A Simple Small Job Markup & Pricing Example

A couple of years ago in Fine HomeBuilding’s Breaktime Forum, a fellow wrote:

“I live in houston and I am a trim carpenter. I do such a variety of things that I never have know the going price of some of the work that I do. I asked this same question here at FHB and i was told then that I shouldnt get involved in footage rates; that I should price by the job. I generally do that but I would still like to know the going rate on some things so I can stay semi-competitive. Example:

I have a woman who wants crown installed in all of her house. 40 feet of it is about 25 feet up in her entry way. She also wants it painted. She also lives 25 miles out in the boonies, ( no stores within 10 miles). I want the job but I am REALLY REALLY REALLY tired of bidding a job and realizing midway that I underbid ,….AGAIN!!! On the other hand I don’t want to miss out on the work. (plus, she is sorta cute, he he). I am not asking for a free bid I just wants some input on factors that would affect the price. Honestly!, I am tired of underbidding. I mean damn tired of it. I have jacked my prices up 2 times when I was busy and didnt mind if I got the job or not. Both those times I didnt get the job. 80% of my jobs I realize that I should have added a little more to the bid. I always write it off as inexperience or a learning experience. Other contractors I know say that I am too honest and thatI should remember that i have a family to feed. On the other hand my repeat clients say that they like me because I am hobnest and fair; which explains whyI have repeat clients. Any help would be appreciated thanks.”

I wrote in reponse:

Cutawooda- the best I could do is tell you what we would charge for your project and you might take it from there either rejecting or accepting our price and the mechanics of how I came up with it. However I will tell you right off the bat we do not sell our projects on the basis of staying competitive. You either want or need us to do the project or not.

1. I don’t care what everyone else charges.
2. I know what it takes for us to do the work
3. I know what it costs for the people I use.
4. I know what I want for a return on my investment in my company. (In other
   words I know what I want to make)

BUT having not seen the project I still need some more information.

1. How much total crown for the total project?
2. Are you supplying the crown?
3. What kind of crown? (hardwood, softwood, urethane, or plaster)
4. What size crown?
5. What kinds of joints? Miter, cope, scarfs?
6. Any tough joints or a a higher than average number of joints?
7. You mention 40 feet of it is about 25 feet up in her hallway can a scaffold
   be set up easily in that space without damaging the floor or walls?
8. What other temporary protection will need to be set up elsewhere?
9. What size crew do you plan to deploy or is this a one man job in your mind?
   ( You made no mention of your crew if you have one)
10. Painted how? Prime and two coats or what? We virtually always paint and
    then install all our millwork and then schedule a post installation touchup
    or final coat.

You shouldn’t get “hung up” on linear footage rates but you have to have an idea of a linear footage rate as a base price to which you can then modify specifically for a project given conditions. In other words if the typical crown molding price is $8.50 per foot for a normal room ( 8′ to 10′ ceiling) then that price needs to be modified for the difficulty or working up 25′ on a scaffold plus the cost of setting up and taking down the scaffold.

With regard to your statement:

“On the other hand my repeat clients say that they like me because I am honest and fair; which explains why I have repeat clients.”

Watch it! The real danger in that statement is you actually don’t know whether they like you because you are so “honest and fair” or because you are so frigging cheap. Your repeat clients are never going to tell you the truth about what they say about you behind your back. Translation: more often than not “Honest and Fair” is client speak for “frigging cheap”.

He then replied back :

“Thanks for your response.

Actually, I am pretty good at trimming. I am a one man crew and got a good rep for doing quality work. The tall stuff I was going to get a helper and another 24 foot ladder. (ladders since there is a stairway obstructing). It is preprimed fj crown. 4 5/8

10 foot ceiling in the rest of the house. Front room she want a squares on the wall below her chair rail to immatate wainscotting. Probably around 12 of them.

