Bidding jobs

[M.D. Vaden]

You mentioned as a Certified Arborist, how much does that add to your value.
I am a member of the ISA and soon hope to get my climbers certification and then on toward the CA.

This is reversed. The system double posted.

Wanted to add, that I often look for what people did not call for. Something that takes 10 minutes, but looks like it took an hour when done.

I side-note that 10 minute item in a bid for a multi-hour project, and don't raise the price.

Something like that starts to make estimates more incomparable, but shows more items on mine for the investment.

 

[M.D. Vaden]

You mentioned as a Certified Arborist, how much does that add to your value.
I am a member of the ISA and soon hope to get my climbers certification and then on toward the CA.

It adds value - quite a bit - if the customer knows what one is, and the non-certified company is low-bidding a bit.

For me, the greater value in it when prices are close, is it's value to shove the other company out of the choices.

Sometimes I'm bidding against other Certified Arborists who have great companies and standards. In that case, I raise the bar, and list on my contract proposal that there will be at least one Certified Arborist with 20 years minimum experience.

In companies where the owner who is certified has Certified Arborists with say, 4 to 10 years experience, we may snag the project from them with the double guarantee of certification and long experience.

Certification can probably raise the bid ceiling for a bunch of Certified Arborists - as a group - by 40% in a community where the reputation of the credential is established.

It's not a guarantee, but it is a benchmark.

 

[jonseredbred]

Certification can probably raise the bid ceiling for a bunch of Certified Arborists - as a group - by 40% in a community where the reputation of the credential is established.

It's not a guarantee, but it is a benchmark.

and this is very rare

 

[ddhlakebound]

I'm not getting what you're saying. If it will take extensive rigging time that should be figured into the bid amount. If you need to bring in one extra man on the ground for rigging/cleanup, it should be figured in.

How I figure dificulty/liability is how much I want/need the job. Then I increase the proffit margin accordingly. If in talking to people who I get the feeling will be difficult, I may bump up the price by an extra crew hour or two.

What I mean is, by using a single set hourly rate when bidding, (and only giving the customer the cost), on more complex jobs, we may find out later we could have bid the job higher and still got the job, maybe even as low bid. I left money laying there by bidding too low. Even if the hourly estimate is accurate, and the job finished on time, I could have made more because it seems other bidders were considering that job at a higher hourly rate.

On the flipside, easy jobs with little danger/liability almost always go to the lower end of the bidding scale. Many times when I'm looking at a job like this, and dont lower the hourly rate to reflect the ease of the job, I dont bid low enough to get these easy ones.

I'm trying to develop a sliding scale to account for difficulty, danger, liability, and a few other variables to more accurately reflect the value of the job, instead of just "It'll take 4.5 hours, so i'll charge $X.00"

Hopefully learning to bid with some sort of multiplier factor for the variables will help maximize profit per job, while still offering solid value to the customer.

Reading the input from everyone here helps refine the process, and I thank you all for your thoughts and comments.

 

[M.D. Vaden]

and this is very rare

Rare is one way to look at it.

It might seem that way, because it's already established in areas, and the effect is not noticeable.

Like in Oregon, Certified Arborists are well established in Portland and it's suburbs, Eugene, Salem and a few other spots.

But Medford and the 20 or so satellite communities around here, the certification is just starting to be noticed.

 

[begleytree]

and this is very rare

yup. here, the company reputation is paramount. folks here could care less about some ISA certification.
my degree carries much more weight here than my CA.
funny thing: a woman saw the CA thing on my proposal and says, huh, you trim power lines too? lol, me and asplundh/nelson foremans are the only CA's around here. people here have started to associate the CA with utility cutting! not good for the ISA....
-Ralph

 

[jonseredbred]

Rare is one way to look at it.

It might seem that way, because it's already established in areas, and the effect is not noticeable.

Like in Oregon, Certified Arborists are well established in Portland and it's suburbs, Eugene, Salem and a few other spots.

But Medford and the 20 or so satellite communities around here, the certification is just starting to be noticed.

you might be able to get the 40% on diagnosis, spraying, fert. ect. but on removals I fear people are just too darn cheap.

we are a family owned business, 35 yrs +, you would be hard pressed to beat us on a quote with a arborist certification as a sale point.

someday, when I get time I am going to sit for the exam. I believe it is important but unfortunately in my market, my dogs AKC cert. might be more accepted.

