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NightScenes
07-29-2008, 08:58 AM
Ok, so I see threads on here all the time talking about pricing out jobs and I have never once seen anyone mention insurance as a cost of doing business. I carry $3 mil in general liability and I also carry workers comp. The cost for this alone is over $1200 a month. Do the rest of you carry all of this insurance? If so, don't you pass this on in your pricing?

INTEGRA Bespoke Lighting
07-29-2008, 09:26 AM
Paul, we are fully insured, like you.

All of my soft costs are passed along in each day of work on a site. Your cost of doing business should be factored into your operations.

Take all of your soft costs for the last year. I mean all of them: Phone, Insurance, Rent, Marketing, Safety Gear, everything except labour, materials and trucks. Now you have a number to work with. Say it is 100,000.00 bucks.

Now figure out how many days you were open for business last year. Call it 250 days.

Now divide your total soft costs by the number of days open. $100K / 250 = $400 per day. This is what it cost you to open your door for business.

So if you are on an installation that takes 5 days. You should be factoring in your cost of operations into the quote. 5 days x $400 = $2000.00 Start your quote with this. then add the job specific costs.

If you are not doing this, then it is you who is paying for the operation expenses of your business. Many small business owners do not know of this or do not practise it. Then they are surprised at the end of the year to see how small their NET profit is.

Hope this helps.

AI Inc
07-29-2008, 09:32 AM
You may want to shop around a little Mine is $8k annualy for comp , GL and 3 trucks, 2 with full coverage.
$4k less then I was paying last yr after putting iot out to bid this past winter.

NightScenes
07-29-2008, 10:13 AM
My comp is around 8k but I also have the liabilty. I didn't even include the insurance for the three trucks and a trailer. Then there's the insurance for my office and storage space...

AI Inc
07-29-2008, 10:20 AM
How much payroll is that on?

NightScenes
07-29-2008, 10:23 AM
About $250k I think. I don't have it in front of me right now.

AI Inc
07-29-2008, 10:25 AM
ok, that does sound right in line.

S&MLL
07-29-2008, 02:22 PM
2 mil general liability-Workman's comp-2 trucks 1 with full coverage. Somewhere around 950 a month. Although payroll not as high as you Night scenes.

Chris J
07-29-2008, 04:42 PM
Paul, we are fully insured, like you.

All of my soft costs are passed along in each day of work on a site. Your cost of doing business should be factored into your operations.

Take all of your soft costs for the last year. I mean all of them: Phone, Insurance, Rent, Marketing, Safety Gear, everything except labour, materials and trucks. Now you have a number to work with. Say it is 100,000.00 bucks.

Now figure out how many days you were open for business last year. Call it 250 days.

Now divide your total soft costs by the number of days open. $100K / 250 = $400 per day. This is what it cost you to open your door for business.

So if you are on an installation that takes 5 days. You should be factoring in your cost of operations into the quote. 5 days x $400 = $2000.00 Start your quote with this. then add the job specific costs.

If you are not doing this, then it is you who is paying for the operation expenses of your business. Many small business owners do not know of this or do not practise it. Then they are surprised at the end of the year to see how small their NET profit is.

Hope this helps.

So how does one show these costs on the estimate? Do you have a line item called "cost of operations", another for materials, and another for labor? I try to factor in all of the costs associated with doing business, but my proposals are in the most simplistic form. Only the number of fixtures/transformers along with the wire footage and any boring necessary then a total cost. I'd very much like to see a sample bid to get some ideas for changing my forms.

JeffY
07-29-2008, 05:51 PM
What we do is take what material we would use, then charge a percentage of "overhead recovery" which is what it would take to run the business. Since we have various operations of maintainence, irrigation, landscape, and hardscape, each one has their own overhead recovery percentage. Then we find our labor and how long it would take. Labor should be cost of the hire plus all other thing associated with that such as insurance. We also have an overhead recovery percentage on labor. Then we factor in the overhead recovery on equipment used. This method is part of the Vander Koi method that my boss employs. It works well for us because of its multiple recovery percentages. It took a long time to find out the percentages, but once we were comfortable with our percentages, we stuck with it.

One key thing is, we don't show the client itemized costs in our proposal and instead the total cost. We have noticed that some clients are going to ask why they are charged this much for an item when they can get it cheaper somewhere else. So we just give them two figures, one for the deposit and one for the total cost of the installation.

NightScenes
07-29-2008, 05:54 PM
Texas does not require contractors to carry workers comp so I really don't know many who do. Actually, I don't know any who do which means when I sub some things out I have to cover them as well. It does mean that I have to charge quite a bit more than my competition though.

How about the rest of you guys out there, who is/isn't insured and are you figuring that into your proposals?

S&MLL
07-29-2008, 08:10 PM
I know what my overhead is. So I take that number divided by average jobs a month. So for every estimate i incorporate That percent into that bid. Now if I didn't I would be having do add an extra 2100 into the last job of every month. Not sure if that makes sense to everyone. On a side note does anybody have a small business phone system in place. Im looking to have something a little better then your standard voicemail. But every system I have seen is around 1800 or so. Seems quite expensive for 2 phones and a little control box.

TXNSLighting
07-29-2008, 08:30 PM
I had insurance first thing! Didnt want to do any installs without it.

INTEGRA Bespoke Lighting
07-29-2008, 09:02 PM
So how does one show these costs on the estimate? Do you have a line item called "cost of operations", another for materials, and another for labor? I try to factor in all of the costs associated with doing business, but my proposals are in the most simplistic form. Only the number of fixtures/transformers along with the wire footage and any boring necessary then a total cost. I'd very much like to see a sample bid to get some ideas for changing my forms.

I dont show these or any other costs on the Quote (I dont provide estimates, only quotes and contracts) I keep things very simple on the contract.