I was going to prepaint everything as you do, install it, and then t-up.

total footage on the crown was around 200. 40 of it was 25feet up.

the wainscotting was going to take me around 2hours I figure. Layout about 30 minutes and 1.5 install.

Also, I need to invest in a larger chopsaw. My 10 inch doesnt cut 4 5/8. this is the third job I have recieved that wanted taller crown and its a pain in the *% without the right tools.

I figured the job at $1600.00 that is time and material. What do you think?

I am REALLY trying to be competitive. But I am really trying to “cross the line” and become a business man as well. And I am ready to cross over from “just making it “to assuming the a more responsible position and making some money. I have seen too many “hot shots” go out and experiment on a clients home only to fu.. it all up. I am so cautious about doing good work and casting a “Knowledgeable appearance” , that I found it easier to be a sub contractor and hide behind the skirt of the contrctor who hired me. And it is alot easier that way. Let them do the figuring. But I have seen others workmanship, and I have seen their bills to the clients, and I realize that I am doing better work and charging less money. I cant avoid the occasional handyman or hispanic that comes in and underbids me by 80% but I can learn from guys like you and avoid an empty bank account because I forgot to “pad ” for the days when its a rain out or when the phone just doesnt ring. (The latter just happened for 2 weeks).”

I then came back again with:

Okay Cutawooda, Nothing long with lengthy posts per se. Ya gotta say what ya gotta say to get your point across. I came up with a Price of $1740, wainscoting not included with my Costs coming in at $1130 (costs being Wages, Labor Burden & Materials). For this kind of small project we then markup materials 30% and markup the labor subtotal 65%. The wainscot thing was unclear to me so I ignored that in all my stuff. I’ll try and give you the break down of just how I came up with that price as soon as possible so you can pick it apart and modify it. Just as a point of reference there we two Labor Billing Rates I used in computing this project see the table below.

It going to take me a little while to write out and illustrate how I came up with my price in HTML but hey that’s a start.

And a day later to explain that estimate I wrote:

The Crown Installation Estimate

First of all I view one of the the jobs of the estimator as a little more than just entering numbers from an estimating book or database on to a spreadsheet and then totaling it all up. I think the estimator needs to design how the project is going to be handled. What’s going to get done, in what order, how, and by who. That’s all because if it’s not down the way he or she planned it then when it comes time to perform the forensic Job Costing on the project you’d be comparing apples to floppy disks. They’re not even remotely similar.

In the case of this Crown Installation Estimate I divided the job up into three hunks, chunks, quanta, phases or what ever you want to call then and estimated each discrete hunk separately. I actually call them “pocket” estimates to metaphorically imply that they are small easily handled hunks of information that you could keep in your pocket. I try to keep them as a discrete contiguous group of tasks that can be done as a whole. That helps later in both scheduling the work and defining payment schedule parameters. You could also think of these chunks as Work Orders. Essentially any client project estimate can be broken down into several individual work orders.

For the purpose of estimating I divided this project up in to three chunks.

1. Set-Up & Preparation
2. The Trim Installation
3. Painting (final touch-up) and Takedown/Close-out

1. Set-Up & Preparation
I figured to do this project I would plan to have one my carpenters go off to Home Depot to pick up some of their primed finger jointed trim. He would then return to the shop and -lay the stuff out > sand the primer > spray back and fronts with Benjamin Moore White Metal Wood Enamel. He’s then done for the day with that project and can move on to something else. Probably 4 hours of time but I estimated it at 5. The Hourly Billing Rate for that carpenter (what I call a Carpenter-B) is $56.80.

Just a quick note here, These figures are copied right from my estimating program and it automatically rounds of the Price line so 172+111.80=283.80 which is then rounded off to $280

2.The Trim Installation
For the next phase I selected a Unit Cost from our Internal Cost Database for the Trim Installation and entered it twice. For the first entry I filled out the Quantity as 200 for the total Linear Footage of the Project. For the second entry I entered 40 as the Quantity to account for the 40 feet of installation that had the increased level of difficulty because of the 25′ ceiling height and narrow confines. Since the material was already accounted for in the first line item I deleted the material cost from the second so it wouldn’t extend out in the calculations. Essentially I’ve charged twice as much for the labor on the high section of crown.

