Electro

When it comes to pricing for service oriented businesses, the reality is, most don't really know what their labor costs. They may have a ballpark idea. But ballparks come in all sizes. Now here's the part that puzzles me. I think most are afraid to really know. Most would be suprised how much higher their actual costs are than they thought. I'm not talking pennies, but dollars. Take a small company with 3 employees. The average company has miscalculated by 3-5 dollars per hour. That comes to a minimum of $ 17,500.00 for 3 employees. Figure the average owner is in their business for 20 years. That's $ 350,000.00. So why. Most owners are experts in their given field. Most trade associations promote education again in their given field. Where does the average mechanic learn about the business side? If you were offered a 1 night course in either accounting for small business or a demo on the latest hot water powerwasher spray rig with all the bells and whistles which would you attend? No one ever went out of business for doing to good a job. Find tools that will educate your business mind. Spend at least as much time learning this side as you would the tech side. Brian http://www.yourcostcenter.com

As long as we are talking about hours, are you making sure you are properly allocating and recovering your compensation? What I mean is, if you work with a tool in your hand for 6 hours per day and then spend another 6 hours doing estimates and paperwork. Part of your salary is billable, part is overhead. I know many owners who work 14 hour days, yet when they look at their compensation they would be better off working for someone else and doing this on the side. Construction services can be an incredibly financially rewarding endeavor as long as you spend as much time growing your business mind as you do your professional expertise. Happy Holidays Brian http://www.yourcostcenter.com

In this day and age of law suit crazy people, if you have even 1 employee you would be crazy not to carry WC. You are putting your family's lifestyle at risk. I understand when you look at this large premium and prices are already tight how you base your decision on risk. Let me offer this thought. Break all your expenses down to the working hour. I have posted a shot of what an average employees costs exclusive of overhead. Do this for your company and then base some of your financial decisions on an educated basis. Decide if it is worth raising your price $. 50 to $ 2.00 per hour. http://forums.thegrimescene.com/attachment.php?attachmentid=6382&stc=1&d=1165671687 Brian http://www.yourcostcenter.com

I recommend throwing your unit pricing list in the garbage. Have production rates and figure (measure) everything that goes into job. Include setup, breakdown, actual hours worked on all items and remember you only get about 6.5 hours of actual work out of an 8 hour day. When I hear people comment that they can't get x for a job. I raise the following questions. You need to understand only 5 things to be profitable in any service business: 1. Know your costs 2. Control your costs 3. Know your production rates 4. Control your production rates 5. Find a client base that fits in with your business model. If you find yourself failing, it usually relates to 1 of the 5 items mentioned. Number 5 is the clincher, You can't sell steak to a vegetarian no matter how good the price. A McDonald's will not do well in a neighborhood of wealthy people over 50. And so on. Brian http://www.yourcostcenter.com

I run a commercial paint company in NJ. We have a new strip mall that needs a cleaning after construction. Anybody work near Hackettstown, NJ? Contact me at brian@drucksinc.com. Thanks Brian brian@drucksinc.com

McMoo Sometimes half the sandwich is okay, but which half, left/right top/bottom? In any business, there is always room for low price/low quality, as well as the opposite. You want to be the one who can figure how to give the best quality at the best price. So, when you say you can get the work and still make a profit, are you sure your making a profit? What does profit mean to you? Let's take this example: Let's say to do a job it will take 8 hours. You pay an employee $ 15.00 per hour So your paying $ 120.00 to get the job done Than add on insurance, taxes and holidays and your cost jumps to approx. $ 164.00. You could take the at $ 164.00 and slowly go out of business. Add company overhead and your at approx. $ 320.00. Take the job for that and you'll never go out of business, but you'll never have a rainy day fund, nor achieve anything more than a paycheck. So add on profit of let's say 15%. Now the selling price is $ 368.00. So when you say you can take a job and still make a profit. Is that net free and clear above all expenses profit. Or somewhere in the middle? Pricing and negotiating a job is an art and a science. If your a good salesman, you may have the art. Just make sure you also have the science. Brian http://www.yourcostcenter.com

Bill, I remember you. Nice to hear from you. The first years subscription for smaller companies is $ 199. than $ 99.50 to renew each year. As far as stating I'm a painter. I'm stuck with that title. If you remember me from MAC, you know I'm just the type that believes in sharing and helping orthers shorten the learning curve. I had great mentors before me. Regarding the "The importance of knowing costs isn't obvious" That's one of the issues that I have a hard time conveying to people. They think if they charge their daily rate and run a cash business, their ahead of the curve. I try to stress to people, there's 3 things that make a business successful Pricing Production Clientel You can't have 1 without the othe 2. So I picked the first one for our software. Price is like manners for some people. They both go out the door when things get tough. It's not easy sticking to your guns when you know your price is the right price for YOUR company. Good luck with the rest of your season. Brian http://www.yourcostcenter.com

Thanks for remembering me. I just spent the day at a convention/seminar for the Pest Control Association. It is amazing that no matter what trade you are in (Powerwashing, Pest-Control or Painting like I am) how we all have the exact same issues. We think they are unique to our industry, but they are univeral to service oriented businesses. The one thing I have found aftering traveling around the country talking to all types of trade groups is, ask any contractor how long something will take (i.e. how long to clean a deck, paint a room) they will give you roughly the same answer. Yet, ask them how much they would charge and the prices are all over the hemisphere. How can that be? The reality is that most contractors have no idea what it costs to run their operation. We all sell the same thing, LABOR. So how much does that labor actually cost? That is what our software does. It lets you know exactly how much your labor costs and what you must charge to recover all of the costs of running a service business. It took my company over a year to develop this program and we had a staff of accountants, programmers and financial advisors to create something that would be, all inclusive, yet easy to use. So I understand that its more the norm, not to understand how to determine your costs. My family has been in the paint business for 4 generations, I was taught everything there is about paint and wallpaper. The one thing I never learned was about how to run a business. Hopefully our program will help others speed up the learning curve. I would be glad to offer any assistance requested. Sincerely, Brian Drucks http://www.yourcostcenter.com

I run a union painting company in New Jersey so I understand how expensive running a legitamite business can be. I also own a software comany that shows you exactly what it costs you to run your business. I am showing a break-out below of a typical employee and their direct costs. (Click on image to enlarge) [ATTACH]5314[/ATTACH] add on top of this all of your office expenses, non-billable time for you the owner and you can see that you can't afford not to know the true cost of running your operation. Sincerely, Brian Drucks

JL Here in NJ as an S Corp. you are covered under WC. You must wisely choose what classification you are listed as. If you list yourself as one who actually does the work at let's say $ 13.00 per hundred, that would be about $ 3.70 per hour. If you list yourself as sales it would equate to about $ .17 per hour. Of course every state is a little different. Also speak to your accountant regarding what you draw as salary vesus owners withdrawal. It makes a difference for WC. Electro

As a sole pro. you would not be covered by your WC policy. But as a S corp. or LLC you would. Compare the cost of WC to a disability policy. I look at this way, expensive maybe, don't look at it as taking 900.00 or whatever the amount lump some would be. What does it cost you an hour for that protection. If your policy was $ 2000.00 that would be about a $ 1.00 an hour. Would you lose any clients if you raised your price $ 8.00 per day? We had a member of our local trade chapter sue a client because he got hurt at their home and he had no insurance. How does that make our trade look? People complain when government agencies policy an industry. Proper insurance is part of the cost of doing business. Electro http://www.yourcostcenter.com