I just saw an ad on craigs list in nh for a guy that has an excavting bussiness and is slow. He is willing to work a small bobcat for $50 an hr min 3 hours.I know things are slow but that hardly seams like it worth going out of the house for, when you think of machine and truck fuel, wear and tear and haveing to load and unload then load back up again the machine.That price was fine when fuel was down around a dollar or so .
I guess when your business is dead it may be psychologically healing to be active working............ even if you have to pay for it. Its not going to do much for the overdraft except run it in the red but it might keep a smile on your face, if you like keeping busy.
I agree, not making money sucks but not working period is the worst.
Gotta dissagree with you on that one, Aussie Nick. It's far better to leave the equipment in the yard than wear it out and lose money at the same time. It is not a problem that we have ever had but we do not lower our rates just to get a job. There is no point buying work. (more time to go on the forum) Rn'R.
i believe there is negative incom, positive incom, and even incom, if he goes out for $50 dollars an hour he may not be putting extra money in the bank but at least he doesent have to borrow money to make his monthly insurance payment. parked equiptment makes negative money if you are paying for it to sit there.
I had a guy pull up today in a tandem today looking for dirt. He then went on to tell me he was willing to hire out at $35/hr.
G'day stumper120, My argument is, that once he lowers his prices, he will never get them back to where they were and even if he does, by then all his costs have gone up, so he will have to put his prices up even more to survive. It is far better to increase your prices a little, often, than big jumps occassionally. What happens if his machine breaks down, because they only break down when they are working, not while they are sitting in the yard? He is only making enough money to meet his commitments, so how does he repair the machine? I'm not having a go, stumper120, this is a very interesting topic and one that comes up every time there is a downturn in business. The cowboys will cut their prices, do a second rate job and then dissappear because they have gone broke and this makes it a lot harder for the serious operators that are in it for the long haul. A little bit of advice was given to me by a bank manager (and I could write a book on bank managers) and I say this to all of you young blokes out there having a go "Think with your head, not your heart". Rn'R.
If you read my post carefully you will see that I touched on your point of view and gave it creedence. The problem with just taking your position in a recession is that sitting around doing nothing can cost the person serious psychological problems. This is especially so as recessions often occur over several months if not years. I do not agree that if you lower your charges that you then can't raise them again. I think your fee structure has to represent the economic climate otherwise you stand a good chance of being a forgotten non-entity. The activity itself and being seen to be "operating " generates business, in most cases. Being in business means that you are not on a set wage and one has to go with the flow both in times of prosperity as well as downturn. With the greatest respect to your views, I believe it is tantamount to business suicide in a climate of recession because to follow it through, as you have suggested, will mean that the operator that follows your suggested path will be through. Just bear in mind that the Tornado is about to hit the neck of the woods where you and I come from. It will be interesting to canvass your views again in six month's time when the "eye" has arrived.
G'day Aussie Nick, Firstly, I wonder if you are speaking from the experience of having owned and run your own business in this field, or have you only been an employee, because this does make a big difference to this discussion. The practicality is that you can not keep running machines for lower rates when all your expenses are increasing. And believe me, the phsycological problems are much worse when you have monthly lease payments coupled with fuel bills, wages, maintenance bills and no money to pay them, because you have been working at a lower rate just for the sake of working or been seen to be working. If you just have lease payments they can often be re-negotiated until things improve. In business you have to keep an open mind because there will always be recessions. It might mean scaling back and selling off some plant, which we have done at different times and I even hold the view that sometime in the future our business may become unsustainable for various reasons, but lowering the rate is not the answer. This is not only my view, but the views of various bank managers and accountants I have worked with over the years. It just means we have to get smarter or perhaps diversify in other areas. I agree with you that things are going to get tough, but we have been through tougher times and I look forward to talking to you in six months time, but I can guarantee we will not be lowering our rates. Rn'R.
