How to price jobs


#1

I understand when pricing jobs to figure how long it will take and add the materials. What I don’t understand is the overhead and profit part. Is there a multiplier to use for profit? With overhead, do you divide how long it will take by my overhead, and then multiply?


#2

You charge a flat price and after all is said and done ,you get what is left over,yes ,you get the leftovers.


#3

Everything you need to know is right here:

roofing.com/forum/about5963-0-asc-0.html


#4

Overhead and profit is something you have to figure into the job before you give the price.

One insurance job paid overhead and profit this year at a 10% rate which really blew me away. Usually overhead and profit is only reserved for inurance restoration companies doing many jobs on an insureds property.

You can get technical with the overhead and profit but like another poster posted, when the job is done and your paid and you pay your labor or subs whats left is your profit. If you bid too low and pay too high there’s a problem and you need to adjust. If you bid high and pay low there may also be a problem but your check book will be happy! The best way is to bid high and pay high with good workers/crews and then the home owner makes out on the quality side, actually everybody makes out.

Some restoration contractors charge 10% overhead and 10% profit. On a $100K job that’s an extra $20K, that’s a lot of money!!!


#5

[quote=“dougger222”]Overhead and profit is something you have to figure into the job before you give the price.

One insurance job paid overhead and profit this year at a 10% rate which really blew me away. Usually overhead and profit is only reserved for inurance restoration companies doing many jobs on an insureds property.

You can get technical with the overhead and profit but like another poster posted, when the job is done and your paid and you pay your labor or subs whats left is your profit. If you bid too low and pay too high there’s a problem and you need to adjust. If you bid high and pay low there may also be a problem but your check book will be happy! The best way is to bid high and pay high with good workers/crews and then the home owner makes out on the quality side, actually everybody makes out.

Some restoration contractors charge 10% overhead and 10% profit. On a $100K job that’s an extra $20K, that’s a lot of money!!![/quote]

First of all when i read this post I went back and read some other post’s from you Doug. i noticed that you’re doing mostly insurance work now because of the storms. Congragulations it must have been a true blessing to go from new construction to insurance work. my area was recently hit by hail. However we have done storm repair for certain customers in other area’s in the past.So when the storm came I had more knowledge than the local companies. They seemed to have learned as they go type of thing.

Overhead and Profit each being 10% of total contract (which you always get both for a total of 20% is not necassarily reserved for "restoration companies"  If you are a licensced contractor then you should be getting O&P anytime you do 3 trades or more for example nearly any hail damaged residential house should give you New roof, metal fascia, window screens, metal window wraps, a/c unit fins dented or dinged, storm/screen door, awnings, gutters, and of course siding.(and to mention when dealing with siding and roof you can get an electrician charge to detach and retach the electric mast/meter and possible a satelite if applicable. 

Now of course not every house has the following but show me any hail hit house and I can almost always find three separate things damaged. Which then gives you your O&P 20% on top a premuim rate being paid by the insurance company already. If for reason on a rare occassion
I can’t get 3 trades I will add 10% to what i know the insurance company will pay. if the house has already been adjusted i will ask the adjuster to pay my price which includes the 10% more than he gave the homeowner. usually they agree, if not i will ask for a re-adjustment and meet the next adjuster at the property. Now granted i only do this if i have commitment from the homeowner. Then i can tell the Adjuster this is what I charge for my services if you won’t pay that then you will have to tell your homeowner to find a new contractor because i won’t work for that price. Yes, of course I sometimes negioate with adjusters and settle for less than my estimate. But I still get more than there original price.

For that i give the home owner complete replacement of everything that was damaged.  They pay nothing out of pocket not even deductibles.  I use only the best material such as dimensional shingles no three tabs ever no matter what they had before, Vinyl coated aluminum trim, high performance  underlayments, full ring shank nails, siding .44 thick complete vapor barrier or fanfold, sealed siding trims, you get the point.  Reason being is look how much there paying you.

#6

That is insurance fraud.


#7

[quote=“RanchHandRoofing”]

That is insurance fraud.[/quote]

Explain to me how that is insurance fraud. The insurance is paying for the damaged property. The damaged property is being replaced correct. It in no way frauds the insurance company when they give mr and mrs homewner a check for say $28547.60 for damages. The contractor replaces and fixes all damage and charges the homeowner $28547.60 because the insurance company has already taken the homeowners insurance deductible out of the check. If it is fraud then you should be working for some insurance companies. Because you start by going after the companies that openly advertise"nothing out of pocket", “we cover deductibles”, and “we will pay your deductible for you”. Are simply saying that if your customers insurance pays you $260.00 per square for 5/12 ranch tearoff 1 layer. itemizing every expense from the detachs and reattachs, dumpster fee,and so on your gonna go back and ask the homeowner for the $250. bucks that the insurance company took out of the check? I sure hope not cause how else do you do it Ranch?


