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Contractor, v2.0
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188 Posts
Discussion Starter · #1 ·
4501.00 Total sale

-800.00 Labor paid to 1099 sub

-1,192.47 Materials (direct receipts on the job)

2508.53 Gross total

627.13 25% Tax allowance (on the gross 2500)
90.02 2% Warranty Allowance (on the revenue 4501)
450.10 10% OH (on the revenue 4501)
900.2 0 20% Sales / Supervision (on the revenue 4501)

441.08 Net total

44.11 10% Business tithe

396.97 Retained earnings


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1- Where is workers comp / gl coming out? 10% OH or retained earnings?

2- Sales supervision is essentially 'owners salary'.

3- Job is 60 miles away from home - 4 trips to job means 8 hours of travel and about $100 in gas. Where would you account for that? 10% OH is getting squeezed hard.

4- Job takes 4 days to complete - soley with the 1099 sub as labor. Owner is free to attend to other bids, sales, walkthroughs, other jobs in progress, etc.

Question: Is this job worth it?

Question: What would you change or add to this job for a professionally run business.
 

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Working
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4,127 Posts
The only thing that stands out to me at first glance is no trip charge. I charge for anything over 50 miles.
 

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Custom Stuff
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867 Posts
You are making things too complicated. First, you haven't figured all your direct costs correctly. You need to account for your travel time and costs as a direct cost for the job, not OH. Second, you are pulling your OH numbers out of the wrong place. Everything comes out of the total sale price. What's left over if you did it right is your direct costs.
 

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chief pencil holder
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1,605 Posts
Your bid is completely different than mine, but I tend to bill 1k a day, so you are probley pretty close. Whether or not it is worth it depends on how much you will need to be on the job to manage.
 

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New York City
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289 Posts
I'm not clear why you are figuring tax on $2,500? that does not seem to be your gross profit. Shouldn't all business costs be expensed-out before you arrive at a taxable figure?
Isn't your OH and your supervision(labor) part of your costs?
 

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Contractor, v2.0
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188 Posts
Discussion Starter · #7 ·
You are right - not sure why I put it that way. Working with a spreadsheet and having a discussion on it with some folks. Update figures are as follows:

4501.00 Total sale

-800.00 Labor paid to 1099 sub
-1,192.47 Materials (direct receipts on the job)
-450.10 10% OH (on the revenue 4501)
-900.20 20% Sales / Supervision (on the revenue 4501)

1,158.23 Gross total

-289.56 25% Tax allowance (on the gross 2500)
-90.02 2% Warranty Allowance (on the revenue 4501)

778.65 Net total

-77.87 10% Business tithe

700.79 Retained earnings
 

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Custom Stuff
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867 Posts
15% profit is not bad. Does look better when you use the right numbers. As a rough estimate, I try to have my OH&P be around half of the sale price. I'll adjust numbers next year. I take my direct job costs and multiply by 1.65. Good for a decent ballpark estimate.
 

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Contractor
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4,735 Posts
are you paying yourself the sales/supervision figure? If so, you're making $778 + $900-that's pretty good for not doing much except overseeing.

how do you account for warranty allowance? do you have a savings account it accrues in?
 

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291 Posts
The percentage looks good. But that can be deceiving. If this job were completed in a day rather than 4, it would be a whole nother story.

Your OH is not 10%, its so much per day.

Does your landlord charge you a percentage of your sales for rent?

Is your truck payment a percentage of your sales?

Do you pay your office help a percentage?

If you answered no to these questions, then you should see that OH is a function of time. Any cost that is a percentage of sales is a direct cost.
 

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Contractor
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4,735 Posts
to followup on outlaw's discussion on OH being per day, if the job were a one day job but I didn't expect to get another job during that week, charge for the overhead for the week. So, if OH = $50/day (Mon-Fri) or $250/wk and I had two jobs tack on $125 each (if 'equal' jobs). Can't run a business effectively if you were to charge $50 OH for one day of work then sit on the couch for 4 days.
 

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463 Posts
I would call a small job that my crew or my self wont be working on a tack on job .
I would run it and collect the money .
My over head and profit is figured monthly and is already covered into other work so I could charge 4000 + 300 bucks office fee + sales tax if applicable
I only do small jobs to meet new people and get referrals the money isn't the main focus .
 

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The percentage looks good. But that can be deceiving. If this job were completed in a day rather than 4, it would be a whole nother story.

Your OH is not 10%, its so much per day.

Does your landlord charge you a percentage of your sales for rent?

Is your truck payment a percentage of your sales?

Do you pay your office help a percentage?

If you answered no to these questions, then you should see that OH is a function of time. Any cost that is a percentage of sales is a direct cost.
Outlaw,

Although I agree with your point, I also agree with his. It really depends on how his business and bidding is set up. I go over my following year budget starting around the middle of November of each year. Based on past performance, indirect and direct job costs, salaries, variable expenses, etc., and my budgeted sales projections, I come up with the overhead percentage I need to cover my operating costs and then I add my desired profit for the business. You can find your market may be 1.54 or 1.72 or 1.39. It will be different for every business and the more lean you run your company and control your costs, the lower your overhead markup will be. Your profit on top of that is whatever you feel your business should be profiting and sell business. This is a typical 'Stone' method of markup and has to be monitored. I monitor mine monthly to make certain I am on budget for expenses and sales. If not, I have to make adjustments. The most important thing is you cannot use a pie in the sky number when you set your initial budget. It has to be realistic. It is not likely that you did $200,000 in sales this year and project $1,000,000 next year. It's better to go over your sales projection than below. If he is subbing the majority of the work, this method will work better than daily overhead as he may not have employees on the job.

Agree with both, depends on how your business is set up.
 
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