Pricing per hour or per job?

[kenmac]

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.

In my area. You'll be hard pressed to find someone to give a free estimate. Days of FREE estimates are over in my area

 

[paulharvey]

I kinda just had a thought that protects you and your client, but will be more work when estimating. In road work we (the county) pay by the unit on many things; limerick is per square yard finished/compacted/at a certain specced thickness; sod is by square yard as well; asphalt is either by ton in place or by square yard at a specced thickness. This allows the county (me) to expand a little to fix problems (ie if we pave 25 feet farther we can fix a major problem). For you you could come up this something like $50 per load of gravel to spread, or $125 per quarter acre tilled. This lets the home owner expand some and lets you get paid as well. Lets say your area has fierce rocks, you could say $125 per quarter acre (100 ft x 100 ft) but if I have to gather up all the rocks that's an additional $15 per loader bucket full, stock piled where they choose, or $125 per quarter but $40 per hour to pull stumps you encounter during the tilling. (We never know what we will truely encounter building a road so as part of the bid the contractor includes a price per cubic yard to excavate and haul off and backfill/compact good material anything we/I deem "unsuitable material". If it wasn't for this semi open contract we would have change orders daily, which slows work, and complicates everyone's life.)

It would require some serios effort on your part, but you might just be able to give your clients some peace of mind with out cheating yourself. Another thing would be that you would have to adjust your unit price if its either very a very small job or a week long job.

Imagine your looking at a 200 foot drive for a customer, you could tell them $350 per load for gravel if I order and spread, or perhaps tell them it will be $12.50 per square yard at 6" thick. You could measure it up with them to give them peace of mind, and they don't have to watch you work for 8 hours a day nit picking how fast it goes. You could sit down with them and go over options (I can disk the garden for $65 per quarter, I can disk and cross disk for $95 per quarter or I can till for $125 per quarter, and here's my price if I have to pick rocks, here's the price if I need to pull out stumps) you could make up simple flyers to post at Ace/TSC, that has many services prices.
Gradens tilled $125/quarter acre
Gravel spread $50 per 20 ton load
Finish mowing $50 per acre
Rough mowing $75 per acre
Bush hogging $100 per acre with up 1" steams
Bush hogging $150+ per acre with 1"-3" steams.

This allows the home owner some idea what it could cost before they ever call you.

Sorry if I'm getting too into this, I'm kind of planning my own little venture one day build driveways/house pads (seems to be shortage of honest people in the business)

 

[Western]

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.
.

One other way to figure it, you may be "cheaper" than some competitors, but you may also be the "guy" that does work for the ones that can afford you, that otherwise may have had to go without. In that case, I say it's a win win.

We have a small family business. The yearly contracts can run from a business net from 100k to over 3 million. The times we have to struggle are when the "work for beer money" upstarts severely outbid us. In all but one case, we have got back our better contracts after the low bidders didn't realize the full scope of work and fell flat on their face. The other case they found a company that fit their needs better than we would.

We try to be low competitive, this allows us to buy materials in bulk and keeps the cost down. In turn, this has allowed us to do a bit of "charity work" for a few schools, churches, police and fire depts.

I would recommend starting as low as you feel comfortable (and make some $$) and do like Eddie and get your name out there, then raise your rates as you get a feel of the market.

I know it's not much help, but I though I'd throw my thoughts out there too

 

[paulharvey]

In my area. You'll be hard pressed to find someone to give a free estimate. Days of FREE estimates are over in my area

I don't like to do anything sight unseen, and I have turned down a rather large (for me) retaining wall/terraced back yard with some fancy poured radius stairs. Bottom line for me was yes I can do it, but I would have tie up so much personal money that if anything went poorly I would be missing rent payment on house. I also had a full time 7-5 job that I couldn't loose trying do too much. There comes a time when the smartest thing to do is thank them for the call but that you are not going to be able to do it. In my part of Florida you can run into solid layers of grey gumbo clay 32" down in one neighborhood, and the pretties white or orange mortar sand down to 10 ft less than a mile away. Some times not getting a job is better then winning the wrong job.

 

[Western]

Some times not getting a job is better then winning the wrong job.

Truer words where never spoken!!:thumbsup: Well probably was, but thats certainly a true statement

 

[wcampbell47]

I have read just about all the posts in this thread. I started with a B7510 which gives me some basis to comment. I bought the 7510 to clean up a place we had purchased and to till a garden. Work for the public followed. At first it was small jobs for neighbors, then a contractor started using me on an occasional basis. I quote $55 an hour for work with the 7510. I have come to the conclusion that it is worth $40 to show up and unload. If the project takes a full hour then I charge $55. I have gradually learned that I can spread 14 yards (one truck load) of dirt in an hour, ditto for limestone. I can shred a 50x100 lot in an hour (we have extremely tough salt grass here). I quote $60 an hour for the B3200 tractor. How this works is I quote the hourly rate and give them a not to exceed price. If I grossly underestimate I just grin and bear it. I never leave a job before I am finished. I try to learn from my mistakes. I have been able to get my asking price because I have a reputation for doing good work at reasonable prices. Those lots that belong to people that wanted me to mow them for less for the most part remain in the same state I last saw them in. I am known as the guy that will do small projects. Some of the other tractor owners will not do the small jobs. I give discounts to the elderly and veterans. I am in my 7th year of owning a tractor. I get a call for work most every day - they don't all pan out but I stay busy. I work hard every day, I have fun and I get paid for doing it. Just another day in Paradise.