#8

Frank,

When say the customer doesn’t pay their deductible then that means exactly that - no deductible paid by customer.

Let’s remove all the ancillary repairs (Air Conditioning, windows, siding, etc) & for the moment say the insurance estimate is for one single item repair for $ 10,000.00

This “X” repair has the homeowner responsible for a 1% out of pocket deductible based on the value of the structure, say 250,000.00, or a deductible of 2,500.00.

From this $ 10K, the shingles are estimated @ 10 years old on a 3T, or 50% aged / depreciated on a recoverable depreciation.

Insurance pays
$ 5,000.00 up front from insurance

  • 2,500.00

$ 2,500.00 1st payment by insurer

  • 2,500.00 insured’s portion (customer)
  • 5,000.00 final payment by insurer for depreciation

10,000.00 total bill if using insurance estimate.

Now, if the insurance co. does NOT hold a depreciation out & pays all monies up front, then the breakdown is this:

$ 10,000.00 insurance estimate

  • $ 2,500.00 deductible

$ 7,500.00 paid out up front by insurer

  • 2,500.00 insured’s portion (customer)

$ 10,000.00 total bill if using insurance estimate.

It’s simple, really. If you don’t collect even one penny from the insured (customer) then you are, by default, telling the insurance co. that you could do the job for less by whatever amount you did NOT collect.

& Technically, if you offer the customer a lower figure than what insurance offers, the insurance co. should require the customer to use this lower figure (if they knew about the lower amount) & the deductible remains the same.

Tell me this: If the deductible was a low figure, say 250.00*, & there was a receipt required from you before the depreciation is paid... do you write a receipt for the amount they ACTUALLY paid which is short by 250.00, OR do you write a receipt showing the customer paid the $ 250.00 (which is in reality a lie)?

If you write the false receipt, that’s fraud.

If you write a correct receipt showing they short paid, watch the depreciation check show up short by this $ 250.00 figure.

Bottom line: Go to the doc & ask if they can let you slide on your co pay. Co pay = deductible. Anyone who offers to not charge it is committing insurance fraud.

*We know there are still some policies out there with a nice, low figure like this but none are being written any longer to my knowledge.


#9

[quote]Frank,

When say the customer doesn’t pay their deductible then that means exactly that - no deductible paid by customer.

Let’s remove all the ancillary repairs (Air Conditioning, windows, siding, etc) & for the moment say the insurance estimate is for one single item repair for $ 10,000.00

This “X” repair has the homeowner responsible for a 1% out of pocket deductible based on the value of the structure, say 250,000.00, or a deductible of 2,500.00.

From this $ 10K, the shingles are estimated @ 10 years old on a 3T, or 50% aged / depreciated on a recoverable depreciation.

Insurance pays
$ 5,000.00 up front from insurance

  • 2,500.00

$ 2,500.00 1st payment by insurer

  • 2,500.00 insured’s portion (customer)
  • 5,000.00 final payment by insurer for depreciation

10,000.00 total bill if using insurance estimate.

Now, if the insurance co. does NOT hold a depreciation out & pays all monies up front, then the breakdown is this:

$ 10,000.00 insurance estimate

  • $ 2,500.00 deductible

$ 7,500.00 paid out up front by insurer

  • 2,500.00 insured’s portion (customer)

$ 10,000.00 total bill if using insurance estimate.

It’s simple, really. If you don’t collect even one penny from the insured (customer) then you are, by default, telling the insurance co. that you could do the job for less by whatever amount you did NOT collect.

& Technically, if you offer the customer a lower figure than what insurance offers, the insurance co. should require the customer to use this lower figure (if they knew about the lower amount) & the deductible remains the same.

Tell me this: If the deductible was a low figure, say 250.00*, & there was a receipt required from you before the depreciation is paid... do you write a receipt for the amount they ACTUALLY paid which is short by 250.00, OR do you write a receipt showing the customer paid the $ 250.00 (which is in reality a lie)?

If you write the false receipt, that’s fraud.

If you write a correct receipt showing they short paid, watch the depreciation check show up short by this $ 250.00 figure.

Bottom line: Go to the doc & ask if they can let you slide on your co pay. Co pay = deductible. Anyone who offers to not charge it is committing insurance fraud.

