Hey all!
I was hoping to start a real transparent thread on how you pros go about including your profit margins into your estimates. The reason? Well, my shop has been getting away with "general idea quotes" and it's time we implement more of a system. Also, I suspect we're doing it wrong.
If any response to this thread, it'd be great to get other estimate models from job shop owners on what their estimate calculators look like and where they add their profit margins.
I'll go first...
Our private and in house estimate calculator (on an excel spreadsheet looks like this):
-- Material 1: $XXX
-- Material 2: $XXX
-- Material 3: $XXX
-- Finishing supplies: $XXX
-- Installation: $XXX
-- Studio Fee at $400/day*: $(days of work times $400)
-- Labor at $125/hour**: $(projected hours of work times $125)
-- 20% of total of everything above: $(.2 times studio fee, labor, materials etc...)
-- Grant Total: $(that 20% added to all the numbers above it)
*We calculated our studio day rate by adding together all our monthly operating expenses including rent, our shop truck payments, utilities, insurance etc.. and then dividing that number by 30. So for any job, no matter how small, we will add at least 1 day. Our thought process being that studio day rate encompasses everything that goes into keeping the doors open and the lights on at the shop for the duration of any job.
**There are five of us that work here. Again, we figure if we all were paid $25/hour (5 times $25) our labor rate on our price calculator should be $125/hour. So we estimate how many hours of work there are for any job and multiply by $125, even if only one or two of us work on this or that job because we all gotta get paid right?
Then we add 20% (our profit margin?) to the whole sha-bang.
So.... If I thought this was the most professional method I wouldn't be starting this thread. After reading up a bit on here, it seems that you guys add profit margins to your material costs, not both labor and materials. And, it also seems that for coming up with labor costs, you guys likely break down the steps of a job into drilling; 1 hour, cutting; 1 hour, welding; 2 hours, and only include the hourly rate of the operator into your estimates.
I'd be curious to see how you guys would list out your pricing calc like I did above. And I'd like to know where you guys include your daily operating expenses and profit margins. Cause it looks like maybe we've been gouging the hell our of our clients?
So the real truth behind why I'm writing??? Because we only get these big jobs now, and then sit empty for a number of weeks because the smaller jobs, "can't afford us".
Thanks in advance!
I was hoping to start a real transparent thread on how you pros go about including your profit margins into your estimates. The reason? Well, my shop has been getting away with "general idea quotes" and it's time we implement more of a system. Also, I suspect we're doing it wrong.
If any response to this thread, it'd be great to get other estimate models from job shop owners on what their estimate calculators look like and where they add their profit margins.
I'll go first...
Our private and in house estimate calculator (on an excel spreadsheet looks like this):
-- Material 1: $XXX
-- Material 2: $XXX
-- Material 3: $XXX
-- Finishing supplies: $XXX
-- Installation: $XXX
-- Studio Fee at $400/day*: $(days of work times $400)
-- Labor at $125/hour**: $(projected hours of work times $125)
-- 20% of total of everything above: $(.2 times studio fee, labor, materials etc...)
-- Grant Total: $(that 20% added to all the numbers above it)
*We calculated our studio day rate by adding together all our monthly operating expenses including rent, our shop truck payments, utilities, insurance etc.. and then dividing that number by 30. So for any job, no matter how small, we will add at least 1 day. Our thought process being that studio day rate encompasses everything that goes into keeping the doors open and the lights on at the shop for the duration of any job.
**There are five of us that work here. Again, we figure if we all were paid $25/hour (5 times $25) our labor rate on our price calculator should be $125/hour. So we estimate how many hours of work there are for any job and multiply by $125, even if only one or two of us work on this or that job because we all gotta get paid right?
Then we add 20% (our profit margin?) to the whole sha-bang.
So.... If I thought this was the most professional method I wouldn't be starting this thread. After reading up a bit on here, it seems that you guys add profit margins to your material costs, not both labor and materials. And, it also seems that for coming up with labor costs, you guys likely break down the steps of a job into drilling; 1 hour, cutting; 1 hour, welding; 2 hours, and only include the hourly rate of the operator into your estimates.
I'd be curious to see how you guys would list out your pricing calc like I did above. And I'd like to know where you guys include your daily operating expenses and profit margins. Cause it looks like maybe we've been gouging the hell our of our clients?
So the real truth behind why I'm writing??? Because we only get these big jobs now, and then sit empty for a number of weeks because the smaller jobs, "can't afford us".
Thanks in advance!