Thread: Bidding a job
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Old 10-13-2011, 02:24 AM
David Gretzmier David Gretzmier is offline
LawnSite Gold Member
Join Date: Mar 2001
Location: Fayetteville,AR
Posts: 3,645
Your best bet is to install your own house or a friends house and track everything. add up all clips, c-9 cord, cords, 3 ways, timers, spool to put them on when done, instruction labels, labor up , down, and labor time to drive there and back twice ( remember, install and takedown), time to pack and label, cost of a box or 2 for cords or garland, mini lights etc, and the labor time unload and warehouse at shop. , gas, portion of ladder purchase, plugs, bulbs, figure 2 hours drive and work labor and a few bulbs times 2 service calls per customer. you will go down to 1 service call per customer after 3 years or so. it will start going up on older customers in year 7. I would also include some cost here is inventory that does not get used. example- you will have some c-9 cord that you will throw away from time to time. 3 feet, 8 feet, etc. you will always have to carry some bulbs, cords, clips etc, that you have to pay for and keep replenishing in inventory. you will not run out of everyting perfectly at the end of the season.

and then don't forget to add a few hundred bucks per customer for overhead recovery for advertising, cell phones, jobsite and management vehicle depreciation, shop foreman and secretarial, liabaility insurance, workman's comp, umbrella for fire protection on homes you install, and theft/fire insurance for storing at shop. include around 60 cubic feet of shop warehouse rack space (try to think of the cost of large wood shelves or pallet racks, those are common) per customer to figure a cost of warehouse rent or buy. in my case, yearly overhead recovery often exceeds the cost of materials on the job on the first year of buying materials. don't forget it. we honestly have tens of thousands in overhead recovery because we track it. and we recover it.

and then you add what you need to make on the job in pre tax profit. this number also represents what other costs come from if you have forgotten any. This is what you feed your family on and pay with and represents your risk of ownership in this business. what do you like to "take home" per day?

and then divide that final number by how many feet you got up.

I find that my consulting clients that are honest with themselves about the costs will be shocked by how much they have to charge. most were at 2-4 bucks per foot before adding it up. And hey, that is what their competition charges, right?

I will tell you that we charge $6.50 per foot the first year and 3.25 per foot thereafter. After tracking the costs for several years, I know that this year or next we need to go to 7 and 3.50 or we will start being unable to recover overhead. The profit margin for us at 6.50 is pretty thin right now. but, our overhead recovery currently reflects we are sized to grow to double our size right now from our recent shop. Your cost per cubic foot of shop space may very well be lower than me. our average cost per cubic foot will go down as we add customers and fill up empty space. but trucks will be added, insurance tends to be linear with payroll, etc.

good luck.
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