Fri, Dec 10, 2004, 3:25pm (EST+5) snipped-for-privacy@verizon.no.spam.net (Mark=A0Jerde) says: I prefer things I can recognize:
Yeah. I still remember my first visit to the Smithsonian gallery. I was able to recognize different artists' styles clear across the room, and actually know who the artists were before I got close enough to read the little plaque. Wonderful.
JOAT Remember: Nova is Avon, spelled backwards.
Fri, Dec 10, 2004, 10:03am snipped-for-privacy@leevalley.com (Robin=A0Lee) interprets: Hmm ... Karma... Tibetan for "able to sleep well at night"....
I always wondered what that meant, and where it came from. LMAO
JOAT Remember: Nova is Avon, spelled backwards.
I remember, vaguely, from my Accounting 101 and 102 courses, that there is the possibility of a line item for "Good Will" that could be a negotiating point in the sale of a business - then again, I may have been smoking dope that day.
Regards, Tom.
"People funny. Life a funny thing." Sonny Liston
Thomas J.Watson - Cabinetmaker (ret.) tjwatson1ATcomcastDOTnet (real email)
Fri, Dec 10, 2004, 12:34pm (EST-1) snipped-for-privacy@interoz.com (John) says: Depends on how you quoted the price. If you just quoted $900 for the project, then I agree, you feel into a deal and made $200 more profit than originally anticipated.
In theory, I can agree with that. But, if it came down to practice, I would probably just drop the price anyway. Karma. If I were making my living that way, I'm sure I would stay with the original price, but I don't, so moot point.
However, if you priced it with the material cost broken out seperate from the labor, then the price SHOULD drop by the $200, otherwise you are essentiall STEALING from the customer
Agree. Even so, on a personal level, that's also basically how I'd feel by not passing along the saving in either case. Karma again.
JOAT Remember: Nova is Avon, spelled backwards.
Sam:
What follows is a repost of something that I put up a couple of years ago.
I reckon it still holds true.
It is interesting to me in reading this thread that people confuse cost and price.
You must know your cost.
It does not always have to determine your price.
The price may be a multiplier of the cost, or it might be the perceived value of the item or service - but must always exceed the cost - if you would like to be in business.
In direct response to your query about the thirteen year old person - I would seek to do that for free, in hopes of luring bigger and more profitable fish.
Kindness is a great lure.
Formula is:
M+L+O+P (Materials plus Labor plus Overhead plus Profit)
MATERIALS COST = Cost plus Tax plus Acquisition Cost (going to get it) plus carrying costs if financed. Make sure you do your take-offs cleanly and add for waste.
LABOR COST is a bit more difficult. You need to break the job down into individual operations and make sure that you charge for all of them.
Once you have your number of hours figured you need to figure your shop rate.
Maximum number of hours available for work = 2080 (52 weeks x 40 hours = 2080 hours). Minus vacation time = 2000 (2 weeks x 40 hours = 80 hours). Minus holidays = 1944 (7 days x 8 hours = 56 hours).
Minus non-billable hours = 1555 (20% of 1944 hours = 388.8 hours) (marketing, selling, bidding, bookkeeping, purchasing, emptying spittoons, etc.)
So, you now have 1555 billable hours in which to earn your money for the year.
How much do you want to make a year as your wage (not including profit, that's a different animal)?
Let's use $50,000.00 a year just for fun.
Labor Cost per billable hour = 32.15 ($50,000 / 1555 billable hours = $32.15 per hour).
OVERHEAD COST = All the costs of doing business. Some of what I put here should go into a thing called Labor Burden but screw it, I'm putting it here, which works if you're a one man shop.
Shop Cost = 3.86 (We'll include heat and electric, etc. in here, $500.00 per month x 12 months / 1555 billable hours = $3.86 per hour). Machinery Cost = 1.29 (Acquisition, repair, maintenance,depreciation, $2000.00 per year / 1555 billable hours = $1.29 per hour). Truck Cost = 2.22 (34.5 cents per mile x 10,000 miles per year / 1555 billable hours = $2.22 per hour). Office Cost = 1.16 (Space, furniture, computer, supplies, etc.$150.00 per month x 12 months / 1555 billable hours per year = $1.16 per hour). Insurance = .64 (Contractor's Liability, building, etc., $1000.00 per year / 1555 billable hours = $.64 per hour). Health Insurance = 1.93 ($250.00 per month x 12 months / 1555 billable hours = $1.93 per hour). Professional Services = .64 (Accountants and lawyers, $1000.00 per year / 1555 billable hours = $.64 per hour). Other = .5 (All sorts of consumables and other stuff that can't be directly billed to a job, $.50 x 1555 per billable hour = $.50 per hour).