BTW - there are people out there that you don't want for customers. The ones that want the lowest price - and then ask you to do something not in the original quote and don't want to pay for it. The locals are harder to work for than the weekenders. Don't know if this will help - sometimes you just have to get out there and do it and adjust as you go along.

Wayne

 

[nitroxn]

I have read just about all the posts in this thread. I started with a B7510 which gives me some basis to comment. I bought the 7510 to clean up a place we had purchased and to till a garden. Work for the public followed. At first it was small jobs for neighbors, then a contractor started using me on an occasional basis. I quote $55 an hour for work with the 7510. I have come to the conclusion that it is worth $40 to show up and unload. If the project takes a full hour then I charge $55. I have gradually learned that I can spread 14 yards (one truck load) of dirt in an hour, ditto for limestone. I can shred a 50x100 lot in an hour (we have extremely tough salt grass here). I quote $60 an hour for the B3200 tractor. How this works is I quote the hourly rate and give them a not to exceed price. If I grossly underestimate I just grin and bear it. I never leave a job before I am finished. I try to learn from my mistakes. I have been able to get my asking price because I have a reputation for doing good work at reasonable prices. Those lots that belong to people that wanted me to mow them for less for the most part remain in the same state I last saw them in. I am known as the guy that will do small projects. Some of the other tractor owners will not do the small jobs. I give discounts to the elderly and veterans. I am in my 7th year of owning a tractor. I get a call for work most every day - they don't all pan out but I stay busy. I work hard every day, I have fun and I get paid for doing it. Just another day in Paradise.

BTW - there are people out there that you don't want for customers. The ones that want the lowest price - and then ask you to do something not in the original quote and don't want to pay for it. The locals are harder to work for than the weekenders. Don't know if this will help - sometimes you just have to get out there and do it and adjust as you go along.

Wayne

This is exactly what I am striving form thank you Wayne

 

[cockeyedMFer]

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

In my experience, we called a number of excavating companies (the pros) to level a pad for our 40x54 barn project and cut in a 600' driveway. The pad was on a grade in a thinly wooded area, the drive was just a matter of cuttting off topsoil along the edge of our property.
No one would return calls. Or if they did, the promised estimates never appeared. It was too small of a job to get their attention. Other outfits would only take the job if they could do the entire thing - build the building or haul the rock for the road.

If you're a DIY type who wants a specific job hired out, often the "on the side" guys are a lot more flexible and able to give you what you want.

Paulharvey - thanks posting the math. That was very helpful.

 

[paulharvey]

In my experience, we called a number of excavating companies (the pros) to level a pad for our 40x54 barn project and cut in a 600' driveway. The pad was on a grade in a thinly wooded area, the drive was just a matter of cuttting off topsoil along the edge of our property.
No one would return calls. Or if they did, the promised estimates never appeared. It was too small of a job to get their attention. Other outfits would only take the job if they could do the entire thing - build the building or haul the rock for the road.

If you're a DIY type who wants a specific job hired out, often the "on the side" guys are a lot more flexible and able to give you what you want.

Paulharvey - thanks posting the math. That was very helpful.

I build road for a living (well I inspect/supervise building roads) generally between $500k and $3.5m and I am often asked if I know a good contractor to pave a driveway, people are surprised when I tell them I don't know a single contractor who will do a quality job on small stuff like that. The is big companies who pave 100 miles of road per year wont do small stuff, and the guys who do from what I see daily are incompetent, crooks, or will charge $5000 for what is frankly a $1500 job. In the county I work for, all new homes (and any old home that pulls a building permit) must have either a poured concrete drive or paved driveway from the edge of road to the RoW (18-30 feet) with 10' radius and if needed a 15" culvert with poured mitered ends, now we inspect before the pour to make sure its 6" thick, with wire (WWF) but I hear all the time of getting it inspected, then pulling wire out, throwing dirt in the forms to only pour 3-4" of concrete, and pouring at a 9-10" slump. Asphalt, we require 1.5" of asphalt on 6" of compacted rock, but I frequently see asphalt that us 1/2"-3/4" thick, with tire marks, segergation, and barely compacted. There is room and demand for small Guy who takes pride in his work, and doesn't gouge people.
.... that's my rant, ill stop now...

 

[hawkeye08]

20 years ago when we were building our own house, I did not have a tractor or backhoe and needed some help with the drain field for the septic. I found a guy that did this work on the side. He was agreeable and willing to discuss ways I could save some money. He allowed me to purchase all the materials (rock, pipe, d-box) from his supplier and pay for them myself (saved me his markup). We discussed what it would cost flat rate and what it would cost hourly.

It boils down to this,

Flat rate, the guy doing the work takes the risk (it could take longer and have problems),
Hourly rate, the customer takes the risk, it could take longer and he has to pay more.

Both methods can have reward for the worker and customer, flat rate, it could take way less and he makes more profit or hourly, it takes much less and the customer does not have to pay as much.

I chose to go hourly and saved several thousand dollars over the flat rate. The guy I hired still made good money and I saved alot.

There is also two methods of setting price (that I use often in my work).

1) cost plus (what it costs plus a reasonable profit) and,
2) value priced (priced higher than cost plus because of the value of the service)

Most folks understand the cost plus method but often the value priced is a mystery. Value is used when the market will bear a higher price because the service is in demand and no one will do it for less. It may only take an hour, but may be billed at $500. This is most often used when new or unique services are introduced. As the service becomes a commodity, then the pricing comes down and the market is closer to the cost plus method then...