Lets see what YOU would charge to make this unit.......

[Guy Ashley]

The "hourly rate" has many formulas and variations but for what its worth I will give you the way I price and quote/charge

If you are fitting on site you should charge a minimum of GBP150 per day for your labour alone. There must be an equivalent "subbies rate in SA"?

If you are in the workshop it becomes more complicated. In short you should add up all your outgoings, rent, rates, utilities, insurances, annual vehicle running costs, an amount for depreciation/replacement of tools and consumables, and I am sure there are other members who will say don't forget other things.

You end up with an annual figure, divide that by 260 (52 weeks @ 5 days) then divide that by 8 (Hours) and there is an hourly rate that you need to run your business.

You will the need to add on an amount you ideally want to earn a year and do a similar breakdown taking into account tax, health insurance, shoes for the wife, etc.

Add those together and you have an hourly rate to cover your business and living costs.

Only then can you consider your "profit margin" or Festool purchasing pot".

I don't know how competitive you have to price in SA but you may have to adjust your figure according to the job on the degree of difficulty/skill.

I have sat down with a couple of clients who have choked on a quoted price and set this out and when they realise how little you actually pocket from the job they have seemed embarrassed they even questioned it.

That's the way I do it here and my accountant and wife still say I am too cheap but when you are chasing work it is hard not to keep your prices keen.

Hope this helps

Guy    

 

[waynelang2001]

The "hourly rate" has many formulas and variations but for what its worth I will give you the way I price and quote/charge

If you are fitting on site you should charge a minimum of ?150 per day for your labour alone.

If you are in the workshop it becomes more complicated. In short you should add up all your outgoings, rent, rates, utilities, insurances, annual vehicle running costs, an amount for depreciation/replacement of tools and consumables, and I am sure there are other members who will say don't forget other things.

You end up with an annual figure, divide that by 260 (52 weeks @ 5 days) then divide that by 8 (Hours) and there is an hourly rate that you need to run your business.

You will the need to add on an amount you ideally want to earn a year and do a similar breakdown taking into account tax, health insurance, shoes for the wife, etc.

Add those together and you have an hourly rate to cover your business and living costs.

Only then can you consider your "profit margin" or Festool purchasing pot".

I don't know how competitive you have to price in SA but you may have to adjust your figure according to the job on the degree of difficulty/skill.

I have sat down with a couple of clients who have choked on a quoted price and set this out and when they realise how little you actually pocket from the job they have seemed embarrassed they even questioned it.

That's the way I do it here and my accountant and wife still say I am too cheap but when you are chasing work it is hard not to keep your prices keen.

Hope this helps

Guy    

Thanks guy that does help alot, it seems like im going to have to take a loooooong sit down to work this out. In the long run its going to help a great deal because at the moment I still dont know my exact costs. I spend a little here for that extra material and some more over there for the new spray gun and it all adds up. Before you know it you have nothing left for the end of the month ( or FOGtainers ).

 

[ericbuggeln]

You should try to charge the most amount of money humanly possible without offending the client.  That way you really win and they still win bc they got your nice piece.  This only works if you have lots of work to fall back on and want to have a 50% or so acceptance rate.  If you are dying for work, then charge what it costs you to do the job plus a "fair" profit to you.  Eric

 

[waynelang2001]

You should try to charge the most amount of money humanly possible without offending the client.  That way you really win and they still win bc they got your nice piece.  This only works if you have lots of work to fall back on and want to have a 50% or so acceptance rate.  If you are dying for work, then charge what it costs you to do the job plus a "fair" profit to you.  Eric

I think my problem is i look at the way im living and if i could afford it.......but looking at the clients i work for i should charge what THEY can afford, after all they are the ones with big houses and driving around in a BMW X6.

 

[Spike]

You should try to charge the most amount of money humanly possible without offending the client.  That way you really win and they still win bc they got your nice piece.  This only works if you have lots of work to fall back on and want to have a 50% or so acceptance rate.  If you are dying for work, then charge what it costs you to do the job plus a "fair" profit to you.  Eric

I think my problem is i look at the way im living and if i could afford it.......but looking at the clients i work for i should charge what THEY can afford, after all they are the ones with big houses and driving around in a BMW X6.

Nice jobs, big homes, and X6's are becoming a thing of the past here Wayne, terrible terrible economy here. [crying]

 

[nickao]

150.00 for labor alone is per day is 18.75 an hour.  I barley can get to the job for that. 45-60.00 an hour is the lowest I can leave the house for with all my tools. My brother is a laborer with no tools at all and makes about 28.00 an hour. He is just an employee with no other responsibilities, for a person bidding and running a job as owner and supplying tools etc should make at least double that, IMHO.

Possibly there is a regional difference, but I just do not see how any small business owner can pay their bills on 18.75 an hour. After the ins premiums, taxes and incidentals there is about 5.00 an hour left.

