Pricing per hour or per job?

[nitroxn]

Bruce,
I worry about pricing the whole job. Even if I "pad" my prices a bit with the intention of not charging if the job finishes faster than expected. What concerns me is whats below the surface, large rocks or a large area of medium sized rocks that will really slow down progress. So what I take from this is I price the job by estimating my time and explain in detail about rocks, roots and other obstructions as a possible up charge.

Steve,
I own the tractor, all implements and tow rig. As a home owner I have payed for them. Honestly I have no idea on operating cost yet, I figure only time will help me put numbers to that. I started out doing jobs only for family and friends but enjoy my seat time and figure to make a little money while doing it. I want to be a little lower on price than the next guy but not so low I seem desperate. I make great money at my day job and dont really have to do this, I just enjoy it.

Dave,
Trust and keeping my word if a very big part of who I am. Obviously a new customer wouldn't know that about me. The jobs I prefer to do are small jobs such as field lines tilling and french drains so the budget can almost always be met. Im with ya about the car salesman thing.

LD1,
I dont mind them watching simply because I work and dont stop when Im on their time. I can see how that may bother some operators. I like to periodically ask while im on the job if they are happy with the current results Im producing. Plus most of the time its their project, Im just doing the digging or roughing in.

Pine,
No doubt about bigger tractors and more work in less time, I dont have a big tractor for a reason. They tear up the work area more. I advertise about being a less intrusive on the surroundings. I work the best I can with what I have.

Paul,
I like your idea of a flat rate for jobs but its 40 per hour additional if I go over due to roots, rocks or other unknowns. I just want to make sure each one of my customers feel they got their moneys worth at the end of the day.

Everyone,
Thanks to each of you for reading and responding. This has given me a lot to think about, as always GOOD ADVICE.

Curtis

 

[nitroxn]

Kenmac,
I split it simply to help with the sale. If I had enough business going I could charge for all the drive time. It is food for thought though.

Curtis

 

[ustmd]

You may have already gotten all of the info you need, but I will throw in my :2cents:.

I don't mind paying by the hour if I have an established level of trust with the person or if I have a basic understanding of how much time it should take.

To give you an example, before we got our tractor, I was talking to a guy about doing some mowing on 5 acres. He quoted me $x/hr, but would not give me an estimate of the amount of time. I asked if we could do a fixed amount, he said "yes", but he wanted to DO the work and then give me the amount...needless to say he did not get my business, since I was not comfortable signing blank check.

In contrast, I do contract with a guy to do some skid steer work on regular basis (maybe 2-3x per year). On the first job we walk the property and discussed what I wanted done. He quoted me a $x/hr and a not to exceed price as well. Additionally, he was very clear, that he only charged when he was "in the seat"....ever since then, we don't even discuss a price, he does the work and tells me how much...

 

[paulharvey]

It's not related to tractor work ,but I'll give the cust. the option. By the HR or by the job. Some like having the option. You say you split your travel time ?? I don't split or give any travel time. All my time is charged

I don't know about travel, as a contractor you know where the customer is located, and if you have a 4 hour minium built in to cover your travel and set up. Its not like a plumber on a midnight service call. Just my opinion. Another hard fast firm rule for me is I always always look the jobs over before I bid or even agree to do them.

 

[smstonypoint]

Steve,

I want to be a little lower on price than the next guy but not so low I seem desperate. I make great money at my day job and dont really have to do this, I just enjoy it.

Curtis

Curtis,

I realize you are really doing this as a hobby and you may be (likely are) subsidizing the pricing of your services with your outside income.

Let's think a minute about your competition. They may be in business to put food on their tables. As such, they have to price their services to cover their operating cost (e.g., fuel, allowance for maintenance and repairs, allowance for depreciation due to wear and tear on their equipment, their labor, etc.), their ownership cost (depreciation incurred regardless of use, interest on their investment, insurance, property tax on equipment, etc.), and hopefully a profit as a reward for their entrepreneurship and the risks they assume.

I am not passing judgement, but I would not be happy if I was one of your competitors who was in this as a real business.

Steve

 

[PoorPlowboy]

Curtis,

I realize you are really doing this as a hobby and you may be (likely are) subsidizing the pricing of your services with your outside income.

Let's think a minute about your competition. They may be in business to put food on their tables. As such, they have to price their services to cover their operating cost (e.g., fuel, allowance for maintenance and repairs, allowance for depreciation due to wear and tear on their equipment, their labor, etc.), their ownership cost (depreciation incurred regardless of use, interest on their investment, insurance, property tax on equipment, etc.), and hopefully a profit as a reward for their entrepreneurship and the risks they assume.

I am not passing judgement, but I would not be happy if I was one of your competitors who was in this as a real business.

Steve

That's the simple reality of the market. Services are available in every segment at different price tiers. Just how professional of a job do you need done? Those "professionals" offer perks that a hobbyist can't such as usually a quicker start time due to more folks on payroll, bonded and insured, and sometimes a better understanding of estimating expenses simply due to experience.

Those are perks that cost, but not all jobs require them. If the task at hand doesn't require that professional level of "accessories" why pay the extra that the big boys charge to get that garden tilled or that pasture groomed?

