business. It's good to know what they are charging, but never think that you should lower your price because youa re bidding against someone with a lower price. Being the lowest bidder isn't sales, it a formula for bankruptcy.

03-12-2005, 07:16 PM	#8
all vinyl View Profile all vinyl ALL VINYL Send Message Follow Blogs (0) Threads (219) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity ALL VINYL Trade: VINYL SIDING CARPENTRY Join Date: Apr 2004 Location: HAZLET NJ Posts: 219	Re: Learning About Pricing burlington county around 575 per sq midelsex 500 per sq monmouth 450 per sq ocean county 400 per sq this is any thing that has decent runs . I have found the best way for me is material plus manpower plus profit plus overhead.it's all trial and eror and depends on how good and fast you are speed + quality = profit

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03-13-2005, 02:00 PM	#10
Glasshousebltr View Profile Glasshousebltr Custom Builder Send Message Follow Blogs (0) Threads (4,403) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Custom Builder Trade: From dirt to ridge vent Join Date: Feb 2004 Location: South Central Illinois Posts: 4,403	Re: Learning About Pricing Hey! if anybody's going to stroke thier own chicken around here that would be me! Bob __________________ Bob

03-13-2005, 03:44 PM	#12
Glasshousebltr View Profile Glasshousebltr Custom Builder Send Message Follow Blogs (0) Threads (4,403) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Custom Builder Trade: From dirt to ridge vent Join Date: Feb 2004 Location: South Central Illinois Posts: 4,403	Re: Learning About Pricing Won Jack yard?......What the hell is that? Ah........a yard full of jacking wons........sorry for the visual. Bob __________________ Bob

03-13-2005, 03:47 PM	#13
ProWallGuy View Profile ProWallGuy Back from the dead... Send Message Follow Blogs (0) Threads (6,544) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Back from the dead... Trade: Paperhanger/Painter Join Date: Oct 2003 Location: St. Louis, MO Posts: 6,544	Re: Learning About Pricing LOL that should have been your own jack yard. __________________ Wallpaper Hanger St. Louis Digital Murals Installation

03-13-2005, 04:06 PM	#14
BKFRAMING View Profile BKFRAMING Registered User Send Message Follow Blogs (0) Threads (14) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Registered User Join Date: Mar 2005 Posts: 14	Re: Learning About Pricing When I price a job for a deck,garage,house ect. I never supply materials, so I can't price this into my job. But is there any advantage to supplying your own materials? or should I be buying the materials then including them into my price, rather than do a take off from the projects and have the customer get the materials?If I get the materials myself should I be marking up the cost a little? If so how much is fair?

03-13-2005, 05:10 PM	#15
DBS01 View Profile DBS01 Metal roofing specialist Send Message Follow Blogs (0) Threads (23) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Metal roofing specialist Join Date: Mar 2005 Location: Northwest Iowa Posts: 23	Re: Learning About Pricing OK, I MAY HAVE BEEN A LITTLE HARSH, I JUST HAVE A VERY STRONG OPINION ABOUT THIS SUBJECT, MY BUSINESS WAS RUN BY "SHIRT TAIL" ADVICE FOR A LONG TIME, BUT UNTIL I PAID FOR ADVICE, THE ADVICE I WAS GETTING WAS WORTH AS MUCH AS I RELIED UPON IT. THIS ADVICE WAS COSTING ME A FORTUNE AND ALMOST MY BUSINESS. SO SOME ONE TELLING A POSTER THAT THEY CAN KNOW ALL THERE IS TO KNOW BY READING A THREE PARAGRAPH POST INSTEAD OF A BOOK ON THE SUBJECT IS SOME HORRIBLE ADVICE. THAT IS MY BEEF __________________ Dbs01 - metal roofing Guru Diamond Building Systems

03-13-2005, 05:19 PM	#17
Glasshousebltr View Profile Glasshousebltr Custom Builder Send Message Follow Blogs (0) Threads (4,403) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Custom Builder Trade: From dirt to ridge vent Join Date: Feb 2004 Location: South Central Illinois Posts: 4,403	Re: Learning About Pricing BK, I normally mark material up 20%, this covers my cost on putting it all together. Advantage?........ I think it's a more attractive package if the homeowner see's a bottom line dollar. That helps the sale as well as weeds out some of the penny pinchers trying to take your kids food off the table. Bob __________________ Bob

03-13-2005, 08:04 PM	#19
NewGuy View Profile NewGuy New Guy Send Message Follow Blogs (0) Threads (19) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity New Guy Join Date: Mar 2005 Posts: 19	Re: Learning About Pricing Thank you all for sharing your advice with me. It is much appreciated. If I ever have some advice or any more questions I will be sure and speak up (type up) Thanx Again!!!

03-13-2005, 09:38 PM	#20
BKFRAMING View Profile BKFRAMING Registered User Send Message Follow Blogs (0) Threads (14) Photos (0) Reviews (0) Projects (0) Toolbox (0) View All Activity Registered User Join Date: Mar 2005 Posts: 14	Re: Learning About Pricing Thanx for the advice I think thats all that I needed to here.

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