# Price this job out



## electricalperson

I also like to add that the job is located on the 4th floor of a mill that has stairs sized for children. They used to use child labor at this mill. There is stuff all over the place so it might be hard to get a ladder around, Theres open wiring on insulators although i dont know if its live still and you will be standing on a ladder about 15 - 20 feet up. Plus there is no AC and it was about 90 degrees on the floor in there


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## flyboy

Based on my overhead and desired profit, the absolute minimum we would price this job is $2,700.

This price does not necessarily take into consideration what you wrote in your last post. 

Depending on the degree of difficulty it might be 3-4 hundred dollars more.


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## electricalperson

i used my estimating book to price the job out. i would have a high degree of profit if i used all the prices from that book


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## electricalperson

flyboy said:


> Based on my overhead and desired profit, the absolute minimum we would price this job is $2,700.
> 
> This price does not necessarily take into consideration what you wrote in your last post.
> 
> Depending on the degree of difficulty it might be 3-4 hundred dollars more.


how did you price that job out?


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## flyboy

electricalperson said:


> how did you price that job out?


*I run a 17 truck operation so sending you my formulae (which is somewhere around 30 pages) wouldn't do you any good. *

*Here’s how to figure your selling price for a one truck operation (you in the truck, no employees): *Copy and paste this into Word, Excel or program of choice. 

Note: This formula is for residential/light commercial service work (no new construction) using flat rate pricing. 

*Billable Hour**: *A billable hour is the actual time during the workday when income is produced. *FACT:* Your total billable hours for one year *will not* exceed 1,000 hours.
4 (hours a day) x 5 (days a week) x 50 (weeks) = 1,000 hours/yr. 
Total Billable Hours/Year: *1,000 Hrs. *Don’t make this higher, it very accurate.

*Selling Price:*This is the hourly amount you must charge as the labor component of your flat rate pricing. It does not include material. Include material in your flat rate pricing and mark it up whatever amount you desire (or not). You’re really selling your labor, so if you sell your parts & equipment at cost (including freight & taxes) it really doesn’t matter. What matters is selling your billable labor hour. Here’s how to calculate the selling price.

*OVERHEAD ITEMS: *Fill in amounts and total it on line 36.

A word about owner’s salary: Consider what you could be paid in a year if you worked for a reputable company, that pays what you are worth, as a tradesman and offers a bonus based on performance. It is not uncommon for some to earn upwards of 70-80,000/yr. or more. Do not sell yourself short, even in the first year of business. As a business owner you should pay yourself at least 80k/yr and more like 100k/yr. treat your salary as a business expense.

1. Owner’s Salary __________________ 
2. Advertising - YP ___________________ 
3. Advertising – Other ___________________
4. Answering Service ___________________
5. Bad Dept ___________________ 
6. Bank Charges ___________________
7. C.P.A. ___________________
8. Call Backs ___________________
9. Cellular Phone ___________________
10. Computer Expense ___________________
11. Credit Card Fees ___________________
12. Donations ___________________
13. Dues/Subscriptions ___________________
14. Educational Expense __________________
15. Gasoline Expense __________________
16. Health Insurance ___________________
17. Insurance – Truck ___________________
18. Insurance – Contractors ________________
19. Insurance – Umbrella __________________
20. Insurance – Workers Comp ______________
21. Legal Expense ___________________
22. Office Supplies ___________________
23. Payroll Company ___________________
24. Payroll Burden ___________________
25. Postage Expense __________________
26. Rent & Taxes ___________________
27. Retirement/401k ___________________
28. Telephone ___________________
29. Tool Repair/Replace ____________________
30. Travel & Entertain ____________________
31. Truck Expense ___________________
32. Truck Maintenance ____________________
33. Unforeseen Items ____________________
34. Uniform Service _____________________
35. Utilities _____________________

36. Total Yearly Expenses ___________________

37. Expenses Divided by 1,000 B/H = _____________ (This is your *break even* (B/E) price – 
*NO PROFIT!*

*20% PROFIT ON TOP OF BREAK EVEN COST: This is a standard acceptable profit, please don’t short change yourself. Enter the breakeven number from above and divide by .80 to get your selling price. *

*__________________Divided by .80 = CORRECT Selling Price Of______________/hour*
*Enter break even number here*
*B/E Cost = 80% Of Selling Price *


*The above list of expenses is only a representation of expenses and may not include all expenses. Be sure to add any and all additional expenses you may incur.*


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## electricalperson

that makes sense why its so expensive. i thought i was pricing out wrong again. i probably am but thats besides the point


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## flyboy

electricalperson said:


> i probably am but thats besides the point


You are...but it's your business to do with as you see fit.


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## electricalperson

flyboy said:


> You are...but it's your business to do with as you see fit.


i am still learning how to properly estimate jobs


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## mdfriday

electricalperson said:


> 150' of 12/2 MC
> 6 MC connectors
> 40 3/8 MC clips
> 1 - 2pole 20A QO breaker
> 2 - 20 amp tandem QO breakers
> 1 - 4" x 2-1/8 box
> 1 - 120/277v double pole switch
> 1 - 4" switch army cover
> 2 - 3/4"-1/2" reducing washers
> 1 - 90 degree MC connector
> 20 - MC beam clamps (caddy makes them not sure on the model number)
> 
> 
> MC runs up sheetrock wall about 20 feet in the air then over to follow a large I beam then down a wooden post to the switch
> 
> i figured about 6 hours. 4 to do the job and 2 for office/estimating/gathering materials
> 
> my price was 1,000 dollars. same job i priced 1,500 for EMT


Quick calculated guess, I do not have my estimating program available.

$1,869.00 in EMT - standard time. Premium time is not included.

How far do you have to run on the beam? I assumed 150' total for conduit. I also asumed a man lift. I do not know if one would fit...

If this is working off of a ladder, add some extra time for that..

