Pricing question

[Billct2]

$900 is not your "profit". Profit is what is left after all the bills, including your salary have been paid. Not to mention depreciation on your equipment, which includes your vehicle.

 

[HulkSmash]

No harm meant towards the OP, but this my son is the difference between a home-based operation and a full blown business with a plan.

I wouldn't do that for a day. You are over-looking so many hic-cups.... but that's in my world. Perhaps for you it is different and that is why so many people talk about lowballing. They might do 50k with you in a year, but based on your thought patterns and policies [or lack of].... you are probably leaving a lot of money on the table.

You aren’t leaving any time for mistakes, traffic lights, detours, or some other problem creeping up or having to go back and do something again.

Your reasoning is exactly why your business is not growing. You’re thinking scared and take whatever anyone dishes out to you. The thing to do is hire someone to go out and do this for you, while you stay at the shop/house and get other orders going, answer phone calls and keep production going. While you’re out doing this one job and making a whomping $900, you might be missing the call of a lifetime. If you have your cell with you and have call forward on, you’re not accounting for phone interruptions. There are so many reasons for you to hire someone to put these up, pay them $250 to $300. That becomes a cost, so you need to add that in.

Now, this thread is out where everyone and their uncle can see it, but at $1,000, you are most definitely leaving lotsa money on the table. Even Addie’s numbers are wrong. You people think small; therefore, you’ll remain small.

Don’t get the wrong idea. $1,000 isn’t chump change, but for what you are providing and doing…. it’s fools gold.

Well said Gino. Everyone has different overhead, and therefore charges differently. Your valuing yourself with 3 days at about 37 dollars an hr. As an owner as a company, treat yourself as an employee - charge yourself out as your paying someone else. Then what's left is your true profit. If you put money into your pocket rather then back into the business.. you won't grow.

 

[jkdbjj]

No harm meant towards the OP, but this my son is the difference between a home-based operation and a full blown business with a plan.

I wouldn't do that for a day. You are over-looking so many hic-cups.... but that's in my world. Perhaps for you it is different and that is why so many people talk about lowballing. They might do 50k with you in a year, but based on your thought patterns and policies [or lack of].... you are probably leaving a lot of money on the table.

You aren’t leaving any time for mistakes, traffic lights, detours, or some other problem creeping up or having to go back and do something again.

Your reasoning is exactly why your business is not growing. You’re thinking scared and take whatever anyone dishes out to you. The thing to do is hire someone to go out and do this for you, while you stay at the shop/house and get other orders going, answer phone calls and keep production going. While you’re out doing this one job and making a whomping $900, you might be missing the call of a lifetime. If you have your cell with you and have call forward on, you’re not accounting for phone interruptions. There are so many reasons for you to hire someone to put these up, pay them $250 to $300. That becomes a cost, so you need to add that in.

Now, this thread is out where everyone and their uncle can see it, but at $1,000, you are most definitely leaving lotsa money on the table. Even Addie’s numbers are wrong. You people think small; therefore, you’ll remain small.

Don’t get the wrong idea. $1,000 isn’t chump change, but for what you are providing and doing…. it’s fools gold.

This is why I joined and paid my 50 to this site.
I want to evolve, and I soak up this kind of comment.
So please know your words have not fallen on deaf ears.

That goes for anyone else wish to help me learn. I am not here to say I know it all, but quite the opposite. I REALLY love this industry, it has treated me well, but I want to keep learning. THANKS!

 

[jkdbjj]

If you're happy with what you're getting for the job then that's great.....but knowing the difference between selling price and profit is very important.

If you figured out your actual overhead (including vehicle) then figure out how much you're charging an hour for that job.....I would bet you're not "profiting" much.

Just saying.

Well I have been running this business myself for 4 years. So there is so little time for me to evaluate stuff like this. I know I leave a little on the table, and for the most part I don't do many installs. A lot of the time I produce and hand over.
I also try not to lowball for those that have mentioned that. Example, I have clients that pay 6-7 per sqft on banners all the time.
I sell foamboard prints at 15/sqft for a few clients. My point is I REALLY don't try to jump on a job with the lowest bid. Also, I am a perfectionist when it comes to quality, and on my website the testimonials speak for themselves about that.

