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Need advice from other fellow contractors or handymen about how much my husband & I should charge...new to the business and need to figure out how to estimate

I need some advice about how much to charge for a project such as this one, we are new to the remodeling business so we haven't quite gotten the hang of how to come up with a appropriate estimate yet? The general materials is going to cost us around $894.65 all except for each cabinet door they have to custom made because the customer wants each cabinet door to be 34 inches high and 17 inches wide and they want the door to have a arch in the middle to match their front door and the crown molding in the living room where this entertainment wall is going to be built in and that itself is going to cost us $770.53 for all 8 cabinet doors that's $96.32 for each door including hinges, boring and primed (Seems a little steep for me but that is just one of the custom cabinet door makers around our area in Pasadena Texas I'm going to continue to look & shop around, any suggestions?)  ! it's gonna take us 2 day's from start to finish but I always estimate for a extra day just in case something comes up that could take a little longer.  We will need only one other worker besides my husband and we will pay the other person a $125 a day so approximately $375 so so far that is $2,040.18 And the measurements for the wall unit are going to be 12 ft wide and 8 ft 9 inches high and the customer wants the cabinet depth to be only 18 inches deep so that will require us to build custom cabinets instead of purchasing them already prefabricated. I am really confident my husband can build just about anything that it put's his mind to building so him doing this project is not a problem...where the problem arises is coming up with a fair estimate to where the customer will be satisfied but yet we will still be able to make a decent profit off of this, if we get the job. My husband has a real problem of always cutting himself short and low balling his own estimate in order to try to get the contract! I told him he has to think about and include a % of all of the company's bills such as phone, internet, gas, liability insurance, all the time I spent looking for and pricing the materials for this month and ect when coming up with the appropriate estimate but the last 2 jobs we did for other clients he didn't end up making hardly any profit after we bought materials and paid our workers and I told him we CANNOT CONTINUE TO RUN A BUSINESS LIKE THIS... So I really need some advice maybe he will listen to someone else that has more experience running their own business because he hasn't listened to anything that I've told him yet! Lol! By the way we are giving the estimate for building the custom built in entertainment wall unit and the materials to do so but we are not going to paint or stain it the customers said they have someone else to do that. We have only been in business for less than 3 months and I'm afraid that we aren't going to be able to make it another 3 months if he doesn't learn how to estimate! Out of curiosity I called a few more companies that make custom built in units such as this one and asked them approximately how much would they charge to do something such as this for labor only and I got a vast range of prices from $2,800 to $9,999. If it was up to me to come up with a fair price (with me being a woman and not knowing much according to my husband lol!) I would say $3,285 for labor only  so for a total estimate of $5325.18 including materials and labor but I might be a little high? My husband says that $2,300 is fair price for labor only but I think it's $500 lower than the lowest estimate I got and I think he is cutting himself way to short once again! Can someone please give us some advice on how much is a fair price to charge here in  Houston Texas, thank you! 

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Rhonda

Your question is an important one and one that every contractor must answer properly or they won't stay in business. To get the correct answer its important o understand your COGS, or cost of goods sold. You need to back into your estimates. Start by adding up all your expenses for a month, quarter or year and divide by the number of jobs performed. Capture these things on a simple excel spread sheet and you can begin to reach some simple conclusions. You will do jobs that you lose money on. It's just a fact of life. As you gain experience you will get better at it. Sooner of later you will determine how many man hours you need for the job as well as materials and apply a proper margin for each. (Margin for material is usually higher than labor.)

It seems that you have accurate costs for materials. Have you thought of adding 5% or 10% for incidentals? The things you may not think of like glue, sandpaper etc. These things add up as well as your time obtaining them. Really large projects with high materials costs would add a lower incidental costs. Are you making margin on your materials? You should. Anyway keep your chin up. don't be afraid to charge your customers. Just give them a dollar of value for every dollar you charge.

The best method of determining what to charge is to determine how much you need to profit from the project. This is after figuring in all the possible problems that you may encounter in completion of the project.  As a rule it is better to figure high rather than low as once a price is given you are pretty much held to that price.  You can always charge a lower figure than quoted but is hard to charge more that you quoted.   One way around this is the figure your price depending on what you are doing.  You are talking about remodeling then that is going to determine what is the extent of the remodel.  Are you going to have to change structure of the building and if so what it the condition of the back bone of the building which means the skeleton of the building.  How was it built and what is its age and how well has it been cared for.   On some remodels it is impossible even for the most experienced to figure it accurately.  In this kind of remodel it is sometimes best to figure it by quoting " Time and materials"  meaning that the cost of the materials and the amount of time is actually unknown but you will need to give the customer some kind of idea so figure of what and amount of material costs, as if you were doing the adding and or repair of what you can see without tearing into the project.  Framing and construction hidden by walls ceilings and floors hide some very extensive costly requirements in both time and labor.  To arrive at the labor price use the going rate of construction per hour in your area.  These are items that you need to consider when doing anything to a building where you add or change something.   In some areas you will need permits and or licensed professions like electrical and plumbing even to add a cabinet where you will need to change the existing condition.  For instance if installing a floor covering such as tile.  Here you must take into consideration as tot eh condition of the sub flooring as well as the structural design and or condition from every area such as the floor joists and the sub floor.  If not any imperfections in the completed project will cause the customer to blame you for poor installation workmanship and or defective product.   Always get a signed legal contract before starting the work.