I am doing a factory job now, on premium time as it is on the production floor, It is going as I figured (better, actually, but it is not complete yet), but it is amazing how slow work goes when you are working on a production floor, up in the air. Don't forget, if you need something moved, it will take some time to get it accomplished....


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## HARRY304E

electricalperson said:


> that makes sense why its so expensive. i thought i was pricing out wrong again. i probably am but thats besides the point


Thats why we are here so we can learn to price it out right.


Flyboy has a good system going...:thumbsup:


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## electricalperson

mdfriday said:


> Quick calculated guess, I do not have my estimating program available.
> 
> $1,869.00 in EMT - standard time. Premium time is not included.
> 
> How far do you have to run on the beam? I assumed 150' total for conduit. I also asumed a man lift. I do not know if one would fit...
> 
> If this is working off of a ladder, add some extra time for that..
> 
> I am doing a factory job now, on premium time as it is on the production floor, It is going as I figured (better, actually, but it is not complete yet), but it is amazing how slow work goes when you are working on a production floor, up in the air. Don't forget, if you need something moved, it will take some time to get it accomplished....


the beam is about 50 - 60 feet long and there is a lot of stuff in the way but she is able to move it all.


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## electricalperson

we are going to trade services. she can make awesome business cards and i will knock whatever the cards cost off of the bill. she knows a lot of other printing companies around and she will recommend me. she was fairly impressed with my knowledge i noticed


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## electricalperson

to be honest for whatever reason when i price out the job and add overhead and profit and all the stuff im supposed to add if it comes out high i feel like im not worth it. i am a good electrician and do great work and know what im doing but for whatever reason i feel bad about charging 1500 dollars to run EMT. i dont know why. im sure ill get over it


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## HARRY304E

electricalperson said:


> to be honest for whatever reason when i price out the job and add overhead and profit and all the stuff im supposed to add if it comes out high i feel like im not worth it. i am a good electrician and do great work and know what im doing but for whatever reason i feel bad about charging 1500 dollars to run EMT. i dont know why. im sure ill get over it


You better get over it or you will not survive in business.


Remember we are all gun shy because of this economic depression so don't feel like you are not worth it because you are you have worked hard to get this far and derserve to get your profit from your blood sweat and tears.

Remember that boss you have night mares about??

You don't want to go back to that crap again...


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## electricalperson

HARRY304E said:


> You better get over it or you will not survive in business.
> 
> 
> Remember we are all gun shy because of this economic depression so don't feel like you are not worth it because you are you have worked hard to get this far and derserve to get your profit from your blood sweat and tears.
> 
> Remember that boss you have night mares about??
> 
> You don't want to go back to that crap again...


What do you do when people cry poverty and say your price is too high?


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## mdfriday

electricalperson said:


> What do you do when people cry poverty and say your price is too high?


Because most of them are employees. 

Most people do not save any money. They spend it all.

If you spend all your money, and make what ever you make. Coming up with $2000 for a service change would present a problem.

"I only get paid $25 an hour. How am I suppose to pay you $100?"

We've all heard it before, I am sure.

Some of the best advice I've heard on this site;

1. Don't breakdown estimates/invoices into hourly rates.
2. Accept credit cards

Those two items alone will help negate a lot of that. When people spend with plastic, it is easier to spend. When they have to write out a check, or count out cash, it is much more emotional and thought provoking.


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## mdfriday

electricalperson said:


> to be honest for whatever reason when i price out the job and add overhead and profit and all the stuff im supposed to add if it comes out high i feel like im not worth it. i am a good electrician and do great work and know what im doing but for whatever reason i feel bad about charging 1500 dollars to run EMT. i dont know why. im sure ill get over it



We are all worth a lot more than we think we are. Just ask ourselves...

:laughing:

Seriously though, we all cut ourselves short sometimes. I do it when it comes to estimating for people I know. When it is a business or someone I do not know, It is easier to price appropriately. I am a nice guy, sometimes too nice. But, I need to be nice to myself and provide what my family needs before I can afford to be "nice."


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## electricalperson

mdfriday said:


> Because most of them are employees.
> 
> Most people do not save any money. They spend it all.
> 
> If you spend all your money, and make what ever you make. Coming up with $2000 for a service change would present a problem.
> 
> "I only get paid $25 an hour. How am I suppose to pay you $100?"
> 
> We've all heard it before, I am sure.
> 
> Some of the best advice I've heard on this site;
> 
> 1. Don't breakdown estimates/invoices into hourly rates.
> 2. Accept credit cards
> 
> Those two items alone will help negate a lot of that. When people spend with plastic, it is easier to spend. When they have to write out a check, or count out cash, it is much more emotional and thought provoking.


i learned the hard way not to break down estimates. they always say they can get the parts cheaper at home depot. i just started yesterday accepting credit cards with my phone


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## mdfriday

flyboy said:


