# how much....



## plumber75 (Aug 31, 2013)

I just finished up the rough in for a remodel job and when talking to the framer I found out that the other plumber that bid the job gave a price of 50k when my bid was 26k. I keep track of all my hours and expenses and it turned out that I made 76 per hour. I was woundering what some of you try to make per hour on remodeling jobs?


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## Cajunhiker (Dec 14, 2009)

You are not seriously expecting a serious reply to your question, are you?:whistling2:


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## LIQUID (Sep 26, 2013)

as much as possible.


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## MTDUNN (Oct 9, 2011)

You have to figure in your overhead and business costs. You know, the things you learned while taking your masters. 

You do have a masters don't you?


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## Cajunhiker (Dec 14, 2009)

I'll pretend I'm teaching the master business course, even though I am lowely j-man.

In the old days when gas was .75 cents a gallon and you didn't have a cell phone bill, you could double your gross labor costs and hope to have enough to cover your overhead and make a small profit.

Today, you have to know your cost per hour to be in the plumbing business - figured on an annual, quarterly, monthly, weekly and daily basis. Every plumbing company will be different cause they have different costs, margins, profit, etc.

So, OP, you can't compare what you make per hour on a job to what someone else makes per hour on a job. But you are thinking in the right direction. Follow me here: 

Before you or your plumber even get to a job, you have expenses for insurance, trucks, workers comp, drug testing, specialized training, gas, oil, tires, equipment, taxes, social security, labor, advertising, electric bill, phone bill, tools, rent, computers, lawyer, accountant, employee benefits, office help, office supplies - ALL of this overhead must be added to you and your plumber's pay BEFORE you buy one pipe and fitting for a remodeling job. Some of this overhead will be the same every year (fixed) and some will change (variable).

Knowing your overhead costs at all times is as important as knowing your material and labor costs. Re-read that and keep repeating it to yourself!

Let's say you plan on being open for business for 1920 hours a year (40 hrs x 52 weeks = 2080 hrs. Less 2 weeks vacation & 10 days of holidays = 160 hrs. 2080-160=1920 hrs a year.)
Now let's say on average you have 6 hours per day of billable time. (The other 2 hours are spent at the supply shop lol) That's 1,400 hrs a year of billable time.
Now, let's say you figured your annual overhead expenses (not counting salaries) to be 20,000 annually (your a small 2 man shop)
20,000/1,400=14.29.
This is your per hour of overhead cost. 

On every job, you need to charge $14.29 per hour of billable time to cover your overhead expenses. Now add in your material cost & labor cost per hour for every job, and your goal, for example, to make 15% profit on every job.

Now, an easier way to account for overhead cost for every job, but more riskier to the financial long term health of your business because it is not as accurate ( you could be shorting yourself), is to add 15% or 20% to the selling price of every job to cover overhead. This is not to be confused or used in place of a percentage for profit.

Speaking of profit. Here's the best reason why your overhead (watch your nickels & dimes) needs to be kept low, so you can be competitive on labor and material costs. If your remodel job sold for $20,000 & you hoped to make 15% profit, you would earn $3,000 in TAXABLE dollars.

In summary, you can't compare what you make to others. :thumbsup:


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## justme (Jul 4, 2012)

Its all about Overhead and everyone's Overhead is different. We have a huge shop in Houston and the shop I run in D/FW say we bid a project for 

375,000 and a small non-union shop comes in and bids it for 275,000, more than likely they will still make money . Does this mean our price is way out of 

line? No , our overhead is 5 to 6 times as much as their overhead. The small shop has 2 people in the office full time , between our Houston office and 

D/FW office we have 15 people in the shop full time. We run into to this all time. Everybody's cost of doing business is different .