 

[paulharvey]

That's the simple reality of the market. Services are available in every segment at different price tiers. Just how professional of a job do you need done? Those "professionals" offer perks that a hobbyist can't such as usually a quicker start time due to more folks on payroll, bonded and insured, and sometimes a better understanding of estimating expenses simply due to experience.

Those are perks that cost, but not all jobs require them. If the task at hand doesn't require that professional level of "accessories" why pay the extra that the big boys charge to get that garden tilled or that pasture groomed?

Agreed, it will self regulate in short order if he's robbing him self, but lets take a minute to explore true costs.

1. Purchase price, reserves for replacement $15,000 divided by useful life (we use 6000 hours on diesel engines under 60 HP) =$2.50 per hour
2. Repairs, service, tires, ect will typically come out to roughly the purchase price over the useful life =$2.50 per hour
3. Fuel = 0.3 lbs per HP per hour / 7.5 #/gal = 0.8 gal/hour x $3.50 (off road diesel) =$2.80 per hour
4. Insurance; lets just say a lower end liability policy runs $250 per month (hope that's kinda accurate but its a guess) even if you only work 10 hours per week, $250/10/4=$6.25 per hour
5. Total hourly operation costs =$14.05/hour
6. Inspect/meet/bid trip at $0.40 per mile average 15 miles (30 x 0.40)=$12.00
7. Transport of equipment at $0.50 per mile average 15 miles (30 x 0.50)=$15
8. Total set up $27
9. 4 hour min x $40=$160-set up($27)-4 hour run time($56.20)=$77.80 profit before taxes extra for 4 hours work, if he works 8 or 10 its much better. 10 hours x 40=$400-$27-140.50=$232.50. Even if you give 33% to Obama your making $154.85 in 10 hours ($15.48 per hour take home) which is pretty darn good for an operator, although your taking on far more risk then a typical operator. In my area an operator (other than a grader rarely makes more than $12-15 before taxes).

 

[paulharvey]

I hope someone finds all that math useful for something.

 

[nitroxn]

Steve,
I see the point about taking food from someones plate. I dont believe thats the case with what im doing. I want the small jobs for the small tractor. The jobs that the people that are in business dont want due to the proffit margin being low simply because its a small job.

Poorplowboy,
You took the words out of my mouth.
Paul,
The math is exactly what i was hoping for. The numbers will be a little different but that gives me something to examine.
THANKS EVERYONE.

 

[EddieWalker]

I'm in a different line of work, but there are enough similarities that I'll offer my opinion. I bill both time and material for some jobs and a total cost in other jobs. The unknown, or surprise factor is what really decides which way I will go. For a bathroom remodel, it's pretty basic and I will give a client a total cost with a working budget on materials that can go up or down depending on what they want to use. I also include that if I discover a surprise, I will stop what I'm doing and go over it with them if it's going to add to the cost of the job. Here, the most common surprise is termites, but shoddy workmanship or some Southern Engineering will also cause me to increase the price of the job if it comes up. One recent example is a shower job where I found a wet area inside the wall from a leak that had gone undetected for years. It wasn't in an area that was easy to get to, and I added a days labor to fixing it and putting everything back together again. In another case I was installing a front door and I found that the framing was almost eaten away from termites. That easy half day job turned into a very long three day job.

When I started out here, I didn't know anybody, so I advertised in the free classifieds paper as a handyman. I charged $10 an hour just to get some work and get my name out there. For a year or more, that's all I was getting, but after awhile, I started getting call backs and then jobs from their friends based on their recommendations. Word of mouth is what it's all about when you are self employed. Once that started to happen, I stared to raise my rates.

Like others have mentioned, it's all about trust. Clients have to trust you to do a quality job and not to take advantage of them with what you charge. There are so many thieves out there that if you can establish yourself as the "good" guy and the one they know wont hide something or pad the hours, you will be the one they call regardless of what you charge. They will pay more for this because they know that it's cheaper in the long run. They will also wait for you. The job I'm on now hasn't had cold water to half their house for two months. I stopped the leak but didn't have time to rerun their water line until now. This is a 5,000 sq ft high end home, and they waited for me to finish off what I was already committed to, and go on vacation, to do their job.

Sounds like you are building your reputation already. I've found that Facebook is another really good way to get your name out there and to build relationships with future clients. Become friends with as many people as possible in your area on FB and post tons of pictures of what you do. Before and after pictures and also pics of you working. Add personal pics that show you are a real person and somebody who has interests that clients can relate to. Nature photography is what I hear about the most with my clients, but my pets also come up fairly often in conversation. Most of my new jobs come from Facebook and people that I've been friends with on there for awhile. They have been burned by other contractors in the past and they are very hesitant to get taken advantage of again. It takes time, but when they call me, it's because they have been seeing what I post, that I finish the jobs and my clients are happy. When I show up to their house, they always like to talk about my pics on FB. They already know I can do the job, so what is most important is if they like me and are comfortable with working on their house.

If they trust you and feel comfortable, price isn't a factor. I never lose a job on cost. I've never had a client tell me it's too much. Usually when I lose a job, it's because they don't want to wait. Sometimes after they get it done by the other guy, they hire me to tear it apart and do it over again. LOL

One really good piece of advice that I live by is to never talk about money or joke about it while working for the client. If you under bid it, suck it up and do it for what you agreed to without mentioning it to the client. Every education has a cost, and learning what to charge is something you have to learn over time and by making a few mistakes along the way.

Eddie