 

[CwbyClmr]

I would have to say that my town is probably saturated with tree companies but there are enough trees to go around to everyone. Basically I have only had a hand full of customers ask if I was a CA. Fortunately or unfortunately there are quality companies that are not certified and customers like them.
What it comes down to in my town is word of mouth and availability.
Me being a small new company I pretty much pick up what everyone else is either to busy to call back or show up for an estimate. That also includes traveling for up to 30 min around my town, those are my best jobs cause there are no companies out in "Hickville" nor are they willing to go there.

 

[windthrown]

Double the rational calculated bid

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.

 

[CwbyClmr]

Much Gratitude to all!!!!!!!!

Man, you guys have really set me straight as a new business owner (4+ months). I would have been on a long learning curve if it weren't for this site and you guys who contribute to it.
I can tell that this is going to be a very valuable resource not only for me but also for my company in the long run.
Thank you from all us little guys out there trying to get started!!!!!!!

 

[M.D. Vaden]

someday, when I get time I am going to sit for the exam. I believe it is important but unfortunately in my market, my dogs AKC cert. might be more accepted.

Agreeable to a point in several cities. In fact, I pruned many more years without certification - only being certified for 3 years as of the end of next month.

It streamlined things for me a lot once I got it though, but mainly since Portland seems to be one of the small meccas of arboriculture certification.

Anybody interested in seeing how rare Arborist Certification is in areas?

Go to the International Society of Arboriculture's Website, and find the arborist locate option in the menu. On the next page, enter in any zip code or city name, and watch how many certified arborist names display.

Compare that with the estimated population for the city. It will give an indication of where certification is dense or scarce.

You might note how many arborists use or omit websites or emails in the contact information there. That may reflect the computer influence in the same areas.

 

[CwbyClmr]

You might note how many arborists use or omit websites or emails in the contact information there. That may reflect the computer influence in the same areas.[/B][/I][/COLOR][/FONT][/SIZE]

Very true in my area, I was reluctant to use the internet for advertising but its paid off big time. I use a referral service and its free unless you get a referral. Needless to say I've gotten two jobs from them in less then a month of joining. One of those bids is the largest bid I've ever gotten and could pay for the use of the service for the next few years. The funny thing is that there are no other services anywhere close that use the same service, therefore I get all the referrals.

 

[John Paul Sanborn]

I would have been on a long learning curve if it weren't for this site and you guys who contribute to it.

Just keep up the attitude that you are on the curve and you'll do fine.

We all are allways learning something, also try to maintain the joy of the work.

Ten years from now you will still occasionally pooch a bid and have to eat some loss. Forgetting to look for powerlines (have a checkbox on the bidsheet "call for temp. disconect Y N) missing that the gate is one inch smaller then the ball carts track width, not seeing a defect in your main rig-point....

We all do it and each time is a learning experiance. I usually mess up on big wood extraction. Be wary of monster willows

 

[M.D. Vaden]

Just keep up the attitude that you are on the curve and you'll do fine.

We all are allways learning something, also try to maintain the joy of the work.

Ten years from now you will still occasionally pooch a bid and have to eat some loss. Forgetting to look for powerlines (have a checkbox on the bidsheet "call for temp. disconect Y N) missing that the gate is one inch smaller then the ball carts track width, not seeing a defect in your main rig-point....

We all do it and each time is a learning experiance. I usually mess up on big wood extraction. Be wary of monster willows

That's a good subject in itself.

I included a small directions line or box on proposal forms (contracts when signed). I put just the basic directions. Right under the address line. It saves dragging the map out most times if the work is to be done weeks later.

Another spot to the side, has, or had, a spot to note tools I don't usually carry, like a pick-ax or round point shovel.

 

[John Paul Sanborn]

I included a small directions line or box on proposal forms (contracts when signed). I put just the basic directions. Right under the address line.

I've doen that too, or the nearest major intersection "s/w of Fon du Lac & Capitol" or do a small line map for some of the curvey sub divisions.

