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Author Topic: Formula for pricing jobs  (Read 5285 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
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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
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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
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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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Brad Weber

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Re: Formula for pricing jobs
« Reply #10 on: February 27, 2011, 09:57:59 am »

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.
Keep in mind that in venues like hotels and convention centers the venue may take a percentage of the billing, they are not providing you the work, space in the venue, etc. as charity but in many cases rather as a potential profit center.  You also can't turn down or defer work there in order do to other work or due to inadequate inventory or personnel and have to be ready to support last minute requests, so even if you have no billable work for days you may have to have inventory and personnel available on site at all times.  You may even have to supply services for that venue's internal events for a reduced charge if not for free.  All of those things have a cost that has to be recovered in the billings.
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James Feenstra

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Re: Formula for pricing jobs
« Reply #11 on: February 27, 2011, 01:40:04 pm »

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.
as an example i rented a hammer drill for some home reno work i've been doing the last week..

$67/week to rent...after the first week i returned it once i looked at the store price- $120 + tax

went and bought myself one instead, so now i have a new tool that will get used frequently :) it was way cheaper in the long run to buy than continue renting till the jobs done

some companies that frequently rent gear do the same thing...if they're going to be renting for more than a few weeks on a mid range priced item, they'll just purchase it instead
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Ryan McLeod

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Re: Formula for pricing jobs
« Reply #12 on: February 27, 2011, 04:17:17 pm »

[quote author=Ivan Beaver link=topic=1004.msg5073#msg5073 date=

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.
[/quote]

... Or as I always call it "you can't compete against someone who can't lose".
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Frederik Rosenkjær

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Re: Formula for pricing jobs
« Reply #13 on: February 27, 2011, 08:20:45 pm »

Heh - just calculating what I'm charging for the gear I'm bringing. I get around .5% of the retail price... (that's POINT five).
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Ivan Beaver

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Re: Formula for pricing jobs
« Reply #14 on: February 27, 2011, 09:10:00 pm »

Heh - just calculating what I'm charging for the gear I'm bringing. I get around .5% of the retail price... (that's POINT five).
That's why the "corporate guys" don't bother with normal club or concert work.  They are actually getting a decent return on their investmnets.
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Sheldon Harris

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Re: Formula for pricing jobs
« Reply #15 on: February 27, 2011, 10:02:04 pm »

That's why the "corporate guys" don't bother with normal club or concert work.  They are actually getting a decent return on their investmnets.
corporate work is quite easy on the gear in comparison to clubs and concerts too. great hours, plenty of "off time" and usually,(the best for last) no problem getting paid. most times the checks i received were dated days before the event ended!
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Mac Kerr

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Re: Formula for pricing jobs
« Reply #16 on: February 27, 2011, 10:24:31 pm »

corporate work is quite easy on the gear in comparison to clubs and concerts too. great hours, plenty of "off time" and usually,(the best for last) no problem getting paid. most times the checks i received were dated days before the event ended!

The gear on the corporates I do gets treated just like a tour. It gets loaded in and out repeatedly, rides around the country in the back of trucks, and is usually handled by people who have no connection with the owners, so they are not as careful as they might be with their own gear.

Once in a while an event has reasonable hours, but 7am to 10pm is more common lately, with 1/2 hour meal breaks. Time off is very rare, although I did have a dark day in Vegas a couple of weeks ago.

Getting paid is pretty reliable if waiting 60 days is OK. Regular clients sometimes pay quickly (30 days), but 60 is getting more and more common, and some are 90 days.

It's a good thing we get paid well. Although I think 2%/day and 5%/wk are at the high end of rental rates.

Mac
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Tim Talbot

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Re: Formula for pricing jobs
« Reply #17 on: February 27, 2011, 10:37:38 pm »

corporate work is quite easy on the gear in comparison to clubs and concerts too. great hours, plenty of "off time" and usually,(the best for last) no problem getting paid. most times the checks i received were dated days before the event ended!

Really...... i find there the worst for not paying on time and you just get sent around the houses 100's trying to track down the accounts manager ARRR !!

We give 7 day terms now and over the last two months it seems to be working quite well :) There still always late paying but we have been getting paid within 14days....

 
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