Contractor Talk - Professional Construction and Remodeling Forum banner
1 - 16 of 16 Posts

·
Registered
Joined
·
13 Posts
Discussion Starter · #1 ·
Ok guys I do have a question pertaining to pricing but it is not about the exact number and I hope yall will give me some real advice.

I have worked for about 5 years as a residential contractor building spec homes. I have no employees and subcontract all work. I have a set of contractors that I regularly use who do fantastic work at reasonable prices.

Since the speculative market has been so slow in the past years I am changing my direction. I just started a company on my own (I've been working with family). I am now doing work for clients. Anything from home repairs to new home construction.

My question is about estimating. I am currently getting prices from my subs and then adding any materials I am buying and then adding in a number that I calculated for overhead using some of the advice I have seen on the site and some information I learned in school.

My question is this. I include my salary in the overhead of course but I have no idea what a fair salary is for myself. I am not asking for advice on a exact number. My question is this. I obviously don't want to base the amount I charge off other people since everyone's situation is different, but I also don't want to make my salary and coincidentally my overhead so large that I price myself out of every job I bid. How do I find this magic number where I make enough but I'm not ripping people off or not getting any jobs. Obviously more is always better so where do I draw the line.

I have a feeling nobody will give me advice on this last part but I'll throw it out there just in case. Say my cost (subs and materials, no overhead) on a job is 25K. If I put a quote in for 50K is anyone else going to be that high or is that just an absurd amount. Also this job will take 4 weeks.:blink:

flame suit on

Thanks for all the great advice.:clap:
 

·
bathroom guru
Joined
·
1,348 Posts
Ok guys I do have a question pertaining to pricing but it is not about the exact number and I hope yall will give me some real advice.

I have worked for about 5 years as a residential contractor building spec homes. I have no employees and subcontract all work. I have a set of contractors that I regularly use who do fantastic work at reasonable prices.

Since the speculative market has been so slow in the past years I am changing my direction. I just started a company on my own (I've been working with family). I am now doing work for clients. Anything from home repairs to new home construction.

My question is about estimating. I am currently getting prices from my subs and then adding any materials I am buying and then adding in a number that I calculated for overhead using some of the advice I have seen on the site and some information I learned in school.

My question is this. I include my salary in the overhead of course but I have no idea what a fair salary is for myself. I am not asking for advice on a exact number. My question is this. I obviously don't want to base the amount I charge off other people since everyone's situation is different, but I also don't want to make my salary and coincidentally my overhead so large that I price myself out of every job I bid. How do I find this magic number where I make enough but I'm not ripping people off or not getting any jobs. Obviously more is always better so where do I draw the line.

I have a feeling nobody will give me advice on this last part but I'll throw it out there just in case. Say my cost (subs and materials, no overhead) on a job is 25K. If I put a quote in for 50K is anyone else going to be that high or is that just an absurd amount. Also this job will take 4 weeks.:blink:

flame suit on

Thanks for all the great advice.:clap:
Dude, if you can make 25K gross profit for "selling" and managing a job without doing any of the work yourself, more power to ya!!

However, at least in my market, I cannot see that happening too often.
 

·
Balding quickly
Joined
·
954 Posts
It totally depends on what you are doing. I have a friend that does about 3 mill a year, basically just owner and does some selling and managing maybe 50%. He takes home about 10%. I take home probably about 30%. But I have a completely different structure than you. So those numbers should mean about nothingto you. It depends on how your business is structured and your prices should be taylored to your overhead.
 

·
Super Moderator
Joined
·
11,965 Posts
sonalamp

There are SO many variables here. Do you have a shop-if so utilities, insurance,

Ok I wont even get started listing everything.

The absolute best thing ever invented was the spreadsheet (like excel)

Before I make a decision like you are contemplating, I always run spreadsheets to ensure I have all the "what if" scenarios accounted for.

I'm a bit of a math freak and that has come in handy too. If you're not good at math or spreadsheets, find someone who is and you will be amazed at how much you can analyze decisions BEFORE you make them!
 

