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  #1  
Old 11-24-2013, 03:23 PM
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ksss ksss is offline
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Developing a pricing structure.

Given the interest in the operating costs thread, and some of the thoughts that were generated, I thought maybe a thread devoted to pricing might be in order. Here are some of my very random thoughts.

I think we all likely have different restrictions on how we price work. Here basements are bid by the square foot. Utilities assuming a standard install are by the LF. Concrete prep is by the SF. and so forth. I prefer bidding like this I incorporate my mob, costs and profit into a unit price. The biggest advantage is my late model machines and the productivity they bring benefits me.

By the hour work. I try to avoid it. Often I get the call "what do you charge per hour to do this job"? My standard response is, my hourly depends on the machines used, your location and so forth. I can take a look at your job, and give you a solid price on what it would take for me to do it. This usually works, but it takes time and money to run bids. Charging to do bids in my view is a death sentence.

Than there is the what I call the "come and do" jobs. Usually tends to be established customers both contractors and residential customers. Sometimes I will give a number before we show up, but sometimes we just do it and bill it by the hour. Here is where your productivity works against you in the sense that the more productive you are the less money you make. The upside is, you likely have a very happy customer who keeps using you. MOB has to be included in these jobs, as well as a minimum rate for those real small jobs.

Lastly there is change orders to larger jobs. Depending on the customer, this is a precarious issue. Many GC watch change orders very close, meaning you need to document and be able to justify changes to your written bid. Sometimes I just put a number on a change order, especially if its complicated. However if its simply equipment time, than I have less issue if I use an hourly equipment rate to price the change order.

Any one have any thoughts?
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Old 11-24-2013, 10:21 PM
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alldayrj alldayrj is online now
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I like this stuff, but pricing is like handwriting, no two people do it quite the same. I have minimums set for anything just to show up with the machine whether its for an hour or a day. You figure out if youre making enough after you screw up a few times or have to buy tires etc.

I personally know what i can do in a day, and i know what i want to make in a day, and set the price. The only work i do by the hour is snow. I work for some other contractors on jobs that i dont see before hand but they also have a feel for what i can do. I give them 8 hours for a set flat rate just using forks and a bucket, $100 an hour overtime if we run long.

New customers love to call and ask about my day or hour or sf price and im always higher than the other guy they talked to but im happy to spend 5 mins on the phone and explain that this is what i do full time, and ive been operating for 15 years etc.

Very rarely are my jobs strictly bobcat work, i always try and get my guys working or upsell some brick or concrete, topsoil etc.
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Old 11-24-2013, 10:33 PM
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Interesting on the overtime charge. I have not done that in the past, but this year it has been an issue several times on cost plus jobs. I just had never charged for it, but I have this year. I had just adjusted the schedule or ate it if that was not possible which was dumb in the past.
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Old 11-24-2013, 10:51 PM
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alldayrj alldayrj is online now
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These guys do concrete and brickwork so i would go rip out two or three driveways in a neighborhood, or a driveway walkway and patio etc. if i finished in 2 hrs or 8 hrs i still got my number. They were happy i was done early so they could start working. Only once did i hit them for OT since the trucks were coming back slow and i had to wait to load thrm. They didnt want to pay me a whole other day and i didnt want to come back there so it worked out mutually.

Ill eat a half hr here and there since they were great customers. Sucks they just bought a bobcat of their own. Im almost not taking straight bobcat jobs anymore. Too many idiots on craigslist doing it on sundays for $250 or $300.
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Old 11-24-2013, 11:16 PM
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That's why I like bidding by the SF. Time doesn't matter, efficiency does matter and after 20 years I have learned a few things about getting things done in an efficient manner .

The jobs that pay the best for me are those that involve a SSL/track hoe and a dump truck.
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Old 11-25-2013, 08:49 AM
txirrigation txirrigation is offline
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Most of the time our skid steer use is involved in a bigger scope of work, and is figured into the price. When it is not we charge by the job for those who have a clear scope of work and plans from either a landscape arch or an engineer. For those who do not have a clear scope we charge by the day, and there are no half days. As soon as we hook up the trailer and head your way you have been billed for the day.
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Old 11-25-2013, 09:36 AM
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Quote:
Originally Posted by ksss View Post
Than there is the what I call the "come and do" jobs. Usually tends to be established customers both contractors and residential customers. Sometimes I will give a number before we show up, but sometimes we just do it and bill it by the hour. Here is where your productivity works against you in the sense that the more productive you are the less money you make. The upside is, you likely have a very happy customer who keeps using you.

