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Discussion Starter #1
Hello, everyone!!
I have a question and know that there are many variables involved and labor prices generally tend to be dictated by your location. I have only been in business for approx. two years. Had a GC take me for alot of money, so I am going to try and be more service oriented, Remodels, ect. and try to stay away from new construction. I live in NC, and have a labor rate of 65.00 per hour and service work is time and materials. When you guys price remodel work, do you base it on approximately how many hours it will take, cost plus 10% or do you have a set unit fixture price? Just still trying to figure out the most efficient way to bid work. For example on new work I was charging 300.00 per fixture, and was letting the gc provide materials, did not charge a fixture unit price for hose bibbs, or ice maker, because he was always beating me down on price anyway. For remodels labor was based at 350.00 per fixture.I would just like some help in figuring out how to price work in general. New Construction, under slab, repipe of water linesl, service, repipes, ect. Confused, and tired of wondering if there is an easier way that is fair to me and the home owners. For example home owner wants to repipe two bathroom house. I based it on 2.5 days at 10 hour per day, they already have purchased fixtures and some of the pipe, after estimate, then they ask how much more to replace three lav. faucets, two tub shower valves, and kitchen faucet???? I know from experience it will add approx 7 more hours to labor, but I am already cutting myself short because I am not going to be able to completely repipe in 25 hours anyway, plus it has a low crawlspace. Any help would be appreciated, frustrated and really need help figuring out how to price labor in all areas, new construction, remodels, drain cleaning, repipe, ect. I am also finding it hard to charge someone 65.00 to replace a flapper or rebuild a leaking delta faucet. Please I need help!LOL
 

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Well, I for one supply all my pipe and fittings. If they want to supply fixtures its ok as long as I have all the specs in advance. I would charge for the hours I think it would take plus material at retail. The whole per fixture thing you would have to see how that would measure up to how long you think it will take. 300 per fixture for a remodel seems low to me but everyone is different.
 

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Figure out how many hours you are going to have in the job.

Including:

  • bid time
  • ordering time
  • loading time
  • working time
  • unloading time
Add all this time up and multiply by a profitable per hour rate that includes ALL your costs of doing business.

Figure your material and material mark-up.

Add these numbers together. Do not shave off time to try and get the job. Very seldom do remodels go faster than planned.

Don't charge by the fixture. Field conditions vary wildy. There is no cookie cutter per fixture price. You are there looking at it. Figure out how long it will take you.

Track all your time on all jobs. Use these numbers to adjust your future bids and track profitability.

If you are not sure of how long it will take you. Err on the side of caution.
 

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For me I charge a flat rate for most service work. For remodels I charge T&M. If your fortunate enough to find a good contractor or two, develop a trusting relationship, after a few jobs they may not even ask a price because they know what range your price will be in when the jobs done. Also when you charge your contractors T&M they have more incentive to be ready for you, and not waste your time with any BS.:)
 

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I used per fixture base when I was bidding high end remodels and it worked out fine, I just made sure that I covered downtime in my per fixture rate.
 

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I think you should charge by the hour and give them an approximate time it will take. Tell them if I run into a problem that will cause the bill to exceed this amount I will notify you and explain the problem. I find I get better customers this way and i've never been accused of being "slow". That way I know when I get in the truck,I'm making money no matter what happens on the job. If the customer talks alot and it takes longer then they pay for it....if they make me park in the street and walk 100 yards to the backdoor through 2 gates....they get charged for it. If they live across town and they want me their in rush hour traffic.....they will pay for that too. its all time and the meter starts running when I dispatch to the job and ends when i finish the invoice. yes I charge to write your bill too. The customer gets what they pay for and I make a profit everytime. If I wanna gamble I go to a casino....not rolling the dice on "Whats in your crawlspace"....like a brickwall from an earlier addition that I gotta break through to access under a bathroom. Everyones market is different and business goals are different. I like to keep prices above average and the volume down. I'm over trying to be everyones plumber in town.
 

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Baton, you remind me of me when I was a kid. :rolleyes:

There comes a point in this business when you have to grow a pair and realize that you have to stop the customers from running your business and run it yourself.

