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Author Topic: Formula for pricing jobs  (Read 5812 times)

Kevin Callery

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Formula for pricing jobs
« on: February 25, 2011, 02:15:49 pm »

Hey all,

Due to all things economic being as they are, we are currently revaluating our pricing to remain competive and still give our customers the service they require.
I'm just looking for some insight as what kind of formula people are using when quoting jobs.

We cover alot of different types of events; theatre shows, variety shows, festivals, one off events and outdoor 100 volt line systems, as well as a small bit of lighting and projector hire.

We're lucky enough not to have a huge ammount of competition in the area we cover but some of the larger companies outside of our area are trying to gain access to some of our events and while I'm not interested in starting a pricing war, I don't want us to rest on our laurels and start loosing some of our existing business.

We have alwaysbeen complimented on our level of service and the professional way we do things, but compliments don't pay the bills and as new people start taking over committees, price is there utmost concern.

Looking forward to your feedback.
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Kevin Callery
MKSound
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g'bye, Dick Rees

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Re: Formula for pricing jobs
« Reply #1 on: February 25, 2011, 03:22:56 pm »

Hey all,

Due to all things economic being as they are, we are currently revaluating our pricing to remain competive and still give our customers the service they require.
I'm just looking for some insight as what kind of formula people are using when quoting jobs.

We cover alot of different types of events; theatre shows, variety shows, festivals, one off events and outdoor 100 volt line systems, as well as a small bit of lighting and projector hire.

We're lucky enough not to have a huge ammount of competition in the area we cover but some of the larger companies outside of our area are trying to gain access to some of our events and while I'm not interested in starting a pricing war, I don't want us to rest on our laurels and start loosing some of our existing business.

We have alwaysbeen complimented on our level of service and the professional way we do things, but compliments don't pay the bills and as new people start taking over committees, price is there utmost concern.

Looking forward to your feedback.

Kevin.....

My bottom line is this:

I have to charge enough to be able to pay another reputable company to take over for me if I should have the bad luck to be hospitalized and unable to fulfill my obligation to the client.  That pretty much eliminates low-balling and keeps things on a business-like basis.
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Ivan Beaver

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Re: Formula for pricing jobs
« Reply #2 on: February 25, 2011, 05:17:02 pm »

Hey all,

Due to all things economic being as they are, we are currently revaluating our pricing to remain competive and still give our customers the service they require.
I'm just looking for some insight as what kind of formula people are using when quoting jobs.

We cover alot of different types of events; theatre shows, variety shows, festivals, one off events and outdoor 100 volt line systems, as well as a small bit of lighting and projector hire.

We're lucky enough not to have a huge ammount of competition in the area we cover but some of the larger companies outside of our area are trying to gain access to some of our events and while I'm not interested in starting a pricing war, I don't want us to rest on our laurels and start loosing some of our existing business.

We have alwaysbeen complimented on our level of service and the professional way we do things, but compliments don't pay the bills and as new people start taking over committees, price is there utmost concern.

Looking forward to your feedback.
What a lot of the corporate houses do is price it at 10% of RETAIL (for the gear), and then hourly charges per man for delivery (truck price is additional), setup and operation-and of course tear down and back to the shop.

In the concert/bar world it is very likely you will not get anywhere near that.
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Ivan Beaver
Danley Sound Labs

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Kevin Callery

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Re: Formula for pricing jobs
« Reply #3 on: February 25, 2011, 07:18:47 pm »

What a lot of the corporate houses do is price it at 10% of RETAIL (for the gear), and then hourly charges per man for delivery (truck price is additional), setup and operation-and of course tear down and back to the shop.

In the concert/bar world it is very likely you will not get anywhere near that.

We're currently working off 3-4% of discounted retail and whatever labour we can get away with (not the total hours of labour involved but the amount we feel the client can absorb)
People round here don't seem to think transport is a cost even though diesel is averaging around 1.45 a litre as well as all the other associated costs involved.

We're lucky enough not to have any finance on our gear or premises, we only ever bought what we could afford and made sure that it could be recouped in the total income of the first couple of jobs it was used on.
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Kevin Callery
MKSound
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boburtz

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Re: Formula for pricing jobs
« Reply #4 on: February 25, 2011, 07:59:04 pm »

Kevin.....

My bottom line is this:

I have to charge enough to be able to pay another reputable company to take over for me if I should have the bad luck to be hospitalized and unable to fulfill my obligation to the client.  That pretty much eliminates low-balling and keeps things on a business-like basis.

This is my formula as well... Pretty safe AND maintains the value of the service in the marketplace.

Hey my first post in the new forum!
« Last Edit: February 25, 2011, 08:00:45 pm by boburtz »
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Tim Talbot

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Re: Formula for pricing jobs
« Reply #5 on: February 25, 2011, 08:16:55 pm »

(I've copied this from another forum to share with you guys)

Surely a lot of this depends on your business over heads as well... no ?

