Pricing Methods

[jmmcgorman]

Hey guys, please by all means do not rip me a new one. But I have a question about pricing out a job. I have heard so many different schools of thought on pricing. And I understand that some lean more on the side of market value, and some on exclusively on your businesses operating costs and overhead and such. The only issue is just because I think i deserve to make 760 an hour and factor that into my overhead would price me out of business compared to the other guys in my town. So I understand that discretion and a blend of those approaches are necessary. I have also been counseled by guys at ntca about pricing your jobs off of the cost of materials. If the materials cost more than the labor is more. I have been told as well that the installers need to make as much as the cost of materials and the company needs to make as much as the installers and then overhead. So theoretically the total labor cost would be twice the cost of the materials. I think that in smaller bathrooms that this method is great. I have used this method a lot in these smaller jobs and been competitive.

I am running into an issue though in a kitchen. I cannot lie, bathrooms are my specialty, Love em, and know what I need to charge to make money. However kitchens are a little different. I have a customer wanting a bid for tiling their kitchen, I need to remove their 3/4 red oak hardwoods. I have to cut around the base cabinets and pull the dishwasher and fridge and cut out the hardwoods under those. Then they wanted schluter and 18'' tile down as well. This is a 228 sq/ft kitchen. The problem is if I go off materials to determine labour then I would wind up charging like 500 bucks just to put down the schluter which is a bit excessive in my opinion. If the tile is 3.50 a foot then I am charging 7 dollars a foot just for the tile. Like I say in small bathrooms this is fine. In a kitchen this could add up to make me not get the job. How would you guys approach pricing this job? And please no lectures on everyone is different when it comes to overhead. I understand that. I am asking for advice on methodology more so than your individual estimate. I have had some guys tell me around here locally that they have never charged more than 3 bucks a foot for the tile, and $1 a foot for underlayment. I understand that just because they do that does not mean that I have to. However I have to keep that in mind since they are my competition. Your thoughts would be greatly appreciated. Thanks

[MarkTarkus]

Every job is different but I usually figure how much I need to make per day (take home pay), times # of days I expect it to take , add materials/operating costs and then round up. I lose a lot of jobs but I get enough to stay pretty slammed all the time.
I don't bid by square foot any more but I couldn't make a living on 4 or 5 bucks a foot for anything. I don't know how guys do it.

[custombuilt]

You need to realistically look at the job and figure off of your weekly rate (of what you want to make in a week) It sounds to be that the kitchen you are on would take one guy about 3-4 days total so just figure a week. What is your weekly goal?

Personally I try and get make 1500-2500 per week gross, sounds wide open but that depends on a one man or two man crew. I rarely have to go under it.

[jmmcgorman]

I am just a one man show. I usually try to bid things out to make at least a $1000 a week gross. This is labor obviously. I am glad to hear your responses. And I am also glad to hear your estimate of how long it should take. This was in the timeline that I was thinking as well. I usually do double check my estimates in accordance with what I need to make per day/week as well. Thank you guys for the constructive feedback. Encouraging.

[Higher Standard Tile]

Jonathan- I would not base my labor rate on the material cost. True that some high end materials are harder to install but base your labor on how long it will actually take you to complete the work considering the difficulty/ease of the materials you are installing and the jobsite conditions. Every job is different.

The other way to look at it, the hardest tile to make look good is the .99 sqft stuff because it is so inconsistent. So you would really be cheating yourself if you based your labor off of that.


And regarding the $1,000 gross per week. You must have very low overhead and live in a 'more affordable' place than I do. But for the risk of owning your own business you should aim higher.

[cx]

Jonathan, if you're in the tile trades, please add some information to your User Profile so folks can look in there and see what sorta fella they're having the discussion with when you post such questions in the Hangout. What's your background, what kinda work you do, in what geographic area of the country you do it, that sorta thing. Thanks.

[tilemanct]

$1000/per week would be OK if you just worked for a company. You own the business. There is no way you will survive as "the business" on the $1000/wk. There are too many guys in the trades who really need to take a business course and talk to an accountant. Never be embarrassed to "make money". In fact, "take pride". Your family will love you for it! Just remember that when you lower your price your kids will be eating hot dogs while the customers kids eat steak.

[tilelayer]

You can make 1000 a week as a mechanic for a shop and you have your own shop you should be making over 100k a year, figure your bids to hit that target.


I bid ( wages + helpers wages)x days + materials + profit to the company =BID

[tilejoe]

The advice about talking to an accountant is critical! It never hurts to consult with small business professionals. These fees are all write offs and pay dividends. Not to mention keeping the tax man off your back.

The big fight we have as trades people is, we know OUR trade, and not necessarily the business side of our trade. Let's face it, they are equally important.

We price labor based on time.

[coping skills]

I usually figure $400 a day for myself, plus $120 a day for a helper. Not organized enough to figure in overhead and profit yet.

At $1000 a week you're shorting yourself. Unless you're in Florida, then you're 4x higher than everyone else... : )

Must live in an apartment without a wife or kids, huh?

[jmmcgorman]

Wow, Thanks so much for all the wonderful feedback. I had bid the job originally for $4000. This included a 3.5 s/f allowance for the tile, laticrete 253 gold under the schluter, ditraset on top. This was also removing the 3/4'' hardwoods, possibly having to pull some stain grade trim and reinstall. And purchasing new wood thresholds to match up to hardwoods. This price also included spectralock pro grout. This was a turnkey price. I think the reason I got frustrated and hopped on here to double check myself was because someone else had given her a figure of $2000. HOWEVER, she didn't know what underlayment was going to be used, she didn't know what size tile, was not epoxy grout. And the person quoting her that also owns the tile/hw floor store. Which means that he is probably able to quote lower numbers on the tile aspect, when in fact he is making up the difference in the profit of the hardwoods and tile material so as to keep the tile install price down. I am just an installer. Don't have that same advantage. I guess I just haven't had the extensive experience of having guys come in at half my price.

[Mountain Tile]

Joe

[Higher Standard Tile]

If she goes with the flooring store she won't know who will actually be walking through her door to work in her home.

[muskymike]

Hi Jonathan, how long have you been in business?

[barradas23]

there are about.........1 million threads talking about pricing on this forum... everyone talk about bussines in thier area... some are just installers, some are experts remodelers, etc everyone is different.....bottom line...


DONT LOWER YOUR DAMN PRICES!!!! find out the going rate for your area and try to stay on the top( also quality has to be that high).

different areas different factors: no habla ingles, not much work, different methods, different rices for materials etc

take pride on your job and learn a little bit of sales stuff you will need it when youre convincing a client why they have to pay YOU those $2000 more.
good luck:2cents: