Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
AJS ALEX & LIHR.. People like Sandyjet will never know the true cost to run a legal business. What he thinks is ridiculous is just the true price to run a construction business on Long Island.
Just for ****s and giggles... Since city data is anonymous.. What is your operational overhead/payroll per week? I'm sure you know this number off the top of your head, every business owner does. I don't do construction anymore because I draw now so I don't care about saying numbers. I can talk freely. I hope you guys will also.
When I was doing cost estimating we added up our payroll, insurances, liability, rent, and etc into one number per week and used it to calculate jobs. This number does not include materials, subs, or profit...
I was working for a company that did mostly Second Floor Additions and Extensions and the cost per week was $8,000.
That means if the company had a 4 week job, before we even purchased any material, the job started at $32,000 without a profit....
That also means that one day operational cost was $1,600. That meant the company need to make at least $1,600 per day to just keep the doors open and the lights on...
AJS ALEX & LIHR can you guys agree with me on this? I don't know the sizes of your company's and your scope of work so I'm going out on a limb but I'm hoping you guys were/are similar? Where do/did you guys stand?
AJS ALEX & LIHR.. People like Sandyjet will never know the true cost to run a legal business. What he thinks is ridiculous is just the true price to run a construction business on Long Island.
Just for ****s and giggles... Since city data is anonymous.. What is your operational overhead/payroll per week? I'm sure you know this number off the top of your head, every business owner does. I don't do construction anymore because I draw now so I don't care about saying numbers. I can talk freely. I hope you guys will also.
When I was doing cost estimating we added up our payroll, insurances, liability, rent, and etc into one number per week and used it to calculate jobs. This number does not include materials, subs, or profit...
I was working for a company that did mostly Second Floor Additions and Extensions and the cost per week was $8,000.
That means if the company had a 4 week job, before we even purchased any material, the job started at $32,000 without a profit....
That also means that one day operational cost was $1,600. That meant the company need to make at least $1,600 per day to just keep the doors open and the lights on...
AJS ALEX & LIHR can you guys agree with me on this? I don't know the sizes of your company's and your scope of work so I'm going out on a limb but I'm hoping you guys were/are similar? Where do/did you guys stand?
DesignBuild516,
you're a baby-boomer like me. THe last of the Mohicans. I'm the tail end of that era and the tail end of the real mechanics, craftsman, etc..,,, the generation that when you looked into a persons eye and shook their hand the deal was as good as gold. I was raised with "your word is your bond" I guess that's why I breath, eat and sleep every project and will not sign off and pass it back to the client unless their expectations have been met or exceeded.
I had to throw that in because I know you understand it and lived it, (and still do) and you also know that paragraph could have easily turned into a book.
OK, business.
I just had my workers comp audit the other day, not too bad and my rate actually dropped a point. Don't ask me how. (16.24%) But I went over my average payroll so my bill should be in the mail any day. The state wants their money.
I'm throwing that percent in their because if anybody on this board has a few brain cells they will understand that for every dollar paid out in salary workers comp ins gets 16.24% of that dollar. It's actually more than that because you need to factor in other fees, accounting, payroll book keeping time, etc. So basically I'll add 18% to each dollar paid out just to cover my comp costs. Thank God I'm not a roofer because they are paying out over 30%, and bridge workers are about 50%.
I'm not divulging business data but I've become very smart in this business over the years. I keep overhead low because overhead will kill you in slow times. (it killed me in another business) But there are some costs that can not be streamlined.
I'm looking at my excel spread sheets on two projects about to start soon. I need to bring in minimum $1,300.00 per day just to stay in the black. No material, just to show up and stand there each day.
AJS ALEX & LIHR.. People like Sandyjet will never know the true cost to run a legal business. What he thinks is ridiculous is just the true price to run a construction business on Long Island.
Just for ****s and giggles... Since city data is anonymous.. What is your operational overhead/payroll per week? I'm sure you know this number off the top of your head, every business owner does. I don't do construction anymore because I draw now so I don't care about saying numbers. I can talk freely. I hope you guys will also.
When I was doing cost estimating we added up our payroll, insurances, liability, rent, and etc into one number per week and used it to calculate jobs. This number does not include materials, subs, or profit...
That also means that one day operational cost was $1,600. That meant the company need to make at least $1,600 per day to just keep the doors open and the lights on...
Doesn't this show us as a consumer looking to spend comparatively as little as possible, that we shouldn't be hiring the bigger companies? It's not hard to see it from our perspective either. I mentioned something about overhead here earlier.
One of you stated we're used to lower prices because of industry hacks, but maybe it should be explained it's not all due to skill but the cost of licensing and extra staff at a minimum.
Sincerely, it's unfortunate you can't compete with them, especially if you go the extra mile with intangibles, but you're in it for profit like every other business/industry so maybe if it's not profitable for you then you'll need to close the doors. Consumers have their own agenda and keeping businesses open is low on the priority list. You would just have to charge what the market will bear or do something else. Lucky for you, there are still some out there who would pay asking price or close to it.
you're a baby-boomer like me. THe last of the Mohicans. I'm the tail end of that era and the tail end of the real mechanics, craftsman, etc..,,, the generation that when you looked into a persons eye and shook their hand the deal was as good as gold. I was raised with "your word is your bond" I guess that's why I breath, eat and sleep every project and will not sign off and pass it back to the client unless their expectations have been met or exceeded.
I had to throw that in because I know you understand it and lived it, (and still do) and you also know that paragraph could have easily turned into a book.
OK, business.
I just had my workers comp audit the other day, not too bad and my rate actually dropped a point. Don't ask me how. (16.24%) But I went over my average payroll so my bill should be in the mail any day. The state wants their money.
I'm throwing that percent in their because if anybody on this board has a few brain cells they will understand that for every dollar paid out in salary workers comp ins gets 16.24% of that dollar. It's actually more than that because you need to factor in other fees, accounting, payroll book keeping time, etc. So basically I'll add 18% to each dollar paid out just to cover my comp costs. Thank God I'm not a roofer because they are paying out over 30%, and bridge workers are about 50%.
I'm not divulging business data but I've become very smart in this business over the years. I keep overhead low because overhead will kill you in slow times. (it killed me in another business) But there are some costs that can not be streamlined.
I'm looking at my excel spread sheets on two projects about to start soon. I need to bring in minimum $1,300.00 per day just to stay in the black. No material, just to show up and stand there each day.
^
Exactly this.
Customers don't want to know the overhead you incur. Some of them are too obsessed with getting it done as inexpensively as possible. It's those dishonest types who hire the 'day laborers' and who are paying them off the books (undercutting the legitimate guy) that help drive up our premium cost.
We had our NYSIF workers comp audit a few months ago, and the auditor was trying to charge 3 clients bounced checks against me as labor because the clients name shows up when the returned check is reflected on the bank statement. Not only do we have to make sure all of our 'i's are dotted and 't's are crossed, but we have to make sure the auditor knows what they're doing or our premiums go up that much more.
We've had potential clients question the overhead line on their estimates. I go into detail as to all the fixed costs which factor into the figure, and they still try to haggle it. I asked one very persistent gentleman if he was successful in negotiating down his homeowners or auto insurance, and if so, would he like to negotiate down my workers comp, liability, and commercial auto. At that point he started to realize that there are some things which can't be reduced.
Doesn't this show us as a consumer looking to spend comparatively as little as possible, that we shouldn't be hiring the bigger companies? It's not hard to see it from our perspective either. I mentioned something about overhead here earlier.
One of you stated we're used to lower prices because of industry hacks, but maybe it should be explained it's not all due to skill but the cost of licensing and extra staff at a minimum.
Sincerely, it's unfortunate you can't compete with them, especially if you go the extra mile with intangibles, but you're in it for profit like every other business/industry so maybe if it's not profitable for you then you'll need to close the doors. Consumers have their own agenda and keeping businesses open is low on the priority list. You would just have to charge what the market will bear or do something else. Lucky for you, there are still some out there who would pay asking price or close to it.
Larger companies offer lower prices because they are doing volume work. They hire warm bodies off the street -- there's no guarantee in the caliber of employee they are sending to your home, if he has a record, or whether you will see those same employees day in and day out. If there is something special or a change, the larger company employees might have to send it through the office and their supervisors and billing before (if they even could) effect a change. If you have an issue, you have to deal with layers of employees, not the owner directly.
Quality smaller companies in turn offer skilled mechanics and an established crew. You will see the same faces over the course of the project and it is highly likely that they've been background checked and vetted. You will be working directly or closely with the owner. If there is something special or a change, the smaller company would handle it in the field better as the owner would either be on the site, or easily reached. If you have an issue, you have a better chance of resolving it with a quality small company.
Overall, it is up to the consumer to choose the best fit for them and their budget.
Doesn't this show us as a consumer looking to spend comparatively as little as possible, that we shouldn't be hiring the bigger companies? It's not hard to see it from our perspective either. I mentioned something about overhead here earlier.
One of you stated we're used to lower prices because of industry hacks, but maybe it should be explained it's not all due to skill but the cost of licensing and extra staff at a minimum.
Sincerely, it's unfortunate you can't compete with them, especially if you go the extra mile with intangibles, but you're in it for profit like every other business/industry so maybe if it's not profitable for you then you'll need to close the doors. Consumers have their own agenda and keeping businesses open is low on the priority list. You would just have to charge what the market will bear or do something else. Lucky for you, there are still some out there who would pay asking price or close to it.
Quote:
Originally Posted by OhBeeHave
Larger companies offer lower prices because they are doing volume work. They hire warm bodies off the street -- there's no guarantee in the caliber of employee they are sending to your home, if he has a record, or whether you will see those same employees day in and day out. If there is something special or a change, the larger company employees might have to send it through the office and their supervisors and billing before (if they even could) effect a change. If you have an issue, you have to deal with layers of employees, not the owner directly.
