Thread: Bidding a job
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Old 10-16-2011, 01:19 AM
David Gretzmier David Gretzmier is offline
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Join Date: Mar 2001
Location: Fayetteville,AR
Posts: 3,656
You have direct costs and overhead costs. You will need to recover all direct costs on each job, plus a portion of overhead on each job. I recover that by assigning overhead costs to shop and then taking a percentage of shop space used based on space available verses average cubic foot storage per customer. I think you may be taking overhead and trying to apply it all to one customer. If you only have storage space for 20, 50, or 100 customers, you can use those numbers to divide it if you wish. But the idea is to pric e jobs to be able to capitalize growth as it happens. The only way to do that is to recover 100% overhead costs right around the time you need to buy another truck or shop. That is why my overhead seems high right now, my new building is at less than 1/2 capacity, yet I still have to recover all the costs from my existing customers and turn a profit. The time when your overhead recovery is the highest and profit at the lowest is at at low utilization rate of assets like shop and trucks. But as the trucks and storage get close to 100% utilization, overhead on a per customer basis goes down and profit per customer goes up.
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