*We know there are still some policies out there with a nice, low figure like this but none are being written any longer to my knowledge.


Do it right the 1st time & there won’t have to be a 2nd time.[/quote]

You are making my head hurt Ranch…
It doesn’t have to be that complicated, at least not in Michigan…


#10

Say Ranch and Frank are bidding on the same house.

Their bids are pretty close and the homeowner likes both contractors because they are both known to do exellent work.

But Frank says he will cover the deductable,and Ranch says he can’t do that.Ranch just lost a job,is 250.00 worth not getting that job.

Salesmen all across the country use this dirty little tactic to get the job,and bottom line its the contractors loss.But he sold the job.

The homeowner is happy now, they don’t have to pay the deductable.Frank is also happy because he beat you on getting the job,
.The insurance company got their deductable and the contractor is out 250.00.


#11

Ranch, In Ohio wether the customer gets the full amount in one check or the company gives them a check minus depreciation of say $2500.00. The insurance company is still going to take out the homeowners deductible which is usually $100. to $500. bucks. I have dealt with nearly every insurance company that does biz in Ohio and none have a problem with homeowners not paying a deductible. it in no way hurts an insurance co when the homeowner has a loss of say $10,000.00. and they have a $250.00 deductible. They give the homeowner a check for $9750.00. You the contractor do the job and repalce all damage for $9750.00. Tell me how that hurts an insurance company and therefore commiting fraud? BTW every contract/reciept I write is the true amount that I charged the homeowner. If not then that is fraud. If you by chance are asking homeowners to pay you there deductible when there insurance comapny is paying you premuim rate then you are being to greedy in my opinion.


#12

I am pretty sure that this is what Ranch was Talking about.

But taking care of the customer is more important.
You write it into the estimate and that is all there is to it…

As roofers we all get Raped by insurance companies, more so than just about anybody else…
You guys all know the pain I am speaking of…
It makes it hard to be legit…
I mean you pay 2x as much on insurances per year, than you make yourself…
If not more…
Why do my rates in Michigan go up because there was a storm in Florida?

I have found that it doesn’t so much matter which insurance company you are with as much as how long…
People that have had the same insurance for, ever…
These people tend to get a whole new exterior if there is a bad storm, of whatever type…

People just starting out in life have to fight for their legitimate coverage.
That they have been and are currently paying for…
I have seen this many times.

Insurance companies are crooks, unless you have been paying them for a long while…
If you are a Roofer, even just paying them is not enough…
They always want more.

If all you have is insurance work, do what you gotta do…
There is better work out there, less paperwork more real profit.


#13

If you offer to do a job for the exact dollar figure that an insurer pays out of their pocket with nothing out of the insurED’s pocket (the homeowner), that is fraud.

You have essentially stated “I will work for a lower dollar figure than what has been offered.” If you say this often enough, insurers will take note & eventually begin to lower their payout estimates similar to these dollar amounts.

While I MAY be able to do the work for this reduced amount, I am not willing to commit fraud. Sorry, not me.

I have a customer whom I’ve done a total re-roofing for who is a lawyer in the Texas Dept. of Insurance & he is working out a sting with the intent of making an example of a few contractors & homeowners in regards to this very issue.

They are going to ‘set it up’ (as far as the basic details) & I think are awaiting the next major hailstorm.

I imagine a mixture of storm chasers as well as some local salespeople will get wrapped up in this along with some homeowners who knowingly request deductible non pays.


#14

OK RANCH, if you say so
as I stated before you should quit roofing and go into the business of pointing out contractors and home owners that have frauded the insurance company by homeowners not giving the contractor a few hundred bucks to cover thier deductible. I mean afterall it should be fairly easy for you. With so many companies advertising that they do it. Hell use my company for example every estimate I send to an adjuster shows that the homeowner isn’t paying us thier deductible, and not to mention of course I always get from the insurance co the full loss amount(minus the homeowners deductible). The insurance can’t hit the contractor and the homeowner for the deductible twice. for example homeowners has a loss of $10,000.00 thier deductible is $250.00. i agree to fix all damage for said price of $9750.00. I send insurance co my contract with a price of $9750.00 they pay me $9750.00.

btw you still have avoided the most important question RANCH how does it hurt an insurance company when the homeowner doesn’t pay thier deductible. hoewner


#15

An estimate for insurance work is no different from any other estimate.