> *I run a 17 truck operation so sending you my formulae (which is somewhere around 30 pages) wouldn't do you any good. *
> 
> *Here’s how to figure your selling price for a one truck operation (you in the truck, no employees): *Copy and paste this into Word, Excel or program of choice.
> 
> Note: This formula is for residential/light commercial service work (no new construction) using flat rate pricing.
> 
> *Billable Hour**: *A billable hour is the actual time during the workday when income is produced. *FACT:* Your total billable hours for one year *will not* exceed 1,000 hours.
> 4 (hours a day) x 5 (days a week) x 50 (weeks) = 1,000 hours/yr.
> Total Billable Hours/Year: *1,000 Hrs. *Don’t make this higher, it very accurate.
> 
> *Selling Price:*This is the hourly amount you must charge as the labor component of your flat rate pricing. It does not include material. Include material in your flat rate pricing and mark it up whatever amount you desire (or not). You’re really selling your labor, so if you sell your parts & equipment at cost (including freight & taxes) it really doesn’t matter. What matters is selling your billable labor hour. Here’s how to calculate the selling price.
> 
> *OVERHEAD ITEMS: *Fill in amounts and total it on line 36.
> 
> A word about owner’s salary: Consider what you could be paid in a year if you worked for a reputable company, that pays what you are worth, as a tradesman and offers a bonus based on performance. It is not uncommon for some to earn upwards of 70-80,000/yr. or more. Do not sell yourself short, even in the first year of business. As a business owner you should pay yourself at least 80k/yr and more like 100k/yr. treat your salary as a business expense.
> 
> 1. Owner’s Salary __________________
> 2. Advertising - YP ___________________
> 3. Advertising – Other ___________________
> 4. Answering Service ___________________
> 5. Bad Dept ___________________
> 6. Bank Charges ___________________
> 7. C.P.A. ___________________
> 8. Call Backs ___________________
> 9. Cellular Phone ___________________
> 10. Computer Expense ___________________
> 11. Credit Card Fees ___________________
> 12. Donations ___________________
> 13. Dues/Subscriptions ___________________
> 14. Educational Expense __________________
> 15. Gasoline Expense __________________
> 16. Health Insurance ___________________
> 17. Insurance – Truck ___________________
> 18. Insurance – Contractors ________________
> 19. Insurance – Umbrella __________________
> 20. Insurance – Workers Comp ______________
> 21. Legal Expense ___________________
> 22. Office Supplies ___________________
> 23. Payroll Company ___________________
> 24. Payroll Burden ___________________
> 25. Postage Expense __________________
> 26. Rent & Taxes ___________________
> 27. Retirement/401k ___________________
> 28. Telephone ___________________
> 29. Tool Repair/Replace ____________________
> 30. Travel & Entertain ____________________
> 31. Truck Expense ___________________
> 32. Truck Maintenance ____________________
> 33. Unforeseen Items ____________________
> 34. Uniform Service _____________________
> 35. Utilities _____________________
> 
> 36. Total Yearly Expenses ___________________
> 
> 37. Expenses Divided by 1,000 B/H = _____________ (This is your *break even* (B/E) price –
> *NO PROFIT!*
> 
> *20% PROFIT ON TOP OF BREAK EVEN COST: This is a standard acceptable profit, please don’t short change yourself. Enter the breakeven number from above and divide by .80 to get your selling price. *
> 
> *__________________Divided by .80 = CORRECT Selling Price Of______________/hour*
> *Enter break even number here*
> *B/E Cost = 80% Of Selling Price *
> 
> 
> *The above list of expenses is only a representation of expenses and may not include all expenses. Be sure to add any and all additional expenses you may incur.*



How does this work when you are bidding a construction job?

Do you use the same rate for construction and flat rate service?


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## mdfriday

electricalperson said:


> i learned the hard way not to break down estimates. they always say they can get the parts cheaper at home depot. i just started yesterday accepting credit cards with my phone



I saw a guy at HD a couple months ago. He had a clipboard and like 7 pages of someone's estimate. I felt sorry for some ec. Why would you even give it out. He had all his material listed out. (I looked over the old dudes shoulder.) He would hem and haw as he looked for stuff. He was there for a long time. 

I had to wait for some wire to be cut, so I was there for a while. 

Funny thing is. They are not cheaper. Their pipe / wire is competitive. Their boxes, fittings and devices are way more than I pay at a supply house.


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## Island Electric

I have a question about after one comes up with the break even cost.

You say to make sure you add 20% to break even for company profit.:thumbsup:

You say to divide by .80 and that is your hourly. Is that suppose to be 20% added to break even? When I divide let say for giggles 100 divided by .80 I get 125. When I do 100 x .20 (or 20%) I get 20. so 100+20=120 NOT 125. Please explain why you use divide .80 for 20% profit. 

BTW I used your list and came up with a break even of 231.30 if I divide by .80 I get 289.12 If I x by .20 I get 277.56. 

Last: when coming up with break even costs should I include the rent and utilities for a shop? I do not have a shop right now but will eventually want one. I'm also not paying workmans comp right now either. If I take these factors into consideration that will lower my hourly to 241 or 251 per hour depending on the (.80 or 20% factor asked above). I would really appreciate if someone could clear these questions up for me. Thank you.

_This part is for electrical person. you take 289.12 an hour and lets say your going install a gfi. lets say it takes 20 minutes from the time you leave your truck walk up the device remove and install the gfi. 289.12 divided by 3 (1/3rd of an hour) = 92.52 to install 15 for the gfi. your at 107.52 to install the gfi. Add for trip charge or service call 157.52 for the first device._


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## electricalperson

mdfriday said:


> I saw a guy at HD a couple months ago. He had a clipboard and like 7 pages of someone's estimate. I felt sorry for some ec. Why would you even give it out. He had all his material listed out. (I looked over the old dudes shoulder.) He would hem and haw as he looked for stuff. He was there for a long time.
> 
> I had to wait for some wire to be cut, so I was there for a while.
> 
> Funny thing is. They are not cheaper. Their pipe / wire is competitive. Their boxes, fittings and devices are way more than I pay at a supply house.


everything i sell to people always costs more than home depot because i mark it up. i wonder if carlon blue boxes are cheaper at a supply house than home depot. they were 43 cents for a regular single gang nail on. (not trying to cause problems with blue box haters)


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## TheBrushMan007

I came in at $2400.00

MDfriday, billable hours for construction work are higher than service work.

So yes the price would be different.