There's always that feeling that if you quote too high you'll lose the job. It's a good feeling and it's true, especially when you don't have the confidence to look like you know what you're talking about when you quote a price. As Frank Blau might have said, it's time to bite the bullet.

Step 1 is learning what your hourly costs are, and they vary from company to company. This means listing every single thing that you spend to work - phones, computers, your wife's wages if applicable, gasoline, the next new truck you're going to buy, insurance, retirement, and don't forget a wage. Figure all those things per year.

Then figure your hours per year. In service, you figure three billable hours per day, 280 days per year. That's if you're swamped. In a one-man operation, you won't be likely to do more than that. The rest of the time is spent on running and managing the business. One day you get in eight hours, the next day you spend collecting it. Then next day you spend on the phone and replacing the radiator on your van. Etc, etc.

Now you've got fixed costs and if you know what you want your salary to be, you add that, do the math and come up with what you need per hour. Believe me, it isn't $65. That doesn't even cover your fixed expenses. Your truck is going to break and you aren't going to have any money to fix it.

It's a little easier when you're doing new construction because you know how long it will take you, on average, to plumb a house. You figure out to the penny how much money you have after you finish the job and then deduct your fixed yearly costs to find out your take. From that, you have to pay your fixed costs and your wages and profit. IT'S NOT ALL WAGES!

Are you any good at plumbing? Then price yourself at what you're worth. You are your biggest enemy. Or, as Richard Feynman said, "You must not fool yourself, and you are the easiest one to fool." Only you can figure out your costs. Calling around and finding out what the other plumbers are charging isn't much help. They may be clueless about knowing what it costs them to operate. They may have arrived at the number by calling around to see what everyone else was charging. This is how the "Going Broke Rate" develops.

The nice thing about a flat rate system is that you charge for everything you do. If the customer calls you for a repipe and you give a price, then he adds two tub valves, YOU ADD THEM ON. In new construction, maybe two hours. In remodel/repair, more like four hours each. You have to figure removal of the old, cutting, drilling, building the valve and mounting it in place, hooking it to the existing water, and then maybe coming back to put on the trim. It takes time to drive to the job.

With flat rate, you price the tasks, each one spelled out on the invoice. There is no question that the additional work isn't included in the job.

Example: replacement water heater may, if you choose, include a new valve and flexes. You need a pan? Add it on. There's a furnace and pipes and homeower's belongings in the way? Add for access. They see you pricing out of a book and figure they're getting the same price you would give anyone. They understand that the work needs to be done. Quote them the full price. If they want to call around, thank them for thinking of you and go on to the next one. They say they have a lower bid? Tell them that's fine, but you think you can do a better job and you'll stand behind the job.

Your earning years will be over before you know it. Don't sell your birthright for a bowl of pottage.
 

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While I don't run my own buisness these guys are right. You are being your own worst enemy right now. You say you bid a re-pipe for 25 hours but know it will take longer. Unless you have a good reason for doing that you're not going to make any money. At the last company we worked for we were working for a contractor who had another guy doing the heat at every house we roughed.
Now we were perfectly capable of doing the heat but we were being undercut by as much as forty percent. This guy drove a 15 year old beat up van with no advertising on it, had old beat up hardly working tools, kept every tool and fitting he owned in potato sacks or five gallon buckets, then he cried to us about not making any money, he only had a few hundred bucks in his bank account, etc. Sometimes guys like that are going to low ball you and all you can do about it is try to build a reputation that people are willing to pay more for. What you never want to do is go down to their level and become that low baller who has to decide between dinner and an acetylene refill. Guys like that would be better off working for someone else then running their own buisness.
 

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Unfortunately most business fail not because of poor service but because of poor business practices. Lots of good advice above, from guys that "been there, done that"
Bottom line is that you have to know your ..... bottom line. You can NEVER base your labor rate and estimates on what the competition is doing. NEVER get used to being the cheapest guy in town because that's exactly what you will be for the short time you are in business. Get used to not getting every bid you put out and having folks hang up on you when you give them a price. There is no point in going to work to loose money. Worst part when you underbid is that because you know you are not making money, you tend to drag your feet getting the job done and as a consequence, loose even more money.