As an aside while doing this “chunk” of the estimate I knew that the material budget line cost for the crown in this case was different from what I was actually going to be getting. The $2.10 per foot was for a stock clear crown and I was getting some pre-primed finger-jointed pine from Home Depot for just $.89. For such a small project I didn’t bother with making the change in the price. I was installing a painted finished final product so since either material would meet the performance specification I let slide and decided the company would earn the excess on this project knowing full well that somewhere sometime in the future I will estimate short and that excess will help cover that in the future.

While there is 1% figured for Contingency in my company’s Overhead Markup I’m sort of padding that Contingency a little further with that $242 dollar difference knowing that the slightest little thing can turn such a small project like this into a money loser.

On a larger project I probably would have made an adjustment for the change in the materiel from the Cost Book Item to what I was actually using. Regardless of that I still however would have specified in my proposal that I was using FJ trim and not have represented it as clear pine.

The carpenter actually doing this installation in this particular case is not the same Carpenter-B @ $56.80 per hour that I used to set-up the job. I’d be sending a Carpenter-A @ $79.40. That’s because the total lineal footage of the project should be able to be done in 8.6 MHrs meaning it was a one day project for one guy. If it had been a sixteen hour project I might have sent two Carpenters either an A-B combination or a B-B group but I wasn’t going to do that for just an 8-1/2 hour project. The A-B or B-B group probably could have done it all in just 4+ hours but then they would have to travel to somewhere else for the rest of the day and that wouldn’t have been as efficient a use of their time.

I was doing the project in oil paint so I needed the overnight for any touch-ups to dry. As part of the “Work Orders for this “chunk” would have been instructions to fill nail holes and caulk as required so that on a final visit the whole thing can be Touched-Up or another coat of paint applied. In other word get as much done as possible so the remaining tasks to finish the project can be kept to just one trip.

3. Painting (final touch-up) and Takedown/Close-out
For the final coat and touch-up and clean-up I’ve got that same Carpenter-A @ $79.40 who did the installation going back there again to: apply a final coat > fix any problems > clean-up > present the bill and pick-up a check > then return clean brushes and put away any tools and equipment that he or she wouldn’t need for the next project. I budgeted that at five hours knowing that it would probably take three maybe four.

The Complete Project Summary
Okay someone is going to say that I didn’t include the cost of the paint putty and caulk anywhere in my estimate and that’s sort of true. That paint, the Benjamin Moore White Metal Wood Enamel, is something that we use on all our woodwork as kind of the default primer/paint ( it’s self priming and builds up fast so I really like it a lot). We buy it and the other stuff caulk and putty by the case in bulk and not by the project. Since I knew I was over estimating the cost of the trim I knew I was covering the costs of those materials and still making the contribution to the Cost of materials account that any materials would be credited against.

While that’s just the way that I would have done the estimate for this project I’m really entrusted in getting some feedback on the pros and cons of the technique and my thinking. While it took a couple of hours to write out this explanation of just how I did it it actually took just 15 minutes to do the actual estimate either entering or looking up all the data in my estimating system. The extimate numbers and client information are automatically entered in to a Contract form so the only thing I had still remaining to do was to tweak the payment schedule numbers however I wanted them to appear. Probably $600 with the $1140 balance due on completion.

J. Jerrald Hayes

Primus Inter Pares at Paradigm Projects, Ltd.

I am an architectural woodworker and general contractor turned IT, Business and Project Management consultant, software developer wannabe senior division triathlete and ski racer, Yankee fan and founder of ParadigmProjects.com, 360 Difference Mac4Construction.com,iOS4Construction.com and now TheBuildingAndRemodelingWiki.com too.