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Larger projects - Labor pricing in estimate ??

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  • Larger projects - Labor pricing in estimate ??

    Hey lads!

    I'm starting to land larger renovation projects, I'm currently in phase 2 of a 6000$ project.

    I wanted to ask you if the more experienced professionals here if you guys tend to use the multiplier x 2 or x 3 for estimates.

    For example, my current project.

    The material cost was 1500$

    I charged 2500$ for labor,

    Total was 4000$

    I've spent probably 25 hours on the job so far, have one more 8 hour day to go.

    It involved 1100 sq foot sodding, cutting down 5 large trees, garden design and planting, and a lot of little odds and ends with regards to those services.

    Would you guys use the rule of x 2 or x 3 the materials to be safe?

    Like 1500$ x 2 = 3000$ total? or 3000$ in labor, so it would be 4500$ total,

    Would like to hear your feedback, thanks.

  • #2
    I did design/build for a decade before specializing in maintenance services only. Bidding a price using a multiplier is a very risky practice because it does not take into account the risks involved during the course of a project, nor does it account for the various facets of overhead.
    Exhibit A: A customer wants a new lawn comprised of Zoysia turf. Total square footage is 2000 square feet. Zoysia is sold by the pallet. One pallet covers 500 square feet, and has a wholesale cost of $250.00/pallet.
    If one were to take the $1000.00 in material cost (sod), and simply multiply it by 2 or 3, the installed cost becomes a range of $2000.00 to $3000.00. This is hardly a competitive bid. The proper way to bid would take into account the materials, man hours (labor), delivery fees, equipment rental fees, sales tax, and markup (profit) to arrive at a bid. So, my bid would look like this:
    *Materials (zoysia).....$1000.00
    *Delivery of sod........$ 125.00
    *Skid steer rental......$ 325.00
    *Debris disposal fee...$ 100.00
    MATERIAL SUBTOTAL.....$1550.00
    *Labor (employee) 10 hrs. at $12.00/ea...$120.00
    *Labor (owner) 10 hrs. at $30.00/ea.......$300.00
    LABOR SUBTOTAL.....$420.00

    OVERHEAD SUBTOTAL.....$1970.00
    SALES TAX (7%)............$ 137.90
    OVERHEAD TOTAL..........$2107.90
    MARKUP (profit margin) at 20%.....$421.58
    GRAND TOTAL INSTALLED COST.....$2529.48

    This is how you bid out a project. All overhead is covered, you and an employee get payed for your labor, and your company receives a respectable profit.
    integritylawnpro.com

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    • #3
      Thanks Chilehead,

      Very in depth estimate analysis. Appreciate your time and effort !

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      • #4
        You're welcome.
        integritylawnpro.com

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        • #5
          So, my bid would look like this:
          *Materials (zoysia).....$1000.00
          Do you ever find that you charge the customer the retail price of materials if you get it at a discounted wholesale price or do you try to stick with passing on your price of materials regardless if you purchased it at wholesale or retail.
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          • #6
            Do you ever find that you charge the customer the retail price of materials if you get it at a discounted wholesale price or do you try to stick with passing on your price of materials regardless if you purchased it at wholesale or retail.
            I stick with passing on the savings to the customer. I stay competitive that way. I make my money in the Labor category, and the company makes its money in the Markup category.
            integritylawnpro.com

            Comment

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