How do any of the other small owner operators deal with the rising cost of doing business by private contract or by bid with the cost of everthing increasing, insurance, fuel, labor, materials etc. Yet other contractors are still giving bids and quotes like it was five years ago. Just for info D4G dozer $88 per hour, Deere 120 trackhoe $100 hour, tractor and 10yd pan $105 hr, 12yd dump truck $65 hr. farmtractor with loader and grademaster $45 hr, general labor $12.50 hr. One can price themselves out of maket, but notes and fuel bills come every month and seem to increase every month. We pride ourselves in getting in and out and doing quailty work quickly, 10 hr days 6 days a week are the norm if we have the work. Any suggestions on how to be more cost effective would be appreciated as we are a son and father business. :beatsme
I don't know how you guys can do it? $65.00 hr. for a dump truck? $12.50 hr. for general labor? Is that what you pay for a laborer or charge for a laborer? With SDI, workmans comp and any bennys, that seams real low.
Business Costs ? The price of a 12yd dump truck for hire, here is $95 per hour. Belly dumps and side dumpers are $105 +. Prices continue to climb with fuel prices. I just bought a 4DLT battery for $171. price of lead has gone from $0.60 per # to $1.20 per# Price of the last one was $134. Inflation is here !
Just bought 4 tires for my pick-up. They went up $20 a piece compared to 1 yr ago.
NY now charges a "tire disposal tax" regardless of if you keep your old tires or not!
CatD4g, If you're like me you are in buisness to make money, you have to in order to keep things paid and your equipment maintained. I have a minimum that I will not go below which will sustain me and my equipment in lean times. Anything below that minimum I consider giving it away and a poor business move. It's cheaper to sit than to wear out equipment for nothing. Some small contractors get trapped into tring to keep their crew busy and work for nothing to do so, I do not. I pay my help well but when the work runs out I lay them off, they are told this at the beginning. Cost cutting is difficult, efficient use of labor,keep equipment ready for the next day fueled , greased and ready when your labor gets there, Be sure your help understands the job and knows how to go about it, The only way to keep your insurance to a minimum is not to have a claim, be sure your help see and understand USA markings and other job hazzards, I buy bulk fuel (1/2 load) but your equipment is smaller and uses much less plus you have on road for your truck which I do not. I run red in my water truck . Don't get to far in debt, it's easy to buy newer equipment when times are good but being stuck with payments is not fun if the work slows. If it were easy everybody would be doing it. DP
It is a complex problem. Supply and demand is a factor. As long as there are thoes willing to work cheap it is hard for others to make a decent living. Many people in business know nothing about the business they are in. They do not have a clue as to the real cost of doing business. Unfortunately as the economy continues to cool people will be willing to work for less! This may provide opportunity for thoes with cash to pick up some equipment at a lower cost. Case in point, as I posted on another thread there is a local fellow that retired from a plant. He purchased a new Kubota compact TLB new Duramax dually and new gooseneck. His rate $50.00 Hr. with no minimum. I ask him why he works so cheap. He said he just loves working with tractors. How do you compete with that?
W have an ever increasing problem with these same issues, it seems like retirees and state employees who work afternoon or midnight shifts are the ones that hurt us the most.
I am a very small contractor in NE Ohio with very small equipment and I am even feeling the pressure of cost increases and increased competition. I started with the idea that I would specialize in small to midsized jobs. That suited me very well up to now. When I started my business 7 years ago there were 70 excavating contractors in the local phone book and now there are 170 in the same book. Most of these 100 extra names are actually NEW companies. In my area of NE Ohio, as many other areas of the county, we have taken a hit from manufacturning facilities closing and companies moving. Many displaced workers have decided to strike out on their own. I think that this is great, after all this is the land of opportunity, but they have to understand that to be around for the long term you can't give away your services or break even. That only lasts for a while until major machine maintainance and replacements are needed. From a outsiders view contractors are making huge money at $95 per hr. If machines, insurances, fuel, etc. were not involved I could live quite well on $95 per hr. but once you factor in all of the expenses it isn't that much. As I compete with many new companies in my area I find that I have to depend even more on my reputation in order to continue to get jobs. I can not win jobs on price alone. In fact lately I have lost jobs to competition willing to charge 1/2 of what I bid. I make sure that I offer my insurance certificates etc., referances, etc. but that only goes so far. With the downturn in the housing market I am also competiting with well established businesses that are looking at things that they thumbed there nose at only a few years ago. I only run my phone book ads in order for past customers to find me next time they need my services because I actually now get very few new calls and fewer new jobs from the phone book. By the way who is charging $12.50 for manual labor? I would lose my *ss only charging that much. I have adjusted my prices to reflect increased expenses as necessary. You can't absorb price increases and continue to maintain margins. Its just simple math. My hope is that low priced competition will come and hopefully go and I will continue to survive. Stay the course men. Alan
my family has been in the business here locally for 60 yrs. my son is the 3rd generation. i remember hearing my dad talk about "newbies"....and how they attempt to blow a hole in your pricing structure. i've experienced the same. in my opinion, what it all boils down to, is you have to "circle your wagons" and establish a very good customer base while actively seeking new ones. you need to price jobs to them fairly, perform well, and on time. time and time again, i've had good customers take considerably lower bids only to have them call me up on the next one not asking for a cost and say..."just do it and send me the bill". it's all about being fair on pricing, promise to do what/when the customer needs it, not quote them one number on your proposal, and bill them another. it also means taking care of any gripes they might have. although it might sound trivial to you at the time, it might be a big thing with them. it also means you have to be seen at their place of business. your employees need to know that also.