You all are giving me plenty to think about though, and I need to start factoring in other aspects. Thanks!

 

[jkdbjj]

Well said Gino. Everyone has different overhead, and therefore charges differently. Your valuing yourself with 3 days at about 37 dollars an hr. As an owner as a company, treat yourself as an employee - charge yourself out as your paying someone else. Then what's left is your true profit. If you put money into your pocket rather then back into the business.. you won't grow.

I have had a hard time with this, but at least I am aware of it.

 

[allamericantrade]

Being you did join and pay the dues for the site, Take advantage of the sites resources and post financial number questions in the private area. Your either going to hurt your profitability or improve your status as being a cheap desperate one man operation by customers doing there homework and looking up businesses that they deal with. Remember the time you are billing out needs to be your hourly rate plus any and all taxes associated with that. For example a $20.00/hr employee will cost after taxes and possible health care upwards of 32.00. Add in business expence such as insurance for your vehicle, liability, workers comp. and then add overhead costs such as shop rent, phone lines, utilities etc.. and you will have an Idea as what you should have charged. I used to chase after the cheap jobs believing that if I had enough of them i'd be ok. I have nothing to show for it now. Do you have any intention of retiring in the future or working forever? Subtracting all the costs of conducting business and how many actual working days you have a year, What are you really paying yourself on those rates? maybe 5.00/hour? keep going that route and you would be better off working for someone else. Until you figure out all your overhead costs and I mean really sit down and factor every thing you won't know how to bill the customer.... ie the stamp used to mail the invoice, a staple used to hold the paperwork together, paper for the regular printer, The time it took for you to figure out what to charge aka the estimate. I personally don't work for free if I can help it.

 

[royster13]

I try to mostly do sales, however, when I do production and/or installation I try for 60.00+ per hour....Plus mileage....

 

[jkdbjj]

Being you did join and pay the dues for the site, Take advantage of the sites resources and post financial number questions in the private area. Your either going to hurt your profitability or improve your status as being a cheap desperate one man operation by customers doing there homework and looking up businesses that they deal with. Remember the time you are billing out needs to be your hourly rate plus any and all taxes associated with that. For example a $20.00/hr employee will cost after taxes and possible health care upwards of 32.00. Add in business expence such as insurance for your vehicle, liability, workers comp. and then add overhead costs such as shop rent, phone lines, utilities etc.. and you will have an Idea as what you should have charged. I used to chase after the cheap jobs believing that if I had enough of them i'd be ok. I have nothing to show for it now. Do you have any intention of retiring in the future or working forever? Subtracting all the costs of conducting business and how many actual working days you have a year, What are you really paying yourself on those rates? maybe 5.00/hour? keep going that route and you would be better off working for someone else. Until you figure out all your overhead costs and I mean really sit down and factor every thing you won't know how to bill the customer.... ie the stamp used to mail the invoice, a staple used to hold the paperwork together, paper for the regular printer, The time it took for you to figure out what to charge aka the estimate. I personally don't work for free if I can help it.

Appreciate the time you have taken to write this. I didn't realize there is a private area for posting numbers.

Again, I hope you all see I am trying to learn. I am not trying to start trouble or anything. I've done the best that I can up til now, and seeing everyone dialog here gives me plenty to think about.
Also, I am not the cheapest guy in town, even though my overhead is low. I have several customers that prefer to work with me simply on quality. I take that quite seriously.
I have always known my approach to the backend has been lacking, so I am taking a good hard, sobering look at that.
Thank you.

 

[Locals Find!]

The numbers I gave you were based on my overhead and expenses. Like the others have said you really have to calculate your own shop rate it may be much higher than mine then go from there.

I know in Gino's case he probably pays more for electric, water & insurance a month than my entire monthly overhead. However, he is also in a larger city and I am in a moderately sized area with 30% unemployment and 1000s of foreclosures with a very low cost of living right now.

