Thread: Newly self employed

It would be nice to say you price what the market can stand.

Depending on your experience, estimate how long each job would take and allow 1.5 - 2.0 as long for any hold ups. Some jobs will be quicker, others take longer.
Allow for materials and time to obtain, or wait time if they are being delivered.

Quoting is a bit of a guessing game but if you get it wrong you loose, if you over price you loose, sometimes you have an I don't want so you really overprice and you win the job - not sure if that is a win win or a loss.

Good Luck.

In my market you need to charge at least 1.5X your costs to make enough to show a decent profit. Don't forget to include travel time and expense, materials transportation, helpers if you need them plus at least a 10% buffer for the unexpected.

Thanks for the response, I looked over the plans I have last night figured I'd take 10 days for 2 men so I added 4 days for any unforseen that may arrise. Our going rate is 20 per hour and 8 hours per day.
All materials are on site for us so it will be labour only.
8x14
112x20
2240x2
4480 for the job.
Now if we turn up to the job and the materials are short can I put something in my quote to say we need paid according or is this just the normal goes without saying?

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I'd recommend that you up your hourly rate, as there's insurance, if you injure yourself, work cover for an offsider (helper), wear and tear on tools, cost of running generator if no power, nails etc. GST (MANDATORY), PAYG /PAYE tax (similar to income tax) wear and tear on vehicle plus running costs, insurance for faulty workmanship, even if it's not you fault, someone has to be responsible, it's a case of pass the buck, which will probably end with YOU!!!!! The investigators will probably turn around and say that you used the wrong sized nails or insufficient/excessive quantity, anything to get the blame on to someone who can least afford a fancy lawyer.
As a general rule, what you pay an employee, cost is 100%, so if you pay someone $20.00 hour, it will cost you another $20.00 in tax, work cover, superannuation etc.
Most wouldn't be under $50 per hour, as an example, take your car for a service, $110 per hour average. We have a mechanic nearby that works from home, $80 P/H.
Remember to pay the taxman, they don't like being left out, and WILL ruin you if you don't. DAMHIKT.
My best advise is to see your accountant, to guide you on this. If you were to charge $50 per hour, and it takes a day longer, you're not really out of pocket, if you were to work at your suggest rate. you will be out of pocket. Times taken on a job comes down to experience, remember as you get older, your speed tends to slow down, what you used to be able to do in 8 hours, could take an extra 2 + hours more than it did when you were 30 years younger.
Now days, a lot of tradesmen wouldn't get out of bed for less than $30.00 per hour working for someone.
Kryn

When first starting out on your own, hourly rate or day labour are the best options. Accurate quoting only comes with experience. If you under quote you will probably get the job and wish you didn't. If you over quote you probably won't get the job and wish you did.
After almost fifty years in the trade, I still have to take a punt on some of the more unusual jobs that seem to come my way. One tends to get lumbered with this oddities when one has been around for a while. It's not unusual for me to resort to hourly rate in the more complicated instances.

I do hourly every time unless the job is really simple and small. Hidden damage and built in defects are almost always found on larger jobs requiring either a good buffer in the whole-job quote or renegotiation of the original contract.

My most recent experience of this type was due to termites. They'd eaten the studs in an approximately 4m section of the first floor load bearing wall of a two storey structure. Ended up needing to jack up the second floor nearly 30mm, replace wall studs, plates and window framing. Customer didn't think to tell me about the prior termite problems. If I'd been working a fixed price contract I'd have had to renegotiate the contract or lose 10 days labor + materials. Retail on the jack I used is about $2000US. I didn't pay that for my kit but I'm the only renovater I know in this area who's got one. It would have been quite a pinch if I'd been caught out and needed to source one in a hurry.

I know I'm pricing it on the lower end of the scale but I am one man with no real overheads, as for this job it's a new build so everything should go smooth. Basically I'm desperate to get the job as right now it's the only thing I have lined up unless I choose to take on some agency work.

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It's not going to help your immediate situation but you should seek out some formal training. The UK might be different to Australia, but here we have a cert 4 in building and construction which is necessary to obtain a building contractors licence. I reckon nearly a quarter of the course is devoted to estimating and bookkeeping. As one of my instructors told us repeatedly, the happiest a client will be is the moment they sign the contract, it goes downhill from there. Accurate quoting and contract terms that make it clear how to handle disputes are crucial.

Being self employed actually means you are the owner of a business which employs you. It's an important distinction, because you have to treat the business as an entity separate from you. It needs to make money to pay you. You're already thinking the wrong way when you say it is just yourself with low overheads. What are your billable hours? How many hours are not billable, like the time spent preparing quotes. Are you allowing for travel costs, running a vehicle, replacing tools, insurances, banking costs, accountant fees, contingency for inclement weather delays?

I'd suggest you work on a cost plus basis, stipulating an expected weekly wage for yourself paid by your business. Cost plus simply means allowing all the costs of the job, including the operating costs of your business and your wages, plus a profit margin for the business. Here that is nominally 20 percent, but the actual amount needs to be calculated from an estimate of the amount of work you can do and expenses and expected profit.

You should be able to obtain building price guides to help you with estimating. We have Cordell and similar available here which are quite useful, but they cost money - another business overhead. In your case stick with pricing based on time and materials, until you are experienced using a square or lineal metre rate will probably see you losing money.

I have had 2 goes at Selfemployment over the years, doing Carpentry and cupboard work and didn't do well either time. I was busy and did a lot of quotes but at the the end of the day I had to call it quits because I wasn't making any money and my health let me down.

One thing that I didn't take into account was allowing an amount to purchase a new work vehicle. I used our family vehicle which was adequate but getting older and would need replacing. So you would need to factor in a vehicles repayments as well as an allowance for tools (replacements and new plant). These two factors didn't show up until after I gave up, but I think they are important.

Be very careful with clients!! I found out quickly that working for some people gave an unpleasant view of what some people are like when it comes to paying you. Don't do anybody "a favour" because it could cost you money instead of making money.

I am looking at this thread with deliberate interest because I would like to know the "winning formula" to make money out of the trade.

Originally Posted by chambezio

Be very careful with clients!! I found out quickly that working for some people gave an unpleasant view of what some people are like when it comes to paying you. Don't do anybody "a favour" because it could cost you money instead of making money.

Bang on --> 1,000,000% right.

They will always try to screw you and allocate blame where none is warranted. Fixed the door knob? Door now squeeks, your fault.... paint the roof? Light doesn't work now. Your fault.

People are insane.

I always take before, during and after photos. Always.

I have a very low opinion of people in general when it comes to doing work for them. Its worse in my city. Everyone is an over-entitled public servant with very little to do and lots of time in which not to do it. They are ALWAYS trying to rip you off or allocate costs to you.

Photos. Always.

Hi Kyle,

I agree on others saying you need to seriously up your hourly rate. You're doing nobody any favours by having an hourly rate that barely covers minimum wage, plus you'll quickly realise that there's sufficient work around to keep you busy for quite a while by charging the going rate. The higher rate will also cover you doing periods where you are not as productive. Plus with most households these days having double incomes they can afford it despite most that cry poor.

By charging a rate that is representative of the quality of your work not only ensures you get better clients who value your services, but also reduces the liklihood that you'll drive yourself out of business.

I also second WoodPixels comment, having been in retail for many years, you'll find that the majority of customers do the right thing, but those that don't will do whatever it takes to get what is "rightfully" theirs. In a world where social media and "reviews" are being used as your cover page can make or break your business, as there's an old saying in retail that says people with negative experiences are 11 times more likely to say something that someone with a positive experience.

Originally Posted by woodPixel

Its worse in my city. Everyone is an over-entitled public servant with very little to do and lots of time in which not to do it. They are ALWAYS trying to rip you off or allocate costs to you.

Photos. Always.

Of course they are, they were well trained by our government.

Wow! Such tales of woe. In 47 years I can honestly say I have only had 5 difficult customers.
That is not to say I have enjoyed ever one's company, but we have got through it without incident.
If you are the type of person that can be easily manipulated, go work for a boss. Self employment is not for the faint hearted.

Originally Posted by rustynail

Wow! Such tales of woe. In 47 years I can honestly say I have only had 5 difficult customers.
That is not to say I have enjoyed ever one's company, but we have got through it without incident.
If you are the type of person that can be easily manipulated, go work for a boss. Self employment is not for the faint hearted.

As a self employed person I have to agree with this. It's not for the faint of heart and you have to have a certain degree of fatalism.

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