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Question DetailsAsked on 10/6/2013

Looking for advice/opinions. i seem to be loosing my touch when it comes to pricing projects.

as i said, i am just not able to price work this year.currently i have $839,000 worth of work priced this year, with no call back on any of it. we have secured some jobs, but they are sporatic.
i always take pride in my job estimates, i provide very detailed estimates.
i believe my hourly rates are competitive, i.e. carpenter $45 per hr.
we carry general liability/ workmans comp/ umbrella policies.
we also have all the necessary licensing, all my sub contractors are properly licensed & insured.
we have great ratings with past clients on angies list/ bbb etc.
but when it comes to pricing work i find myself not in the ballpark. here is a for instance.
remove 4 metal basement windows and replace with vinyl.
framing required: $2,100. job done for $1,100
fire damaged house. split level ranch. existing structure remained,
new electrical,plumbing,roof,windows,doors,spray foam insulation,board plaster,kitchen,flooring etc etc. 12 x 24 composite deck. $184,800 or $88 a sq ft. done for $147k.?

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4 Answers

0
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In a recession environment, you are competing (assuming you are a small business, from the annual volume) with companies that are working at near cost just to stay in business, unemployed or laid off individuals working for half normal labor rate (and usually without insurance, bonding, or even license), sole proprietors who do not have to carry workers comp, illegal aliens, etc - all of which can do the job cheaper than an established company.

Check out some of the contractor websites for typical pricing and labor rates, and make sure you follow up on EVERY job you lose to see why you lost it - may not be just price, but if is see if they will give you a clue if there is any particular items you overpriced, relatively speaking.

Another thing you could do it work up a single page document emphasing the importance and benefits to homeowners of having a licensed, insured, bonded contractor and provide this free online as well as giving it to them when you first meet them - could put a few recent job references on the back, as well as your BBB rating and referral to sites like Angie's List where you are reviewed.

When you meet them the first time, explain that as an established contractor with a place of business and equipment, there will always be someone operating out of his home and pickup that can undercut you on price, but that there are benefits to them in having an established contractor with an established track record, and that you bid based on what it costs you to run the business, not to undercut the cheapest price, with the expectationthat you will give them a quality job, not the cheapest that can be done.

On the pricing examples you gave - the window job sounds like it was done using box store cheapest vinyl windows. The fire rehab does sound high to me - $88 a square foot sound like a complete house shell roughed in but without cabinets or flooring or interior paint, though depending on how much structural rehab was necessary might have been in the range - and of course you did not say where you are located.

Hopefully your work will pick up as the economy recovers - our area has seen about a 4-fold increase in remodels in the past year, and more than a tripling of new construction permits, so the housing market seems to be recovering.

Answered 6 years ago by LCD

0
Votes

thanks lcd.

i'm sorry we are located in the boston area.

the price for the fire job did include an oak kitchen & granite countertops, appox 25 lf of

wall and base cabinets.

honestly I do follow up on why we did not win the bid, and what I find in 90% of the cases is that there budget is way off.

my overheads are not massive because I gc a lot of jobs, I do the framing & carpentry myself.

my subs are all licensed & insured.

a close friend of mine a gc also is $185 SQ FT for a new addition, over 1,000sq ft on the side of the house, they leave it painted including doors/windows/baseboard, etc, etc.

that does not include kitchens/tile/c tops.

high end finishes start @ $225 sq ft. this guy has 2 years work in front of him.

labor in boston area is expensive, a good carpenter starts @ $30 hr min.

plumbers. $100 hr, but will charge between $1,000 & $1,500 a fixture for a bathroom remodel, that does not include any fixtures. that's using existing locations & water lines.

electrican. $75-85 hr. it's $3,000 to change over a service. good painters $35 hr.

so it's hard to price work & score it as you said when you have guys pricing low, but it's even harder when subs are charging these rates.

a kitchen remodel we recently priced. (complete demo).

demo: $1,800. plumbing $3,800. electrical. $4,200. cabinets $6,500. C. Tops $2,450.

rough carpentry $2,200 new sub-floor/wall framing/move window.

icynene closed sell $1,925. board/plaster. $2,350. tile labor only; $650.

new oak floor $1.100. finish carpentry $4,100. total $31,075.

absolutely no mark up on my subs from me. this was a 19 x 10 with an l shape kitchen.

this job all going well would take 3-4 weeks to complete, as you can see my end of it was $6,300. I would have to make a site visit every day I was not working on it and also pay a laborer for every day we worked on it. needless to say we did not get the job.

nobody else got it ither, there budget they told me afterwards was $17,000.

oh well the show must go on. thanks again lcd.

Answered 6 years ago by pats fan

0
Votes

Don't you just hate it when they have an unrealistic budget - and this applies to commercial and industrial as well as residential jobs. I can understand people not telling their budget up front for fear bids will rise to meet the budget, but I guess all you can do is, during the on-site assessment, discuss up-front what the ballpark cost for a job like theirs would normally be before you waste time preparing a full bid on a job that will never go. Ditto for those who are "planning" the job and get bids to develop a budget, but have no intent to go ahead at this time.

All I can say in your case is don't bid any jobs that are not likely to generate a profit, and maybe drop back on the GC side and emphasize just the trades you can do yourself until things pick up again - that is what my contractor Dad (he was a specialty contractor - tile, surrounds, countertops, laminates and floors) did during recessions like in the early 60's and the late 70's - cut back to just himself and his brother and stayed only with the work he could do in-house, using zero subs. Cut overhead to near nothing (Other than insurance and licensing and such) and was enough to pay the bills until the housing market recovered. His reputation was such that he had no problem getting back into the swing of things and re-expanding to all the areas he had previously covered before the recession.

One thing he did do which seemed to be a very good move - he cultivated close relationships with just a few highly respected local architects and GC's and eventually got almost all of his business either through them or from return clients, and almost no work "off the street". Cut his lost jobs to almost zero, cut out most of the problems with clients trying to change the scope of work without changing the cost, and pretty much totally eliminated bad checks and the need for liens.

Good luck.

Answered 6 years ago by LCD

0
Votes

yes sir a clever man. well thanks for the advice bud.

funny how things go, I am in the process of pricing a kitchen and room renovation as your email came in. that maybe the rub of the green I need.

thanks again bud, stay safe.

Answered 6 years ago by pats fan




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