Pricing

Here is the info you need to develop your pricing system.

http://www.contractortalk.com/showthread.php?t=27899

It really comes down to knowing your production rates for various things and going from there. If you do not know, use an educated guess based on your experience, keep track and modify for the next job. Easier said than done. I am still doing the eyeball method of estimating (based on time I think the job will take) but I know that as my business grows, I am going to have to take the time to measure everything very carefully and pay attention to the crew and develop formulas that will help with bidding.

For me, bidding is the most difficult part of the job, especially new construction since it seems to be based arbitrarily on floor square footage and those numbers really do not work well for everyone. Some will do a base price of 2.00/sq ft. of floor, others 4.00/ sq. ft. of flooring, each one not including custom built-in work. One may be using good materials and really going the extra mile on getting the work to as perfect as possible. The other may be using cheap materials and just walking in and shooting two coats on the trim as quick as possible.

For new construction, it really is important that you develop your system and sell that to the builder as why it is the best for his homes. Some builders, are 2.00/sq. ft. builders and cannot fathom why anyone would pay more., others will not be happy with what can be done for that price.

Like HGP says in post #7, I like the old four-fold formula for pricing a job, i.e. labor + materials + overhead + profit.

Of those four costs, the material is the most straightforward and less confused.

The other three vary between individuals and areas.

Having less overhead doesn't necessarily mean one should charge less. But having higher overhead (office, advertising, newer work vehicles etc) likely results in higher chances of landing more jobs at higher prices --which is vital for the business.

I think profit actually is a part of the labor. And the labor is much or less determined by three following factors:

1. Experience (or skills and knowledge): Experience usually comes with all the years.. Having the abilities to get the job done right, nicely, and in less time, is priceless.. I mean, pricey..

2. Clientele: A small (likely wealthy) percentage of the population would pay more for the best of everything. The market one is in shapes/determines one's pricing.

3. Desired Income: "I want, therefore I am"
Of course, in real life one can't always get what one wants.. I'm still working on this one...