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Discussion Starter · #1 ·
Morning everyone...
Well after working my entire life either based on tips or hourly pay I am now at the stage of trying to figure out how to calculate my income as a business owner. I'm a one man show right now with a buddy who is willing to give me an extra set of hands whenever I need him. I have read books, talked with contractors (usually who run companies bigger than what I am starting out with) etc etc and I'm still finding it hard to figure out how the hell to charge people for jobs. I haven't started working as a GC just yet but friends and co-workers are sending people my way for work and after explaining my situation (waiting on my final approval letter) they still would like bids for these jobs. I got the material part down no problem but when it comes time to figure out the most important part (profit) I'm stuck. I don't need to know what anyone makes but what is the most simple way to calculate my profit on a job??? I'm starting out doing smaller residential renovation type work but have had some people calling looking for entire kitchen renovations. Do most of you "estimate" an hourly type rate or the time/materials or % of job etc.... My overhead isn't too much with the exception of my truck, bond, insurance, office materials (paper, postage, etc) and the good chance that I will have to get worker comp if and when I hire my buddy on as part-time. I have a number in my head for an hourly rate but am having a hard time trying to factor it in and figuring how many hours to figure as well. I can look at a job and figure out how long it will take me to complete but do I just say "Hmmmm.... about a week to finish, so do I figure a 30-40 hour work week?"............:rolleyes: Thanks in advance.
 

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The best way to figure it out is to read a business book. I wont rip on you for not knowing what your doing because I don't know weather you do or not. The dumbest thing you could do with your money is to waste it trying to be a contractor if you don't know how to run a business. Being a successful G.C. is about a lot of different things, one of the most important is knowing how to run a business.
Having grown up with a step father who was a G.C. doing multi-million dollar projects in the late 80's I saw first hand what happens when you are not good at running a buisiness. He now works for another GC. Building things is only half the battle, find a mentor and work for them, take classes, go to school. but learn how to figure your overhead, direct and indirect, understand the tax code, learn how to manage your finances, and learn what sucessful businesses do with their money to make more.
Now time to get back to my jobsite so I can practice what I preach.
 

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spacing in the pararunon would be nice...:thumbsup:
 

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It's a bit of a hard thing to work out. People on here gave me some advice but it didnt really apply to me. I have noticed that some people doing the exact same trades charge totally different rates! Work out exactly what you need to earn to cover all of your outgoings and then decide what you want to pay your self a week. Then base your priceing on that. As time goes on and you build a experiance in how long things take then you can better price your work. You def wont get it in the first few weeks.
 

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experience! and the school of hard knocks. do some jobs, take your best estimate, then keep careful track of your time. Every community will be different, what will work in one place (price wise) will not work in another.

I know how long it takes me to do crown, or baseboard or ?? trim etc. figure on how many feet per hour you can do x $50/hr or 35/hr? depends upon what the market is in your area. You will know pretty quickly if you are too high or too low.

On small jobs, it pretty much takes a whole day by the time you load up your stuff, work for 3-4 hours, then drive home- even if you are home by 2-or 3pm, the working day is shot. I just figure a days wages on that-8 hrs x your price per hour, or a variation of that.

Some "catch all" jobs I just quote $50/hr - and say it could be 2 hrs, it could be 5- - some folks die of shock, some hire me. it is what it is! LOL

good luck!
 

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Discussion Starter · #10 · (Edited)
Just Curious,

Have you ever actually done any remodeling,other than your own home?
Yes I have, and then some... renovated two late 19th century Victorians working with a GC, worked on a 1000 sq ft addition, worked with a drywall contractor for two winters installing sheetrock & mudding newly constructed homes, worked with two different framing contractors doing roofing work and window installations for two summers, spent another couple of summers building seawalls along the ICW, did some bush-hogging one summer to clear lots, built a few decks with another contractor, installed Toro irrigation systems and more landscaping than I care to remember, did a little finish carpentry, painted new homes and have worked for a property management company for the past 3 years as their maintenance director doing everything from changing light bulbs to being on call every two weeks taking care of ruptured supply lines at 3am with the Department of Water & Power guys. Have spent countless hours repairing walls, painting, ceilings, and floors from said water damage because the jobs were just too "small" for a contractor to want to mess with. Have demo'd probably in upwards of 20 tons of concrete slab (by myself) over the past few years and have spent many a night with my arms tingling from the jackhammer. And that's about all that has jumped out of my memory for now. I'm sure I can think of some more that I have forgotten... so yeah I've done some re-modeling.

And it's not that I don't know how to run a business, that's something I'm learning and will continue to learn... my main issue is that I have been working by the hour for other people for as long as I can remember, punching a time clock. All I'm trying to figure out is how to figure out MY actual pay. I will be doing smaller projects to start out with, so would it be smart to just charge by the hour or.... add 10-15% on top of what the job costs etc.... I know a GC out here in CA that charges $70 an hour just to go through new construction condos and finish up the punch cards for the builders on site Realtors. That's insane to me.... & sorry for the jumbled original post. I was in a hurry to get out of the house this morning.
 

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Discussion Starter · #11 ·
experience! and the school of hard knocks. do some jobs, take your best estimate, then keep careful track of your time. Every community will be different, what will work in one place (price wise) will not work in another.

