Labor Pricing HELP

[Mega Arc 5040DD]

Thanks for your support.



It can be a very harsh world and these guys that operate "part time" welding outfits so they can post as experts on the internet don't have a clue what it takes to provide every $$$$ of income for a family with a stinger in your hand, thay are in my opinion phoneys. Fortunes are made and lost every day in this business, but not by people with a "day job".



JTMcC.

I agree for the most part with the exception of the above quote (if I did it right I am still trying to figure out how to quote only part of a post).
I operate a "part time" welding outfit. I have never posted claiming to be an expert. I do have a clue what it takes to provide all the $$$ since I am doing it. I do not consider myself a a "phoney" because I make my money with a stinger in my hand all day monday to friday just not for my own business I am just starting out and it would be irresponsible to my family to quit my day job right now since my business is not yet big enough to suport us without worry. But it won't be to long before I will make the leap. I just have to think of my family first.

Maybe I read into this wrong I am very tired from working 2 jobs if I have it wrong I am sorry. And thank you and everyone else who is posting on this thread I am learning alot

[Sberry]

That post wasn't a rule of any kind but it really supports JT's position of pricing work high enough to cover all the collateral costs especially when there are several variables. The original post suggested that he wasn't intimately familiar with the job at hand from extensive experience. Good chance he quotes it and leaves a lot of money on the table vs the competition. I have had guys that work for me couldn't get a grip on why the cost was 4 or 5 times the hourly wage I pay them.
I just went thru some of this with a neighbor, was low balling some work on the theory that he would get more and even hired buds with little markup and couldn't figure out why he wasn't making money. His technical expertise was tops but business instincts very poor and actually his 30 yrs (mostly working for big outfits) was actually a liability. He should been charging on the top of the curve instead of the bottom, always thinking someone was going to remember some big pricing favor. It really hurt him bad and to this day he still cant see the logic despite being broke from hard work when he didn't need to have a huge gap between him and competitors, just giving it away for no good reason other than he "thinks" or "believes" some self learned theory despite all the contradictory evidence.
You can never make up for to low price no matter how hard you try. You cant get that much faster, better, or shop materials to overcome that.

[JTMcC]

I am just starting out and it would be irresponsible to my family to quit my day job right now since my business is not yet big enough to suport us without worry.

If you really think you are going to reach a point where you just magically make enough money to support your family, "without worry" as you say, you probably don't have any business being in business.

It just doesn't work that way. I have to hustle pretty regularly for work. I never worry about it but I do hustle.

And yes I pulled the pin with a start up business and a young family. That's the only way to go. It wasn't irresponsible, people do it every day. I made sacrifices and I planned ahead.

The morning you wake up and realize that for your kids to eat, YOU (and nobody else) are going to have to get out there and find the work, get the work, complete the work and collect for the work, now THAT'S motivation brother. That guy devotes 100% to his business. This guy doesn't want or need the security of a day job, he wants his business to BE his day job.

When you can always fall back on your "day job", you're not really doing it, you're just playing at it. That guy can either do it or slack off, he CAN'T devote 100% of his working time to his business because he spends his time and energy at his "day job".

This takes a considerable amount of confidence in your ability to hustle and do the work. And the ability to work very hard with no supervision. And the ability to accept a considerable amount of calculated risk. It's not for everybody and it may not be for you, but don't decieve yourself into believing that a part time hobby business is like the real thing.

JTMcC.

[walker]

Speaking as the legit local, you actually do need a business license if you are going to do this regularly, no matter how much you make in a year. You need a contractors license for any job, or part of a job, over $750. You must have a bond to get a contractors license. There is also a bond you must have for the AZDOR, just to be sure you are paying all your sales tax.
Insurance is your call, I think it is a must. If you are putting canopies on penthouses you had better have insurance. Think about all that furniture/plants/trees/glass in the streets in downtown earlier this month due to high winds. If you don't have insurance I would bet I would see a canopy on top of a police car in the next one.
BTW I left a high paying career in the natural gas industry to strike out on my own with a wife and three kids. It can be done. Even in this economy I am still working.

[Mega Arc 5040DD]

No offence to JT or walker but I've seen businesses here start this way first hand. Its a safe way of starting you don't get rich as fast but you don't loose your shirt as fast either. I know this first Hand thats how he started his business. It worked good because we could always count on the cash flow once business picked up enough that he was to busy for 2 jobs he quit his day job and ran his business for 10 years before wanting to do something else. You can be motivated to put food on the table all you want but if the work flow slows down then what. When you've been doing it awhile like I'm sure you have you can plan for it and get by. Obviously you Jumped right in and it worked and thats cool and Just cuz I said it wouldn't be responsible for me doesn't mean it wasn't for you.

Look at it this way. Lets say a guy who has great work ethics is fast, reliable, works great on his own and is one **** of a welder (I am just making this up please don't think I mean me). Hes been working for someone else for years.

One day he decides he whats to work for himself and buys A truck and eerything else. For argument sake it didn't cost him much because he found a heck of a deal.