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## mdfriday

Island Electric said:


> I have a question about after one comes up with the break even cost.
> 
> You say to make sure you add 20% to break even for company profit.:thumbsup:
> 
> You say to divide by .80 and that is your hourly. Is that suppose to be 20% added to break even? When I divide let say for giggles 100 divided by .80 I get 125. When I do 100 x .20 (or 20%) I get 20. so 100+20=120 NOT 125. Please explain why you use divide .80 for 20% profit.
> 
> BTW I used your list and came up with a break even of 231.30 if I divide by .80 I get 289.12 If I x by .20 I get 277.56.
> 
> Last: when coming up with break even costs should I include the rent and utilities for a shop? I do not have a shop right now but will eventually want one. I'm also not paying workmans comp right now either. If I take these factors into consideration that will lower my hourly to 241 or 251 per hour depending on the (.80 or 20% factor asked above). I would really appreciate if someone could clear these questions up for me. Thank you.
> 
> _This part is for electrical person. you take 289.12 an hour and lets say your going install a gfi. lets say it takes 20 minutes from the time you leave your truck walk up the device remove and install the gfi. 289.12 divided by 3 (1/3rd of an hour) = 92.52 to install 15 for the gfi. your at 107.52 to install the gfi. Add for trip charge or service call 157.52 for the first device._


When you divide, it is _margin_. Some people debate that this is the proper form of mark-up. Thus, your costs are 80% of what you are selling, the mark up is 20% of the total price. If you mark it up 25% (multiply), correct you come up with the same number. It is a mater of terms to get the same numerical result. I.E.

$100 material/labor/overhead etc...

100 / .8 = 125 (20% Margin)

100 X 1.2 = 120 (20% Markup)

100 X 1.25 = 125 (25% Markup)

The problem becomes the debate of terms and the numbers used....

If a contract allows 5% margin for OH and 5% profit for change orders, you'll net more by doing it properly.

FYI, better check on the workman's comp thinggy. It is now a felony in IL to get caught with out it. (I've been told)


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## MarkyMark

flyboy said:


> Based on my overhead and desired profit, the absolute minimum we would price this job is $2,700.
> 
> This price does not necessarily take into consideration what you wrote in your last post.
> 
> Depending on the degree of difficulty it might be 3-4 hundred dollars more.


Based on Electricalperson's estimate of 4 hours, looks like you are making over $500.00 per hour.

:001_huh:


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## mdfriday

TheBrushMan007 said:


> I came in at $2400.00
> 
> MDfriday, billable hours for construction work are higher than service work.
> 
> So yes the price would be different.


Yup...just interesting to talk about. I know our service rate is higher than our construction rate. I would never get a construction job if I applied service rates too them....


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## mdfriday

MarkyMark said:


> Based on Electricalperson's estimate of 4 hours, looks like you are making over $500.00 per hour.
> 
> :001_huh:


4 hours is low, I think. I would double it.


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## electricalperson

TheBrushMan007 said:


> I came in at $2400.00
> 
> MDfriday, billable hours for construction work are higher than service work.
> 
> So yes the price would be different.


i am going to start to charge more for sure now. screw it. i want to make money and not be a grunt. i will price my jobs differently from now on


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## TheBrushMan007

electricalperson said:


> i am going to start to charge more for sure now. screw it. i want to make money and not be a grunt. i will price my jobs differently from now on


Once you start, you will never go back. 
For example: I know some guys on here that talk about running a 20 amp romex circuit for $150.00 - $200.00 within 25'.
Yesterday, my guy installed a 20amp circuit 20ft away from it's source, easy access for $488.00
Installed a small buck-boost transformer for $275.00
2 hours of work.


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## flyboy

electricalperson said:


> to be honest for whatever reason when i price out the job and add overhead and profit and all the stuff im supposed to add if it comes out high i feel like im not worth it.


You are worth it! Someone just needs to fully explain to you why you are worth it. Believe it or not, your being an electrician is only part of why your worth it. Your also a business person who takes an enormous risk to be in business. It is your electrical expertise and your ability to run a viable, ethical business that makes you worth it. You have a respondsibility to price yourself correctly. 



electricalperson said:


> i am a good electrician and do great work and know what im doing but for whatever reason i feel bad about charging 1500 dollars to run EMT. i dont know why. im sure ill get over it


I'll tell you why; you have what is know as "price objection". It's one thing for customers to have a price objection and another thing when the business owner has a price objection. It's a paradigm you really need to get rid of; and you can if you really want to.


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## Liteitup

I think I have the same problem. I feel like if I charge too much I will lose the job or a customer. People still are saying" I didn't think it would be that much" .


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## mdfriday

TheBrushMan007 said:


> Once you start, you will never go back.
> For example: I know some guys on here that talk about running a 20 amp romex circuit for $150.00 - $200.00 within 25'.
> Yesterday, my guy installed a 20amp circuit 20ft away from it's source, easy access for $488.00
> Installed a small buck-boost transformer for $275.00
> 2 hours of work.



What is your % of closed sales to quotes/proposals.


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## TheBrushMan007

mdfriday said:


> What is your % of closed sales to quotes/proposals.


Very high, it varies from 80 to 90% and just like any town, we compete against guys who charge $55.00 to $75.00 an hour.


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## mdfriday

TheBrushMan007 said:


> Very high, it varies from 80 to 90% and just like any town, we compete against guys who charge $55.00 to $75.00 an hour.


That is excellent. I thought it would be lower, like less than 50. You must have a good reputation.


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## gold

MarkyMark said:


> Based on Electricalperson's estimate of 4 hours, looks like you are making over $500.00 per hour.
> 
> :001_huh:


No his company is charging 2700 for a job that requires 4 hours of on site labor. This may sound hi if your used to construction rates of companies with multiple employees that are calculated at a much higher billable:non billable ratio. 

A one man shop doing service is typically 1:1
A construction company with say 10 jman and 2 office staff / management could be 5:1 
The overhead cost for both companies are relative with the construction company having the advantage of more billable hours so there overhead cost per billable hour is usually much lower.


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## NolaTigaBait

gold said:


> No his company is charging 2700 for a job that requires 4 hours of on site labor. This may sound hi if your used to construction rates of companies with multiple employees that are calculated at a much higher billable:non billable ratio.
> 
> A one man shop doing service is typically 1:1
> A construction company with say 10 jman and 2 office staff / management could be 5:1
> The overhead cost for both companies are relative with the construction company having the advantage of more billable hours so there overhead cost per billable hour is usually much lower.


