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Beth n Rod

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Posts posted by Beth n Rod

  2. Posted · Report reply

    Hello Everyone.

    Thought I would put up some relevant articles for those who are trying to figure out how to price their bids/quotes.

    Many people on TGS and other bulletin boards have asked the question; How do I figure out my price?
    The responses have been varied but the most common have correctly been to find out what YOUR costs are and price

    yourself in respect to them.

     

    Other contractors prices may seem like a good gauge or a way of being competitive but their pricing structure may be wrong or

    not inclusive of the many necessary costs of doing business and as a result we see those companies disappear in a short time

    because they weren't properly covering their costs and ran the business literally into the ground and went broke.

     

    So when it comes to competitive pricing, one must consider there will be many aspects of a competitors price that they

    won't be aware of and as a result, it becomes a shot in the dark when applying their pricing to yours.

     

    But how does one determine their own pricing?

     

    Overhead is the first part of it.

     

    It all starts with the constant costs or recurring costs of doing business. These costs are the underlying basis of what

    has to be paid to operate a business and are seen in the forms of:

    -phone bills, internet service and possibly cloud based services with a monthly fee

    -utilities (electric, water, etc)

    -insurance(s) (Business, workmans comp, vehicle, liability, health and equipment etc)

    -Space/building rent/lease and maintenance fees

    -Administrative staff

    -Equipment rental/payment and repairs

    -Licensing

    and in some localities, taxes.

    These are the most common and come with a regular billing cycle and as such can be quantified into monthly averages or

    increments which can be factored into a unique cost percentage that becomes part of the overhead equation.

    Some of these are direct costs while others which occur as a result of operational requisite become indirect costs.

     

    One way and typically the easiest way to derive an overhead cost is to gain an average. Taking all these costs and any others

    your business may incur into consideration, add them all up together.

    Divide them either by the number of months if they occur quarterly, semi annually etc and then divide by the number of days in

    that period relative to their billing.

    This gives you a daily cost.

    Take all others which occur on a monthly basis and divide by the number of days in a month if they are billed in that manner.

    This gives another daily cost.

    Add these costs together and get a cumulative cost for all. This is what you need to make per day to cover these expenses.

     

    Let's break that down into some examples.

     

    Monthly costs;

    rent/maintenance fees-$3000.00

    utilites-$450.00 (avg)

    phone-internet-cloud based subscriptions-$1000.00

    Insurances (combined for this example) $5000.00

    Administrative/staff-$20,000.00

    State/local taxes (average for this example) $1500.00

    Equipment/vehicle payment/repairs-$1500.00

    Total Monthly payments:$32450.00

     

    Divide that by 30 days (365/12=30.41666) =$1081.00

    This is the amount of money you need to bring everyday to cover your operational costs.

     

    Now, you can look into other costs that will be added into your overhead figure and broken down

    to equate to a price you can use towards bidding/quoting a job.

     

    Employee wages for the work as a start. Do you have any measure of productivity to apply towards gaining an hourly price?

    For example, how long does it take to wash X sqft of ____________?

    You can use a couple of ways to determine that but most people who have been in the business know how long it takes

    to wash anything they bid. They time it or they use the results in the time taken in previous jobs similar to it to create an average

    by the hour or sqft. or even sqft/hour and that will be based upon the equipment being used or not used, the number of employees

    on that job and include set up and break down times.

     

    Some will even factor a travel time based upon a service area they designate and anything that falls outside of that area, an extra cost will

    be added in the form of a percentage of labor/fuel and any other expenses such as tolls and metering fees if they need to attach to a hydrant.

     

    Many companies make the mistake of solely pricing by time and materials in which time is the wages of the employee's on the job and not necessarily

    those of the owners and administrative staff (if any) creating a negative pricing structure which leads to a company working into debt.

    This is why knowing all your costs up front helps to keep your company profitable and helping to create a price that not only covers all

    your expenses but also contributes to profits and incidental cost coverage without which can hurt of cripple a company.

     

    I will provide a small example of a pricing model, but realize this is but an illustration for the basis of helping you to determine how to go about

    creating your companies unique pricing guide. Only you know what those costs are because you are the one that has set them up, and your 

    responsibility for paying them on time and regularly depends upon accounting for them in all bids and prices you give.

     

    Earlier, we arrived at a price of $1081.00/day the business needs.

    Let's assume you have enough business under your belt to have a record of previous jobs which are recorded for start and end times,

    the number of employee's on those jobs and the expenses that went into completing them.