Do you mean to tell me the next day he should quit his day job and hope that he can find enough clients that week to make the next morgage payment (witch is alot of money where I am huge boom realy pricey to live here so we are talking alot of money)

Personal I think he should take it slow and get his name out there. Especialy since he isn't worring about having to make quick money right away and can consentrate on doing realy good work and getting known for it.

Just my 2 cents you are proof that your way works but I have seen my way work to and I have seen many small businesses start slow and small and grow huge. Heck I have worked for a few.

Besides you have alot less debt if your overhead for things like a bunch of steel for your first big job is coming from your day job and not you over draft or your kids collage fund.

I don't think one way is right or one is wrong just depends on your situation and how you like to do things.

[Sberry]

There has been more than one company started by guys with a day job. A poster child for it is Ron from SFT. I know a couple good size outfits started that way. These days a day job can be gone overnight too and a guy has a start on things is a lot better off than one with his **** in his hand.
Its not that big of leap for a lot of guys in the trades to go on their own, in the construction trades like JT is in there is a lot of uncertainty, ups and downs, job changing anyway, I doubt it was a wrenching big leap for a guy with a bit of business savvy. There was always the safety net of going back on a payroll if things really went sour?
I think Mega is doing what he has got to do, buys him time to find his spot. Probably cant easily replace his day job next week if it was slow and he needed it.

[Sberry]

I think the original poster Singear is off to a good start. More than one engineer went into this business in a round about way. I was at an old retired couples place a while back, they bought this farm when they were 60 and retired or sold their metal working company in the city, now in their 80+ yrs. She was showing us around and I had to comment that it was obvious they knew what they were doing with fabrication he was quite the electrician. Turns out his degree 50+ yrs ago is electrical engineering and after 10 yrs of that he winds up in the welding biz. Lots of people started out as something else in this country, never know until you try it.

[FATFAB]

Speaking as the legit local, you actually do need a business license if you are going to do this regularly, no matter how much you make in a year. You need a contractors license for any job, or part of a job, over $750. You must have a bond to get a contractors license. There is also a bond you must have for the AZDOR, just to be sure you are paying all your sales tax.
Insurance is your call, I think it is a must. If you are putting canopies on penthouses you had better have insurance. Think about all that furniture/plants/trees/glass in the streets in downtown earlier this month due to high winds. If you don't have insurance I would bet I would see a canopy on top of a police car in the next one.
BTW I left a high paying career in the natural gas industry to strike out on my own with a wife and three kids. It can be done. Even in this economy I am still working.

So I am not full of SH!T one is required to acquire bonding and licensing and foolish not to have insurance.



What a surprise.

I played at being IN BUSINESS for several years just like JT describes it was play at best.

One can learn from play and I did one big lesson ties directly between the OP, JT comments and my first reply.


That until you start forking out the cash for all the little BS the government wants, bonds, license, paperwork tracking, hiring and firing, employment security tax, 941 deposits, 940 deposits, estimates income tax, the list continues, and until you start playing in the big pool you don't have a clue.

Labor pricing help. Well here it is in a nut shell, I pay 33.65p/h+18.65p/h health and welfare+ EST+ company fed tax and ssi+ workmans comp+employee liability ins.

All that works out to approximately $78.00 actual cost per hour per journeyman. Now to that I add for consumables including O/A maintainence on the welders and trucks general liability inc. employee screw ups, tooling and repair, my health care ins. some $$$ for my time in stocking the truck and looking at jobs that never turn out to be jobs, and finally profit.

That gets me $122.50per man hour. Then I figure out how many hours it take me to do the job then I double the hours and multiply by my hourly rate. Then I add for "named additional insured" "retainage" (where they keep your money for up to two years) mark up on all materials minimum 30% then I add for equipment I might need (crane forklift manlift)


Add all that up hope like **** you did not for get something and maybe in six months you get some work.

Good Luck

[JTMcC]

I disagree completely. (with SBerry)
I'm with Bruce Williams on this one, as I heard him say long before I ever started a business, but when I was plotting and scheming to:

"If your planning on climbing Mt Everest, but are waiting patiently for a safe way to do it, with no risk, then you just aren't mountain climber material".

I follow that school of thought.

Motivation is a powerfull force that people underestimate.
The fastest 100 meters or 200 or 400 wasn't run in the olympics or at a world championship. It was run by a guy in boots, carrying a rucksack and a rifle and a couple of grenades. A very motivated individual. Just didn't have anybody timing him with a stopwatch

Under pressure people can accomplish amazing things.If your not scaring yourself, your not really in business. Or as some British race car driver said a long time ago, "one should be slightly frightend to stand next to proper racing machinery". I love that quote

My take only.


JTMcC.

