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#157985 - 03/07/06 06:26 PM Know your costs?
Dnkldorf Offline
Member

Registered: 12/12/04
Posts: 1091
Loc: nowhere usa
It seems alot of guys keep using this line, religously.

Know your costs.

But has anyone pondered the importance of controlling your costs, and knowing what your competitions costs are?

Knowing your costs is a minute point if your competition has less overhead than you and controls his costs better than you , don't you think?

Dnk...

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Business, Office, Estimating, Legal:
#157986 - 03/07/06 06:48 PM Re: Know your costs?
mahlere Offline
Member

Registered: 11/17/05
Posts: 514
Loc: New Jersey
only if you are selling strictly on price.

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#157987 - 03/07/06 07:49 PM Re: Know your costs?
LK Offline

Member

Registered: 01/21/03
Posts: 1721
Loc: New Jersey
I have no concern, with what others charge, as for controlling my cost?

Phone company has a funny policy, they refuse to lower their price.

Our state labor department, rufuses to lower their required unemployement, and disability contributions.

Our Truck Insurance is set by the state department of insurance, and the only way to reduce it, is to reduce coverage, pay less get less.

Our workers comp insurance rate is set by state comp board, try to make a deal with them,

The IRS 941 payments, now there is something you can control, keep your hours down, and pay less.

General Libality Insurance, pay less get less coverage.

Cost of operating Trucks, Fuel, and repair costs are going up every month.

State corporate fees, no chance of a reduction there.

The Liability account, i may be able to take money from there, and pretend it's mine for a while.

Truck payments, cut there and the bank will come with the hook.

Lic fees and CEU's, cut there, and your out of business.

Along with all the minor fees, and expenses, which we check each month.

Direct labor cuts will reduce ability to continue operating.

Now we are down to material, where every one in the line of supply makes money, so i guess since were in line, we take our share, "finally, something we can control."

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#157988 - 03/08/06 04:09 AM Re: Know your costs?
Dnkldorf Offline
Member

Registered: 12/12/04
Posts: 1091
Loc: nowhere usa
Les, the big players here are;

Henckles and Mccoy
Armour and sons
HB Frazier
Donald Posey

Each one of them know the others labor rate, they know each others overhead, and they know how each bids jobs.

If these guys know thier costs and the competitions costs, why would you not apply the same thinking to your business?

Is it a scale thing, if you want to be big, you take these into consideration, if you want to stay small, you don't bother?

Or is it because the nature of the job and customer your dealing with?
Ie. typical resi customer with no experience dealing with contractors vs degreed engineers with vast experience.....

Dnk...

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#157989 - 03/08/06 04:39 AM Re: Know your costs?
mahlere Offline
Member

Registered: 11/17/05
Posts: 514
Loc: New Jersey
when you get to the size of those companies, the playing field levels. they all have the cost and overhead. they also are run by people who want to make a profit. so they price accordingly.

a large company here in NJ (union shop) needs to have 300 men in the field to cover overhead. They know it and they price for it.

no matter what size company you are, you have a bunch of fixed costs that only change when you get bigger or smaller. but so does your income, so the percentages stay relatively the same.

you can offer any customer 3 main things - Price, Quality and Service. Now, the truth is, you can only offer 2 of the 3 at any given time. So pick your 2 and run with it.

(what i mean above is that, you can't offer same day service with the best materials, for the same price as tract housing with resi grade materials)

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#157990 - 03/08/06 02:53 PM Re: Know your costs?
Jim M Offline
Member

Registered: 08/10/01
Posts: 453
Loc: Chestertown, MD, USA
It is important to know your costs for the following reasons:
You want more than a paycheck.Maybe a retirement account to carry your golden years.

You need some sort of savings for the slow times to cover your expenses.

You need money to grow the business.

You can't sell for $xxx when it costs you $xxx+YYY to operate. You sure don't last long when it costs you money just to open your doors, let alone lose money on the install.

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#157991 - 03/08/06 03:05 PM Re: Know your costs?
LK Offline

Member

Registered: 01/21/03
Posts: 1721
Loc: New Jersey
Well said Jim, i have no intrest in what others charge, or how they bid, what i do know, is what it costs me to operate, and make a profit, I estimate my jobs present my price , and move on to the next one, i am in business, to earn a living, and provide for my family, and my future.
When i bid a job, i submit a price, based on it being profitable.

[This message has been edited by LK (edited 03-08-2006).]

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#157992 - 03/08/06 06:06 PM Re: Know your costs?
Dnkldorf Offline
Member

Registered: 12/12/04
Posts: 1091
Loc: nowhere usa
LK, what sid eof the industry do you do your work?

Jim also...

Resi service, large or small commercial, light or heavy industrial?
What percentage of each?


Maybe this will show me why you are thinking the way you are...

Dnk...

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#157993 - 03/08/06 08:24 PM Re: Know your costs?
LK Offline

Member

Registered: 01/21/03
Posts: 1721
Loc: New Jersey
Our work is in the residential, and small commercial, remod, and installation market.

20% to 30% of our calls, are from price shoppers, the remainder is from customers that have work to be done.

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#157994 - 03/08/06 09:33 PM Re: Know your costs?
Jim M Offline
Member

Registered: 08/10/01
Posts: 453
Loc: Chestertown, MD, USA
98% resi
additions mostly wit about 25% service type stuff.

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