I know how long it takes me to do crown, or baseboard or ?? trim etc. figure on how many feet per hour you can do x $50/hr or 35/hr? depends upon what the market is in your area. You will know pretty quickly if you are too high or too low.

On small jobs, it pretty much takes a whole day by the time you load up your stuff, work for 3-4 hours, then drive home- even if you are home by 2-or 3pm, the working day is shot. I just figure a days wages on that-8 hrs x your price per hour, or a variation of that.

Some "catch all" jobs I just quote $50/hr - and say it could be 2 hrs, it could be 5- - some folks die of shock, some hire me. it is what it is! LOL

good luck!
Thanks for the input...
 

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When I do something new to get a baseline I take the material cost and multiply by three to get a price for the job. On subsequent jobs I adjust it up or down as necessary.
 

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Go down to the bookstore and pick up an estimating book like Craftsman 'National Repair and Remodeling Estimator', it's a good starting point.

Then hang out on CT and learn, but try not to ask any more stupid questions.
 

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Discussion Starter · #14 ·
Go down to the bookstore and pick up an estimating book like Craftsman 'National Repair and Remodeling Estimator', it's a good starting point.

Then hang out on CT and learn, but try not to ask any more stupid questions.
No problem, and thanks for reading my stupid question. Hope it didn't take up to much of your day...:thumbsup:
 

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Yes I have, and then some... renovated two late 19th century Victorians working with a GC, worked on a 1000 sq ft addition, worked with a drywall contractor for two winters installing sheetrock & mudding newly constructed homes, worked with two different framing contractors doing roofing work and window installations for two summers, spent another couple of summers building seawalls along the ... so yeah I've done some re-modeling.

Sorry,
But in your OP ,your background was quite vague.
When you mentioned working for tips,I pictured waiter,valet.....


I just like hearing a little background info,before responding to get a better
idea of how to answer,and I didn't see much in any previous posts.
 

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I haven't started working as a GC just yet but friends and co-workers are sending people my way for work and after explaining my situation (waiting on my final approval letter) they still would like bids for these jobs.
I was going to make a smart-ass comment about how you managed to pass the law test since there is a good portion of it dedicated to calculating overhead and profit, but I see from your application date that you may not have taken/passed the exam yet? I'll leave the smart-ass work to others.

Aside from being a bit further away from "final approval" than you suggest, my two-cents would simply be to study up on general construction book keeping as well as calculating overhead and profit so you do well on that portion of the test. In the process, you'll probably find many of the practical answers you seek as well.

It's been my experience that most guys who fail the contractor's exam typically do well enough on the trade portion but suffer on the business and law portion. It's a function of not actually having any experience dealing with contracts, budgets, etc (areas it sounds like you may be a bit light on).
 

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I got the material part down no problem but when it comes time to figure out the most important part (profit) I'm stuck. I don't need to know what anyone makes but what is the most simple way to calculate my profit on a job???

I'm starting out doing smaller residential renovation type work but have had some people calling looking for entire kitchen renovations. Do most of you "estimate" an hourly type rate or the time/materials or % of job etc....
There are a couple of ways for you to do this since you are a one man shop.

If you choose to build your overhead into an hourly rate you could do this:

Determine the hrly rate of pay you want to earn (say $25/hr). Then add your state, fed, and local payroll taxes to this including any additional business taxes for your area.

Say that adds up to $40/hr. Then by charging $40/hr you would cover all your tax & payroll related costs and still get you a take home wage of $25/hour.

However, this won't address your operational costs (truck, gas, insurance, bond, license, etc) so you will need to estimate a total annual amt for those and, assuming you plan on working a full year, divide that amount by 2,000.

(2000 hours -actually 2080- is the typical number of hours worked by an employee who works 40hrs/week).

So if your total annual operational costs are $10k, then $10k/2k = $5.

Add that $5 to your adjusted hourly rate and you get $45/hr.

Now, by billing $45/hr, you will cover all your operational, payroll, and tax costs AND take home $25/hour.

If you want your business to make an additional profit on top of that, then just add more to your billing rate. For instance, raising your billing rate to $50/hr would cover all your costs, your take home wage of $25/hr, and give your business a gross profit margin of $5/hr (or $10k/yr if you work a full year).



" I can look at a job and figure out how long it will take me to complete but do I just say "Hmmmm.... about a week to finish, so do I figure a 30-40 hour work week?"............:rolleyes: Thanks in advance.
Well one advantage you have as a sole proprieter is that you can bid a job for 30 hours, but if it takes you 40 hours to complete it, you don't have to pay yourself for the ten hours you went over.

So you can take some chances on bids if you are willing to sacrifice your time in the event that your bid was too low. You won't lose money, but you will lose time and it will drive your avg hrly wage below the goal you've set for yourself.

For example, if you think a job will take you 30 hours to complete, and you bid it at $50/hr + materials ($6k plus materials) but it actually takes you 40 hours to complete you'll still earn $6k for that job. It's just you won't have earned $25/hour, it will be more like $18/hr.

Either way, your total income for the job is the same.

When you start paying employees, you won't have this latitude. Your bids need to be spot on or you will be working for free while paying your employee to work beside you. Believe me, that is not a good feeling.
 

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GC-B, forget about being able to "bill" for 40 hours per week 52 weeks per year. As a one man show, it just doesn't happen.

Realistically figure 20 - 25 billable hours and come up with the hourly rate required to put Ramen noodles on the table from there.
 
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