 

[Gino]

Being you did join and pay the dues for the site, Take advantage of the sites resources and post financial number questions in the private area. Your either going to hurt your profitability or improve your status as being a cheap desperate one man operation by customers doing there homework and looking up businesses that they deal with. Remember the time you are billing out needs to be your hourly rate plus any and all taxes associated with that. For example a $20.00/hr employee will cost after taxes and possible health care upwards of 32.00. Add in business expence such as insurance for your vehicle, liability, workers comp. and then add overhead costs such as shop rent, phone lines, utilities etc.. and you will have an Idea as what you should have charged. I used to chase after the cheap jobs believing that if I had enough of them i'd be ok. I have nothing to show for it now. Do you have any intention of retiring in the future or working forever? Subtracting all the costs of conducting business and how many actual working days you have a year, What are you really paying yourself on those rates? maybe 5.00/hour? keep going that route and you would be better off working for someone else. Until you figure out all your overhead costs and I mean really sit down and factor every thing you won't know how to bill the customer.... ie the stamp used to mail the invoice, a staple used to hold the paperwork together, paper for the regular printer, The time it took for you to figure out what to charge aka the estimate. I personally don't work for free if I can help it.

This is all so true.

Here's an example... and I have another person on this forum in which I shared this information with, just yesterday, so you know I'm not blowing smoke.

We have a customer in which we do quite a bit of work for. They are among our top 4 or 5 customers. Years ago, when I got my first big guy, I wasn't satisfied having just one, so I went after others. Yes, after nearly 40 years, I still treat this business like day one and I still go out after customers and try to cultivate new ones. I don't sit idle and just hang out on s101. I work for a living and try to make it better everyday.

Anyway, this one customer came to me around Christmas time and to keep me honest, had me bid out our work on this particular job. I put the bid in and out of 6 companies, there was one much higher than me, one far-far lower than me and three others and myself... all within a few thousand dollars of each other. I ended up being fourth as to where our prices were. We got the job because of determination, ability/quality and product knowledge. Not price at all. The job went for $168,000. I just got the deposit check today. We sat in his office for over an hour this morning and talked about all kinds of things. We're already discussing future projects in this same price range and I'm making plans as we speak. In fact, he told me there will be an additional $54,000 package added on to this one in another week. We have other customers like this, but I don't worry a whole lot about the price. You get what you pay for. He then told me how some of the others cut corners and tried all kinds of gimmicks to get the price down and he said, he didn't appreciate that kind of business model. He liked what he's seen with us over the years and knows we will take care of him at every level. I asked him, will I have to bid it out again and he winked and said.... of course. In a few years, but until then, we have a lot of ground to cover.

My point is simple. The only difference between this job and yours is how many zeroes are in front of the decimal point. Mine be 48 times higher than yours, but then I have more overhead, more materials, more labor, more electric, more travel, more everything, but I'm fair and they don't mind paying a fair and competitive price for a well-done job.

So, it you treat your people/customers fairly and give good competitive pricing, you should have no problem taking more money home at the end of the job/day and growing your business in the process.

 

[Gino]

The numbers I gave you were based on my overhead and expenses. Like the others have said you really have to calculate your own shop rate it may be much higher than mine then go from there.

I know in Gino's case he probably pays more for electric, water & insurance a month than my entire monthly overhead. However, he is also in a larger city and I am in a moderately sized area with 30% unemployment and 1000s of foreclosures with a very low cost of living right now.

Addie, to keep this civil, keep your trap shut and don't talk for me. You don't know what you're talking about and you have your facts all screwed up.

The city, Reading, is the top city or almost top city for shootings, killings and we are over 68% Hispanic. Most businesses have moved away in the last 20 or 25 years and there's really not much around here. We are THE highest city in the COUNTRY for people living in poverty under a very low level at about 41%. We have barely 70 some thousand people and like I said.... mostly Hispanic and they don't pay taxes.

So, instead of talking jack, just keep your pie hole shut.

 

[jkdbjj]

This is all so true.

Here's an example... and I have another person on this forum in which I shared this information with, just yesterday, so you know I'm not blowing smoke.

We have a customer in which we do quite a bit of work for. They are among our top 4 or 5 customers. Years ago, when I got my first big guy, I wasn't satisfied having just one, so I went after others. Yes, after nearly 40 years, I still treat this business like day one and I still go out after customers and try to cultivate new ones. I don't sit idle and just hang out on s101. I work for a living and try to make it better everyday.

