# Figuring out overhead, hourly rate etc..



## George Z (Dec 23, 2004)

john elliott said:


> the problem with "whatever the market will bear"?
> 
> There isn't a problem if you look at your own point 1). If you can't make money in your chosen market then you need to get into a different one, ideally before you go out of business.
> By different market I don't necessarily mean going from painting to electrical etc, or other such major change, but maybe selling the same thing to different people
> ...


But by using the same logic, you let the next market dictate your pricing again.
My point is:
If you need $5, it's better to get $5


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## john elliott (Oct 23, 2005)

George Z said:


> But by using the same logic, you let the next market dictate your pricing again.
> My point is:
> If you need $5, it's better to get $5



But how do you get $5 if the market says $3????????

My point is you can't get the money you calculate you need simply by asking for it, if the market won't bear it. This has been proved over and over again. By people like Ford, for instance.

John


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## George Z (Dec 23, 2004)

john elliott said:


> But how do you get $5 if the market says $3????????
> 
> My point is you can't get the money you calculate you need simply by asking for it, if the market won't bear it. This has been proved over and over again. By people like Ford, for instance.
> 
> John


Like this:
Instead of selling a Camry, you re-package it and call it a Lexus
Maybe you meant that by the finding another market.

Or call it diferentiation.
Or positioning. 
Or create the market demand yourself.
Or find a niche
These concepts are used all the time.

I heard this before: _Don't compete. Create._


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## john elliott (Oct 23, 2005)

George Z said:


> Like this:
> Instead of selling a Camry, you re-package it and call it a Lexus
> Maybe you meant that by the finding another market.



Absolutely I meant that, and so did Toyota. That is the very essence of finding another market.

John


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## Double-A (Jul 3, 2006)

john elliott said:


> But how do you get $5 if the market says $3????????
> 
> My point is you can't get the money you calculate you need simply by asking for it, if the market won't bear it. This has been proved over and over again. By people like Ford, for instance.
> 
> John


John, how do you know this is all the market will bear? And what segment will bear this? Can you get $5 from 10% of the market? What is your market?

My point is this. You can make excuses for charging 'market rates' all day long and they are still just excuses. If you're providing a professional service then your 'market price' is what you charge. Your services are not a commodity to be bargained for or a price set on some exchange someplace.

Raise your prices tomorrow by 10% and see if anyone notices. My bet is that no one will notice.


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## Brushslingers (Jul 28, 2006)

When I first started... oh too many years ago, I used GC's to figure my rates. I sat down with RSmeans and a phone book... few quotes later I raised and raised until I hit the glass ceiling. THAT's, how I came up with my prices for framing, finish, rock, paint, electric and plumbing, everything but foundations... which to tell the truth, hell with it.

Worst part is the prices I came up with in the early 80's are still good today.. WTF? 120 a hole for electric install, 28 per board finished rock.... how come the price of life didn't raise those prices? Some did.. but by slight margins here.


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## john elliott (Oct 23, 2005)

Double-A said:


> My point is this. You can make excuses for charging 'market rates' all day long and they are still just excuses. .


You are way off base here. Why should you think I am making excuses? 

Firms like Toyota are well aware that if they raise their prices by 10% then they will lose sales. That is because they sell at the top of their market, and so do I

When I talk about selling at market prices that is not an excuse,* because I am selling at the top of my market.*

It surprises me how some people on this forum are happy to make assumptions about how others run their businesses. And it also surprises me how these assumptions are nearly always are that the person receiving the assumption (in this case, me) know less that the person making it (in this case, you).

I, on the other hand, am not going to make any assumptions about how you run your business. although I have learned something about your attitude

John


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## George Z (Dec 23, 2004)

Everyone has opinions.
For example: market sets the rates.
In the same market, I have been told I am an idiot for charging more than $150 per room.
The reason: the market won't support it and we will be out of business.
The thing is, we have been averaging $600 per room for quite a while now.
And I see how the market rate will support $150.00 per room in one condominium unit, but $600.00 for the one next door.
And honestly, we have a better chance of staying in business with our prices.
In this board here, we exchange ideas and many times we disagree.
Some times we even make wrong assumptions too, but who is perfect anyway.
One thing that this board and others do very well, is raising the bar
both for business practices and knowledge.
There is room for charging the market rate.
Some of us don't even care what someone else is charging.
Going into an estimate, I know what I need to charge and when I leave
I know exactly what my margins will be.
I have one in three chances to get the job and it works exactly like that all the time.


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## toddcla2002 (Apr 25, 2005)

This is not an advertisement but I have been recently using this website and it is fantastic! I am a peer group member for a trade association and part of the fee allows us to use it. It has help me tremendously in figuring my overhead and making it easy to do my projections. If you have any questions get back to me and I will do my best to help you with them or I could send them to the guy that wrote the software. 

www.yourcostcenter.com

Worth every penny!

~todd


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## wackman (Nov 14, 2005)

Gordo said:


> Matt,
> Usually, things go a little _wack_ when you bring in employees because you will need to adjust your numbers.


I take offense to your use of my name...:furious: 

Just kiddin...:w00t: :laughing: 

Wack


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