     

    1. Travel time: 20 minutes city driving/15 mile radius

    2. Time of the job: 4 hours

    3. Employees active: 2

    4. Wage of each employee: $14/hr and $16/hr

    5. Fuel for the power washer at $2.59/gal and the power washer runs for 5 hours on a 7 gallon tank

    6. Plus diesel fuel for the burner at $2.99/gal and it's duration is dependent upon temperature required X time in use.

    7. Avg at same 5 hours of gas used and heated to 150*=6 gallons/5 hours=1.2/gal/hour

    8. Vehicle fuel at $2.59/gal and your mpg is 15X15 miles=1 gallon of gas used to transport vehicle and employee's.

    9.Set up time=15 minutes

    10. Break down time=15 minutes

    11. Chemicals used @ $3.00/gallon X 1 gallon and downstreamed

     

    1 -> wages for travel (butt time) 14/hour/60=.23/minute X 20 minutes=4.66 + 16/hour/60=.26/minute X 20 minutes = 5.33 which equals $9.99

    2, 3 and 4 -> job time; 14 X 4 =56, 16 X 4 =64 which equals $120.00

    5-> 7/5=1.4gal/hour X 4hours = 5.6 gallons X $2.59 = $14.50 in gasoline fuel used

    6, 7 -> 1.2/gal/hr X 4/hrs = 4.8 gallons X $2.99 = $14.35 in diesel used

    8 -> $2.59 for vehicle fuel

    9 and 10 ->.23 X 15/minutes = $3.45 + .26 X 15/minutes = $3.90 which equals $7.35 X 2 (break down time added here) = $14.70

    11 -> $3.00 chems.

     

    Total-$179.13 direct job cost (time/materials etc)

    Average this for a regular day at 8 hours equates to $358.26

    Add in the overhead figure-$1081.00+$358.26=$1439.26

    For simplicity sake, divide by 8=$179.90/hour

    Break that down by sqft if you like by dividing that number in the total sqft covered.

    Let's put a figure out there of 3500/sqft / 4  hours = 875 sqft/hr that 2 employee's can cover in a 4 hour period

    875/4=218.75sqft/hr

    218.75/2 employee's = 109.37 sqft/hour

     

    Now, we have broken this down to the hour and sqft.

    Do we know how much we need to charge per/sqft to cover a days expenses?

    3500sqft x 2 = 7000sqft a crew can cover in a day.

    $1439.26 is our direct cost including overhead.

    7000/$1439.26=.20/sqft

     

    BUT!!! that doesn't cover any margin we need to make also known as profit.

    What is the percentage you wish to make to help your company grow? 10%, 15%, 20%?

    Take your total expenses and multiply it times the percentage you need to make. Remember though, this

    can affect serveral things. One is your competitiveness in pricing. The other is your revenue tax bracket. An accountant

    would be best served to advise you on this subject.

     

    Below, I have provided some links to the topic for the benefit of supporting documentation and reference in case something

    is not clear here. Remember also, that in a service business, many examples provided in the links will be based upon selling a

    product. I have tailored the examples here to apply towards a service business like our industry has and it is from that basis that

    I hope to have covered as many bases as possible.

     

    Feel free to ask questions, make suggestions, post examples and any other relevant information or ideas. After all, this is where

    people come to learn.

     

     

    http://smallbusiness.theprivatebank.com/how-to-avoid-three-common-profit-mistakes/
    http://www.wikihow.com/Calculate-Overhead
     

    Rod

     

     

     

     

     

     

    mike movila and Guy B reacted to this

  3. Posted · Report reply

    Good day everyone.

    Thought I might bring out this topic since many are going to be starting up soon.

     

    How many have written a manual for your employee's on how to perform their services and have guidelines for them to follow?
     

    In addition, how many have a employee manual for your employee's to understand the companies rules, policies and any regulations?

     

    Rod

  5. Posted · Report reply

    I will expound on what Guy was saying.
    There is a sliding scale that many contractor use towards pricing and it is representative of the time, labor and materials it takes to complete a job.
    Higher price/sqft for smaller jobs and a reductively lower price/sqft as the job gets bigger.

    ie; 1.00/sqft - up to 200 sqsft.

    .75/sqft - up to 500sqft.

    .50/sqft - up to 1000sqft.....etc.

     

    Find out what it takes to do jobs of various types and look into your costs.

    How much fuel does your machine consume in an hour? Factor that into the price.

    What is your travel distance and factor costs for ass time in the vehicle for each person and

    a service area radius to base your rates on. Compute for larger distances as an additional charge upon

    the regular area.

     

    What are your overhead costs you have to meet each month?

    Divide that total by the number of days you work to come up with a minimum per day you need to meet those

    expenses and learn to factor that into your hourly costs overall.

     

    Many companies here have stated that they have certain minimums they will need to make before accepting any job.

    That is another thing to consider but beware, it is also market driven and demographically sensitive. You can price yourself

    out of business if your area of business can't support your costs if they are too high.

     

    Let me know if you have any questions...

     

    Rod

    mike movila, Guy B and Bert Lorch reacted to this

  7. Posted · Report reply

    On that type of roof, we use a ladder with standoffs.

    You can position on each pitch with ease and work off the ladder.