·
Registered
Design/Build Remodeling
Joined
·
6,589 Posts
Under no circumstances is tree fiddy enough. It's a trial and succeed process! :thumbsup:

I first tried a buck, two, four, eighty-five. But after the Euro conversion, I didn't have a peso to stand on!

Then I tried moving the tin cup, but the Mad Hatter was gone.

I know all this sounds incomprehensible, but so is the question!

If all you can do is throw an example of a 100% mark-up out to see if it sticks - without any thought or reasoning - Keep the flame suit on for just a little while longer! :furious:
 

·
Scooter
Joined
·
304 Posts
:whistling ahhhh if we ALL could just find that magic number!
 

·
Contractor
Joined
·
4,763 Posts
how do you guys figure overhead for a project? if you have overhead for a year, say $100k and your job is expected to take 1 month, do you attribute $8333.33 plus an additional percent of the project for profit (plus an additional amount for 'fudge' factor)?
 

·
DavidC
Joined
·
2,550 Posts
How about take your hard costs + your overhead and consider that rock bottom. (breaking even is technically working at a loss) You said your salary is in the OH so you won't starve. The only thing left is profit so pick a point you like to start and experiment until your happy with the results.

Good Luck
Dave
 

·
Registered
Joined
·
318 Posts
Ok guys I do have a question pertaining to pricing but it is not about the exact number and I hope yall will give me some real advice.

I have worked for about 5 years as a residential contractor building spec homes. I have no employees and subcontract all work. I have a set of contractors that I regularly use who do fantastic work at reasonable prices.

Since the speculative market has been so slow in the past years I am changing my direction. I just started a company on my own (I've been working with family). I am now doing work for clients. Anything from home repairs to new home construction.

My question is about estimating. I am currently getting prices from my subs and then adding any materials I am buying and then adding in a number that I calculated for overhead using some of the advice I have seen on the site and some information I learned in school.

My question is this. I include my salary in the overhead of course but I have no idea what a fair salary is for myself. I am not asking for advice on a exact number. My question is this. I obviously don't want to base the amount I charge off other people since everyone's situation is different, but I also don't want to make my salary and coincidentally my overhead so large that I price myself out of every job I bid. How do I find this magic number where I make enough but I'm not ripping people off or not getting any jobs. Obviously more is always better so where do I draw the line.

I have a feeling nobody will give me advice on this last part but I'll throw it out there just in case. Say my cost (subs and materials, no overhead) on a job is 25K. If I put a quote in for 50K is anyone else going to be that high or is that just an absurd amount. Also this job will take 4 weeks.:blink:

flame suit on

Thanks for all the great advice.:clap:
There are no magic numbers! In order to set your salary you need to determine what it is you need make. Once you have determined this number then you need to decide what you want to make. You can look in the general discussion area of this forum and you will find recent discussions on calculating O&P.
 

·
I own stock in FotoMat!
Joined
·
12,985 Posts
............Ok I wont even get started listing everything.........
But I will.

Keep in mind, this list is made up for ECs, but can easily be adapted to any trade:

