# Hourly rate on remodels or new construction



## love2surf927 (Dec 22, 2011)

Does anybody lower their hourly rates on remodels or new construction? 
I am predominantly a service plumber and I keep losing out on most of the remodel and new construction bids I'm doing because my prices are too high. 
I'm thinking I can get away with lowering my hourly rate since my percentage of billable hours on these projects will be higher. 
I need the work but I feel I am selling myself short if I lower my rates, but I am not able to compete at the rate I charge for service.
Any thoughts or suggestions from the masters on here are much appreciated. Thank you.


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## stillaround (Mar 11, 2009)

You can get warm bodies to offset labor in new work...dont need everyone at $25+/hr....it is one reason it is cheaper...


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## Qball415 (Nov 20, 2010)

My new install/remodel rate is just a tad lower hourly than my service rate, and is T&M on G.C or H.O account. Depending on size of project I will flat rate and include material at a markup. Just have to know which billing system will earn you profit.


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## plbgbiz (Aug 27, 2010)

love2surf927 said:


> Does anybody lower their hourly rates on remodels or new construction?


Pick a time period of at least a month or more. Reconfigure your billable hour rate based on the increased efficiency. If it is significant then you might be able to be a bit more competitive.

Be very careful though. Often these projects suck up a lot more administrative and "run around" time than you account for. They are seldom as truly efficient as we hoped.

Don't be in too big of a rush to fight for breaking even.


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## beachplumber (Feb 7, 2010)

I find it very difficult for me to be efficient on remo or nc while running service. However I have calculated (thanks mr. biz) a rate that is slightly lower than my service rate.

I try to bid these hours in a min. of 4hr incriments.


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## seanny deep (Jan 28, 2012)

Dont lower your rate on paper "cause extras or changes happen and its cash in your pocket" if you feel your two expensive just lower the time you feel it will take "dont cut your own throat thou" that way the bid is still cheaper or what ever price you feel is fair cause getting the job is your goal. Then once you get the job if theirs changes ect you can still come out ahead. I hate doing qoutes and sight seeins and not getting the job what a waste of time... Any changes make sure you document and get ho or gc to sign before you do them on your qoute make a note that any changes are subject to time and materials. Not telling you how to run your busissness for i am new at it, but this seems to work for me. My rate is the same if i augering a toilet or roughing in a new building. Thats my hourly rate the only time it changes is if i decide to be nice. "elderly people, single moms, and or people in unfortuante situations, small town what goes around comes around" good luck seanny


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## MikeS (Oct 3, 2011)

"I am predominantly a service plumber and I keep losing out on most of the remodel and new construction bids I'm doing because my prices *are too high*."

That may be a possibilty, that you are losing out because your prices are to high, but, maybe its that you aren't selling yourself.
Quality, knowledge, and confidence trump price every time. So do warranties. If you are good, give them a 10 or 20 year warranty. Don't do cheap quick work, like one piece stops and supply lines. Not all plumbers are the same. We've seen this on this board. Don't send flunkies out to do the work. And if you do, make sure you check on every aspect of the job. Not everyone goes for the cheapest job. If they do, and you are quality, maybe they are not the right customer for you. Instill to the customer that the reason you prices are higher than others is because you will do a better job. Make a good first impression. Show up clean, and smelling nice. (I spray myself down with a deodorant before I go into any job, and mints too!) Explain that plumbing isn't as simple as home depot and lowe's makes it out. Sell yourself, not the job.


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## plbgbiz (Aug 27, 2010)

seanny deep said:


> ....if you feel your two expensive just lower the time you feel it will take....


What's the difference between lowering your billable hour rate as opposed to cutting your billable hours? :blink:


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## grandpa (Jul 13, 2008)

Inherent in service work is the unavoidable travel time between jobs, dead time if you don't book a day full of jobs, possibly a trip to the supply house, etc.\

new construction...that brings up so many issues it needs a whole thread!


Remodel....if you can schedule yourself right....multiple hours or days on one project...there is a lot of efficiency there. With any luck, you can estimate the material list in advance and stock up, possibly have a helper or your wife pick stuff up! So on that basis, you can calculate a lower hourly and still take home maybe even a better check! It is a fine line, because you still have to pay for the truck, insurance, all that stuff, so if you go to low then you are working just to work... and sometimes that is ok too!


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## Will (Jun 6, 2010)

I usually lower my rate if I bill out over 8 hours. Maybe I shouldn't do that, but so far it hasn't been much of a issue for me. I do pretty well on the remodel work. I bill out about 10% less hourly on my remodel work, but I make it up in large hours billed out. 


I won't do new construction again, except for special occasions. I've done a butt load of new construction before going on my own, and there ain't no money in it anymore. I've never heard of getting hourly on new work. It's pretty much all bid or fixture count.


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## 1703 (Jul 21, 2009)

Maybe its not that you're too high, maybe everyone else is too low.