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## Flyout95 (Apr 13, 2012)

Cajunhiker said:


> I'll pretend I'm teaching the master business course, even though I am lowely j-man. In the old days when gas was .75 cents a gallon and you didn't have a cell phone bill, you could double your gross labor costs and hope to have enough to cover your overhead and make a small profit. Today, you have to know your cost per hour to be in the plumbing business - figured on an annual, quarterly, monthly, weekly and daily basis. Every plumbing company will be different cause they have different costs, margins, profit, etc. So, OP, you can't compare what you make per hour on a job to what someone else makes per hour on a job. But you are thinking in the right direction. Follow me here: Before you or your plumber even get to a job, you have expenses for insurance, trucks, workers comp, drug testing, specialized training, gas, oil, tires, equipment, taxes, social security, labor, advertising, electric bill, phone bill, tools, rent, computers, lawyer, accountant, employee benefits, office help, office supplies - ALL of this overhead must be added to you and your plumber's pay BEFORE you buy one pipe and fitting for a remodeling job. Some of this overhead will be the same every year (fixed) and some will change (variable). Knowing your overhead costs at all times is as important as knowing your material and labor costs. Re-read that and keep repeating it to yourself! Let's say you plan on being open for business for 1920 hours a year (40 hrs x 52 weeks = 2080 hrs. Less 2 weeks vacation & 10 days of holidays = 160 hrs. 2080-160=1920 hrs a year.) Now let's say on average you have 6 hours per day of billable time. (The other 2 hours are spent at the supply shop lol) That's 1,400 hrs a year of billable time. Now, let's say you figured your annual overhead expenses (not counting salaries) to be 20,000 annually (your a small 2 man shop) 20,000/1,400=14.29. This is your per hour of overhead cost. On every job, you need to charge $14.29 per hour of billable time to cover your overhead expenses. Now add in your material cost & labor cost per hour for every job, and your goal, for example, to make 15% profit on every job. Now, an easier way to account for overhead cost for every job, but more riskier to the financial long term health of your business because it is not as accurate ( you could be shorting yourself), is to add 15% or 20% to the selling price of every job to cover overhead. This is not to be confused or used in place of a percentage for profit. Speaking of profit. Here's the best reason why your overhead (watch your nickels & dimes) needs to be kept low, so you can be competitive on labor and material costs. If your remodel job sold for $20,000 & you hoped to make 15% profit, you would earn $3,000 in TAXABLE dollars. In summary, you can't compare what you make to others. :thumbsup:


Best post I've read on this forum.


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## plbgbiz (Aug 27, 2010)

plumber75 said:


> ...I was woundering what some of you try to make per hour on remodeling jobs?


CLICK HERE>>> How Much Should I Charge?


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## Cajunhiker (Dec 14, 2009)

I learned about knowing what to charge per hour by reading and studying books by Frank Blau, AND also from sitting in on the masters continuing ed classes with my dad. The classes are taught by Mrs. Bennie Payne, one of the original owners of Central Plumbing in Baton Rouge, LA. with her husband Mr. Jerry. The company has been in biz since 1974. Mrs. Bennie also preaches that for every job, a lil has to be set aside for a new truck fund.
Our numbers may be different Mr. Biz, but the concepts are the same 
Get out now...Period! :laughing:


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## Will (Jun 6, 2010)

Do you raise or lower your rates based on how much billing hours you get? I know you don't, but I'm trying to understand how you can factor your rates based of a fictional guess of how many you will bill out for the year.


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## plbgbiz (Aug 27, 2010)

Will said:


> Do you raise or lower your rates based on how much billing hours you get? I know you don't, but I'm trying to understand how you can factor your rates based of a fictional guess of how many you will bill out for the year.


It doesn't have to be a guess for very long. Let's say a OMS is starting Monday....

1. Start by using the 1,040 average that countless industry professionals have agreed on.

2. Keep track of time spent with your truck actually parked in front of the customer's house.

3. After the first month, analyze the number of hours spent turning wrenches.

4. Are you billing 20-21 hours a week? Are you billing 86-87 hours a month?

5. Multiply the month's number of hours by 12 and compare to the 1,040 target.

6. If it is off by miles, adjust your rate, get more hours of work, refigure hourly rate, etc.


It will not take very long at all to be in a position to make an exact calculation based on known numbers.

I do not adjust hourly rates often. The key is being realistic with the budget and allowing room for "you gotta be kidding me" days.


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## Cajunhiker (Dec 14, 2009)

You are correct Will, it's a guessing game, UNLESS, billable hours and a lot more info is tracked for a certain period of time either by yourself or by a part-time or full-time administrative assistant. I know the most successful companies track everything about their biz and are lustful for spreadsheets. I'm not as successful as I could be because of a lack of execution on a lot of these administrative things. I'm constantly debating about when to put my tools up and stay in the office to work on my biz and not for my biz.