Firstly, I wonder if you are speaking from the experience of having owned and run your own business in this field, or have you only been an employee, because this does make a big difference to this discussion. My comments speak for themselves in answer to your query in this regard and I wouldn't be making them unless this was based on actual experience especially having survived one serious recession back in the early 90's. The practicality is that you can not keep running machines for lower rates when all your expenses are increasing. And believe me, the phsycological problems are much worse when you have monthly lease payments coupled with fuel bills, wages, maintenance bills and no money to pay them, because you have been working at a lower rate just for the sake of working or been seen to be working. If you just have lease payments they can often be re-negotiated until things improve. I agree...... and you would have seen this in my initial post on this thread. However, If you sit at home waiting for the call to work which maybe months away you are not generating any income and the lease expenses continue. Granted you don't have the fuel and running expenses but, you are also going stale, fretting and worse of all there is no exposure to others that you are surviving and still operating as a going concern. In business you have to keep an open mind because there will always be recessions. It might mean scaling back and selling off some plant, which we have done at different times and I even hold the view that sometime in the future our business may become unsustainable for various reasons, but lowering the rate is not the answer. This is not only my view, but the views of various bank managers and accountants I have worked with over the years. It just means we have to get smarter or perhaps diversify in other areas. Rn'R.[/QUOTE I don't listen to bean counters or bank managers instead I try to rely on my own intelligence and experience. I think the worst mistake anyone can make is to act purely on the advice of the type of people you have referred to and I say that with good cause and justification,and to some extent I believe that you have yourself conceeded as much ,in regard to some bank managers you have encountered. I agree with you that things are going to get tough, but we have been through tougher times and I look forward to talking to you in six months time, but I can guarantee we will not be lowering our rates. Rn'R.[/QUOTE] In respect of diversifying I say this : In a recession all industries take a dive. Some attempt to diversify into areas that they have no expertise or experience only to find that those areas too are already suffering or that there are so many trying to now break in that it becomes unsustainable or uneconomical. In relation to your contention that you have been through tougher times I say this: A.We have a property bubble just like the US if not worse. B.Most households are indebted up to their eyeballs. C.Interest rates are high but not 21%,as they were under the world's "greatest treasurer" . D.Most of the manufacturing has moved off shore to one specific country to which we sell alot of our resources to. E. The price of oil is at all time records and going anywhere but south. Quite frankly Rocks I am a little bit concerned. About your rates. Ok everybody has got to do what they got to do. I personally would prefer to keep my hand in as far as possible . If that means lowering my rates just to stay busy I prefer that than just sitting around . Anyway, I hope you do not take this personally. I am merely expressing a point of view. I recognize that this type of debate is valuable to me as I hope it is to you and other members here. No-one has a monopoly on the truth. By the way if you are interested I know where there are some cheap twenty tonners here...... probably. One of the major contractors has just gone under,however I wont be buying given what I smell in the wind. Regards
G'day again, Aussie Nick, I have been knocking around the bush too long too let a slight difference of opinion get in the way of an interesting discussion. I respect your views, you obviously have very good reason to think that way as are my views which are based on past and sometimes bitter experiences. After reading your last post I was thinking that our backgrounds probably contribute to the different lines of thought, somewhat. I presume your background is metropolitan based, whereas my background is rural based. In the cities I can understand that you need exposure and you probably rarely work for the same people twice as well as competing with other contractors. In our situation 90% of our business is repeat business and we have worked for the same customers several times over many years, some on an annual basis. We also have very little competition in fact most of the contractors here tend to work in with each other if the neeed arises. Our viability relies more on the prices rural commodities are bringing than some of the factors you mention, although they do all have an effect. We also survived the late eighties, early nineties recession with the high interest rates (I am not quite sure how) and while there a lot of problems out there, I think it will be along time before we see interest rates back up to 21%. By the way, I will pass on the twenty tonner offer, thanks anyway. Rn'R.
And I thought the rates were cheap here in North East Tx , they range anywhere from $45.00 per hr to a high of $60.00 ph
I have mixed feelings on this. The guy may need to make payments on his equipment, or taxes, or whatever. He could be someone who picked up the bobcat dirt cheap, has no bills at all, and does the digging on the side. My rates are never lowered, you can pay me now, or pay me double when someone else clusters it up. But I am not hurting for work, don't know what I would do in that situation.
It's cheaper to park your machine in a parking lot for advertising than to slash your rates. How small is the skid steer? Maybe he's new? SOmetimes though it can be instrumental in gaining a foot in the door of a new development. I've had many job leads just by being in the area, people come up and say can you check out this job. Sometimes its a 15 min. job for a min. callout of $? you make some money back. This recession has two sides. There are the woe is me and panick because I grew to fast and made stupid business choices and there is the Hmm there is somebody in a panic trying to sell his unfinished house for cheap. People up here were slow and aprehensive at the start of year, but now realize they get more out there house finished.
I didn't read the whole thread but a VERY wise man once told me, "you can go broke busting your *** just as quick as you can sitting on it" That has stuck with me through the years. I will do any sort of work that theirs a profit in. If the numbers work then the numbers work. If im loosing money just to stay competitive or get busy work FORGET IT.
