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Bidding....its simple really

Discussion in 'Bidding & Estimating' started by NPMinc, Dec 14, 2010.

  1. I have been accused in another thread of "complaining, and not wanting to help people" Your right if you consider help as telling you exactly what you should charge for a particular job. I will now attempt to help.

    First and foremost do not come on here and ask for a specific bid amount. Do your own "homework" This starts by you sitting down and determining YOUR OWN overhead and operating costs. This includes, equipment, insurance, fuel, labor, time, material costs, wear and tear and anything else that costs you money to do the job. You can break this down by hour,season etc. Next add that number to the profit margin you want to make. After this is figured, apply those figures (overhead/operating costs and profit sought) to the job you are bidding. Figure out what it will COST YOU to do the job then apply the profit you seek and BINGO there is your bid amount! Next compare that number to the "going rates" in your area for similar jobs. If you are close great, if you are way low you may be underselling yourself (lowballing), if you are way high you may want to reconsider if this business is worth it for you. Do Not I repeat Do Not waver on your bid beyond the point where you will make the money necessary to meet your needs. Simply thank them for the opportunity to place the bid and walk away and find another job to bid on. Oh and one last thing if you are unsure of, or uncomfortable how to accurately bid a specific job, simply dont bid it until you are. Hope this helps
    Last edited: Dec 14, 2010
  2. LB1234

    LB1234 Member
    Messages: 91

    can you please define "going-rate"? thx
  3. Rates as you have seen on this site I am sure, vary greatly from area to area. By going rate I mean check around in your area and try to find out what other reputable contractors(not fly by night lowballers) are charging, whether it be per hour or for a similar job. Not that this has any bearing on your bottom line needs as far as profits and covering expenses etc, so doesn't directly play a part in your bid numbers or what you require an hour. It comes into effect however that if you are way low for your area you are hurting your bottom line as well as the local rates(lowball effect). If you are alot higher then you may not be able to get enough work to make it worth even having your equipment. example being that if you determine you need 135/hr to be where you need to be and a vast majority of your local competiton is charging 75/hr (the local "going rate") for the same service, you have very little chance of getting enough work to even pay your bills let alone make a profit.
    Last edited: Dec 14, 2010
  4. JB1

    JB1 Senior Member
    Messages: 182

    that's really nice and all, but can you just tell me what to charge the gas station. asking you is easier than doing all that figuring and that is boring to me. its just a lot easier. too much figuring makes my eyes :dizzy:
  5. LOL JB1 nice humor......sad part though is that alot people of on here actually think that way.
    Last edited: Dec 14, 2010
  6. LB1234

    LB1234 Member
    Messages: 91

    So if it has no bearing on my bottom line, why do we need to find the "going rate"?

    Real world example: I gave an estimate to plow six residential streets and came out to be about 800 per push. Two other companies bid and both were under 500. Are these guys now considered lowballers (your words not mine)? Or, am I so high I can't get work and its not worth having any of my equipment?

    If someone is charging a lot less for a service this does not necessarily make him a lowballer. His overhead can be much much smaller than mine. If it is, that company has every right to charge what they want, if it happens to "steal" the job from me, so be it. And on the flip side, if my rates are significantly lower than the "going rate" ain't no way I'm going to raise my rates so others can compete with me. If i'm making a comfortable profit margin by charging cheaper rates than so be it.
  7. LB1234......your logic simply makes no sense----If someone is getting substantially(not talking a few dollars here) more than you for doing the same job who is losing out----You are! Don't you like making as much money as possible? Why would you not raise your rates to be more comparable to theirs? At least on new bids if you dont wanna raise your current customers prices. So what if your overhead cost is less than the other guy....That means more money in your pocket! And also knowingly bidding substantially less then others can be considered lowballing because if many start to do this it tends to lower the "acceptable" amount people will pay for snow removal in your area which hurts everyone in your area in this business.This is what is referred to as the "lowball effect". Last I checked my fuel prices havent gone down, my insurance premiums are the same, I pay my workers the same etc, so why should I be expected to do the same job for less than I did last year?
    As far as finding out the "going rates"-----bottom line is that it is about ensuring that you are offering competetive and reasonable rates for YOUR AREA. As I said above you are selling yourself short if you charge too little (not to mention the lowball effect as explained above), and if your rates are significantly higher then you will find yourself getting turned down on most bids you give, therefore wasting money and time you spent to make that bid. Also as I said before if you NEED that higher amount to cover your overhead and your local market will not support it you may want to reconsider being in this business. It is all about remaining competetive in your area.
  8. dana60f250