Quality smaller companies in turn offer skilled mechanics and an established crew. You will see the same faces over the course of the project and it is highly likely that they've been background checked and vetted. You will be working directly or closely with the owner. If there is something special or a change, the smaller company would handle it in the field better as the owner would either be on the site, or easily reached. If you have an issue, you have a better chance of resolving it with a quality small company.
Overall, it is up to the consumer to choose the best fit for them and their budget.
Ovi8, I understand your concerns but I think you are confused.
The companies that we are talking about are small. I'm sure LIHR has a small and dedicated company as well since his overhead calculations were similar to the company I use to work for. He quotes that he needs $1,300 a day just for his crew to show up for work. The old company I use to work for was $1,600 to do the same thing. That includes no materials or profit.
This shows that both companies were similar in size. Probably have low over head. Probably work out of a home office and have a few trucks. Probably has a crew of a few dedicated mechanics who know what they are doing. Everyone is on the books and the company is done legally with correct insurances and liability.
Beehave said it beautifully. Everything said in the above quote is perfect and I could not say it better. Large companies just sub out there work. Owners aren't on the job to hold their client's hand. They charge less because they are doing 5 jobs at once and are just sub contracting them out.
The small legal construction companies that employ a true staff get dammed by both ends. They get undercutt by hack handyman and undercutt by large subcontractor base General Contractors.
you're a baby-boomer like me. THe last of the Mohicans. I'm the tail end of that era and the tail end of the real mechanics, craftsman, etc..,,, the generation that when you looked into a persons eye and shook their hand the deal was as good as gold. I was raised with "your word is your bond" I guess that's why I breath, eat and sleep every project and will not sign off and pass it back to the client unless their expectations have been met or exceeded.
I had to throw that in because I know you understand it and lived it, (and still do) and you also know that paragraph could have easily turned into a book.
OK, business.
I just had my workers comp audit the other day, not too bad and my rate actually dropped a point. Don't ask me how. (16.24%) But I went over my average payroll so my bill should be in the mail any day. The state wants their money.
I'm throwing that percent in their because if anybody on this board has a few brain cells they will understand that for every dollar paid out in salary workers comp ins gets 16.24% of that dollar. It's actually more than that because you need to factor in other fees, accounting, payroll book keeping time, etc. So basically I'll add 18% to each dollar paid out just to cover my comp costs. Thank God I'm not a roofer because they are paying out over 30%, and bridge workers are about 50%.
I'm not divulging business data but I've become very smart in this business over the years. I keep overhead low because overhead will kill you in slow times. (it killed me in another business) But there are some costs that can not be streamlined.
I'm looking at my excel spread sheets on two projects about to start soon. I need to bring in minimum $1,300.00 per day just to stay in the black. No material, just to show up and stand there each day.
Beautifully said. Our numbers and ideology are similar. Best of luck my friend. Here's to a great summer! Hope you get some good jobs in during the nice weather!
Doesn't this show us as a consumer looking to spend comparatively as little as possible, that we shouldn't be hiring the bigger companies? It's not hard to see it from our perspective either. I mentioned something about overhead here earlier.
One of you stated we're used to lower prices because of industry hacks, but maybe it should be explained it's not all due to skill but the cost of licensing and extra staff at a minimum.
Sincerely, it's unfortunate you can't compete with them, especially if you go the extra mile with intangibles, but you're in it for profit like every other business/industry so maybe if it's not profitable for you then you'll need to close the doors. Consumers have their own agenda and keeping businesses open is low on the priority list. You would just have to charge what the market will bear or do something else. Lucky for you, there are still some out there who would pay asking price or close to it.
I think you are confused.
I know many contractors who have been in business for over 35 years who all charge these rates because they run a legitimate business. This means we are all charging the market rate... I hate to break it to you but the prices we are discussing are market rate. Seems that you are just looking to get a deal which is totally fine but don't expect a professional to drop down to that level of payment.
We are the professionals, not you. So trust us when we tell you what it cost to run a construction company. I wouldn't tell you how much it cost to run an accounting firm or a law office...
There's a reason why I never offered financing.. I only work for people who have money..
I know many contractors who have been in business for over 35 years who all charge these rates because they run a legitimate business. This means we are all charging the market rate... I hate to break it to you but the prices we are discussing are market rate. Seems that you are just looking to get a deal which is totally fine but don't expect a professional to drop down to that level of payment.
We are the professionals, not you. So trust us when we tell you what it cost to run a construction company. I wouldn't tell you how much it cost to run an accounting firm or a law office...
There's a reason why I never offered financing.. I only work for people who have money..
You seem confused. People who pay 100% cash can still look for a deal. We did. We found a smaller reputable company to do it, every bit as professional since that is what we needed for such a large job. The issue is that larger companies charge more because they have to. You made that clear. How then, would that be market rate for the same job?
People who pay 100% cash can still look for a deal. We did. We found a smaller reputable company to do it, every bit as professional since that is what we needed for such a large job.
How reputable and professional are they if they're skirting the laws to do an under the table deal with you? I'm not risking IRS troubles to save you a few bucks on your project.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