[Sberry]

Now, back to the original post.. I have seen guys fail more than once. Seen them come back and try it again. One I know was fooling around for a lot of years with his finger in the pie here and there, started a new company and in about 10 yrs retired. Took him that long to learn and time things. Another that started company at 30 ish and retire at 50, could have never did it on a payroll probably, not with his education and smarts. I bet I know about as many successful biz guys that are not that smart as are really bright.
I got my own long story and it isn't over yet. I have some huge assets but a bunch of liabilities that goes with it many of which are huge distractions. One day rolls into the next and its easy to get absorbed. Some things get done well and some neglected. My own family biz is a classic example where the second generation lagged on real business skill, was still caught up in survival production mode and at the end of their careers never did those real "businessy" kinds of moves. After long careers never capitalize on the occasions when business cycles allowed excess profits. Often the resistance to prudent business practice doesn't come from outside but within.
I am 50 and still putting pieces together, had I focus where my talent was early on things might have been different but there is still no guarantee it wouldn't have taken so long to get to the understanding (partial) the theory of how competitive business works. When I am the leader and perceived as larger than my competitors it only makes sense to set the price, I out sell the guy next to me 3 to 1, why would I want to lower the price to match his? I would have to dramatically increase production several times to give the same margins. The Ford dealer is a thing of beauty, haven't added a service bay in 20 yrs, just keep increasing price until the flow is at maximum rate of return, my dentist does the same thing and works 4 days a week.
For guys starting out this cant be done, you are likely going to have to focus on attentive service, a value added sales feature is to keep looking up the road for potential problems or be at hand with a practical solution.
Pricing gives everyone the ****s, I went and directly asked in some cases from people that knew as well as any. Here was part of the philosophy especially for start ups (now there is certainly more info out there for free) but something like this. Usually we fear the worst and hope for the best and reality usually falls somewhere in between. If we can live with the worst is say break even and we got to eat a little of our own labor then is it worth the gamble where by educated guess it will take half as long as we quote it for and things go better than we thought, then is this worth the risk? Usually the result is that we didn't make as much money as we thought we could.
I have made a ton of mistakes a long the way, hundreds probably, some were so stupid I would be embarrassed to write down. Ideally you get to do the same type of thing more than once where you can work out some kind of production, hence the pipeline spe******t. These small jobs like Singear and others are taking is adding to other experience and these guys are a smart bunch. They got a good chance of being somewhere when the opportunity presents itself.
I am way more profit minded than I used to be when doing outside work (the farming needs to be more inside job) but I do watch some numbers, I try to beat up on my hourly rate. If I want to work for free I don't have to leave the property. I would rather do nothing than take a beating from a crappy customer. I take a few service calls and don't have one of those cards that say, no job too big or small.

[Sberry]

If I am not mistaken Henry Ford had a day job while he was building the first of his cars?

[jamscal]

I like reading everyone's experiences so keep it up.

A couple of thoughts:

In some areas the government/government agency paperwork and requirements is enough to stop any new business from starting. It's best to start one and then sort through the mess as you grow.

My area isn't bad, and I started 'legit' and have insurance, but I've had several large jobs where I wasn't asked the first question about insurance. Of course most small customers don't care either.

There is no one right way to start a business. Some people will take the big plunge and make it, some won't. Other's will keep their day job and make it, some won't.

Pricing?

Take your fixed monthly overhead (which might be very low if you do it on the side), and divide by 176. That's how much per hour your overhead is going to cost. Then take the hourly rate you need to survive and add it to that. Materials, add. Consumables for job, add. Fudge factor, add. PROFIT, add.

Fixed monthly overhead should include advertising and general costs of doing business.

Don't forget taxes.

The above is very simplistic and general. You'll have other expenses. Just make sure you TRY to think of all your costs and don't do it for less than the amount you come up with.

You might end up with a $5000 check, thinking WOW! and then start paying out of that until there's very little left...then you think: WOW!

Good luck,

James

[SinGear]

Speaking as the legit local, you actually do need a business license if you are going to do this regularly, no matter how much you make in a year. You need a contractors license for any job, or part of a job, over $750. You must have a bond to get a contractors license. There is also a bond you must have for the AZDOR, just to be sure you are paying all your sales tax.

From all the research I did I didn't find anything stating any of this was required, despite the popular opinion I am taking steps to do this the right way, so if there is a link or resource that you know of and could pass my way I would appreciate it.

Thanks

[SinGear]

So I am not full of SH!T one is required to acquire bonding and licensing and foolish not to have insurance.

Hey, if your right I'll be the first one to admit it, I have no issues owning up to something if I'm wrong, but from the research and calls I made I could find nothing that required any of this, not saying it's not a good idea, or that some customers wouldn't require it, but nothing that said the state required it.

The way I see it you guys have nothing to worry about it, you all sparked an uproar like I was going to take over the oworld of welding, if your good and skilled at what you do it doesn't matter how many hacks start up in my experience in my field anyway, because they'll fizzle out and those people that bailed for the cheap sh1t will be back at your doorstep asking for bids.

Good luck to you and any small business owner, it takes a a lot of nut to take that leap, not knowing when and where your next buck comes from, I grew up in that enviroment.

[Broccoli1]

From all the research I did I didn't find anything stating any of this was required, despite the popular opinion I am taking steps to do this the right way, so if there is a link or resource that you know of and could pass my way I would appreciate it.

Thanks

http://tw.yumaaz.gov/WebWare/Default...sage=1560&t=-1


You do business- You need License

all dem little Guv'ment hoops- jumped just like a Circus Poodle too

add an emplyee- F**k me- More hoops- but these cost more $$

Fire an Employee- F**K me- god **** nudder hoop.