In your above writing you are talking about cabinets and show an entertainment center along with some price quotes that you have.  To figure this you will need to figure your shop expense time and how long will it take you to build this project.  How long it will take to build the project depends on your experience in the work you intend to do and do you own the tooling to complete the job.   An example here is you are talking about the doors and having to have them custom built.  In this example you give an dollar figure of $96.32 per door and give an example of 8 doors.   This is to include material plus hinges and primer.   They are arched doors but not explained if they are raised panel and or flat panel doors.  In this situation if they are raised arched panel doors the price is reasonable and especially if this includes the hinges.   Here is the down fall of this situation.  What type of material is this and what is the quality of the hinges.  The figure of $770.53 is a good chunk of change of which can be the bread and butter of the project.  Here it might be an advantage for you to build the doors your self and here again do you have the tooling to do this.  It might be an advantage to even purchase some of the tooling to built the doors and especially if you plan on continuing with this type of work.  Depending on the type of doors and how they are to be made will depend on what tooling you will need.  I assume that you already have a table saw so in addition you would need cabinet door making bits and a router table.  As with anything else tools cost money and the amount depends on the quality of the tools.  That is why I am saying that it might be an advantage to you if you purchased some of the tools as you will need some or all of them again each and every time you take on a project.  This is where experience is of importance in figuring how much to charge a for a project like the one you have pictured.   You would need to know how long it will take you to build the  project and how much will he materials cost and also what grade of work is the customer wanting.   This is where the case if either made or broken as the varied cost will depend on the detail of the construction.  That is why you are getting the difference in the price quotes between $2800.00 and $9999.00.  In your dialoged explanation you indicate the need for a second person to work with your husband.   If the above pictured Entertainment center is the complete project I do not see the need of a second person as that takes up a good portion of your profit margin.  You must and or should take into consideration that along with the wage you quote for that person a type of protection for yourself such as insurance in the event that that person get hurt on the job.  When you become a contractor you assume all the liability of any damage to not only the customers property but also to any employee you have.   One small cut on the finger could have the hazard of you loosing your lively hood in medical and law suits unless you have the insurance to cover your liability.   In this day and age everyone is law suit happy.

What I am getting at is that from what I am looking at there is really no need for a second person as everything here will be small enough to handle by one person as the unit can be build in and should be built in at least 4 or maybe 5 sections and assembled in the home once it is built.  

From my own experience I could build the unit up to and around the size of 12 feet in 6 good days and this is by my self, as this is the only way I work.  My basic shop price is $70.00 per hour and the work is totally custom meaning that there is no short cuts in the project such as nails and staples.  The construction methods vary depending on the strongest and best looking joint possible with out the use of wood fillers.  The joinery is pocket, mortise and tendon , and tongue and grove.   All joinery is glued and there is no particle board or paper or plastic covered panels involved.  It would be sanded and ready to finish.  It would take about 3 hours to install this into the home.

In figuring materials be sure to include about 10 percent as waste and do not purchase the material at any home type store and the material you get will come back to haunt you as it is hard to get quality lumber at a home center.   Find a good cabinet supply house for material and do not use the cheap hardware as it is just that, cheap and might look good when new only to fail you in a short time.

To add credence to what I am telling you, my history is over 27 years building custom cabinet and wood work for high end customers.  I have found that if you are going to make a living that is comfortable and with the least amount of worry try to become custom to building the best that you can and a reasonable price.  Specialize in a certain area of work such as custom cabinets and or custom framing and or finish work.  Customer will gladly pay for quality work and you will build a reputation for your work.   I have seen those who short cut methods in their work come and go and usually go with a reputation of what I would not want attached to my name.  Don't get too concerned with work when customers want you to build it as cheap as you can as that work and its quality will remained attached to your name for years.  I simply will refuse a job is they do not want to do the work right.   Good luck and hope I have given you some information that you are seeking.  Feel free to contact me in the event that you have questions.  I will always get back to you as quick as I can.  Have a good day. 

If you haven't already, check with your local Small Business Association and/or local community college to see if there are any classes or materials available on learning construction estimating.

The cost of materials is only one part of a project's estimate.  It's often the smallest!  Labor, travel time, insurance (of various kinds) and profit margin are often more than the materials alone.

There's an old saying, "the only one afraid of the price is the salesman."  Be sure you're not being afraid to pitch the jobs for what they'll truly cost you, not just what you might think the customer wants to hear.  If the customers don't accept your prices then either you're aiming at the wrong customer base or your prices are above market rates.  

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