 

[Munkee feet]

doing bids

I really like what JBS is writing and that learning curve he speaks of...I learned the hard way...and lost plenty before I got it all figured out. I wish I had seen this site 20 years ago. One thing I do a bit different than what been metioned is I add up all my overhead cost for the year and divide by the 200 days that I can work...and that gives me a overhead cost per day. then I know what i need to survive per year...divide that by 200 days. I then know exactly what I need to make each day. One caution I give to newer guys...dont set your price by what others are charging. They may have a different plan that you cant compete with...and its best to let that job go (if the bid is lower than mine)..I know what I need/have to make. As far a changing my rate, ONLY if I think they are poverity stricken like an old lady on a fixed income or if its my family...other than that, I keep my price as low as I can to get the job.
Munkeeft

 

[CwbyClmr]

Great!!!!

Again, Thank you very much for your input!!!
I finally sat down and ran my numbers on a 200 day work year and WOW was I surprised. Based on the prices that I have been charging I been doing alot better than I needed to, but that doesn't mean that I will drop my prices based only on my needs. If I am getting the jobs at a higher price than thats awesome. It does help that I have very, very low overhead as a climber with a 2001 BC1000, an '84 Chevy C30 10" dump and three saws, Echo 3000 climber, Stihl 026 and 460. Not much to have to pay for but plenty to do with a competitive price. Of course, insured but very cheap insurance with a good coverage.

 

[CoreyTMorine]

Terrific thread here, lots of good information.

I also like the 200 day breakdown. And the “single payment used equipment” model is a time proven money maker. Just for gits and shigles try running your 200 day overhead model, except factor in having payments on new gear.

Even though you are doing great now at some time you may want to upgrade your heavy tools, and if you start working with those numbers now, at the beginning, the transition will be easier.

For myself at least, it has been necessary to upgrade; because although I’m perfectly comfortable pushing on the battery box with my right foot while manipulating the choke and jumping the starter with a bar wrench, all while doing the happy dance and thinking good chipper starting thoughts, most helpers never seem to get the hang of it.

Plus there are few reasons why an industrious, well trained, competent climber/owner, working an area with plenty of work, shouldn’t be cruising around with new\newer iron. And the AC sure is nice on a hot day.


The other thought that comes to mind is that we have talked a lot about what you have to make, but not so much about what you can make. Cost driven pricing compared to market driven pricing. It is easy to get fixated on your minimum and try to pair down every job to that level. We worry about gouging our hard won clients, or of losing the work to another outfit, or of giving a price that is 100% higher than the other two bids and the indignant\incredulous look we might receive from said client.

I have this horrible habit of getting a number in my head before I even look at the job! I don’t know why it happens but it does, and boy have I stuck it to myself a few times.

As for my price, well when I “blurt out the fateful number”\ or is it “assuredly inform the client of the cost required to perform the work that they would like to have done.” In any case when that moment comes I preface it with phrases like “You have beautiful turf here, I think we would both be well served by taking a bit more time with the job in order to minimize the impact.” Or “That is some very technical work over those skylights, I wouldn’t be comfortable letting any one else do it.” Or “Sure happy I don’t have to bring a heavy truck across your driveway\lawn.”

Costs for treework vary greatly depending on the company performing the work, this is mostly due to differences in method. As a climber your cost will sometimes be way below a mechanized outfit. In other situations yours will be much higher. You must recognize these circumstances. Because in the former situation if you can do a job for half of the other guys price, and that is how you bid the work, the customer may become nervous that you are under insured, or under qualified, or a drug addict etc. And in the latter case you must allow the customer to understand why your price is higher and why yours is a better service. People like parity, If all the bids are close then they feel that the price is fair, if the bids are very different they want to know why.

The most comfortable bids for me are those where I know what the other bids are, In many cases they are way over what I would charge. So I knock a few percent off and get the work, with a healthy margin of profit. The customer is happy because I saved them a few hundred dollars and im happy because I made a few hundred.