    In my experience, once a cleaner is applied, the shakes can become very slippery with all the algae on them.
    I did a large gazebo once and Beth had to come to my rescue with another ladder because the one I was using fell over

    with a pull of the hose while I was on the roof washing.
    I started to slide off because the area was wet and coated with a percarbonate. Luckily, I had a cupola to grab onto to stop my fall till

    Beth got the ladder into position so I could slide down to it and then get off.

    Something to consider...

     

    Rod

  9. Posted · Report reply

    That's a big topic. Great questions! First, you need to build the FB page especially for your business. Next, invite your customers to like the page and share it with their friends. It won't get huge overnight. You can do some focused advertising to get more people to your page too. You also have to consider what you post on the page. Keep the variety of topics well rounded, and family rated. Try using Hootsuite to schedule posts in advance so you don't have to think up new content each day.

     

    Beth

    gman201 reacted to this

  11. Posted · Report reply

    My only concern is for the potential damage to the composite.
    I have not to this date had to strip any nor have I applied any coating to it so

    this is new water as well.

    I can only proceed based upon my knowledge of coatings and strippers which does not take into

    consideration any affect upon the composite decking.
    I would only suggest cleaning and recoating in this case.
     

    Rod

  13. Posted · Report reply

    Nice setup Rod. How do you like that blue non marking hose? I use to own some yellow ones & also a couple of blues & I found they use to leave marks on driveways etc. The grey hoses always worked best for us.

    Thanks John.

    This particular one isn't bad.

    I have bought others that did mark.

    The only reason why I buy blue is to be able to distinguish one line from the other during work.

    You know...the spaghetti tangle after a number of hours on a site.

    The grey hoses always are a good bet for non-marking.

     

    Rod

  16. Posted · Report reply

    Sorry about the delay in getting these pics uploaded.
    Couldn't do it with the van loaded from helping Roger and Celeste finish their log home.

     

    The first is of the 2-gun unit at the rear of the van.

    The second is a view into the side door showing the tank, accessory drawer, hose reel stack and tool box.

    Third is of the winterization port between the tank and the pw'er.

     

    Rod

    post-2-0-59710700-1450120793_thumb.jpg

    post-2-0-64017200-1450120825_thumb.jpg

    post-2-0-93465900-1450120858_thumb.jpg

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  18. Posted · Report reply

    http://www.gofundme.com/rogerswrist

     

     

    Okay folks, how many of us have been injured on the job as small business owners, but were exempted from WC? How many of us are small mom and pop businesses that can't afford health insurance? And how many of us understand that when you are working on the last exterior job of your season, and you fall off of a ladder and it needs surgery, it's an overwhelming day? Roger and Celeste Gothorp need the money for Roger's  surgery. All of the money raised here, is for the surgery on his wrist.

    Roger Gothorp must have the wrist surgery. Look at the wrist.  They can't put a cast on it because it needs surgery first.  The log home they are working on, is not fully done. It needs staining and energy sealing - the whole house! Right now, they are worried about paying for the surgery, and are trying to get help on the house. Anyone with log home and energy sealing expereince or chinking expereince who can DONATE some time, it too is welcome! Rod and I (See Dirt Run! Inc.) are planning to help as we can also.  We are going to help get it stained.

    Help your fellow contractor - who is HURT - and needs surgery, out.  If you have the skill and can donate labor, it is greatly appreciated. Celeste can supply the address. If you can help financially with the surgery, that's even better!!!!  Roger and Celeste work really hard and this job has them balanced on the precipice of a really aweful  place. Please, if you can help even a little bit, it will be greatly appreciated. Thank you so much!

     

     

    Let's all help!

  20. Posted · Report reply

    Mike,

    I love the set up. Keeps the unit out of the weather and eliminates a trailer are the two biggest reasons why I decided on installing it

    in a Sprinter.

    I can't say the idea was mine though. Another pw'er in the next county showed me his set up and I thought it was a great idea.

    His version was to use a 325 gallon barrel tank as the supply, two separate cold water units and a 3 stack hose reel set.

     

    I first had the same tank but put in a 2-gun hot water skid instead. Not much room left...about 80 cubic feet.

    Changed out the tank for a square 150 gallon version and placed a sheet of plywood on top with a hole cut for the access port.

    Now I have 125 cubic feet of space for all the rest of the supplies and a place to put a tool box, water cooler and room for accessing the back

    of the skid unit for any repairs.

     

    My service guy (Tom Vogel) hated it when I brought the unit in though because we had everything directly bolted through the floor and getting it

    out for service was tedious and time consuming.

     

    I came up with another idea which is based upon a set of 4x4's bolted through the floor and another bolted onto the skid frame and they sit

    side by side and have 4-1" grade 5 steel linch pins to keep them in place. Now, I just have to pull the 4 pins and out she comes on a forklift.

     

    I can take pics for anyone who is interested in the set up.

     

    Rod

    mike movila reacted to this
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