    dana60f250 Member
    Messages: 47

    going rates

    going rates r all different tho , the guys with 100 a grand in equipment have different going rates than the guys with 50 grand worth of equipment and the guys with 20 grand in equipment r different too. if the guy who has all his equipment payed off comes in. then we r all screwed. so i guess if your the lowest guy on the totum pole equipment cost wise and still able to do the job in a timely manner you r in a good position you could raise your bid to around the guy above you with a little bit more equipment cost and hope for the best.
  9. dana----you understand what I was trying to say. That is why I said that the "going rate" should not be factored into your bid directly--that is what your overhead and profit sought is used for. You should however try to figure out what the "going rate" is and ensure that your bid is competative with that. If you are way low why not try to gain a little more profit margin? Anyway how have things been so far on your end of the Commonwealth? So far just 2 salt applications here on the east side.
  10. tyler.premier

    tyler.premier Member
    Messages: 32

    the guy with the paid off fleet never would of paid a fleet off with planning to lower his prices once its paid off and the fleet would be old no? not to mention I would think not having any right off would suck. or his paid off fleet would cost 30,000 dollars in repairs a month. and at 30,000 a month in repairs a few 400 dollar truck payments on new stuff sounds a lot better. thus putting the guy would good plan never paying off his fleet. more or less managing it correctly. thus making the going rate for people in the snow/ice field completely make sense and the guys doing it for less low ballers or the guys getting paid half as much because they cut every corner possible just to squeeze a profit. I think the statement to start the thread off was well put. that's coming from some one that read and read years ago and tried to figure out pricing and a plan and thought his prices were good. best advice ever givin was how to figure out all your own prices. comes back to the give a man a fish or a fishing pole theory.
  11. DodgeBlizzard

    DodgeBlizzard Senior Member
    Messages: 526

    If you get the bid right on the spot and the customers eyes light up then you bid too low. If you get laughed at, then you probably bid too high. If you bid and the customer says well thats a little more then what I was thinking (but they haven't closed the door in your face) you can sell your service and show confidence then you bid just right. Bidding is tough. I don't think I've ever heard a customer tell me ''wow you're cheap'', I am going to tell all my friends about you. But I do hear that I charge more then their lawyers charge by the hour. But they are doing it as they are filling out the check. ps They still refer me to their friends.
  12. LB1234

    LB1234 Member
    Messages: 91

    Who mentioned anything about knowingly bidding substantially less than others? I sure the hell didn't. My point is simply this, going rate means absolutely nothing. It has zero effect on how I bid. And if you found the going rate it is probobaly so far skewed left or right it is just worthless. It is difficult to compare apples to apples in a bid UNLESS the customer provides a bid sheet of exactly what they want, and in my experience that is few and far between. Even then, how do I know if my price X versus the next price Y is based on leaving a truck at this lot for the duration of a storm or if its just giving it a push every three or so inches, you don't. Fact is, we usually only get to find out the prices of the other bids, but that is ALL we know. And of course lets not forget we are usually getting the costs for what the customer says the costs are. You can almost be assured that number is not 100% on.

    As far as leaving money on the table. I don't look at it this way. I look at it as being honest with the customer. He needs a service and I need money to put a roof over my head, pay the kids doctors bills, etc. I'm not going to raise my price by 100's of dollars just so I can make an extra few bucks.

    What I can't stand is people losely using the word "lowballer". Who the blanky blank cares!!! :sleeping::sleeping::sleeping: Get over it, welcome to the service industry. :rolleyes:

    Ask yourself...do you really want the customer who every year goes with the cheapest service provider out there? If you answer yes than you may want to revise your business plan. If you answer no, then stop complaining and get to work.
  13. LB1234, in your last paragraph you ask if I want the customer who every year goes with cheapest service provider out there? If that means me not not bidding below what I have determined to be the minimum for the job and they wont pay that, well let them go to someone else, as I will not work for free or next to nothing. That being said I have no trouble finding work each year to replace the few I have lost.
    I still see no logic behind you saying you are unwilling to raise a price just so you can make a couple extra bucks. Are you independently wealthy or do just not like money? Maybe if you were treating this more a business instead of just some extra cash as you seem to be and had as much at stake as I do you would understand where I am coming from. Untill then we can just agree to disagree on this and put it to rest. Good luck this snow season, I hope it is a productive one for you.
  14. dana60f250

    dana60f250 Member
    Messages: 47

    Had about ten events i think so far. and about having your equipment paid off, i ment 2 pickups with tailgate spreaders. not 100 grand in equipment. once again if ur costs are lower u can bid lower and its not lowballing. im sorry i forgot everyone in here has a fleet of 50 trucks lol
  15. PhilFromErie

    PhilFromErie Senior Member
    Messages: 263

    You make a good point, people always preach know your cost. That's VERY important but so is knowing your market, if your twice the price the customer don't care if you need that much to cover your cost, they also don't care if the other guy is working below cost. All they care about is the other guy is half the money and everyone likes to say that "well were more money but we do better work" - they don't care about that either (usually) and the guy that does it for half price wont do that bad of a job either. Anyhow I guess my take on it is you have to do it for as cheap as you can while making a profit and if you cant make any money, well that sucks.
  16. AA+ Landscaping

