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Dan13
09-05-2010, 11:26 PM
im currently in the process of starting up my own air conditioning install company but lack knowledge on how to correctly price a job,just wondered if any of you guys could help me out.

cheers Dan

Abe
10-05-2010, 01:03 PM
I would be happy to assist. However it is difficult to tell you what you should do or not to do. Best is if you put forward some scenarios and I will say how I would deal with the situation.

For instance you may want to price a job, I can tell you how I would do it

Hope that helps

sneep
10-05-2010, 10:09 PM
You need your overhead a year.
Insurances, truck payment, phones, licenses, envelopes etc.

Lets do it on the cheap and call it $15,000 a year.
Figure how much you want to pay yourself say $50,000 a year.
For service 50% of your time is billable so that means you have 1000 hours you can bill.
$65,000/1000 = $65.00 hour. Or if you were a wage slave thats $32.50 an hour minus the overhead (7.50) or $25 an hour minus ALL the taxes. In the US employees only "see" half the taxes paid on their wages.

The bloom falls off the rose fast.
Install, some use a lower labor rate since you have more billable hours.
Parts markup and company profit aren't included in the labor rate.
2-5% net is what the industry average is for profit.

I think you can see there's more to dig into. Local trade associations and other contractors can be helpful.
The hard knocks of experience will teach you fast.

My first walk-in cooler it would have been cheaper to pay the customer to not do their work. :-)
Good luck!

surenuff
11-05-2010, 10:13 AM
You need your overhead a year.
Insurances, truck payment, phones, licenses, envelopes etc.

Lets do it on the cheap and call it $15,000 a year.
Figure how much you want to pay yourself say $50,000 a year.
For service 50% of your time is billable so that means you have 1000 hours you can bill.
$65,000/1000 = $65.00 hour. Or if you were a wage slave thats $32.50 an hour minus the overhead (7.50) or $25 an hour minus ALL the taxes. In the US employees only "see" half the taxes paid on their wages.

The bloom falls off the rose fast.
Install, some use a lower labor rate since you have more billable hours.
Parts markup and company profit aren't included in the labor rate.
2-5% net is what the industry average is for profit.

I think you can see there's more to dig into. Local trade associations and other contractors can be helpful.
The hard knocks of experience will teach you fast.

My first walk-in cooler it would have been cheaper to pay the customer to not do their work. :-)
Good luck!

I agree with all of this and more. You will find out really fast that 65.00 an hour won't keep the lights on or your wife off your butt. At best labor will break even your real margin is going to come from sales, sales, sales. I am a small company me and two hands, and 85.00 an hour is break even on labor for us. I wish you all the best. But make sure that you have some kind of safety net under you for the sake of yourself or your family. I read a while back that the most likely to fail business in America was HVAC/R companies. It is because great techs start a business but do not know how to run a business. Study up and then hit the ground running.

coolhibby1875
16-05-2010, 11:55 AM
i always find most important is to source your parts as cheap as possible, and play your suppliers of against each other, in times like these suppiers need every sale humanly possible, any saving made here is strait onto your bottom line.

Joe@C.B.P.
27-06-2010, 02:39 AM
im currently in the process of starting up my own air conditioning install company but lack knowledge on how to correctly price a job,just wondered if any of you guys could help me out.

cheers Dan

Hey Dan,

Best of Luck, and you can make it happen as long as you do it right. That means from the beginning. Absorb all of the info you can - remember your a business owner, not a mechanic anymore.
Suggestion - Read "HVAC Spells Wealth" by Ron Smith. I studied the paradigm he teaches many years ago. While it touched upon many different topics (Didnt give a complete blueprint on how to run business as it would take thousands of volumes to accomplish) it certainly is one of the best when it comes to knowing how to price, relationships, marketing and business savy. It helped me tremendously when I ran my business and eventually helped me to sell it. I currently am in the HVAC Consulting field and I owe alot to what Ron Smith Teaches as well as what he was taught by other consultants.
When you get a grip on pricing, feel free to PM me and I will get you a couple of GREAT spread sheets that helps with how to price jobs effectively.
Best of luck.

bruisermac
13-07-2010, 04:37 AM
whatever you do always make sure the customer OK's the repair first. especially with new customers. Get them to initial the estimate. Know this...you will get burned by douche bag customers i guarantee it...so with that said be prepared for the ride of your life. GOOD LUCK TO YOU!!!

Abe
13-07-2010, 09:11 AM
whatever you do always make sure the customer OK's the repair first. especially with new customers. Get them to initial the estimate. Know this...you will get burned by douche bag customers i guarantee it...so with that said be prepared for the ride of your life. GOOD LUCK TO YOU!!!

Absolutely fundamental, at the onset deliver to the customer cost information and an estimate. Estimates can be varied, Quotes cannot be.

Obtain an agreement to proceed, prefereably in writing, (this way cannot be disputed)

Customers appreciate someone who is clear, concise, frank , honest...

Business is all about Trust

If youre Trusted, you will get the job, even if your price is above that of the competition