First you assess the damages/needed repairs.
Then you figure out how much it is going to cost to fix said problems.
All the costs.
Labor and related costs, material, overhead, profit.
If siding needs to be removed and replaced to fix a roof correctly, that is part of the bid.
If you feel that you will need to replace this siding with new, it is part of the bid.
If for some reason you feel that a window in the repair area may be a problem, you plan to fix it ( short of replacing it), that is part of the bid.
If you feel that a window needs to be replaced in order to keep water out of the house.
Then you need to talk to the homeowner first, or list this as a separate charge.

If you replace a roof that has bad windows and siding your chances of getting a call back increase dramatically.
It is not a roof problem, but there is water coming in the house and most people will assume that it is the roof, unless it obviously is not.
Now you have to explain how it isn’t the roof but something else…
This is fun…
So now you have a call back that truly is not your fault.
But you may have been able to prevent it, there was probably evidence of this when the roof was removed.

In My Opinion Problems, of this type are not related to roof work.
So it is not our responsibility to fix it.
But who are they gonna call when there is a leak?

You should put these little things in your bid.
They can be listed as “misc work”, it doesn’t need to be detailed…
This is where the extra money comes from to do things right, unforeseen things.

People that are experienced in their trades see these little details and allow for them, in different ways.

For complicated or unusual jobs you need to meet with the homeowner at least twice (sometimes more) before you can submit a good bid.

The first time to meet them and find out what they need, require, would like, and can afford/willing to pay for, their desired schedule.
Take all the required measurements for the proposed scope of work.

After you have figured out the cost of materials and a reasonable estimate of how long the proposed work will take, now you can meet with them again and explain their options and related costs.
Hopefully they can make up their mind at this point and you can submit a final bid.

If not, you either help them along more or forget about them.
At this point you have invested a good amount of time to this, you have to make the decision, is more time and effort worth it?
How bad do you want the job and how serious are they?
By this time you should have a pretty good idea of what needs to be done.
If you stick with them and educate them, you will usually get the job.
At the price you proposed…
If it has gone this far, your customer is probably working it into their short term finances, they will accept the higher bid because you explained why, in detail…
And you built trust.
But they are on a budget so do it right, come in as bid if anyway possible.
This is what they are expecting, and what you are selling…

You really need to look at all the details.
These are the parts that take all the work.
They make or break the job.
So don’t sell yourself short.
You have a lot of time into this…

There shouldn’t be any major surprises.
You should have a pretty solid bid, with all the needed allowances for the “seen unforeseen”.

This would be for a complicated structure, they are different…
A roof is a roof…
You know the difference between a Ranch and a Victorian…
Some are easy and some are just steep.


#16

How I like to price jobs…

I like to keep things nice and simple so,

Generally speaking if you pay all your insurances and workers compensations, then you should demand a premium price.

One of the ways to do is

1/3 material costs, 1/3 labor, 1/3 profit

You can also check out the roof estimating article on

newenglandmetalroof.com/roof … guide.html


#17

I’ve talked to a few adjusters about contractors who cover deductibles and the ones that seem to do everything by the book say it’s not going to get you in jail. What they say is that the insurance companies want to pay to a certain amount and nothing more. If all the work is done on the home and the home owner isn’t calling the insurance company asking for more money to cover the contractor that’s a good thing for the insurance company.
What they say is really bad is when a home owner files a claim and pockets the money and then tries to claim again on another storm. Or when they fake the claim in the first place when their home never had damage.

In Texas adjusters say the average roof is $125 a square for insurance and most deductibles are 1-2% of the insured value of the home. If a contractor is covering the deductible that leaves very little money for profit. Of course homes are a lot cheaper in Texas than Minnesota.

To say a home owner gets the royal treatment from an insurance company they’ve had for a long tine is not true. This year did three roofs on a block all approved first time around and one has been denied twice now. The home owners a little angry in the fact that he’s had no claims with the same insurance company for 45 years. One on the block got approved because the adjusters came right out and said they didn’t want to fight him and he pays over $200K a year in premiums. The other said that the hail damage was light but since they took the customer/home on a year previously they should have found the roof was bad. The third never stepped foot on the roof, but he had holes in the siding.

I’d venture to say it’s more on the adjuster and a little on the insurance company than how long the home owner has been with a given insurance company.

What do you think an insurance company would do to a contractor they found to cover everybody’s deductible if they called every home owner and in the inquiry found every home owner to praise the contractor? Do you think their going to shut them down? I’d think they’d be happy to know their claim was taken very well care of.

Just did my Dads claim and the total came to $20,4xx.xx, the insurance company paid my Xactimate estimate right down to the cent, should I ask him to pay me a $1K to cover his deductible? Only two trades were done, roofing and 185ft of gutters.