$ Actually 12.50 an hour for general labor is high. You can get all the workers you want for 8 to 10 an hour. Of course a lot of them are just warm bodies and you have to weed thru them. We have people with tractors and pans who move dirt for less than a $1 yard. With money tight people are price shopping. Dozer prices for D5 size range from $55 hr to $120 hr. How do you compete? Example finished a priviate pond a while back the owner got four quotes. $12,500 $15,500 $17,600(ours) and $22,500. We got the job simply because of our prestation and references.
i'd have called you back on the carpet one more time
If it gets bad enough where it's a loose loose situation then it's probably time to go out. You can't make money sitting and if you work to cheap you're loosing money. I'd rather go out by choice than have to for financial reasons. We'll see what 08' brings
You get what you pay for. We pay our laborer $13/hr. May seem high, but he shows up every day, isn't a drunk, doesn't call off and does what we tell him.
Just keep your bids high and make your estimates only good for say 60 days (w/the price of fuel fluctuating so much if your good for any longer then that in 60 days fuel could go up another dollar an gallon). You wont get every bid dont worry about it. IF you cant make nay money why do it.
Rising Costs ::usaGOOD WORK AINT CHEAP AND CHEAP WORK AINT GOOD. IT COSTS X AMOUNT OF DOLLARS TO DO THINGS RIGHT . CUSTOMERS WHO APPRECIATE QAULITY WORK ARE THE ONES I LIKE DIGGING FOR. I HAD A GUY CALL ME UP THE OTHER DAY AND HE TOLD ME HE FOUND A CHEAPER GUY SINNCE I WAS BUSY BUT SAID HE WAS GONNA CALL ME FIRST EVERYTIME.SO I ASKED HIM WHY . HE TOLD ME THAT I GET IN THERE AND GET IT DONE.SO THE PRICE ISNT ALWAYS WHAT PEOPLE ARE LOOKING FOR. I KNOW IM NOT THE BEST OUT THERE BUT I TRY TO BE FAIR ,PROVIDE GOOD CRAFTMENSHIP AND GOOD EQUIPMENT.THERE WAS A CHEAP GUY CALLING ME FOR WORK THE OTHER DAY. JUST THE DAY BEFORE I SAW HIM BOTH LOADER ARMS ON HIS BACKHOE BROKEN AT THE WELDS .IF HE DOESNT START CHARGING MORE THE NEXT TIME I SEE HIM HE WILL BE RUNNING A BACKHOE WITH NO LOADER BUCKET. HE LEFT NO MONEY ON THE TABLE FOR ADVERTISING ,MAINTNANCE,NEW EQUIPMENT ,INSURANCE . I HATE TO SAY IT BUT I HOPE HE KEEPS DOING WHAT HES DOING. HE HAS TO BE CHEAP BECAUSE HIS CRAFTMENSHIP IS CHEAP,HIS WHOLE OPERATION IS CHEAP.:
For years my grandpa dealt with a competitor who ran JUNK equipment. They would work all winter, in rain, snow, anything and anytime just to be working. However they would spend half of the time working on their equipment. Even went so far as buying used under-carriage off of grandpas dozer to put on their dozer. The boys are still in business but its really getting tougher for them now with all the new rules and regs and MSHA(off the record) fines them heavily each time they inspect their crushing outfit. Talked to a driver of theirs a while back and he was hauling out of a neighboring compaines quarry and I asked why he wasn't hauling out of their own. "Well all five of our loaders are broke down, got a truck with the frame split, dozer with a bad cylinder and a hyd pump out of the excavator, so just helping these guys for today cause we can't do anything else." One thing I am learning really quick, being with a bigger company, is that records for everything on each piece of machinerary is very important. Find out exacatally what it cost you to run each piece each year. Having a better handle on expeneses can help better dictate where you have to spend, where you have to save and wheather you buy new, buy used or fix what you have. Its a numbers game through and through but working for nothing is just that, cause soon you will have nothing(money and machines). Trbo
rising costs Sound Like Grandpa Worked To Live Instead Of Lived To Work. Ill Bet He Knew What He Was Doing When He Sold It.great Point About All The Regulations Were Seeing.out Here In Calif The Feul Is High And The Enviromental Regulations Are Changing .the Trucking Of Equipment Is Going Through The Roof .i Agree With What You Mentioned About Keeping Track Of Costs. I Review Operating Costs Through Financial Statements. Its A Tough Business Alot Of Hours Alot Of Heart Breaks.great Saying " Your Either Failing To Plan Or Planning To Fail"
There are a lot of drivers that have decided to avoid CA, as of the first of the year. I have said as much, myself. I do not want to go there, no more. Push could come to shove, though, as we have customers that operate in CA.