What do you mean by 1:1 and 5:1?...What do those ratios consist of?


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## gold

NolaTigaBait said:


> What do you mean by 1:1 and 5:1?...What do those ratios consist of?


1 billable for 1 nonbillable (1 to 1) or expressed as a ratio (1:1) 
400 billable for 80 non billable (5 to 1) or expessed as a ratio (5:1)

the ratio for some larger companies can be much higher 15 or 20 to 1 (15:1 or 20:1)


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## NolaTigaBait

gold said:


> 1 billable for 1 nonbillable (1 to 1) or expressed as a ratio (1:1)
> 400 billable for 80 non billable (5 to 1) or expessed as a ratio (5:1)
> 
> the ratio for some larger companies can be much higher 15 or 20 to 1 (15:1 or 20:1)


I thought that's what you meant, just wanted to be sure...


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## TheBrushMan007

I'm sure very soon, some of the people that like to argue with me and some of the people on here that say " flat rate does not work or it's a ripoff, will chime in and try to discredit what I have written or Gold's & Flyboy's.

Numbers do not lie and some people do not get that. The worst part is, is that they are blinded by their own ignorance and chime in with emotion and childish remarks.

The best way to find success and make money in this business , is to constantly educate yourself in service, sells and proper pricing.
Try the ideas, and implement a system. You will see that it works.

Taking the time to educate yourself or seek guidance from someone more knowledgeable than yourself.

Will you close every sell? No, but that's OK. Plenty of people will say yes.

The way you carry yourself. 
The way you speak.
The way you dress.
The way you listen.
What you say and more importantly what you do not say.
How you try to close the sell and list goes on and on.

These are just a few, but just these few things done correctly can dramatically increase or decrease ones success.


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## NolaTigaBait

gold said:


> 1 billable for 1 nonbillable (1 to 1) or expressed as a ratio (1:1)
> 400 billable for 80 non billable (5 to 1) or expessed as a ratio (5:1)
> 
> the ratio for some larger companies can be much higher 15 or 20 to 1 (15:1 or 20:1)


That seems about right considering typically a 1 man shop can average about 4-5 billable hours a day, the other 4 hours spent doing other job related functions...


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## TheBrushMan007

mdfriday said:


> That is excellent. I thought it would be lower, like less than 50. You must have a good reputation.


We do have a good reputation. It took time and unfortunately, many mistakes. Change needed to be made, and it was made. Systems were put in place and it helped.


One good thing about a bad economy, you have a very good selection of good electricians.
Once they are trained, they can be money making machines.


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## flyboy

MarkyMark said:


> Based on Electricalperson's estimate of 4 hours, looks like you are making over $500.00 per hour.
> 
> :001_huh:


$400 x 6 = 2,400

Material = 300 (kind of a wild guess on the material)

Total = $2,700 

These are based on my overhead & 25% desired profit. The hourly includes all the overhead based on billable efficiency.


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## flyboy

mdfriday said:


> How does this work when you are bidding a construction job?
> 
> Do you use the same rate for construction and flat rate service?


Great question. I should have made that more clear in my previous posts.

We don't do new construction. I would venture to say you'd probably never win a bid using that formulae.

We only do service work, service upgrades, generators etc.

We are flat rate based. No T&M.

The only time we do any new construction is for an existing customer and we let them know that we can't compete in the bid n' spec world. Most don't care, they want us to do the work. It does not happen often.

I can't help you with pricing new construction. In 25 years I've never figured out how to make money in new construction being the low bidder.

I'm all ears if someone has the answer.


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## flyboy

Island Electric said:


> I have a question about after one comes up with the break even cost.
> 
> You say to make sure you add 20% to break even for company profit.:thumbsup:
> 
> You say to divide by .80 and that is your hourly. Is that suppose to be 20% added to break even? When I divide let say for giggles 100 divided by .80 I get 125. When I do 100 x .20 (or 20%) I get 20. so 100+20=120 NOT 125. Please explain why you use divide .80 for 20% profit.
> 
> BTW I used your list and came up with a break even of 231.30 if I divide by .80 I get 289.12 If I x by .20 I get 277.56.
> 
> Last: when coming up with break even costs should I include the rent and utilities for a shop? I do not have a shop right now but will eventually want one. I'm also not paying workmans comp right now either. If I take these factors into consideration that will lower my hourly to 241 or 251 per hour depending on the (.80 or 20% factor asked above). I would really appreciate if someone could clear these questions up for me. Thank you.
> 
> _This part is for electrical person. you take 289.12 an hour and lets say your going install a gfi. lets say it takes 20 minutes from the time you leave your truck walk up the device remove and install the gfi. 289.12 divided by 3 (1/3rd of an hour) = 92.52 to install 15 for the gfi. your at 107.52 to install the gfi. Add for trip charge or service call 157.52 for the first device._


mdfriday did a fine job answering this in post #25

By the way, the $289/hr. you came up with is very accurate for most small one or two man shops.


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## HARRY304E

electricalperson said:


> What do you do when people cry poverty and say your price is too high?


I stand my ground because they would not have called if they did not have the money but you have to be ready to walk away or they will have you working for nothing.

Remember you will not get every job you look at,,and if you do then you priced too low...


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## HARRY304E

Liteitup said:


> I think I have the same problem. I feel like if I charge too much I will lose the job or a customer. People still are saying" I didn't think it would be that much" .


Remember if you tell someone that will be $1 some people will say the same thing because they do not respect what you do for work because they have no idea what it takes to become a professional Electrician.


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## flyboy

electricalperson said:


> What do you do when people cry poverty and say your price is too high?


Offer multiple options for getting the job done. We typically offer 6 different options. Price too high? Pick an option that costs less. We have an option to fit everyones budget.

