I work for a local contractor that specializes in screen enclosures, awnings, patio covers, etc. We primarily do new builds when it comes to these products. I handle the sales side of things, and build some aluminum awnings out of my home garage for the company.
We were contacted by a potential client to do a re-screen of an existing screen enclosure on a 12x15 patio. Long story short, the boss isn't interested in doing the labor on this and told me if I'd like to do it I can bill him whatever for it and pocket the cash. I'm happy with that but I'm not entirely sure what to charge for it.
For an new enclosure this size we'd likely bill around $5,500 to $6,500 for it, including a roof. I'm thinking that charging between $850-$950, materials and labor, would be reasonable here. I've repaired a screen panel or two on the side for a couple hundred bucks here and there, so I know what to expect as far as the work goes. I just haven't done that much in the way of pricing something like this.
I'm still fresh in this industry compared to my peers, and I've received good advice here before. I'm located in South Carolina. What do y'all think is reasonable for this job?
I appreciate the help.
View attachment 565348
Do you REALLY want help? Because what you described is wages, not making a profit... if you REALLY want to learn how to price things, refer to the below to get you started...
PRICING...
The first "secret" pricing is not basing your price off of someone else's price...
As an example, assuming a 40-hour work week, you have 2080 hours per year you can work... if one guy thinks making $50K/year remodeling houses is fine, because it's more than he made as an employee, his hourly rate just to make his salary is around $24/hour. For ease of example, this does not include taxes, WC, bene's, retirement, etc... which would ADD to the hourly cost...
2nd guy wants to make $75K/year doing the same thing... He needs to make in excess of $36/hour... assuming they both can work at the same rate of speed and quality, the first guy needs to charge $192 for an 8-hour day, but the 2nd guy needs to charge $282 for an 8-hour day, or 50% more just to make their base pay...
Now one guy might have a shop, and the other guy doesn't... one guy might be legit and be insured and the other guy not... one guy may be paying off a vehicle the other guy not... etc... many variables, but the important ones are what YOUR companies variables are...
So, if the 2nd guy based his pricing off the first guy, he would be at a NET negative EVERY DAY of $96 just on what they wanted to make as their base pay. Add in all the other variables costs in running a company, which is different from company to company, and you can see the folly in basing your pricing off of another company's pricing...
L - Labor
O - Overhead
M - Materials
P - Profit
Labor - First, you calculate your Labor.... this includes what you want to make GROSS every year for you and anyone you employ, PLUS taxes, Insurance, bene's, bonuses, retirement, etc....
Overhead - Insurances, Shop, cell, advertising, WC, electric, heat, vehicle insurance, any vehicle payments, accountant, equipment maintenance, office supplies, etc... spend the time to make sure you account for it all...
These two figures (Labor and Overhead) are added together and make up what is typically your HOURLY RATE and divided by 2080 hours (40-hour week or whatever you determine your work week to be) and this is the MINIMUM you can charge per hour as they are a CONSTANT. So if you expect a job to take a day and a half, you better assume TWO days unless you are somehow able to fit another job in that half day (unlikely)... so you would take the hourly cost from this calculation and multiply it by 16 (two 8-hour days).) If you have a day where you had no business, it NEEDS to be accounted for in your upcoming jobs if you do not have Capital Reserves or an Emergency Fund to absorb it.
Materials - these are what your materials will cost for the project. Everything. Then you add a percentage for handling, delivery, etc... I should also mention, we've taken to adding gas to materials because of it's variable nature. We record how many miles it takes to get to a prospects house for the estimate, and calculate our average gas price for the month and build it into materials. Because we add a percentage on top for handling/delivery, it helps cover any variance... Because you will know what they charge, subs (if any) can be included in this category...
Profit - this is what you pay your company, (NOT your pay left over after a job) which is based on all of the above... so add up Labor, Overhead, Materials and then multiply x whatever profit margin % you have determined you need. This goes towards things like a 3-6 months of Capital Reserves account, Emergency Fund and Equipment Fund... developing and having these will also go a long way in planning for employees and not getting stuck in "rob Peter to pay Paul" cycles, which are hard to get out of...
If you do not have PROFIT built into your pricing, there is only ONE place it can come from.... YOURS and YOUR FAMILIES pocket...
Your challenge is when you add up the numbers for the above (the only variable should be materials and the Profit percentage will take care of itself as it is based on the other three) is you will be surprised at how much it indeed costs you to be in business... but the number IS what YOU need to charge to be in business, so THAT'S FAIR no matter the final number... don't let go of that... takes some guys YEARS of chasing the bottom dollar to get there... save yourself the heartache and adopt that mentality early on...
Then you will have to go after the business that can support what YOU need to make, not what they can afford to pay... and then you will come to realize that not everyone is your customer and that your efforts should be focused on finding customers that can support what YOU need to charge to be in business... the good news is, is that once you do, the referrals tend to be among the same demographic/income level.... If you drop your pants on a job to "buy it", if you have not accrued any capital reserves or emergency fund, it comes DIRECTLY out of your pocket... sometimes you have to do what you have to do, just make it the exception, not the rule... but realize, that EVERYONE ELSE (subs, material suppliers, taxes, overhead, etc.) ALL still expect to be paid, so as the person bringing everyone else the business, make sure you and your company are paid as well...
There's no secret involved... just getting to know your prices and what YOU need to charge, not what the other guy charges...
Best of luck... 8^)