Building
Building
Warehouse Space
Trash Removal
Lawn Care
Snow removal
Upkeep & Repairs
Office Expenses
Computers
Stationary
Copy machine
Fax machine
Forms
Printing
Software
Office Equipment
Computer maintenance
Files
Postage
Office Supplies
IT
Internet service
Email accounts
Web site
-Initial creation
-Updating
-Maintenance
GPS services
Benefits
Vacation Pay
Holiday Pay
Uniforms
Uniform Maintenance
Unemployment
Bonuses
Incentives
Retirement Plan
Christmas Party
Taxes
Property Taxes
Tangible Taxes
Pay Roll Taxes
Income Taxes
Sales Tax
Training
Management Training
Office Training
In-House Training
Tech Training
Mfg. Training
Training Equipment
Safety Training
Update classes
License testing
Insurance
Building Insurance
Liability Insurance
Employee Insurance
Life Insurance
Business Insurance
Workers Comp.
Utilities
Gas
Electricity
Telephone / Fax lines
Internet Service
Toll Calls
Telephones
Pagers/Cell Phones
Radio Maintenance
Vehicles
Vehicle Maintenance
Ladder Racks
Interior bins
Fuel
Truck Signs / lettering / vinyl
Tires
Financial
Accounting
Loans
Tax Preparation
Interest
30+ Day Receivables
Bank Charges
Travel
Hotel
Meals
Airline / vehicle
Unique to the electrical trade
Permits
Licenses
Bonds
Inspections
Trade Association
Subscriptions
Memberships
Dues
Retainers
Safety PPE
-Lock-out/Tag-out kits
-Fall prevention harness
-Arc-flash clothing
-Hard hats
-Safety glasses
-Hearing protection
Tools
Company Tools
Safety Equipment
Ladders
2-way Radios
Test Equipment
Replacement Parts
Parts Storage
Damages
Tool Replacement
Job site storage
Misc.
Trips to Supply House
Theft
Uncollected Money
Collection fees
Unbillable Hours
Commissions
Call Backs / Warranty work
Shortages
Bad Checks
Delivery
Credit Card Sales
Drug Testing
Legal
Legal advice
Law Suits
Incorporation / LLC fees
Advertising
Marketing
Business cards
Signs
Radio / TV
Newspaper
Flyers / brochures
Material Purchases
Inventory
Labor
Wages
Salaries
Dispatcher
Answering Service
 

·
Registered
Joined
·
523 Posts
The way i look at this problem is, how much do you want to make? Per year per week per job? How much profit will your market bear? If your getting jobs at 20% and you can not keep up change your mark up to make the same money doing fewer jobs.:clap: There are several books on this subject look on am*zon or someplace like that. Do your research other wise you will lose big. For years I did alot of T/M projects with alot of cash flow, the problem with flowing cash is it is hard to get it to stick to you.:sad:
 

·
Project Manager
Joined
·
2,642 Posts
I have a feeling nobody will give me advice on this last part but I'll throw it out there just in case. Say my cost (subs and materials, no overhead) on a job is 25K. If I put a quote in for 50K is anyone else going to be that high or is that just an absurd amount. Also this job will take 4 weeks.:blink:
You are right, nobody will give you advice on this last part. However, we will all make sarcastic, condescending remarks about it.

So, what you are proposing is a 100% mark-up on this job. If your OH and profit is that high....I think you need to find another line of work.

What you should do is give the customer an itemized bid for the job. For example:

1. Materials: $10,000.00
2. Subcontractor Costs: $15,000.00
3. Overhead and Profit: $25,000.00

If they accept it, then it isn't absurd, if they kick you out of the house, then it is absurd. Of course, at this point you could always try the infamous "porch light close".
 

·
Registered
Joined
·
13 Posts
Discussion Starter · #16 · (Edited)
tree fiddy

Thanks for the suggestions guys.

Jarvis: That was just a random example I don't think i can charge anywhere near that but what about these big contractors with 40 employees and 4 project managers, an office full of workers and an owner that doesn't even do anything but wants 400K a year. Isn't their overhead going to be so enormous that they have to charge something like this? That is my question.


BattleRidge: So you know more about me. I do 100% of the on site management, estimating, billing, accounting, scheduling, selling, and purchasing. Probably a few other things too.

TulsaRemodeler: Prior to the last 5 years I was still in school. During that time I was a construction grunt. Digging ditches, cleaning job sites, painting, demolition. That kind of thing.


DaVinciremodeler: Check my response to Jarvis to see more about what that random example was about. Thanks for the constructive criticism.

72chevy: Check out the list just posted for calculating overhead. You should include the owners salary in that (which I am guessing is you). Then you divide that by the number of days you think you will work this year and then multiply that by the number of days the job will take you. remember there are 4.33 weeks to a month.

rselectric1- thanks for the advice. I have calculated my overhead using a list like was just posted and adding in my salary. Are people saying I should add MORE profit on top of that?

That's a great list sparky thanks for posting!

I just don't want to realize down the road that I have been leaving a lot of money on the table and been the lowball guy stealing jobs from everyone (I doubt this will be the case though because of my business setup)
 
1 - 16 of 16 Posts
Top