Also, offer financing & take credit cards like someone else in the thread suggested.

Unless they are senior citizens or people serving our country we don't typically discount. 

For those folks who say they'll go with you if you can do a little better we might discount 5 or 10% but not without a concession. It might be that we schedule it when we want or when we have a break in the schedule. Otherwise, your just telling the customer that you overcharged them the amount you discounted.

Are these the answers to all price objections? Of course not, some people you just won't be able to do business with and you have to know when to say no. 

But, before you do, you need to learn how to sell value in doing business with you.


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## electricalperson

flyboy said:


> Offer multiple options for getting the job done. We typically offer 6 different options. Price too high? Pick an option that costs less. We have an option to fit everyones budget.
> 
> Also, offer financing & take credit cards like someone else in the thread suggested.
> 
> Unless they are senior citizens or people serving our country we don't typically discount.
> 
> For those folks who say they'll go with you if you can do a little better we might discount 5 or 10% but not without a concession. It might be that we schedule it when we want or when we have a break in the schedule. Otherwise, your just telling the customer that you overcharged them the amount you discounted.
> 
> Are these the answers to all price objections? Of course not, some people you just won't be able to do business with and you have to know when to say no.
> 
> But, before you do, you need to learn how to sell value in doing business with you.


i just need to get over the feeling bad for everyone factor. i will charge what im worth. i want a boat and a big house someday


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## HARRY304E

electricalperson said:


> i just need to get over the feeling bad for everyone factor. i will charge what im worth. i want a boat and a big house someday


Just don't show up in a Cadillac escalade when giving estimates.:laughing::laughing:.


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## Chris1971

HARRY304E said:


> Just don't show up in a Cadillac escalade when giving estimates.:laughing::laughing:.


Take the beat up Ford Pinto.:thumbup::laughing::laughing:


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## flyboy

electricalperson said:


> i just need to get over the feeling bad for everyone factor. i will charge what im worth. i want a boat and a big house someday


There is nothing wrong with feeling compassion and understanding for people, but don't forget the responsibility you have to your family, employees, vendors, the rest of your customers and those that truly need help. If you give your services away you won't be able to help anyone.

If you charge everyone what your suppose to charge, then you'll have extra money to truly help the real hardship cases.

This past winter we installed a 200A service and a new heating sytem, pro bono. It was a true hardship case. We are able to do this type of thing because we are profitable. And, because we are good customers we are able to get our vendors to donate the material and equipment.

There was a theft of Christmas presents for children at a local charity in Newburgh, NY this past Xmas. We went to the toy store and loaded up one of our service trucks with $500 worth of toys and delivered it to the church.

Proper pricing makes it possible for you to give back to our community.

Do these things and the boats and toys will just come. See my avatar? 

My airplane not only allows me to enjoy the thing I love, aviation, but also allows me to fly cancer victims to their medical appointments through an organization called "Angel Flight". I also fly dogs that are on death row from places in the south to homes in the north through another organization called "Animal Rescue Flights". 

It takes money to be able to these types of things.

I hope this helps you understand the importance of proper pricing. Proper pricing is not what you think something should cost, or what you think the market can bare, or what you think someone can afford. Proper pricing is using a formulae based on overhead, billable efficiency and at least a 20% profit.

Get profitable!


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## Mr Rewire

electricalperson said:


> 150' of 12/2 MC
> 6 MC connectors
> 40 3/8 MC clips
> 1 - 2pole 20A QO breaker
> 2 - 20 amp tandem QO breakers
> 1 - 4" x 2-1/8 box
> 1 - 120/277v double pole switch
> 1 - 4" switch army cover
> 2 - 3/4"-1/2" reducing washers
> 1 - 90 degree MC connector
> 20 - MC beam clamps (caddy makes them not sure on the model number)
> 
> 
> MC runs up sheetrock wall about 20 feet in the air then over to follow a large I beam then down a wooden post to the switch
> 
> i figured about 6 hours. 4 to do the job and 2 for office/estimating/gathering materials
> 
> my price was 1,000 dollars. same job i priced 1,500 for EMT


 You seem a bit low my labor would be at $1000 and then material /markup.


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## mdfriday

What is billable efficiency?


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## flyboy

mdfriday said:


> What is billable efficiency?


I copied this off my formulae in post #6

*Billable Hour: *A billable hour is the actual time during the workday when income is produced. *FACT:* Your total billable hours for one year *will not* exceed 1,000 hours.
4 (hours a day) x 5 (days a week) x 50 (weeks) = 1,000 hours/yr. 
Total Billable Hours/Year: *1,000 Hrs. *Don’t make this higher, it very accurate for service work.


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## Island Electric

Wow! 
I cannot thank you Business Men enough.

I have no one in my life to tell me how and why. Thank you so much.


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## Mr Rewire

flyboy said:


> I copied this off my formulae in post #6
> 
> *Billable Hour: *A billable hour is the actual time during the workday when income is produced. *FACT:* Your total billable hours for one year *will not* exceed 1,000 hours.
> 4 (hours a day) x 5 (days a week) x 50 (weeks) = 1,000 hours/yr.
> Total Billable Hours/Year: *1,000 Hrs. *Don’t make this higher, *it very* accurate for service work.


 great read and i am not the speelin police but that should be *it is very*

:thumbsup:


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## flyboy

Mr Rewire said:


> great read and i am not the speelin police but that should be *it is very*
> 
> :thumbsup:


you is correct...


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## mdfriday

flyboy said:


> I copied this off my formulae in post #6
> 
> *Billable Hour: *A billable hour is the actual time during the workday when income is produced. *FACT:* Your total billable hours for one year *will not* exceed 1,000 hours.
> 4 (hours a day) x 5 (days a week) x 50 (weeks) = 1,000 hours/yr.
> Total Billable Hours/Year: *1,000 Hrs. *Don’t make this higher, it very accurate for service work.