Good points, all of them, but you guys are talking about some guy running a dump for $35 an hour. My fuel cost $25 per hr so this guy won't make it ever. The point I would make is this, I do lower my price sometimes depending on how much work I have but never lower than every one else and never lower than what I think is a fair price. You have to know what your costs are and you have to know what you competitors are charging, not the guy that happens to own a dump truck or skid steer are what ever but the guy that has the same over head and expertise that you do. The expertise is worth something along with the quality of his or your company. I don't want to compete with anyone running a dump truck for $35/hr nor will I try. $75/hr is too cheap. I will however if I have to go from $100/hr for my dozer to $90/hr if that’s what it takes. Fortunately I never charge by the hour and charge by the day only once in a while. I quote the work as a package as much as possible unless the owner just doesn’t know what he wants so then by the day works for me. Most if not all my work needs more than one machine, or one person for that matter, so by the job to include everything needed complete the job.
Will add my 20 cents worth for what its worth. As some will know have only been running for about a year now and I dont plan on dropping rates if things get tough. Is easy to say as seems there is more work around than I/ we can keep up with. Am often told by a customer that they had someone else lined up to do the job but they didnt turn up. Am also told that I am $10 an hour dearer than others in the area, or my quotes come in $100 more. They still pay and at the end of the job they are happy, and call me back next time. This is not a real metro area here and I believe that you charge a fair rate and do a job to the standard you would do on your own house. If you can sleep at night then you are not charging to much. These things cost a lot to keep running.
A guy with a machine that normally goes for $100 per hr and drops his rate to $90 or even $80 to stay busy is one thing. The one thats out trying to find work for the same machine at $50 is desperate, and about to go out of business. In the process, he hurts all the other legitimate contractors by making the customer think we can all make $$ at $50 so why should they pay more. By the time he goes under, the rest in that market will suffer. I will hold rates as long as I can get work, but if you have to discount a little to get work, I will cut back expenses and keep making the payments that come every month like insurance and machine payments.
And a very wise man ( father in law, god rest his soul ) said " any fool can work for nothing" A very intresting thread, glad it is being kept civil despite quite different points of view. :thumbsup
well you never know how much hes into his business for he could be a weekend warrior you know one of those state workers who wants to run a side bus maybe he thinks 50 hr is great because he has no other costs and is runnin gypsy. or he gets to the job and starts throwing in extras there s so many varibles. the problem is people get it in there head thats the price it should be. I personally would go to work for someone before id make 150 to drive my stuff to somones job hell rates are 140 with 2 hour min to move my bigger stuff
Was readig a quote from someone saying " its better to go broke sitting on the beach than busting your guts" which is spot on but at the same time I have just got a new toy so thats another $300 per week I need to find so I guess I can see both points of view here. 1, dont want to work for nothing. 2, need to have at least some money coming in unless you own all your eqiqment and dont need to make repayments. Pretty lucky where I am, and most of my work is word of mouth but at the same time its bum up and heads down and lets keep those wheels turning.
It is a very difficult call on when to say NO! I wont work for that. The important thing to know is what your costs are, not just your repayments but your insurance premiums your maintenance ( wear and tear ) etc, then you know at what point the machine is costing you more to work and earning than sitting doing nothing. AND dont forget to add the 10% min to the costs to give you a fighting chance of survival, AND then you can and start to add you earnings to the equation :Banghead
That is why the industry is the way it is, and will never change. Although I do understand, some people get desperate and will do anything to stay afloat, it just doesn't help. And like it was already said, eventually you end up with a bunch of wore out equipment that you can't afford to fix, or replace. The end of the first year I had my black Paystar, I had it parked in the yard and I was driving transport for someone else, until some better work came up. Yes, it made the financial situation pretty tight, but when a good job came along, I still had a nice shiny truck that was in perfect shape, ready to go. I did get rid of my business this past May though. Fuel skyrocketed and guys cut the rates once again this spring, so I didn't forsee it getting any better in the near future so I pulled the pin. I kept all my parts and shop supplies "just in case" but the way it looks I can't see wanting to do it ever again. Here's an example of how bad it is around here. Local guys are working tri-axle dump trucks on highway jobs for $50.00/hour. Where I was working the last couple years (7 hours away from home) I was getting $70/hr. Still not enough for todays operating costs, but better than most places around here. Fuel was still 98 cents a litre (about $3.70/gal.) and I was using $6400.00 a month. When the construction season started this year fuel was $1.40+ (over $5.00/gal.). When i got the call to go back I was told all the other brokers went for $63.00/hour (fearing work was going to be slower this year, they cut the rates to make sure they had a job.). So now at those fuel prices, my monthly fuel bill would be over $8000.00, plus a $3000.00 truck payment, plus maintenance, out of town living expenses, expenses back home with my family, etc. All to gross $16000.00 a month? I don't know about anyone else, but that's not worth being away from my kids all year long and dealing with the government, paperwork, etc. when I can get a job at home here for someone else, be off on weekends, home by 5pm for supper and have no headaches. I don't know how, but somehow this industry has to change. How is it that someone working at a call centre can get better wages and benefits than us, when we have to deal with so many laws and regulations and have so much responsibility operating large pieces of equipment?