If you can shave a few bucks off, so be it. Make sure that if you show your labor rate on your invoice that the customer understands that the labor rate shown is not your service rate. If you got back on a service call later and they see a different rate, it could cause friction.


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## plbgbiz (Aug 27, 2010)

Colgar said:


> Maybe its not that you're too high, maybe everyone else is too low.
> 
> If you can shave a few bucks off, so be it. Make sure that if you show your labor rate on your invoice that the customer understands that the labor rate shown is not your service rate. If you got back on a service call later and they see a different rate, it could cause friction.


Well said Mr. C. :thumbsup:

Oh what a tangled web we weave, when it is a GC we seek to please.


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## smellslike$tome (Jun 16, 2008)

seanny deep said:


> Dont lower your rate on paper 1."cause extras or changes happen and its cash in your pocket" 2.if you feel your two expensive just lower the time you feel it will take "dont cut your own throat thou" that way the bid is still cheaper or what ever price you feel is fair 3.cause getting the job is your goal. Then once you get the job4. if theirs changes ect you can still come out ahead.5. I hate doing qoutes and sight seeins and not getting the job what a waste of time... Any changes make sure you document and get ho or gc to sign before you do them on your qoute make a note that any changes are subject to time and materials. Not telling you how to run your busissness for i am new at it, but this seems to work for me. 6.My rate is the same if i augering a toilet or roughing in a new building. Thats my hourly rate the only time it changes is if i decide to be nice. "elderly people, single moms, and or people in unfortuante situations, small town what goes around comes around" good luck seanny


1. Never price work counting on changes down the road. You can't predict with certainty what might happen. In this business, one of the worst, most sickening feelings is coming to the realization that you lied to yourself about your own abilities or your crews abilities or some other trades abilities and now you know with certainty that you will be clobbered on this job because you didn't price it right to begin with.

2. This is the exact same thing as lowering your price. Again, you will suffer in the end if you lie to yourself in the beginning. If you are going to make a mistake in pricing, make certain that it is always in your favor. If you get to the end and everything went well and you want to cut someone some slack you'll be in a position to do so, but try going back to the ho or the gc or whoever is writing the checks and say "gee I just didn't do very well on this. I know I said it would be this much but I'm going to have to add this much ***X.XX to the bill". Good luck with that!

3. Making a profit is the goal. Why in the world would you want to work for "break even" or worse yet, at a loss. Better to not get the work and spend the time searching for work that pays or even cleaning the truck or all the other tasks that get neglected while you're in the field than to work for nothing. I've been hungry, even desperate, in this business before, I know what that's about but working for nothing or simply for wages sucks!

4. Again, that's a big IF and I wouldn't let my profitability rest on that IF. (refer to note #1)

5. Guess what! It's part of the job and the time spent doing these things should be factored into the sale price. You will not land every job but you only have so many hours and those hours have to be paid for. I'm just picking numbers out of the air here. Let's say you have 30% closing rate, you spend 1 hour looking at each job (small jobs) and your hourly rate is $100 (mine hasn't been that low for a long time but it makes the math easy). So you sell 3 out of 10 jobs and you want to add $100 to each of the jobs you sold to cover the time you spent looking at it and preparing the quote. WRONG, WRONG, WRONG!!! You just threw away $700 of your productivity that you can never recover. 10 jobs = $1000 divided by 3 sold jobs = $333.33 per sold job. This is not perfect, some jobs will require much more than an hour to produce a quote/bid but the point is you can't throw away your productivity and expect to get away with it. Come up with as accurate of an average as you can and apply this number to the sold jobs.

6. You are absolutely correct on this point. The only time it should change is when it goes up for some particularly unpleasant or physically demanding or dangerous task. It really should never ever go down.


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## seanny deep (Jan 28, 2012)

smellslike$tome said:


> 1. Never price work counting on changes down the road. You can't predict with certainty what might happen. In this business, one of the worst, most sickening feelings is coming to the realization that you lied to yourself about your own abilities or your crews abilities or some other trades abilities and now you know with certainty that you will be clobbered on this job because you didn't price it right to begin with.
> 
> 2. This is the exact same thing as lowering your price. Again, you will suffer in the end if you lie to yourself in the beginning. If you are going to make a mistake in pricing, make certain that it is always in your favor. If you get to the end and everything went well and you want to cut someone some slack you'll be in a position to do so, but try going back to the ho or the gc or whoever is writing the checks and say "gee I just didn't do very well on this. I know I said it would be this much but I'm going to have to add this much ***X.XX to the bill". Good luck with that!
> 
> ...


All I was saying is lowering your hourly rate for new construction in my mind doesn't work. An example of Why is .. say your 100$ an hour for service and you lower it to 80 an hour for new construction you bid a hundred hours at 80$ 8000$ total it you Keep it at 100$ an hour an bid 80 hours. Then yes its the same thing except IF and thats a big if anything changes say they add a bathroom. Any extra work is now 100$ an hour instead of 80$ that's all I was getting at. Seanny.


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