If we kept it simple and said there were two companies that were quoting for the same job with the same kit (ish) and it's costing you 3000pcm to run your business but it costs the other down the road 500pcm to run there business the two quotes are going to be miles apart because the profit margin for the 2nd company is much greater thus can become more competitive in there pricing.

My point is there is no stranded formula for pricing jobs as it completely depends on your own circumstances.

This can cause pricing wars thou and I was asked about this only a few days a go as a good friend of mine hire's lasers systems out.... now he charges 500 per night for the said system but his competitor changes 1200 why because after speaking with the other company about this (there losing work now) they rent a nice unit smack bang in the middle of London and there overheads are high(er) than my friends..... tough that's bad business on there part.

Mike McNany

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Re: Formula for pricing jobs
« Reply #6 on: February 26, 2011, 12:37:18 pm »

What a lot of the corporate houses do is price it at 10% of RETAIL (for the gear), and then hourly charges per man for delivery (truck price is additional), setup and operation-and of course tear down and back to the shop.

In the concert/bar world it is very likely you will not get anywhere near that.

TEN PERCENT!!!

Holy crap, Ivan. So essentially your (or the corporations' you mention) gear is depreciated to minimal usefullness/value once used TEN times??? So can I buy a few of those worn out Danleys for pennies on the dollar now?

In the past, here and elsewhere, I have usually read 2% of gear investment PLUS a reasonable labor rate PLUS expenses (gas, vehicle wear & tear, food & lodging, plus a portion of other overhead costs like insurance, storage rent, ect.). How you add in shop labor and transportation labor time is up to you. Even figuring this way adds up a lot.

Mike McNany
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Ivan Beaver

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Re: Formula for pricing jobs
« Reply #7 on: February 26, 2011, 01:45:50 pm »

TEN PERCENT!!!

Holy crap, Ivan. So essentially your (or the corporations' you mention) gear is depreciated to minimal usefullness/value once used TEN times??? So can I buy a few of those worn out Danleys for pennies on the dollar now?

In the past, here and elsewhere, I have usually read 2% of gear investment PLUS a reasonable labor rate PLUS expenses (gas, vehicle wear & tear, food & lodging, plus a portion of other overhead costs like insurance, storage rent, ect.). How you add in shop labor and transportation labor time is up to you. Even figuring this way adds up a lot.

Mike McNany
No, they continue to use the gear-that is how they make a decent profit to stay in business.

Think of a tool rental place.  How much do they charge?  And do they deliver it and operate the tool, then clean it up and return it for the rental rate?  NO, there is additional charge for that.  Yet we typically can't get anywhere near the day rate they do, and we deliver and operate it for free.

Our business is very different than most other legit businesses-regarding rates.  WHY? Because it is a business of passion.  You don't go into this business because you expect to make a lot of money.  There are plenty of other businesses for that.

The other thing in normal businesses is that they don't have hobbiest (bands/part time DJ's etc) that compete for businesses that have to pay rent-insurance, have a business license etc.
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John Livings

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Re: Formula for pricing jobs
« Reply #8 on: February 26, 2011, 06:18:33 pm »

No, they continue to use the gear-that is how they make a decent profit to stay in business.

Think of a tool rental place.  How much do they charge?  And do they deliver it and operate the tool, then clean it up and return it for the rental rate?  NO, there is additional charge for that.  Yet we typically can't get anywhere near the day rate they do, and we deliver and operate it for free.

Our business is very different than most other legit businesses-regarding rates.  WHY? Because it is a business of passion.  You don't go into this business because you expect to make a lot of money.  There are plenty of other businesses for that.

The other thing in normal businesses is that they don't have hobbiest (bands/part time DJ's etc) that compete for businesses that have to pay rent-insurance, have a business license etc.

+1, It is not possible to compete with someone giving their Time and Products away ::)

Regards,  John
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Re: Formula for pricing jobs
« Reply #9 on: February 26, 2011, 07:01:38 pm »

+1, It is not possible to compete with someone giving their Time and Products away ::)

Regards,  John

A number of years ago there was a neighborhood "fall fair" about a half mile from my house.  The folks running the show were notoriously cheap and always tried to get by on donations and freebies.  I loaded up enough gear to do the job, drove over to the venue and parked in the parking lot.  When the idiots who volunteered to do the job showed up late with half their gear missing the head of the committee came out, knocked on the window of my van and asked how long it would take me to set up my gear and run show.  With some volunteer help I had them up and running in half an hour and had them as a regular client for the next 6 years until I moved out of town.  So yes.......you can compete.  As always, being in the right place at the right time can pay off.
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Re: Formula for pricing jobs
« Reply #9 on: February 26, 2011, 07:01:38 pm »


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