Anyway, this one customer came to me around Christmas time and to keep me honest, had me bid out our work on this particular job. I put the bid in and out of 6 companies, there was one much higher than me, one far-far lower than me and three others and myself... all within a few thousand dollars of each other. I ended up being fourth as to where our prices were. We got the job because of determination, ability/quality and product knowledge. Not price at all. The job went for $168,000. I just got the deposit check today. We sat in his office for over an hour this morning and talked about all kinds of things. We're already discussing future projects in this same price range and I'm making plans as we speak. In fact, he told me there will be an additional $54,000 package added on to this one in another week. We have other customers like this, but I don't worry a whole lot about the price. You get what you pay for. He then told me how some of the others cut corners and tried all kinds of gimmicks to get the price down and he said, he didn't appreciate that kind of business model. He liked what he's seen with us over the years and knows we will take care of him at every level. I asked him, will I have to bid it out again and he winked and said.... of course. In a few years, but until then, we have a lot of ground to cover.

My point is simple. The only difference between this job and yours is how many zeroes are in front of the decimal point. Mine be 48 times higher than yours, but then I have more overhead, more materials, more labor, more electric, more travel, more everything, but I'm fair and they don't mind paying a fair and competitive price for a well-done job.

So, it you treat your people/customers fairly and give good competitive pricing, you should have no problem taking more money home at the end of the job/day and growing your business in the process.

Maybe I could come visit your business one day, if you ever had an interest in mentoring someone.

Anyhow, thanks again.

 

[allamericantrade]

I think everyone knows you're trying to to learn, don't worry about that!! You soaking in all the feedback and taking it as constructive criticism is a great sign that you'll learn from all this!

I am learning everyday on this site. I have book marked about 30 links in the past 5 days alone. It's somewhat annoying to hear of jobs going that cheap knowing I used to do the same mistakes but my feedback is ment to help you realize which way is up from someone who has been there done that.

 

[Techman]

I know in Gino's case he probably pays more for electric, water & insurance a month than my entire monthly overhead. However, he is also in a larger city and I am in a moderately sized area with 30% unemployment and 1000s of foreclosures with a very low cost of living right now.

I have the pleasure of living on one side of the USA moving from another side of the USA.

Overall and on the average...there is very little difference in the cost of living between one place or another. Cost of living is a non issue for the long term.

One area has a much lower property tax issue.
Food cost differences are not an issue.
Business taxes are a small issue in only the short term.
Insurance is higher in one region but a little lower in another.
Overall it is just about a wash.

And just because a particular region has 30% unemployment does not mean business costs are lower for that same area. If it costs one 70 bux an hour to operate in one region it will cost another near about the same in another region.

And again,,,,just because someone works from a home office and has a lower overhead does not mean he should charge less than the local arena. That is just plain stinking thinking.

 

[Gino]

I have the pleasure of living on one side of the USA moving from another side of the USA.

Overall and on the average...there is very little difference in the cost of living between one place or another. Cost of living is a non issue for the long term.

One area has a much lower property tax issue.
Food cost differences are not an issue.
Business taxes are a small issue in only the short term.
Insurance is higher in one region but a little lower in another.
Overall it is just about a wash.

And just because a particular region has 30% unemployment does not mean business costs are lower for that same area. If it costs one 70 bux an hour to operate in one region it will cost another near about the same in another region.

And again,,,,just because someone works from a home office and has a lower overhead does not mean he should charge less than the local arena. That is just plain stinking thinking.

In one respect, that's all correct, but what I was saying is......

If I, or some other large shop have more electric motors going, more lights on, more compressors going, more staff to pay, higher unemployment, workman's comp and just more in sheer volume, there is an undetermined amount of difference only separated by zeroes.

A friend of mine said to me once, yeah, we do 120 million a year, but my electric cost is $220,000 a month, my payroll for over 100 employees is..... and so on and so on. So when you do the simple math.... proportionately we were doing about the same. And this guy was only 25 miles south of us so our rates were about 99% the same. Just the amount of usage. This guy started his business from total scratch and is now worth mega bucks.