I understand what a billable hour is.

What is billable efficiency?


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## flyboy

mdfriday said:


> I understand what a billable hour is.
> 
> What is billable efficiency?


The percent value of the time actually billed against payroll time. If you bill 4 hours out of a 8 hour day you are operating at a 50% billable efficiency.

It's usually based on 40 hours. Bill out 20 hours and your billable efficiency is 50%

There are two reasons to know billable efficiency.

1. To know how many hours you are able to bill will allow you to know how much you much charge per hour in your flat rate pricing to cover overhead and profit.

2. Billable efficiency is used to bonus employees. The more efficient they are the more bonus they make. The bonus is more attractive than accumulating non-productive pay hours. As a result, they find ways to be more efficient, like making sure their trucks are properly stocked so they don't have to go to the supply house, not charging the company for non-productive time when cleaning out trucks, washing them or gasing up. They also have less call backs because it goes against their billable efficiency 

Set up properly, this is a win win win for the company, employee and the customer. Some employees will get their billable efficiencies up to to 55-58%.


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## captkirk

electricalperson said:


> What do you do when people cry poverty and say your price is too high?


 almost everyone crys poor....Its unusual when they dont.. If they dont like your price just move on to the next...... 

Next time you go to a restaurant or the supermarket or your lawyer or doctor or accountant, when they give you a bill start to cry poor and see where it gets you.....

The best electricians make the worst business men......


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## Mr Rewire

flyboy said:


> .
> 
> 
> 2. Billable efficiency is used to bonus employees. The more efficient they are the more bonus they make. The bonus is more attractive than accumulating non-productive pay hours. As a result, they find ways to be more efficient, like making sure their trucks are properly stocked so they don't have to go to the supply house,*not charging the company for non-productive time when cleaning out trucks, washing them or gasing up.* They also have less call backs because it goes against their billable efficiency
> 
> Set up properly, this is a win win win for the company, employee and the customer. Some employees will get their billable efficiencies up to to 55-58%.


 This is a violation of labor laws and can subject you to fines and penalties.


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## flyboy

Mr Rewire said:


> This is a violation of labor laws and can subject you to fines and penalties.


Excellent point! If you *require* an employee to do these things without compensation, depending on your states laws, you can assume liability in several areas, not only labor laws.

However, I can't control what they do when they have their trucks at home in their drivway on the weekends. 

*They fill out their own time sheets* and our employee policy clearly outlines how shop time is paid with authorization. If it's not authorized they are not expected to do it (although it's almost always approved unless we are getting into overtime).

We do have employees that request and are always granted shop time for washing and cleaning out trucks, doing inventory, working around the shop, doing paperwork, following up with customers, etc. 

Just like working through lunch breaks. The company does not require it (it's against the law) and we insist that employees take their breaks. However, every once in awhile we'll get a time sheet that does not show the lunch break with a note "worked through lunch". Even though we appreciate their reasons for doing that, it's against the law.

My apologies for the misunderstanding and thank you for bring up this very important point.


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## AFOREMA1

flyboy said:


> Excellent point! If you *require* an employee to do these things without compensation, depending on your states laws, you can assume liability in several areas, not only labor laws.
> 
> However, I can't control what they do when they have their trucks at home in their drivway on the weekends.
> 
> *They fill out their own time sheets* and our employee policy clearly outlines how shop time is paid with authorization. If it's not authorized they are not expected to do it (although it's almost always approved unless we are getting into overtime).
> 
> We do have employees that request and are always granted shop time for washing and cleaning out trucks, doing inventory, working around the shop, doing paperwork, following up with customers, etc.
> 
> Just like working through lunch breaks. The company does not require it (it's against the law) and we insist that employees take their breaks. However, every once in awhile we'll get a time sheet that does not show the lunch break with a note "worked through lunch". Even though we appreciate their reasons for doing that, it's against the law.
> 
> My apologies for the misunderstanding and thank you for bring up this very important point.


It's not illegal for employees to work through lunch if they volunteer and get paid , if they work for free its illegal.

And flyboy it is illegal for your employees to do any work for you off the clock by your request or for them to do it voluntarily. That is under federal labor law. I believe this is for the protection of the employee as if they get hurt or hurt someone else while going to het gas or other free tasks w/c doesn't cover them neither do your other insurances cover them as they are off the clock.

Having your employees work for free is illegal and a crap method of trying to increase your productivity and reduce unbillable hours flyboy . You really need to rethink your policies.


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## flyboy

AFOREMA1 said:


> It's not illegal for employees to work through lunch if they volunteer and get paid , if they work for free its illegal.
> 
> And flyboy it is illegal for your employees to do any work for you off the clock by your request or for them to do it voluntarily. That is under federal labor law. I believe this is for the protection of the employee as if they get hurt or hurt someone else while going to het gas or other free tasks w/c doesn't cover them neither do your other insurances cover them as they are off the clock.
> 
> Having your employees work for free is illegal and a crap method of trying to increase your productivity and reduce unbillable hours flyboy . You really need to rethink your policies.


Gotcha, thanks for the input.


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## gold

There are also whats called "white collar exemptions" to these labor laws that allow employees to work under other pay structures as long as overtime requirements are met but you may need a contract to meet those exemptions if they aren't making 100k per year.


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## gold

AFOREMA1 said:


> It's not illegal for employees to work through lunch if they volunteer and get paid , if they work for free its illegal.
> 
> And flyboy it is illegal for your employees to do any work for you off the clock by your request or for them to do it voluntarily. That is under federal labor law. I believe this is for the protection of the employee as if they get hurt or hurt someone else while going to het gas or other free tasks w/c doesn't cover them neither do your other insurances cover them as they are off the clock.
> 
> Having your employees work for free is illegal and a crap method of trying to increase your productivity and reduce unbillable hours flyboy . You really need to rethink your policies.


