Building your own price

[Beth n Rod 1,279]

The best information I can give on pricing is how to build your own price.

-How long does it take you to wash each piece according to what it is?

-How much to you charge per hour for labor?

-What is the cost of your cleaner and how much will you be using on each piece?

-What is the cost of your neutralizer and how much is needed for each piece?

-Are your sanding any of it?

-How much do you charge to for this service?

-How long will it take you for each piece?

-What is the cost of your sealer? What is the coverage rate? How much will be used on each piece?

-How long will it take to apply the sealer?

-What supplies and tools do you need?

-What are the costs of each item you need?

Here is a simple formula to figure your costs:

Wage per hour X hours required = Labor cost

Product cost / coverage rate (in sqft) X sqft required = actual product cost

Supplies needed for project (brushes, rollers, pads, tarps, plastic, cleaners, rags and any depletable items you may use which are required to be replaced for each job) = supplies cost

Travel time expenses; Wage per hour / travel time + fuel costs (mpg / miles X $ per gallon) and a % for insurances and vehicle maintenance (oil changes, tires, brakes, belts and fluids)

Now let's sum it up:

Labor cost + Actual product cost + Supplies + Travel = job cost

If you want to put it into a simpler form you can take job cost / sqft and get a price. But it will need to vary as the sqft goes up because it will not adjust for set up and breakdown times which on larger jobs vs small jobs could be more. Travel expenses can be made a basic formula add in for a service area and only increase if you go out of it and be based upon the increased time and costs.

If your state requires you to charge sales tax, you will need to account for that in the equation by charging a % based on what your states guidelines require.

We use a sliding scale which is more complicated than the formula above but it is based upon OUR specific business costs (marketing, advertising, office costs, staff wages, insurances such as business, vehicular[drivers and equipment], medical and workers comp., then there are license communications and utilitiy fees.) Safety equipment for employees (gloves, respirators, pvc rain gear, ear plugs, safety glasses etc), Replacement parts for equipment (seals, 'o' rings, QC's, hoses, tips etc), vehicles and equipment leases/purchases, licenses and inspection fees.

This represents the overhead of what goes into calculating business costs which ultimately end up in a spreadsheet which helps to maintain margins and in this economy some profit for re-investment in the business.

The formula above only represents direct costs to the consumer but without adding in all the rest, most companies go out of business because they do not account for them and when it comes time to pay taxes...oops! There is another one.

This is for your benefit and anyone who would read this thread. I would hope it will encourage others to sit down and seriously look at all business expenses and take them into account when making a bid for work and not just pulling a number out of their behinds.

I only wish the best for anyone trying to make it on their own in business since taking that first step is a daring one. I hope this helps to get people interested in educating themselves on how to run the business and not just the operation.

Rod!~

There is this article as well.

Take this post for what it is, help. I don't know how far you have gotten or what your knowledge base is regarding business so I will start with the basics. This of course is based upon wood restoration and will vary depending upon which facet of pw'ing you are currently focused on. House washing for most is pretty cut and dry as they measure by sqft/stories or by the type of house and siding they will be cleaning.

The following will give you reference and transcend into other pw'ing based upon what you have already learned to do.

Charging by sqft -vs- hourly. Well, you need to have a handle on both as I will explain before you can present either.

Charging by the hour is a good measure but in order to determine your rates, you need to first determine your productivity rate...ie sqft/hr.

Once you have a handle on this, you can be more accurate on your pricing without losing money and still maintain your margins.

Solidify your methods for each service you provide. Time yourself or your workers to determine how long it takes under normal circumstances to complete each service (washing, stripping, neutralizing, sanding, defurring, staining/sealing, etc.) How long does it take to do 'X' sqft of ...

You must establish a benchmark not only for pricing purposes but also for tracking employee productivity.

As you gain experience with this, you will also be able to account for difficulty factors and compute them more accurately into your pricing.

Now, let's go hypothetical for a moment.

Let's say you want to get paid $50/hr for one man to perform a service.