Total Overhead per billable hour = $12.24.
Labor Cost plus Overhead Cost = $44.39 (Labor @ $32.15 plus Overhead @ $12.24 = $44.39)
PROFIT is not how much you make as wages, it's how much the business makes.
A rough split on the cost of jobs is 1/4 material and 3/4 labor (Labor Cost plus Overhead Cost).
If your yearly billing for labor plus overhead is $69,026.00 ( $44.39 per billable hour x 1555 billable hours = $69,026.00). Then your yearly materials cost should be about $23,009.00 ($69,026.00 / 3 = $23,009.00).
Annual Sales = $92,035.00 (Does not include profit, yet, Labor @
$69,026.00 plus Materials @ $23,009 = $92,035.00 per year).
Profit = 8.88 (15% of gross annual sales, $92,035.00 x 15% = $13805.00 / 1555 billable hours = $8.88 per hour).
SHOP RATE = 53.27 (Labor Cost plus Overhead Cost @ $44.39 plus Profit
@ $8.88 = $53.27 per hour). ANNUAL SALES = $105,840.00 (Labor Cost plus Overhead Cost plus Materials Cost plus Profit).
QUARTERLY SALES = $26,460.00.
MONTHLY SALES = $8820.00.
WEEKLY SALES = $2035.00
Every time I start thinking like this it makes me want to go back to working for somebody else.
I'll probably catch hell for this because no accountant would ever group things together the way I have. Also, they don't, as a rule, make as much use of the WAG method as I have for cost estimating. They like GAP, I like WAG (they be rich - I be poor). I guess my point is: If I'd had someone present things to me in this way when I started, I probably wouldn't have started at all but, at some point you have to start thinking this way, preferably with the aid of a real accountant, or you won't really be in business, you'll just have a very expensive, very time consuming hobby. And, for you guys who think that 15% is a gaudy figure, yeah, so do I.
Regards, Tom.
"People funny. Life a funny thing." Sonny Liston
Thomas J.Watson - Cabinetmaker (ret.) tjwatson1ATcomcastDOTnet (real email)
Holy Cow! $1600 didn't even cover the materials for my roof. At ~$45 per square for 30 year Architectural Shingles, my shingles alone came to about that. You must have a very small roof area to have gotten tear off, felt, shingles, minor repairs and clean up for that.
Honestly, any half way decent roofer ought to be able to lay down a roof without lines and have it come out perfect. As long as the roof is reasonably square to start with. Everything just follows the tabs or is cut in repeating increments as you go across the roof and they lay out to follow the shingle below them.
A favor JT - can you configure your newsreader to put in some sort of character to indicate the text you're including from a previous post? (The way that I inserted the > ahead of your comments). Your posts can become very difficult to follow - especially when you place comments interspersed within a previous poster's comments. That's the way comments should be placed (interspersed), IMHO, but it gets really hard to follow yours without clear indication where the original poster's comments left off and yours begin.
The term "unskilled labor" has a specific connotation in the construction trade. My wife, a 10-year veteran in construction management for a *very* large construction company, assures me that roofers are considered unskilled labor. Does it mean that some aspects of roofing are not difficult? Of course not.
designer/maker
I picked up some very beautiful quilted maple boards a while back. I paid $2.50 to $3.00 a board foot. I have yet to see any as nice as mine at any price.
So if I make something with it for someone I should charge that much? I don't think so!
I will not likely ever get a deal like that one again. I treasure the stuff and intend to charge what it is worth. I think it muct have been my good Karma to have found it.
What do you think about that?
Loretta
I picked up some very beautiful quilted maple boards a while back. I paid $2.50 to $3.00 a board foot. I have yet to see any as nice as mine at any price.
So if I make something with it for someone I should charge that much? I don't think so!
I will not likely ever get a deal like that one again. I treasure the stuff and intend to charge what it is worth. I think it must have been my good Karma to have found it.
What do you think about that?
