Contractor Talk - Professional Construction and Remodeling Forum banner
1 - 7 of 7 Posts

·
Registered
Joined
·
1 Posts
Discussion Starter · #1 ·
I have a relatively new residential remodeling company and we are trying to establish an hourly rate(s) to charge customers in cost plus bids when we use our own workers. Is it best to get one average rate that would cover different skill levels or is it best to have two or three different billing rates depending on the skill of the worker. Also, do most of you charge the actual hourlyt amount paid to the worker, or do you add other costs into that hourly price charged to customers. This seems to be the area that can really sink the ship or make it float nicely. We want to be fair to the customers, but also make the hourly pricing model simple, and not too complicated.

Thanks for your help.
 

·
Registered
Joined
·
5,425 Posts
PLEASE COMPLETE YOUR PROFILE, AND CONTINUE TO THE INTRO PAGE AND TELL US A LITTLE ABOUT YOURSELF AND YOUR PROFESSIONAL EXPERIENCE, THANKYOU AND WELCOME TO CT", We prefer one rate for everyone, it prevents customers from requesting lower paid employees because they think the skillset is there to do a job. Of coarse you should make $ on your employees, are you serious,GMOD
 

·
Registered
Joined
·
178 Posts
We put different billing rates in our contract based on the staff skill set. Customers really like the fact the the Skilled Project Foreman bills at a different rate than the laborer. As for Subs we bill at their normal billing rate plus X % over for time and material jobs.

I might also add that since you are doing T & M , one system that really pays off is - I make each staff person fill out a daily time sheet in the job notebook for any T & M work ,( including any trips to suppliers ) I used to ask the staff for their time on a CO / T & M and it may have gone back a couple of weeks. They made up their hours trying to recollect what they actually spent in time. Of course, the Owner always said - "The Staff only took 4 hours and You , the GC, are billing for 10.

I made it a policy that all T & M / Change Orders be logged daily in the Job Notebook and that their time sheets match or NO PAY.

Our Time sheets - allow the staff person to write in what "CO / Job Function " they did that hour / day.

We haven't had a discussion with Owner's or Staff now that this system is in place.

Everyone is on the same page , there are no suprises to the Owner when the bill is presented.

Terry

Terry
 

·
Registered
Joined
·
318 Posts
You need to use a crew rate when billing in this manner. Your billing rate should include mark ups for O&P. An example would be (these numbers are not real wages):
2 Laborers @ $1.50 per hour = $3.00
2 Carpenters @ $4.00 per hour = $8.00
1 Lead man @ @5.50 per hour = $5.50
Total crew rate = $16.50 per man hour

If you do not cover your O&P in your billing rate you are not making money.
 

·
Registered
Joined
·
318 Posts
We put different billing rates in our contract based on the staff skill set. Customers really like the fact the the Skilled Project Foreman bills at a different rate than the laborer. As for Subs we bill at their normal billing rate plus X % over for time and material jobs.

I might also add that since you are doing T & M , one system that really pays off is - I make each staff person fill out a daily time sheet in the job notebook for any T & M work ,( including any trips to suppliers ) I used to ask the staff for their time on a CO / T & M and it may have gone back a couple of weeks. They made up their hours trying to recollect what they actually spent in time. Of course, the Owner always said - "The Staff only took 4 hours and You , the GC, are billing for 10.

I made it a policy that all T & M / Change Orders be logged daily in the Job Notebook and that their time sheets match or NO PAY.

Our Time sheets - allow the staff person to write in what "CO / Job Function " they did that hour / day.

We haven't had a discussion with Owner's or Staff now that this system is in place.

Everyone is on the same page , there are no suprises to the Owner when the bill is presented.

Terry

Terry
Employees should fill their time sheets out daily. If you are having problems with employees being honest then you should consider using the Job clock or terminate said employees. Not paying your employees because the job log does not match their time sheet is illegal.
 

·
bathroom guru
Joined
·
1,348 Posts
I think it would be a tough sale if your customer asks what your rate(s) are and you have only one. My personal rate is a little more than double what I charge out for my helper.
 

·
Registered
Joined
·
194 Posts
You said it yourself, by calling it "cost PLUS", why would you charge exactly what you are paying your employee. How are you going to cover workers comp, overhead, liability insurance, etc?

We charge a different rate for different employees, depending on the speed they get work done, and their skill set.

When charging different prices for different people, you need to compare apples to apples, if you have one employee that can do a certain job in one hour, and one employee that can do the same job in two hours, you need to be charging double for the person who can do it in one hour. (And think about ****canning the guy who takes two hours :rolleyes:)

Look at your employees and the speed and skills at which they work, and sit down and make some calculations to find out how you can make the most money while still keeping a competitive price.
 
1 - 7 of 7 Posts
Top