Let's assume that your worker can wash a deck at the rate of 100 sqft/hr and the deck including rails is 250 sqft. Given these variables your formula would look something like this:

250sqft / 100sqft/hr = 2.50 hours

2.50 hours X $50 = $125.00 to wash

Now for staining it takes some a little more time and should include prep and in that figure the total time should be averaged based upon when you arrive and start till all is packed up and the job is finished.

-this may not be in the exact order but the typical services are here-

Set up time = :30

Light sanding the handrails = :20

Application time 1:15

Break down time = :15

Total job time = 2:20

2:20 X $50/hour = $110.00

Carry forward the wash price of $125.00 + $110.00 to seal = $235.00

Now remember, the figures here are just for example. You can plug your own actual numbers in to come up with something more realistic.

This is the most basic way to price a job and once it is based upon real time productivity will give you insights into your labor costs. This does not however include prices for products, fuel expenditures and supplies which should be a part of this equation.

To determine them lets start by asking these questions:

Depletables:

-How much plastic will be required?

-How much tape will be required?

-How many brushes, stain pads/handles?

-How much product will this job require?

-How much Sand paper will this job require?

-How much fuel will the wash require?

-How much stripper/cleaner and neutralizer will it require?

etc...

Tools:

Pump sprayer cost?

Sander cost?

Ladder(s) costs(s)?

etc...

Most will assume that the tools are already bought but the products and supplies to complete the work will be consumed or disposed of after a few jobs depending on use and durability. But the costs associated with them needs to be included in your pricing.

Once you have been able to make a list of all the necessary implements of destruction you need to perform your service you will have the costs that go into your service to plug into your formula based upon which service they are a part of.

I'll stop here before I write a book and have to charge everyone who reads a plug nickel for my carpal tunnel syndrome. :)

Rod!~

[Green Power Clean 14]

After a long career in Marketing (high-tech stuff), all of your post is excellent to understand the fully loaded cost incurred in a job.

There are 3 ways to establish the price to be given to a customer. Cost-based, competition based, and value based. Your post is perfect to understand the cost element (albeit leaving out the discussion of what kind of profit margin should be tacked on). The first step in pricing is to understand what it is worth to the customer in light of their other options. One option is always the "do nothing" option. Here they may not be aware of the costs and risks of not maintaining their property, and avoiding those longer term huge bills can set a pretty high value to the cleaning. If they are in an obscure niche of the market and you have no competitors, a price offer that is well under the value of "do nothing" may be much higher than the cost-based price . If they are in a well serviced market then competitive bids will determine the price range of acceptability to the customer. Inefficient higher cost vendors in this case will either price themselves out of the deal or price below their cost and eventually be forced to exit the business (or adopt more efficient methods). Cost-based price sets the floor for lowest price you can take the deal and stay in business. Value to your customer sets the ceiling price above which the customer will chose to do nothing or go with your competitor. If the floor price is above the ceiling, you do not have a viable business. If the ceiling is well above your floor, you can make huge profits (for a while and risk inviting new entrants), or have reasonable profits (and secure a very satisfied and loyal customer base).

Understanding costs is key to staying in business as the prior post points out. Understanding the customers perceived value and the competitors capabilities give you profit margins to enjoy and is even harder to gain.

[ayetti 14]

In the 3 self employed industries I have been involved in I have seen more people screw this up than you could believe. They ALWAYS want to know what others are charging. You pretty much nailed it when you said "figure out what you need to make." There are so many variables involved here its unreal. Are you gonna price yourself the same as some guy who does low end work and tons of volume? Same goes for some guy who is a total craftsman and just lives it one day at a time. My advice is figure out your expenses, and figure out what you need to make an hour.

[Beth n Rod 1,279]

Thank you for your contributions.

It is always welcome when others can expound or elaborate on information posted here.

Rod!~

[Doug Rucker 31]

Great info Rod, thanks for sharing.

[Amanda parker 0]

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