I can see maybe if I someone showed up to the job with their hand tools and was just an employee where the company pulled taxes and getting 18.75 an hour(though any carpenter charges me a min of 25.00 around here), but running a job and being self employed it would seem pretty rough at those prices.

 

[harry_]

...Oh and on what i have quoted for this job it comes to $2500 give or take a dollar or two.

Wait, you're say 12 days of your time is only worth $1400?

That depends entirely on what $1400 will buy for him. if rents in S.A. average $150/month as opposed to our $1500/mo then that is half way decent money

 

[-woodsman-]

To me its all about what your worth.  I live in a town of hacks.  It makes me sad sometimes to see the work being done.  I live in the north easter part of the U.S. and we are blessed with beautiful historic neighborhoods in the city and in the suburbs..............  Ohh boy I almost went on a rant there.  Reeled myself back in.  I had to delete a few sentences.  My point is that there are plenty of people here with shops and crews and tools who commit crimes with what they do to these homes.  Not talking about anyone here.  If thats the base line to start from my time is automatically worth more than theirs, IMHO, because I care, do better work, and use the correct materials.  Little rant not a big one.  Same with you. You obviously care about your clients and your work.  As others have said, maybe it was on your other thread(can we combine these oh grate moderators),  check and see what the other guys charge.  I would rather hire the one man local operation for the same over the big shop any day.  especially if they where as good as you.  I think if you just try to grab as much as you can you looses the best clients who will give you years of business.

nickao just saw your post before finishing this one. 28.00 for a laborer, wow. He must be good. I know they work hard.  On my job site there are two and they both probably work physically harder than me every day.  No Definitely work harder than me.  You have made me rethink my hourly rate.  I guess next side job its going up.

 

[-woodsman-]

...Oh and on what i have quoted for this job it comes to $2500 give or take a dollar or two.

Wait, you're say 12 days of your time is only worth $1400?

That depends entirely on what $1400 will buy for him. if rents in S.A. average $150/month as opposed to our $1500/mo then that is half way decent money

You are totaly right harry.

 

[mastercabman]

OK,Not including the material and time to get the material,i would charge around $3700.00/$4000.00

 

[honeydoman]

You should try to charge the most amount of money humanly possible without offending the client.  That way you really win and they still win bc they got your nice piece.  This only works if you have lots of work to fall back on and want to have a 50% or so acceptance rate.  If you are dying for work, then charge what it costs you to do the job plus a "fair" profit to you.  Eric

I think my problem is i look at the way im living and if i could afford it.......but looking at the clients i work for i should charge what THEY can afford, after all they are the ones with big houses and driving around in a BMW X6.

wayne,

that is so true... I think that way alot of the times... and I also need to change my thinking also.  when I was 21 years old back in 1976 I was selling insurance at a draw of $80.00 a week  and so when I would sell a policy to someone... I would only ask for a monthly investment of $20-$25 per month.... as I could not even afford that.... even though most of my customers could afford much more every month.. but I did not ask...

so thanks for posting that statement !  it makes me think also.

 

[WarnerConstCo.]

Also, how do you think they got that big house and the x6?

Have the desire to be the person that people say, "I hope we can afford him".

Don't do it all at once but, raise your prices 2 times a year for a couple years and then see how things are working out and plan from there.

 

[Corwin]

You should try to charge the most amount of money humanly possible without offending the client.  That way you really win and they still win bc they got your nice piece.  This only works if you have lots of work to fall back on and want to have a 50% or so acceptance rate.  If you are dying for work, then charge what it costs you to do the job plus a "fair" profit to you.  Eric

I think my problem is i look at the way im living and if i could afford it.......but looking at the clients i work for i should charge what THEY can afford, after all they are the ones with big houses and driving around in a BMW X6.

Your potential customers that live in those big houses and drive those BMWs didn't get there by paying the most amount of money humanly possible for their purchases.  Yes, you should ask a fair price for your work, and it sounds as if you are not currently charging enough.  But, don't price yourself out of business either.  Do take in consideration all the expenses that you will have, as mentioned here and on your other thread, and don't sell yourself short.  But, again, don't overprice your work either.  You should take the time to check what your competition charges for similar work.  Many have replied with pricing based on the type work they do -- but, in many of these replies, they are not doing the same type work as you, so those rates may not apply.

 

[WarnerConstCo.]

If you get more then 5/10 jobs, unless for repeat clients, you should raise your prices.

 

[Mr. Jeff Smith]

I will never understand that statement, I guess . To me, my way of thinking it is the only way to keep the business viable so that it can ever be all it can be. It is the long term view.

I would  like to hear your comments NOT from a  a corporations point of view that may have a duty to use is excessive profits to help the community, but from a small businessman's standpoint that has to succeed to pay for his own family's bills as well all his employees bills.