If you are not making enough money raise your price, don't work for less.
I think the key is to know your true operating costs, and not to lower your rates below that. I understand some are working at a loss for cash flow, but it is just plain bad business. Like Paystar said above, if you add up your costs, and find out you are working for less than wages, why would you not just get a job and make wages, without the headaches of running your own business? There will always be guys with paid for iron (or not) that will work for cost, just to stay in the game till the next good times come, and you will see them with no overhead, no maintenance, and cut their rate to stay busy. They can because all they have to do is make wages for themselves, so they are happy with it. When you talk to them, they are usually happy about making what they are. When you run a legitamate business, it is near impossible to compete with them, so if you do not have any long term relationships to carry you at a fair rate, you will lose out to them.
The kicker I found was when the economy started down builders wanted ya to cut rates by as much as 25%. Luckily I was a sub and didn't have to deal with that and the contractor I was working for managed to keep his rates. It didn;t make since with our costs going up and them wanting us to go down. It slowed enough I'm no longer subbing to him, and he is hunting up new work all the time to try to stay afloat. If I had to guess his work is off at least 70%. which 2 years ago he only contracted with this one large builder. He now has a few of his old contacts back and looking for new ones every day. The problem I'm facing isn't as much the rates as getting payed!!!! I'm basicaly a newby as far as the business, but been doing my line of work for 10 years or more. Right now just trucking and I have a cut off point. If an over the road haul rates will not go down and if my fuel costs exceed 45% of the day I'm not gonna be there the next. There is a line between the good and the bad and that is mine. If I land an onsite haul low fuel and not abusive on the truck I have room to wiggle, but try to avoid it. As bad as I hate it I even contacted a lawyer today to start working on the colection side of things.
With my Mack I run on my days off I guess to some degree I have been the"other guy". But when I started running the dump truck a good friend of mine called me and basically said don't come into this field and try to undercut us to get business, we have to support our families this way. And I appreciated him telling me that, because the goal was to get the dump truck running and see how much business I could get with the goal being quittting the day job. So, I turned to other avenues that all the dump truck guys did not want to do. I got in with a large sawmill operation and started running mulch for them, which was booming in the spring, and that got me in with a landscaper who kept me busy with mulch and rock. The rock is another story, there is a quarry 5 miles from the house but they went up on rock so high that I found I can drive to another quarry 30 miles away, buy the rock make what my friends do per load, save the customer money and make money. The other side of the coin is that no one else was willing to drive the extra miles, however when the fuel spiked in July and August, I parked the truck. By charging per load, now I am running a limited schedule(economy) I am making more money per load by charging what I charged when my fuel costs were higher.
Quarries are weird like that. the contractor I worked for ordered a load for his house in the spring then asked me if I wanted to haul him the other one. I did it for a hundred less and still felt like I was high. He was gonna pay me what he payed them and I couldn't accept it ( especially since he was my bread and butter at the time ). Did another haul a couple of weeks ago. Found the job threw a concrete guy I know. quoted a price on a load of top soil and two haul offs of asphault. Ended up being 2 top soils and 4 haul offs. Home owner wanted to pay me and at 1pm while they were loading me told me to hop in the truck and he carried me to the bank. I ended up working till 8 pm. I was a bit uncomfortable when we returned to his house and asked if he didn;t want to hold onto part of the money till the job was done as I was fixing to be gone for a couple of hours doing a haul off and then going to the other side of town for top soil. Also called a supperintendant that had called me about a couple of days work that turned out being a week and a half. Told him I had just recieved a letter from his company who was to pay me in 30 days ( this being 2 weeks ) that I was gonna tape it back up- and return it to sender! He was like what kinda letter was it? I told him it was a check and I was afraid they'd want a refund or something paying in 15 days!! Just recieved the second check today in 19 days. I was totally expecting a 5 to 6 week first check with the paperwork and office aprovals involved with a new sub contractor. Knowing the supper I did the work for delayed in picking up my invoice a few days as well. I was shocked!! This was the best fuel to hours run I've had in months by far. I just wish they did more road truck work. Still working on tying in tighter with them. how ever codes in my area are so brutal they will likely not bid work in my area again. I can hope other wise and told him I'd travel if there was enough work without question.
The good part is when they pay cash:cool2 The bad part is when I have to deposit it in the bank anyway:beatsme