Calculating your construction labor costs should not be taken lightly. This can make or break your business or cause you to make a costly mistake. Why is it important to know the stressed work rate when you enjoy your job? Let me explain. Your base rate is the unit price set for the work. This is a good starting point for any project, as what you spend on supplies will always be different. Think about the size of your average crew when determining your base rate. In our example, we will work with a team of three people. This small repair order would be offered at $288.00 for the work share. Now apply a surcharge to the total cost of the crew to determine the price of this crew of 3. Use this article as a reference if you are looking for a reputable entrepreneur.
Keep in mind that prices change from time to time. Be sure to always ask for a quote for your project. Make a list of some local entrepreneurs and compare their prices. Find professionals who offer the best price for the work you expect from them. Again, the cheapest is not always the best option. You should always choose the one that will charge you the cheapest price. Set a BASE RATE for different crew sizes based on each crew member`s actual salary. Consider your workload and markup. Use this number as the BASE RATE to estimate orders and create a production plan. In this example, the increase in labor costs is 50% or a margin factor of 1.5. This margin generates a margin of 33%. (See this article on margin and markup.) This formula gives you the labor cost of a project for your crew.
This number can be given by default before adding up the cost of materials and other factors known to change from one project to another. I encourage you to do the math so that your employees make sure that the hourly rate you put on your quote sheet is the amount of money that person costs you when they enter a job. That is not what you are paying them; that`s what they cost you. This is called the loaded labor rate, we have an article that explains how to calculate this rate here. So glad I found your website. It was very helpful. I am a remodeler in… All we do is rebuild. I`ve always wanted to know how it`s really done. I`m tired of making wing estimates, etc.
General contractors (including construction managers) earn an average of $43.93 per hour, or $91,370 per year. When you calculate your markup, there are three main categories of costs: your estimated contract cost, your estimated overhead, your need for profit. Workload is the cost of each employee outside of their hourly wage. The calculation of the workload includes the benefit plans paid by the company. The formula for finding each employee`s workload is quite simple. It uses employees` hourly wages, the number of hours they are available per year, and the number of days they may miss each year. But of course, these days are for things like holidays and illnesses. Finally, you also need to know how to accept your contractor`s invoices. Nowadays, there are a variety of ways to get an invoice.
It can come from manual or electronic invoices. We strongly recommend that you request an electronic invoice as you can save it in your email without losing it in case of problems. They can also use their previous bill to determine how much they will charge you when you buy their services again. Your construction company`s BASE RATE is determined by the actual cost of your « average crew size ». Professional craftsmen can be found for as little as $20 – $25 an hour. Their overhead costs are much lower; However, they also tend to pull projects to get you as much money out as possible. So always monitor the status and progress of the project. Ask questions and raise concerns if you notice one. You may be wondering if you can calculate contractor prices so you can anticipate early before contacting a real contractor. However, this is not really the case. The best and only option you have to determine contractors` prices is to ask them for a quote or quote. This way, you know how much contractors charge you for your specific project.
But to give you an idea of the actual numbers, here`s a breakdown of a general contractor`s price list: now that you know your BASE RATE for a team of 3 people, you can quickly determine the price of labor for a potential project. For the purposes of this article, the BASE RATE* refers only to the unit price of the work you sell to your customers for each hour of work (M-HR). Other contractors do not charge an hourly rate. General contractors charge about 10-20% of the total cost of the construction project. For even larger projects, you can pay closer to the 25% mark for professional construction services. Here`s a breakdown of the current average rates for contractors here in the U.S.: If you`ve evaluated all the hours worked for a project based on your most expensive employee, your price may be too high. This number must then be multiplied by the workload and markup. In these scenarios, always round to the nearest dollar.
Using a beautiful round number always makes things easier. Not only is this BASE RATE easier to sell because it is a lower labor rate, but the efficiency of production should also be higher. Speaking of estimates, this should always be the first thing you ask when looking for a contractor or craftsman. The reason for this is that there is no fixed price in terms of contractor services. They will always fluctuate according to the trend of the industry. To compete with the industry, entrepreneurs charge at a price close to that of other entrepreneurs. This way, customers will not leave them to someone who is cheaper and still offers the same services. If possible, always get a quote or quote in writing. After that, any unforeseen circumstances that occur can be modified and added as long as they are unpredictable. Plumbing problems, poor wiring or mold in the wall are considered unpredictable. Removing a device to replace a floor tile, but without taking into account the time and costs spent on it in the estimates, is not considered unpredictable. I`m here to do my daily reading of your book – Markup and Profit: A Contractor Guide, I also listen to it on Audible…
I will continue to spread the word about the quality of your book. All costs incurred by your business should be included in your labor or overhead costs. No exceptions. The workload is the one that often falls through the cracks. When the mark-up is calculated, it is considered a labour cost or it is completely forgotten. If the order is estimated, it will not be taken into account because it is considered an overhead. As the last answer said, you can easily expect $50 – $100 an hour for a contractor and $40 – $50 an hour for help if you can find one willing to work at that price. However, beware of all those who work by the hour, as most of those who drag a job to get the most money.