Hi Nick.  Without getting the thread to off topic, I believe there are many instances where it makes sense to not charge "as much as humanly possible" as you indicated in your original thread.  Being brief about this, I agree as a business owner you want to maximize profits, my argument centers around the idea that maximizing profit often take the form of not "charging as much as possible". 

For example, by providing a service that covers your costs, provides a nice profit margin, but does not necessarily charge the maximum a customer is willing to pay, you can receive increased word of mouth leading to your next job.  2 jobs @ 1k profit each > 1 job @ 1.5k profit.  Further, by charging a lower cost you increase likelihood of repeat business and reduce likelihood of "warranty complaints" all driving higher net profits.  Fundamentally this is a long term perspective vs a short term perspective in my mind.

Certainly if you are always so busy you cant take all jobs, a price increase is order.  However, I did not get the sense that the OP was in that situation. 

 

[waynelang2001]

Hi Nick.  Without getting the thread to off topic, I believe there are many instances where it makes sense to not charge "as much as humanly possible" as you indicated in your original thread.  Being brief about this, I agree as a business owner you want to maximize profits, my argument centers around the idea that maximizing profit often take the form of not "charging as much as possible". 

For example, by providing a service that covers your costs, provides a nice profit margin, but does not necessarily charge the maximum a customer is willing to pay, you can receive increased word of mouth leading to your next job.  2 jobs @ 1k profit each > 1 job @ 1.5k profit.  Further, by charging a lower cost you increase likelihood of repeat business and reduce likelihood of "warranty complaints" all driving higher net profits.  Fundamentally this is a long term perspective vs a short term perspective in my mind.

Certainly if you are always so busy you cant take all jobs, a price increase is order.  However, I did not get the sense that the OP was in that situation. 
[/quote]

You have a valid point there Jeff, I dont think people would come back to often for more work if they fell you cleaned them out the last time, its a fine balance between profit and repeat business.

 

[Mac]

I will never understand that statement, I guess . To me, my way of thinking it is the only way to keep the business viable so that it can ever be all it can be. It is the long term view.

I would  like to hear your comments NOT from a  a corporations point of view that may have a duty to use is excessive profits to help the community, but from a small businessman's standpoint that has to succeed to pay for his own family's bills as well all his employees bills.

Hi Nick.  Without getting the thread to off topic, I believe there are many instances where it makes sense to not charge "as much as humanly possible" as you indicated in your original thread.  Being brief about this, I agree as a business owner you want to maximize profits, my argument centers around the idea that maximizing profit often take the form of not "charging as much as possible". 

For example, by providing a service that covers your costs, provides a nice profit margin, but does not necessarily charge the maximum a customer is willing to pay, you can receive increased word of mouth leading to your next job.  2 jobs @ 1k profit each > 1 job @ 1.5k profit.  Further, by charging a lower cost you increase likelihood of repeat business and reduce likelihood of "warranty complaints" all driving higher net profits.  Fundamentally this is a long term perspective vs a short term perspective in my mind.

Certainly if you are always so busy you cant take all jobs, a price increase is order.  However, I did not get the sense that the OP was in that situation. 

Jeff, I agree with everything you say here. To me, the long term perspective is based on having respect for your customer (and vice versa), and charging as much as possible doesn't seem easily reconciled with this philosophy. 

Rick

 

[WarnerConstCo.]

Then you might as well donate it.

What is the point of working if you don't make any money.

Paying bills and making wages is not making money.

Being able to set back money in savings and have it for other things is making money.

Plus- you should be charging for those nice renderings you are doing.  I would think at least 150.00 bucks.

 

[Mac]

Warner,

I think you're oversimplifying.  Seems to me that three positions have been described:

1. 'Donating' it...undercharging and making just enough to survive

2. Knowing your value and charging accordingly; making a good profit and good living and leaving customers feeling they've still had good value for their dollar

3. Charging the most you possibly can, or 'as much as humanly possible'

There's a big difference between 1 and 2, (which is where most highly successful corporate and smaller businesses seem to fit best) which you seem to ignore!

Cheers,
Rick

 

[nickao]

Number 2 and 3 are the same.  

Charging as much as possible should be a value to the consumer and give a good profit. Anything less than as much as you can get you left money on the table.

Charging as much as humanly possible and NOT getting the job is where it is wrong. The point is to charge as much as you can while making sales. No one pays something they feel is to much. They move on. And you NEVER want to get into the client saying I would have paid 2000.00 more which has happened to me and will never happen again and hasn't.

I find almost 80% of the people want to negotiate and if you give them the best price first they pass when you do not budge even if it was the best deal they could find.

I find that many people do the opposite, they do not oversimplify, they make it way to complicated. KISS.