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## O.C. plumberman (Nov 21, 2008)

Double... that way if a feisty inspector or h/o makes you yank out everything you will still get paid and if not you will still get paid capisce?


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## pcride (Oct 16, 2013)

only 20K? Self employed, even a 2 man shop, wouldn't you expect 50-60K? What kind of salary is that?

Maybe I missed something...




Cajunhiker said:


> I'll pretend I'm teaching the master business course, even though I am lowely j-man.
> 
> In the old days when gas was .75 cents a gallon and you didn't have a cell phone bill, you could double your gross labor costs and hope to have enough to cover your overhead and make a small profit.
> 
> ...


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## Plumbus (Aug 4, 2008)

"Let's say you plan on being open for business for 1920 hours a year (40 hrs x 52 weeks = 2080 hrs. Less 2 weeks vacation & 10 days of holidays = 160 hrs. 2080-160=1920 hrs a year.)
Now let's say on average you have 6 hours per day of billable time. (The other 2 hours are spent at the supply shop lol) That's 1,400 hrs a year of billable time.
Now, let's say you figured your annual overhead expenses (not counting salaries) to be 20,000 annually (your a small 2 man shop)
20,000/1,400=14.29. 
This is your per hour of overhead cost"

If you're a two man shop, wouldn't the math be
20,000/(1,400x2)=7.15?


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## plbgbiz (Aug 27, 2010)

Plumbus said:


> "Let's say you plan on being open for business for 1920 hours a year (40 hrs x 52 weeks = 2080 hrs. Less 2 weeks vacation & 10 days of holidays = 160 hrs. 2080-160=1920 hrs a year.) Now let's say on average you have 6 hours per day of billable time. (The other 2 hours are spent at the supply shop lol) That's 1,400 hrs a year of billable time. Now, let's say you figured your annual overhead expenses (not counting salaries) to be 20,000 annually (your a small 2 man shop) 20,000/1,400=14.29. This is your per hour of overhead cost" If you're a two man shop, wouldn't the math be 20,000/(1,400x2)=7.15?


 A two truck operation with the owner in one of the two trucks, will never get six billable hours per day.

With a 40 hour workweek.


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## Cajunhiker (Dec 14, 2009)

Pcride - not counting salaries. Point is keep your overhead low.

Plumbus - you are correct. I'm a graduate of Louisiana public schools. I have an excuse.

Don't get lost in the forest. The specific numbers in the example are irrevelant. The concept is the important thing. Grab your P&L statement from your accountant, figure out your overhead. Figure out your billable hours over a given amount of time. Divide them. Come up with a cost for overhead so you can charge customers for your jobs appropriately and stay in business and retire one day. 
A simple way to account for overhead is to add 15%-20% to the labor & material cost of every job, just as you would for profit. 

Now, go make a $millions!! :thumbup:


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## Cajunhiker (Dec 14, 2009)

Biz is correct, the average time that we are actually at a customer's house doing work from which we can charge the customer is 4 hours per work day.

The rest of the day we are arriving late for work, at the supply house, loading the truck, getting gas, taking a crap, eating at 9:15 am, noon and again at 3:15 pm, getting lost driving to customers house, fixing broken sewer machines and worrying about why the 1st yr j-man is making as much as you did 5 years into the job, among many other ways that we waste productive time. :no:


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## Plumbus (Aug 4, 2008)

plbgbiz said:


> A two truck operation with the owner in one of the two trucks, will never get six billable hours per day.
> 
> With a 40 hour workweek.


Biz
Are you sure? Three hours per man a day doesn't seem to difficult.

If you mean 12 hours a day, I agree. 

Cajunhiker
I think the specific numbers are important. Otherwise, it's GI GO. Your efforts to ascertain your true costs and thus an accurate break even point will be for not. It's not just about the exercise, it's about getting and using good data.


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## plbgbiz (Aug 27, 2010)

Plumbus said:


> Biz
> Are you sure? Three hours per man a day doesn't seem to difficult.
> 
> If you mean 12 hours a day, I agree.
> ...


6 hours per truck.


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