All this only applies to hourly employees. You can require an employee to work anytime you want as long as they are over 18 and compensated directly (for time) or indirectly (piece rate / commission / contract).


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## AFOREMA1

gold said:


> All this only applies to hourly employees. You can require an employee to work anytime you want as long as they are over 18 and compensated directly (for time) or indirectly (piece rate / commission / contract).


That is true but his statement implies that they do it with no direct compensation. And most electricians that are employees are hourly , I have run across very few working piece rate or commission that were considered by the EC to be employees. Yet another common violation of law.


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## gold

AFOREMA1 said:


> Yet another common violation of law.


What is? I don't follow.

You should keep in mind that he really isn't trying to avoid paying his guys. In most cases a branded resi service company with high hiring standards is paying there better techs equal or greater then there union counterparts. Not paying for time that they spend standing around the shop becomes beneficial to both the tech and the business. Its a very mutual understanding.


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## AFOREMA1

gold said:


> What is? I don't follow.
> 
> You should keep in mind that he really isn't trying to avoid paying his guys. In most cases a branded resi service company with high hiring standards is paying there better techs equal or greater then there union counterparts. Not paying for time that they spend standing around the shop becomes beneficial to both the tech and the business. Its a very mutual understanding.


Having employees working piece rate and 1099ing them was what I was refering too. Not accusing him of not paying his employees just pointing out the pitfalls of the method he stated he uses which can be seen as a violation of labor law. And as for not having guys sitting around the shop that is great no problem.

But for the non-billable hours they have to work such a restocking, cleaning the van and gassing up they need to be paid to cover them and the company in case of accident or injury . If they are not on the clock when these things happen neither w/c or commercial insurance in most cases will cover them or anyone injured by them. 
It becomes a financial and legal headache for everybody. That is all I'm saying.


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## JohnR

Old thread, I know. Still pertinent information. 

I notice some here that say " our service rate is much higher than construction rate", and Vice Versa. 

I know how to calculate the service rate, How would I calculate the construction rate? Should it be lower than the Service rate?


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## devosf

JohnR said:


> Old thread, I know. Still pertinent information.
> 
> I notice some here that say " our service rate is much higher than construction rate", and Vice Versa.
> 
> I know how to calculate the service rate, How would I calculate the construction rate? Should it be lower than the Service rate?[/QUOTE
> 
> ]Service call rate should be high because there are no other bids on a service call. Commercial and Residential rates should be lower in order to be competitive. Where I'm at, lowest price wins most of the time.


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## JohnR

That explains part of it, but I still am looking for the formula to find the number to use for ME.


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## btharmy

JohnR said:


> That explains part of it, but I still am looking for the formula to find the number to use for ME.


For service rates many agree to figure your annual expenses and base your rate on only billing 1000hrs per year. With construction you will obviously be working/billin for more hours. For example sat you do exactly 50% service and 50% construction. If you can work a full 40hr week doing construction then bill service at 1000hrs per yr and construction at 2000 hrs per yr. make adjustments where needed.


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## yrman

This thread is an oldie but goodie.

We have an hourly rate we use to determine our flate rate service prices and a day rate for multi day projects. Since we can get 6-8 productive hours in a day on a project where we are in the same place all day our day rate hourly rate is about 1/2 our service hourly rate. It also depends on how many people, are they jmen or 1 jman + 1 helper etc.

We are looking for about $1200 per day per man whether it is charged over an 8 or 4 hour day. Some days are less some are more, we are looking for an average.


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## greenwire

Great info in here.

Thanks Harry, and Flyboy, and others


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## janagyjr

Alright, this is the thread I was talking about. I think I need some serious help. ):


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## lortech

*Job estimating is one of my weak areas but, this discussion helps*

I am a LV, Data, Voice technican with desktop support experiance. Doing DATA.VOICE work is not new to me. What is some what new is pricing out the work. I am sure most of you would agree, that square foot vs length of drop or in your case, length of EMT will price differently if:

The distance from CB panel to outlet is longer in a shopping mall vs, insurance office. A 200,000 square foot shopping mall with 20 POS terminals and PCs will differ then 20 PCs in a unsurance office with 20 computers next to each other at insurance office desk. 

I just did my first LV data job that was not platform based. What I mean by platform is a mddle man company, like Fieldnation.com that will bring together the client and the contractor "me" together. The site shows scope of work, price, time amount the client will pay, the hours. I am trying to get away from platform work because it severely undercuts what the REAL expenses the technician will have to be paid for. Platform work can be pathetic and some have left it for real jobs. Who wants to bid on a job that last one or two hours as 30-40 a hour? I KNOW the data technican is not paying taxes, liability, and other expenses with the amount that client will be paying.

So, I need to be accurate for my time to price out the work. Have any of you people tried professional bid software before? How many of you have done LAN network bidding?

BTW, how do you figure in drive time/fuel to the bid ?


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## sarness

Of course it will be different, if your on your own then estimate it as such.

The supermarket job most likely will have longer runs which need more hangers (everyone forgets to price out hardware) , more power poles, and probably require a lift.

Platform work can suck because they want the lowest price. I don't bid on those unless I have time and they hang around and can be made profitable. If they don't accept my bid then oh well. You can always make a counter offer and negotiate a better rate, just stick to it. 

As for travel, figure out how much YOU and your vehicle costs and subtract that from your bid. Are you still making the profit you want? For me my cutoff is 20 miles or 30 minutes for small jobs, anything more I charge a trip charge. Larger jobs usually make enough to waive it. 

One provider I work for has a 50 mile radius, I only go that far out of I can schedule other work in the area, it's not profitable otherwise. Another provider pays me for any amount of time on the road, rare but nice. 

When they ask you to go 3 hours one way at your going rate for a one hour job, tell them to pound sand. As you just put in 6 hours at half pay when you could be doing something local for full pay.


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