Loretta
Sat, Dec 11, 2004, 1:50am (EST+5) snipped-for-privacy@sprintmail.com (Mike=A0Marlow) is astounded: Holy Cow! $1600 didn't even cover the materials for my roof.
My house is 24'X48'. Yours is probably bigger. I live in NC. You probbly don't.
A favor JT - can you configure your newsreader to put in some sort of character to indicate the text you're including from a previous post? (The way that I inserted the > ahead of your comments).
Well, when I read your post, I don't see any >. My system won't allow anything fancy, it still runs on steam. So, I SNIP, and indent my comments. That's the best I can do, and has been no problem.
JOAT Remember: Nova is Avon, spelled backwards.
Fri, Dec 10, 2004, 8:00pm (EST-1) snipped-for-privacy@yahoo.com (Todd=A0Fatheree) says: My wife, a 10-year veteran in construction management for a
*very* large construction company, assures me that roofers are considered unskilled labor.Yup, sounds like a management call. Don't have to pay as much that way.
JOAT Remember: Nova is Avon, spelled backwards.
Fri, Dec 10, 2004, 6:40pm (EST-3) snipped-for-privacy@gmail.com wants to know: I picked up some very beautiful quilted maple boards a while back. I paid $2.50 to $3.00 a board foot. . I treasure the stuff and intend to charge what it is worth. I think it muct have been my good Karma to have found it. What do you think about that?
I think it's a different situation. You own it, so you're entitled to make a reasonable profit from it. Your customers will expect to pay a realistic price for it.
The other was talking about giving a quote for making a piece of furniture, then finding out the materials cost was lower than originally anticipated. In that case, I think the right thing to do is pass the savings along to the customer.
Different. In your case, you already have the materials. In the other, the materials will be bought for a specific project. You have the tight to charge what you consider right for your property. You don't have the right to charge extra for materials bought for a specific project.
You are going to make a small sacrifice of a few board feet of that to the Woodworking Gods, right? Just let me know when you're sending it, and I'll give the shipping address. Just send it along to me, High Priest of the Woodworking Gods, and I'll take care of all the administrative details. Remember, for safety's sake, don't attempt sacrifices at home.
JOAT Remember: Nova is Avon, spelled backwards.
This is a keeper. Best explanation to date. I see I'm not charging enough!
Thanks Tom Gary
Tom Wats> >
Yeah, because management decides what to pay roofers, not the union here in Chicago. Try getting a clue.
todd
Not everyone lives in Chicago. Plenty of non-union roofers in my area.
I was talking about my wife, who works in Chicago. JT responded about my wife. My comment was made in that context. There are plenty of non-union roofers in Chicago, but all of the ones my wife works are unionized and management doesn't decide what to pay them all by themselves as JT asserted. They have representation by the union to negotiate their wage.
todd
Sat, Dec 11, 2004, 9:17am (EST-1) snipped-for-privacy@yahoo.com (Todd=A0Fatheree) says: Yeah, because management decides what to pay roofers, not the union here in Chicago. Try getting a clue.
I've got a clue, that's why I not only don't live anywhere near Chicago, I don't live anywhere near Illinois.
Union roofers, but management only pays what management wants, eh? Be interesting if they go on strike.
By the way, the roofer that did my roof isn't union, he's self employed.
JOAT We cannot direct the wind, but we can adjust the sails.
- unknown
Sat, Dec 11, 2004, 10:16am (EST-1) snipped-for-privacy@yahoo.com (Todd=A0Fatheree) says: management doesn't decide what to pay them all by themselves as JT asserted. They have representation by the union to negotiate their wage.
That isn't the way it came across.
JOAT We cannot direct the wind, but we can adjust the sails.
- unknown
For the sarcasm-deprived, that was my point.
Your response to my post was about my wife's experience, so unless your roofer has worked for her, it's not very relevant.
todd
btw, the last word is yours, if you want it. I'm tired of fixing your posts so that they're readable. I realize it's probably a WebTV thing, but it's still a PITA.
todd
I hope at least one of the roofers on the job is "skilled" . Yes, the remainder can be your general grunts.
Amazingly, when I was doing my roof last year I had several "gentlemen" walking by who thought to help a lady in distress (the distress being that I was a "lady" roofing) and offer their expert knowledge in how to lay a roof. What I really needed was the guy who'd be willing to haul the shingles across the frigin' roof and heave 'em into the dumpster. But, that don't pay as well...
Renata
HomeOwnersHub website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.