"The custom lighting system as laid out in the attached specification can be installed for $xx,xxx.xx plus GST of $xxx.xx" Thats it, thats all.

Simplify your quoting and contracts Chris... makes life so much easier.

Does a portrait artist tell you how much paint, brushes, canvas, and labour will be? Or do they just tell you it will cost X.

Chris J
07-29-2008, 09:47 PM
As I said, my "quotes" are also very simplistic. I simply like the idea of letting the customer know what they are getting in terms fixtures quantity and transformer zones. I don't itemize anything, it simply says the lighting system will consist of X number of fixtures and X number of transformers with estimated wire. There is no labor cost shown.
Thanks for the suggestion though.

David Gretzmier
07-29-2008, 11:13 PM
It blows my mind Texas does not require workman's comp. Arkansas does. Since we get on roofs and do Christmas lights, I can't even imagine going without it. we have 2 mill in umbrella/liability protection, and workman's comp. I believe mine is down this year, no accidents last year. it goes into the overhead bucket along with all other costs. I think I pay an average of around 700-800 per month, but I pay per quarter and it varies based on payroll, so I may be off.

Terradek
07-30-2008, 11:31 AM
Jeffy in post #10 mentions the Vander Koi method of capturing variable, semi variable and fixed costs. For those of you who are thinking of attending the
'09 AOLP Conference in Scottsdale, we are currently in negotiations with Charles Vander Koi to conduct his seminar at the conference...One more reason to consider membership in AOLP. Vander Koi is probably the best known green industry consultant in the business...so bring your questions and financial statements.

Gerry De La Vega
AOLP, CLVLT #0404

The Lighting Geek
07-31-2008, 01:31 AM
CA requires workmans comp and most companies require 2 mil aggregate liability general and vehicles. Everyone I have done work for also requires to be named insured. I use a labor company just for payroll and they cover the workmans comp and liability of the workers. I carry 1 mil on my each truck and max medical. CA is famous for lawsuits. I am switching to in house workmans comp to save some money here shortly. Soon I will be sitting by the on ramp to the highway with a sign 'I work for insurance payments' LOL

irrig8r
07-31-2008, 02:39 AM
Watch out for "experience modification"... back when I ran maintenance crews, a handful of poison oak exposures and one back injury was enough for them to penalize me by doubling my rate from the standard 12.5% to 25% of wages for a year, and then dropping it in increments over 3 or 4 years back to the standard rate. Cost me a bundle.

ixlr8
08-02-2008, 11:09 PM
I am in the beginning stages of setting up a LCO, plan on being a solo operator... I presently work in the corporate world... want out ASAP. In all my searches I have not seen any mention of what folks do for health insurance. So where do you go to get health insurance, assuming you have health insurance, especially the solo guys. I have made a few inquiries into getting health insurance and the costs are a bit scary!! :eek:

Chris J
08-02-2008, 11:37 PM
Before my divorce, I was covered under my wife's policy through her work. I'm now in the same boat as you will be, so I'm looking forward to hearing what some of the others will have to say. Just to clarify, we are talking about solo or 1-3 man operations. I know some of the guys with large corps handling a variety of services will probably have a group policy for themselves and their employees. Not talking to you folks at this time.

klkanders
08-03-2008, 02:52 AM
I am one of those fortunate guys to be covered under my wife's policy. Around here there are insurance providers that offer plans for small businesses. I am not entirely sure how it works but imagine they can do this with competitive rates if they service alot of companies. Ask and shop around in your areas for something similar. Try to go with something local where you can sit down face to face with an agent so they can see what your true needs are.
Good Luck!

Keith

irrig8r
08-03-2008, 02:59 AM
Talk to your accountant to see which health insurance costs are tax deductible. Look into HSAs or health savings accounts too.

http://www.treas.gov/offices/public-affairs/hsa/

ixlr8
08-03-2008, 07:31 AM
I am one of those fortunate guys to be covered under my wife's policy. Around here there are insurance providers that offer plans for small businesses. I am not entirely sure how it works but imagine they can do this with competitive rates if they service allot of companies.
Keith Keith, I have a friend that started her own business, she went through a Small Business Group... rates seemed good... until she started needing coverage... then found out it didn't cover much. Another friend of mine has his through the local Chamber of Commerce, I never heard of such a thing. Only thing is, he is in a large city... my rural area does not have a CoC. Still looking for an accountant I can trust. My friend lost hundreds, if not thousands, of dollars to accountants not doing their job properly... so I am a bit cautious.

NightScenes
08-03-2008, 09:29 AM
I have our health insurance through the NASE (National Association of the Self Employed) www.nase.org .

INTEGRA Bespoke Lighting
08-03-2008, 09:56 AM
I am in the beginning stages of setting up a LCO, plan on being a solo operator... I presently work in the corporate world... want out ASAP. In all my searches I have not seen any mention of what folks do for health insurance. So where do you go to get health insurance, assuming you have health insurance, especially the solo guys. I have made a few inquiries into getting health insurance and the costs are a bit scary!! :eek:

I would suggest you move and become a citizen of Canada, or Cuba. :canadaflag:

The health insurance issue becomes less of a concern in a compassionate democracy. :laugh:

Have a great day.

NightScenes
08-03-2008, 10:24 AM
I know a LOT of Canadians and they have all told me that we have a better system here. This is just what I've been told by folks that I know and I'm not trying to bash our friends to the north.

INTEGRA Bespoke Lighting
08-03-2008, 10:33 AM
There is good and bad on both sides Paul... I was just making some fun with my comments.

Now c'mon up here and buy some pharmaceuticals for prices that do not include options on your first born! LOL

NightScenes
08-03-2008, 01:01 PM
I do understand about those medications, we pay through the nose!