Any one have any thoughts?

This is something that I struggle with. I like to think that I'm one of the quicker operators in the area with a tree shear and grapple. Maybe I'm just the last man standing with two decades of experience..? As such, my daily productivity, and making it look good at the same time, is a lot more than many competitors that I've literally worked side by side with on bigger projects. (I'm talking about quality work, not just blowing and going). I seem to get more done whether it's because I stay off my phone or because my cab is comfortable or my machine is overkill for a tree shear, but at the end of the day, more is done on average. I have the same problem with my chipper. I'm one of only a few around that has a loader on the chipper so I can literally pull two or three trees through it at the same time. My competitors hand-feed smaller chippers which is slower work. Though I'm using more fuel with bigger chipper, I'm still getting done a lot faster on day jobs. If I had work booked weeks out, that wouldn't matter as since I was free to go on to the next project but I think I'm shooting myself in the foot while things are still relatively slow. Not taking a lot of breaks or talking on the phone helps me work faster but everyone else takes a siesta around here and guys I hire have to be reminded to put the phone or cigarettes down and keep working. I just can't waste someone's hard-earned money so I keep busy so I can GO HOME to my family. As a side note, I hate camping out on customer's property for 12 hours. As a consumer, i like peace and quiet too so I put in my 8 hour effort and get out of there for the day so they can enjoy their property.

I don't know how to fix this because I only know one speed.. Steady. As KSSS said, the customer appreciates it and I've made some lifelong customers but when I get done quick and feel the need to prorate, I don't make enough on many days.
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Old 11-25-2013, 09:44 AM
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Quote:
Originally Posted by alldayrj View Post
Very rarely are my jobs strictly bobcat work, i always try and get my guys working or upsell some brick or concrete, topsoil etc.
I don't like upselling. Hated it after high school at Dominos and I hate it now but it is important. Many customers just scan your website or business card. Unless your truck has a really obnoxious wrap, it's hard to list EVERYTHING you do so upselling is important. Can't tell you how many times I have cleared a property or brought in rocks and dirt only to have the customer tell me that "they need to find a landscaper. I do not do landscaping, per se, but I can certainly place rocks and spread dirt! Same thing with clearing land. I will shear and chip or mulch a homesite then the customer hires someone else to dig stumps for the homesite then wants me to mulch them. Duh.. If I had opened my mouth and explained that while I prefer to shear and chip or mulch, I am fully capable of digging out or grinding stumps 2 feet below grade if necessary. I think you have to anticipate what they are going to need and if they are happy with your work anyway, why not offer an upsell? I've started doing that myself and I'm finding that I'm getting it or being asked to be GC on other types of projects (which I mostly reject doing but will get them to where they are ready to do their foundation).

I'm not a salesman. I can sell but I don't like it. I have read many of the guru books on it and have a business degree so I know how the game works but I just don't like selling. I like to make things cleaner... but I'm learning that if you don't upsell, you are setting your competition up to come in and take credit for the whole job or get more referrals because they were there at the right time. Can't win them all but my long-winded response means your point is very good. (Can you guys tell that I've been stuck in the house for 3 days with rain and mud?)
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  #9  
Old 11-25-2013, 09:47 AM
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YellowDogSVC YellowDogSVC is offline
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Quote:
Originally Posted by txirrigation View Post
Most of the time our skid steer use is involved in a bigger scope of work, and is figured into the price. When it is not we charge by the job for those who have a clear scope of work and plans from either a landscape arch or an engineer. For those who do not have a clear scope we charge by the day, and there are no half days. As soon as we hook up the trailer and head your way you have been billed for the day.
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I do half days for existing customers, emergencies, and for widows who need a break but it's hard to justify moving anything for less than a day's work.
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  #10  
Old 11-25-2013, 11:56 AM
Mark13 Mark13 is offline
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I just wanted to thank those who have contributed to this thread and the SS operating cost thread. As someone new to the "business" with a CTL and doing work for hire I have a lot to learn and plenty of mistakes to make along the way. I kinda jumped in with both feet at once when buying the ctl from a friend and generating work hasn't come like I expected it to but I'm partially to blame for that as well as my area and busy schedule that doesn't give me the time I need to promote business and look for customers.
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