If the business end all seems too much, hire a business consultant or start going to business seminars until you feel comfortable with the paperwork. Failure to get a grip at this stage means total failure a short while later.
 

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Discussion Starter #12
I appreciate all of the responses, I am by far not the lowest person in town and do not intend to be. I have worked very hard to get where I am at, I just have a heart, you know grew up in single home and watched my mom struggle to make ends meet. In my area the labor rate is between 45.00 to 125.00 approx. I guess the reason I have a hard time sticking to my guns, is the fact that I know if I can make 1200.00 dollars in a few days, that is more than most people in my community make in a month. With contractors its not a problem, I just bid the job and go on. I am starting to develop a very strong reputation in my community as an excellent plumber, who does exactly what he says he is going to do, in a timely manner. It just seems I get all of the older people, single moms, and friends, as customers. I am still new in this business and truly appreciate everyone taking the time to answer. I am blow away actually, you guys are great. I am thankful to be a part of this forum. quote: "your earning years will be over before I know it".........Now that one stopped me in my tracks. Plumbing is the easy part, running the business not so easy! But I am leaning, thanks again for all of the advice
 

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Exactly like NhMaster just said.

It seems that every plumber when he first starts out says he can do it cheaper than his old boss. Most say their old boss is a rip off etc. etc.

It takes them a few years (over 5 years, if they make it that long) to realize this isn't a charity event, it's a business. It's suppose to be run like any other business out there to make money. We're not doing this to be nice, to have a heart or to give it away to your neighbors grandma etc.

We've all done it, I was proud that I was the cheapest plumber in town when I first started 20 years ago, at that time flat rate was almost unheard of. I said look at all the business I'm taking from the big boys! Man was I stupid then. Once you start giving it away then everyone will expect it, it's a hard cycle to break. Then when you do realize you're screwing the pooch it's too late, you're now known as a rip off when you raise your rates to your old customers.

You have to know your costs. The business should be making money, not just getting by paying the bills. You should never have to worry about paying bills, you should be able to pay them the day they come in, every single time. And at the end of the month you should have more in your checkbook than what you had at the beginning of the month even after paying yourself and all the bills. IF you're not there then there is something wrong.

I got lucky and made a major move to where I live now. I was already flat rate before I moved here and knew what I needed to do. I started with flat rate here and stuck to it. I don't do anything and I mean anything for less than 150 bucks. I don't care if it's replacing a flapper for the old lady on social security, it's 150 bucks plus parts, plus mark up etc.

People know my work and I have a great reputation. Yes I do see all the time that folks try saving a buck and do it themselves or try hiring joe schmuck handyman but when they screw it up they know who to call and they know they will be paying for it to do it right. I love it when that happens and it does happen a lot.

Good luck, hope it works out for you.
 

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Dude, making 1200 bucks in a few days is not good. You will be broke before you know it. You are not making 1200 bucks. You are billing 1200 bucks. If I want a ringer (a 40 hour paycheck) I have to bill $4000 a week. That's just labor. Anything we make on markup is so much gravy. Widows, orphans, single moms, war vets, yadda, yadda, yaddda. If you don't make money, you won't be able to be the guy who fixes their problem. I know. I had my own shop and I was too nice of a guy and I let people set my prices. I folded liked a Chinese laundryman. Now my boss has made it clear. I get paid by the hours I bill. Christ has told us that the worker is worthy of his wages. So don't think it's unchristian to charge enough to make a good wage, plus make a profit as a business owner. I speak the truth in love, bro.
 

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BatonPlumbing said:
I have worked very hard to get where I am at, I just have a heart, you know grew up in single home and watched my mom struggle to make ends meet. In my area the labor rate is between 45.00 to 125.00 approx. I guess the reason I have a hard time sticking to my guns, is the fact that I know if I can make 1200.00 dollars in a few days, that is more than most people in my community make in a month. With contractors its not a problem, I just bid the job and go on. I am starting to develop a very strong reputation in my community as an excellent plumber, who does exactly what he says he is going to do, in a timely manner. It just seems I get all of the older people, single moms, and friends, as customers.
I know how it is. But have you ever considered that your perceptions are wrong? Does it say, "Baton Welfare Service" on your truck?