    AA+ Landscaping Senior Member
    Messages: 142

    Think about it like this if your area's going rate is $75.00 hour for a pickup with 8 foot plow. Your cost comes to $35.00 with a 10% profit and you charge $35.00 per hour but the going rate is around $75.00 you just loss $40.00. On top of it all you are just hurting yourself and lower the going rate for all.
  17. snowcrazy

    snowcrazy Senior Member
    from ohio
    Messages: 409

    I know me and you have talked in another thread about this but i'll give you an example of what Im talking about. Don't think I don't agree with you because you are correct for the most part

    One of the contracts that I got this year was a pretty good size strip mall. Its my biggest account for sure. Beings I was contacted by the mall management company (manage multiple malls) they knew about how much salt needed to be applied to the parking lot. They want 1 full skid of 50lb bags spread (49 bags on pallet). The fella that bid on this along side me was right at 200 bucks cheaper than i was in the end. I met my boss (after I got the contract) up there dressed nicely, nice respectable business truck, and Insurance in hand.

    Now for all of you that are smokers, don't get all pissy..... As I was leaving I saw my competition rolling in. He has a bunch of work in my area... I pulled into McDonalds to eat and all joking aside, do a little spying. I loved what I saw next. This dude walks up to the strip mall manager cigarette bouncing between his lips all the way to my bosses vehicle. Throws the cig but down in the parking lot, steps on it and shakes the managers hand in his usual pair of blue jeans and nasty looking sweatshirt. Now remember, as a strip mall manager, he is going to notice the littering beings he is paying someone to sweep that lot, im sure he picked up on it. I did.........

    I was called back later that day to come up and "have a meeting".... He showed me the 2 other est. that were turned in, 1 which didnt bring insurance. Being a business man he through it straight in the garbage. Sweeeeeet!!! The other estimate was spreading 1 full skid of salt for $300 plus tax. Now that added up to him going to make a little over100 dollars because he gets salt where i do at $4 per bag if you buy in bulk. My estimate was $10 per bag spread which put me at $490 +tax. Thats $200 difference. He wanted to know if I would meet or beat the $300 estimate. I said absolutely not. YOU GET WHAT YOU PAY FOR.

    He had a confused look on his face when he said, "well, whats the difference in if you or he spreads it". All i said was I wasnt going to speak negative about my competition but he could gladly call the McDonalds at the end of the lot and ask them about his service. He called and they explained how he would show up whenever he felt, do a crappy job and the one that takes the cake was this one. He was being watched load his spreader by management on THE LAST PLOW AND SALT HE EVER DID THERE. He billed them for 14 bags of salt and was watched load 6 bags into his spreader. That was it, job was mine....

    All in all, I know what the idiot was going to do......... The same thing he did to McDonalds and a few others in town that I picked up because he did this. He's going around skimping on salt but billing for a lot more that he spread. Now from what I understand that is a pretty common thing that people in this business do but I couldnt sleep at night if I did something like that. The mall might have only gotten half the salt they were supposed to and viola. He actually pockets more money that I would in the end because he screwed someone out of a half a skid of salt.

    I know this doesnt happen all the time but sometimes getting in there and being sure to do everything you can in a professional manner you will get work. For all that may think it was chity of me to tell my boss to call McDonals, hey he brought that among himself. Now I plow and salt a Mcdonalds..... Thats how i knew what he had done to them.

    Our plowing price was actually the same on our estimate. The salting is where we were different.
    Last edited: Dec 28, 2010
  18. Mick76

    Mick76 2000 Club Member
    from Maine
    Messages: 2,157

    Guys, my question to you is why would you not charge the same rate no matter what age or if the equipment is paid off? Nothing lasts forever and you need to have the funds to purchase new or newer equipment once the life is gone out of yours. I charge the same rate no matter if its a 20K loader or a 100K loader. Or for that matter, a 10K truck or a 40K truck. The customers are still getting the same value (service) so why would you charge less for he same service? It doesn't make any business sense. If you can't get this plain and simple example, I'd suggest taking a few business classes. Its Business 101.... Not trying to be an arse but damn, some of the ideas out there are just foolish.
  19. ding ding ding we have a winner!!!!!!!!!!
  20. snowcrazy

    snowcrazy Senior Member
    from ohio
    Messages: 409

    Completely agree!!!!!! Although, If I only had say $5000 in a truck I COULD charge less money than I do now with having nice newer equipment but yeah, What he said. There getting the same service done.

    No different than folks out driving around in brand new trucks with a trailer full of brand new mowers. Now I do think much of folks driving around in rust buckets and being professional but hey if they can provide as good of or better service than the others they should be charging the same amount.......

    Very good point!!!!!!