I'm a one man show and charge $115 per hour for my Takeuchi 135 with all the attachments, but I also work fast (no smoke breaks, show up at 7am work till dark) and have a client list that keeps me busy. I haven't advertised in about 5 years, I always have people waiting and most don't want a price up front. I do an occational job for friends at reduced rates, but most of what I do is niche work. Water front, erosion control, stone work etc... Everyone needs a niche. Once you have one and a piece of equipment that will do jobs that other can't, people will wait for you. There are plenty of other contractors around me but few will talk to a customer and spend the time and effort to see what they really want. It makes a difference. I have customers check-in with me on a regular basis to make sure I'm doing ok and have plenty of work. Several have standing offers that if things slow down and I need work they will do a project to keep me busy. They're more like friends than customers. Then again, I answer my phone when they call, 7 days a week 5 am or 10 pm, they know they can call and I'll listen to their ideas. That's part of why they pay my rates. As for labor cost, $12.50 is a joke. What about workers comp? Taxes? Transportation for that employee? Any employee working for $8 per hour probably isn't worth having on a job site. I'd rather do it myself and bill it out at my labor rate of $32 ? ( I think that's my current rate) per hour for hand labor. Anytime a new potential cutomer whats a bid and they only are focusing on the money it's an immediate red flag. They can get any lever puller to play in the dirt. If they want it done right the first time and want to be able to talk to the guy doing the actual work, they call me. It seems to be working.
Atgreene, I like the way you think! Price is a big factor, always the biggest when doing work for GC's. I do work for GC's give them a better than one time price but don't give it away. Charge by the hour if possible with GC's. I do most of the operating myself and helpers for the rest. I think that the fact that I am the one doing the work, pricing the job and dealing with the customer has worked the best. I have had to bend alot for alot of people but hope that in working with the customer you make a customer for life. The last big GC I got involved with last summer called me for a quote on a state job that would last one week. I priced out this job to low but turned that into a good thing by sticking to the price and giving the GC alot more than what he paid for. The GC had me do all of his work after that, fired the guy he had before me and paid me by the hour for the next 5 jobs. Turned out to be my biggest customer so far and next summer we are doing 22 new homes. The best part he has paid me in 30 days for every invoice, we will see how it works out this summer. I think once you get a customer base that wants to use because of your work and not your price you can outlast the low ballers
I'd love to hear an update to this thread. Did the customer come back and need work done for those 22 houses ? A tractor with 2 pans can haul 36 yards in a go. With a short haul, good dirt and minimal placement requirements, ie stockpile it, one could easily make 10 cycles an hour. 10/hour x 36 yards x $1/yard = $360/hr, for a tractor and 2 pans that probably cost less than $150K. Sounds like decent money to me.
Sounds Like I Need to Move to Mississippi I wish I could Charge $88.00 an hour for a D4G and $100.00 an hour for a 120 sized machine. I'm charging $75.00 an hour for a D4H Wide Track and $90.00 an hour for a Case CX 160 with Hyd. Thumb. The funny thing is I'm making a little money though.
since early in 2002 all my bids say they are only good for 60 days. steel and fuel were all over the map and a few of my competitors lost their asses.