Double the rational calculated bid
CwbyClmr said:
Double my labor costs? Is that like if I have a crew of two guys, not including myself, and I'm paying them a total of about $30 an hour, I should charge $60 an hour?
I did the math down to the penny on costs and labor, and doubled the entire bid, labor, supplies, everything. One bid for everything. One price bid, no breakdown for the customer unless it was a time and materials bid (I did these for certain types of jobs that were 'iffy' or I was uncertain about a customer on a first time basis, or they wanted a bid that way). Some bids were easy, as it was all labor and could be done in a day. We did trees, landscaping, patios, decks, some remodeling, landscape maintenance, etc. Some deals were teasers... we would go in and clean up a place for cheap because we knew we could sell a maintenance contract that was ongoing year round. That was financial security in lean times. Other bids were pricey becasue we knew that labor was tight and/or the timing was critical, like in a close of escrow, or we were booked solid and would have to bring in other labor to do the job. We were in an area that had a WIDE variation in labor costs and some very wealthy clients (the Monterey Peninsula in California). Hence we had the base line price for everyone, and added the 10% for the rich. Often times timing was everything depending on season, weather, and the economy at the time.
You should make way more for your crew than you are paying them, as the overhead for crew labor is going to add a lot in benefits and/or basic stuff like SS and unemployment, insurance, time for filing gov't papers, paying deductions, tool use and depreciation, overhead, phone time, etc. You are the one that gets them the work, and they are getting the benefit of your license, goodwill, advertizing, contracts, etc. You are also out giving bids and losing time on that part of the 'free' process. You have to cover for your own income, total costs and depreciation, not just the cost of one particular job.
As for profit, that was all over the place. I never could account for some set target. Staying alive and fed was job one. The profits sort of evened out over time to some perentage, but in any given month they varied a lot. Some jobs we made a killing. Some jobs become losers and we got stuck with a bad bid. Or some customer would demand some detail work that they wanted completed before paying and it sucked the profit right out of the bid. Or we got a bad check or no check and had to sue the b%$#!@ds in court (happened once). Or, God forbid, you have to factor for something happening like someone breaking a leg, or a tree does some serious damage to a property. Then you have to deal with your insurance company and all that crap. I never had to do that, fortunately. Normally some tools get lost or stolen or damaged and you have to replace them as you go. Cost of doing business, but you have to factor that in, or you will lose your arse in the long run.
Over time we built up a client base and did not have to advertize any more. That was a great time to do business. Reference work only. We had regular commercial and residential accounts as well as jobs that we bid. When we ran ads early on, we got good and bad work. One job in Pebble Beach I walked out on before I even started. Thinning trees in a 3 acre McMansion lot. I went to the door and knocked... the lady answered and told me that the 'servants' enterence was at the back of the house. Door closed. I was appauled and amused. I had just left the house of the owner of the Houston Rockets baskeball team. He was a big time car dealership owner in Texas that had a mansion in Pebble Beach, and was happy that he had signed a top player to the team that day. I had just had a beer with him on his patio overlooking the ocean... and then I have the front door closed on me after I am told to use the servants enterance? No thanks...
Bottom line, don't discount yourself. You set up a business and/or got a license and put up with a lot of crap and crud and sawdust. You got an education or got trained and worked hard and thought about ways to work better and faster. You did a lot of estimates and give bids based on experience and knowledge. You pay a lot of taxes and spend a lot on equipment and built up a labor pool and a customer base and dealt with them all, day in and day out. You should get paid well for doing that.