Another thing to look for is that type of work you are best at. If you are basing your prices on cost, and you get every single pruning job between 3 and 7 hours then you may want to raise your prices for this type of work, or spend some time investigating what other companies are charging for this. If you never get a removal that requires you to handle big rubbish wood you can either stop bidding this kind of work and focus on your really profitable jobs, or figure out why you can’t compete in this type of service and fix the problem, perhaps its lack of adequate equipment, or maybe you are paying too much for disposal, or maybe there is a different company that specializes in removal of big uglies.

Investigating such issues is probably a trade in and of itself. For myself I have spent the past 5 years mostly sub-ing for other outfits, that combined with a characteristic bluntness has given me a pretty good understanding of the local market. There is nothing wrong with asking what someone else is charging or asking a client what the other bids were. Sometimes people will tell you outright, other times they will hint at it, but most folks I deal with don’t seem to lie outright.

It is important for you to know what the market is currently supporting, without this information you can only increase your efficiency with the aim of lowering your prices or of doing more work. If you know what the market will support then you can increase your efficiency with the idea of offering better service, you can increase the bar so to speak. This is how tree work is moving from spike and top pruning or 1\2 ton and beer removals to fully insured, living wage, longevity based pruning\removal work.

You sound like the type of person who works hard enough to own a house, raise a family, drive new vehicles, prepare for retirement, send your kids to college, and otherwise make a good living.

Allow for this possibility, and best of luck.


P.S. google “Earl Nightingail The strangest Secret”. It is a 5 or 6 CD set with lots of good ideas. I think I bought it for 45 USD.

 

[The WoodButcher]

Hi All I need some help Please

As some of you know I have a sawmill. I am charging $45.00hr with a 3hr min. It only takes 15 min. to setup. The rest of the 3 hr's I'm cutting lumber. I can cut alot of lumber in that amount of time. In 3 hours I can cut way more lumber than what you can buy at the big stores for the same money. The thing I don't understand is,... Why does everybody think I'm goin to do it cheaper for them? I had one guy stop at a job I was doing, ask me my rates and then he said, well seeing as how you are already out I won't have to pay the min, right? I told him if he could get the logs there that would fine, him and the guy I was doing the job for could split the min. He didn't like that but I don't know what to tell him I'm NOT going to start doing it for any less. Also when I break the mill down the clock starts all over again.Any pointers would be Great.
Thanks The WoodButcher

 

[Timberhauler]

I have two different crews operating at the same time,and I work with whatever crew I choose that day.During the Busy season,I get a large volume of calls,so it's very difficult to try and work and answer the phone.I have found a very polite way of separating the price shoppers from the people who are looking for quality.If they are price shopping,then I still try and win them over.Sometimes it works,sometimes it doesn't.When a price is agreed for the job,I usually give an apporximate time frame of when I'll be back to do the work,and I give them an exact time the week before I come.I always try to be on time,but I will make it a point to let them know if I can't make it when I said I would.I draw up a contract as well to weed out the people who get you in their yard and try to throw in "little" extra's.If their are trees coming out of their yard,I get the homeowner to physically put their hand on it,and I mark them with green ribbon.I mark whatever is getting prunned or trimmed with yellow ribbon.I specify in the contract that once the work is done that the invoice is to be paid within 48 hours of the day of completion.If it is a commercial job,then I mark on the contract that the bill is due 15 days after completion just because I have had companies have me out to do high dollar jobs that cost alot out of pocket to get done,and take up time that I could be doing something else and leave my pockets dry,then turn around and tell me they only pay every thirty days.I have also formulated a "day rate" for whatever the situation may be which is $1800 per day per 3 man crew.My minimum is $200 which includes up to an hour of work .Once finished and I'm done,I have Thank You cards that I send them in the mail,which by the way has really helped my business.I also send everyone that I did work for that particular year a "Thank You" Christmas card at the end of the year.....I also clear lots and small(up to 10 acres)patches of timber which I have a whole different method for figuring depending the lay of the land and the value of the wood that is on the land.I have cleared lots at no charge to the customer due to the value of the wood,but that did not include hauling off or chipping bruch.I just started the timber business last year and it has been a success because I can go in and clear the trees,and dispose of all the waste,where most loggers in this area only take the timber,then the landowner has to pay a grading crew or a tub grinding crew big bucks to clean the mess.I can dispose of the waste a whole lot cheaper and still make good money on the job.