#18

I agree with you Doug as far as if a roofing company is taking care of the homeowners and there not complaining to the insurance company then the insurer is happy with that roofer. As long as the homeowner or roofer has not frauded the company.
I have several adjusters and insurance agent’s refer my services to homeowners that willing ask for a referral from the insurance company. One customer that met with an adjuster asked the adjuster if he could refer a local company. The adjuster referred my company and knowing how I do business even told the homeowner that chances are I would be able to absorb his $200.00 deductible. He stated that since he was paying for the homeowner for aluminum siding i would be installing vinyl which product wise is more cost effective. End result I have a contract w/ that homoeowner and he is not paying his deductible and I’m replacing 1 basement window w/ a new glass block at “no charge”.


#19

Doug, I agree it is more on the adjuster than the how long the homeowner has been a policy holder with a customer.

Perfect example

I have a family member that was getting divorced. When she entered the marriage her and her spouse each had a house. They bought a separate house together and lived thier. They rented out the other 2 houses. When she filed for divorce she evicted the tenants from the house she owned coming into the marriage so that she could move in. Since the insurance policy was in her soon to be exhusbands name I advised her to have put into the temporary divorce orders that if she filed a claim he would have to sign the check(s) from the insurance company over to her.
When she filed for divorce the house had already been damamged by hail but at that time she had not filed a claim becuase of the up coming divorce. Shortly after she moved into the house, a dead tree fell and hit the roof doing very minimal damage. i told her that now would be the right time to file a claim so that they will pay to remove the tree as well hail damage(she was gonna wait until the divorce was final to file a claim).
I then met the adjuster at the property to inspect the damage (which honestly was hit by penny to golfball hail compared to some baseball size hail and there wasn’t very much damage.) I gave him my estimate which I had already prepared. he then inspected the property and said there was not enough damage for him to approve it for hail. Instaed he would pay for the gutter and one side of the roof from the tree falling on it. i told him I appreciate that consideration however i will not repalce only one side of the roof. He then agreed to replace the entire roof since it was a 17 year old three tab shingle. He took my estimate and told the homeowner he will mail her a check from his office.(he was a local adjuster). Hours later he called the homeowner to inform her that about 3 weeks prior her soon to be exhusband filed a claim and got an approval and a check for $88xx.xx to replace the roof, fascia, window wraps, window awnings, and gutters due to hail damage. Yes of course it was adjusted by a different adjuster. the homeowner said the adjuster she dealt with could not give her a legimate explanation of why he denied hail damage while the other adjuster approved it. Go figure right.
Now we all have had houses denied then readjusted and then approved. i feel as though companies do that to retain policy holders and avoid conflict.


#20

I did a roof for an agent for a large insurance company who became my agent as a result. Later did his boss’s brother house and I can’t go into the details here on how the deductibles were paid.

This year I had to compete against storm chasers that were not only paying $1K deductibles but also putting another $1K back into the insured’s pockets. Had one that went with me although he could have made a grand on his roof with two other contractors.

About adjusters here’s a couple good ones.

Did a roof this Fall for a home owner who first got denied by her adjuster than she asked for a re-inspection and the insurance company sent out Haage Engineering who found the exact same findings as the first adjuster, not enough hail to total the roof. The home owner pressed on and asked for another adjuster and not Haage. Guess what? The second adjuster totalled out the roof and she got a new roof.

Bid a roof this Fall for a home owner who got denied for hail but got a small check for wind damage. The home owner asked for another adjuster and they sent out Haage Engineering who said the same thing as the original adjuster, not enough hail or wind damage to total out the roof. Another adjuster was sent out and that one totalled it.

Here’s one to make you guys think. A tree exploded on a customer of my wifes resturaunt in August. An adjuster came out a month after the claim was made to decifer the damages. A month later her neighbor comes over and said he got an insurance check for hail damage. The next time she’s at the resturaunt she tells my wife to have me look at her roof for hail damage. Her house was surrounded by trees and decided hail damage would be tough figuring the amount of life on the roof. After clearing off the back of the garage a hole was found through both layers of shingles and into the decking. A large branch from the tree was removed from the roof in August which caused a hole in the roof. The hole was about the size of a bottle of soda sideways. I took a bunch of pictures of the roof and hole and areas were trees had brushed up against the shingles over the years and a diagram and estimate was sent to her insurance company. The original claim was a $500 deductible for lightening and next thing I find out it was jumped to $1K for hail damage. Here’s the kicker, an adjuster never stepped foot on the roof, no pictures were taken by an insurance personal.

Job is done awaiting check.