I understand wanting to be helpful to people who don't have much. But dude, you can't be generous when you have nothing yourself and are skating on the edge of bankruptcy. Service work costs a lot more per hour to do than what you make per hour when you're plumbing houses. Remember what I said about 3 billable hours per day. That wasn't a guess.

So, you're working for older people, single moms, and friends. That sounds like what everybody does, and it's amazing how many friends you can have when you're a cheap plumber. What have those friends done for you lately?

The reason we work for older people in a distressed area is that anyone who can do it themselves is down at Homey and Lowe's buying their own stuff and doing their own work. Has anyone said to you, "I used to do that work myself until I couldn't get down anymore?" I hear it all the time.

Single moms have no choice. If they have a boyfriend, he doesn't have the skills to do the work. And he isn't paying for it. Sometimes, mom or dad might pay for it.

You need to know what it costs you to do business. If you have to work without a new truck, then you need to know what it's going to cost to replace the old one in a year or two with another used truck. If you have a little shed out back where you store your stuff, expect to still be in it thirty years down the road.

Long ago, a mealy-mouthed customer said to me, "You just work out of your house, so you can afford to work cheaper than the other plumbers." Sure, if I just want to work out of my house for the rest of my life. And as it's worked out, that's how it worked out. Your own family should not have to suffer because you have decided that you can't get more than $65 per hour. And I know that there are many plumbers out of work now. But if you can't charge what it actually costs to be in business, you can't be in business.

For a while, I was higher than any other plumber in the area, though it didn't seem like much. And I never had any problem with the bill. I almost never encountered anyone who said that it was too much. When I found out that others were actually charging less than I was, I was amazed. Some had been in business longer than me.

I'm currently still lower than other flat rate companies, but higher than most of the people in my area. Neighboring cities have a lot of flat rate companies and I know some of them aren't going to last because they really are too high. There are limits in a small community. But my tickets are currently running about twice what they were a year and a half ago and I'm not getting turned down. Think about that. And realize that the little old ladies and single moms and friends are going to think it's a lot of money NO MATTER WHAT YOU CHARGE.
 

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herk's right

no matter what we charge it is always to much money. if you charge more than they make at their $18.000.00 a year job, well it's to much money. also. don't charge more than the sales fliers for materials. breid
 

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No matter what we charge were a rip off.
I'm learning this as My business grows. Just smile and go to the next job. If Knew what All my competitors charged I would charge the same and get yelled at just as much, might as well make the same while getting called a rip off. You will learn as you go. I know I am. Don't be the cheap guy you will only get cheap customers.
 
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Dude, making 1200 bucks in a few days is not good. You will be broke before you know it. You are not making 1200 bucks. You are billing 1200 bucks. If I want a ringer (a 40 hour paycheck) I have to bill $4000 a week. That's just labor. Anything we make on markup is so much gravy. Widows, orphans, single moms, war vets, yadda, yadda, yaddda. If you don't make money, you won't be able to be the guy who fixes their problem. I know. I had my own shop and I was too nice of a guy and I let people set my prices. I folded liked a Chinese laundryman. Now my boss has made it clear. I get paid by the hours I bill. Christ has told us that the worker is worthy of his wages. So don't think it's unchristian to charge enough to make a good wage, plus make a profit as a business owner. I speak the truth in love, bro.
If it's in your heart to help orphans and widows, fine, great, we need more of that. So here's what you do, pick 1 needy person/family each month (while you are building your business) and go help them.

EVERYBODY ELSE PAYS FULL PRICE 100% OF THE TIME!!!

In the mean time learn how to run your business, not how to plumb, hopefully you already know how to plumb, but LEARN YOUR NUMBERS!!!

The more profitable you are the more charitable you can be.
 
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