Pricing Commercial Work

802climber

TreeHouser
Joined
Nov 1, 2013
Messages
251
Location
Vermont
While I usually prefer fixed pricing on residential work, I am more tempted to go hourly on commercial work, especially on larger potentially open-ended projects. (But obviously if they want a fixed bid, I will give one).

So, for hourly commercial work do you guys give them one hourly rate for the whole job? Or, bill for man hours, individual equipment, etc as it is used? And if so, do you show them a "rate schedule" to explain the costs?

Also, what are reasonable payment terms for commercial customers? 30 days?

Thanks!
 
If the job is clear I have no problem giving a bid. Then you can always tell them any changes will be billed hourly. Most outfits pay within 30, some are further out, just ask them up front, demanding payment from national corps on your schedule will guaranty you don't get the job. Just know ahead of time and plan accordingly
 
I agree. Payment terms are negotiable. I don't mind financing a job on my terms, which vary by customer.


I too don't mind a clear cut bid, or we can do hourly work. Usually it boils down to simple classifications: Laborer, Equipment Operator, and any specialty items. Laborer includes hand tools. Equipment operator includes running any of our standard equipment (including truck/trailer) and standard attachments. Specialty items would be something like the stump grinder, grapple saw, mulcher attachments, etc. I track to the 1/4 hour with regards to billable time, and round in the customer's favor, if applicable. If I have someone driving a truck/trailer, and they get out and do some laborer work while waiting on the next load, I usually keep them at the driver rate. If it was going to be a laborer most of the day and a driver for 2 loads (for example), I would charge an estimated time (based on location) for both loads to the equipment operator line, the rest of the time as a laborer.
 
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  • #4
Thanks!

So do you break down your costs (into laborer, driver, equip, etc) at the billing or proposal stage? I was thinking it might be nice to have something I could hand them at initial meeting showing what goes into figuring our costs...? Or is this something that should accompany the proposal?

So far on my proposals, I fully spec out the work but just give the total costs without breaking it down too much.

Should "standard" equipment (chipper etc) be billed off hour meter, operator's man hours, or by the day? What about specialty equipment?
 
It should go at the proposal, not handed over without conversation. Hourly rates without a production metric are worthless and people who only look at the hourly rate are about the same. While looking at the work I may point out a tree/stump/whatever and say this would take x amount of time and at our hourly rate would cost XXX and compare that price to what it would cost as a bid.

Standard equipment isn't billed, it's included in the operator's hourly figure. A chipper would be a specialty item, if I ran one since the person in the excavator would be running the excavator and the chipper or by hand with the chipper hourly and added laborer(s). I bill for time on site, rounded to the quarter hour. If I am an equipment operator for the whole day but run the grinder of an hour, I deduct one hour of my equipment operator line and add one for the grinder.

Also, depending on the job, my hourly rate is higher than anyone else. "Carl" might be a separate line item/hourly rate. My hourly rate is absorbed in the specialty equipment usually, since I'm the one running it.

Here's an example of a job I "bid" by the hour and won. The scope of the work was far different than described and the bill ended up going to around $10k best I recall.

Messages Image(251412711).jpg
 
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  • #6
Carl, thanks that's very helpful. Looks great by the way. So when they accept that written quote, do you follow-up with a contract? I have had success with residential customers with an all-in-one proposal/contract. Maybe not the best idea for commercial stuff?
 
The signature at the bottom binds their agreement to the proposal and it's converted to a job. Rarely does it need to be more "binding" and rarely do I actually get a signed quote back. Actually on that quote, they had me sign since it was for a community college. They issued a PO and away we went.
 
99.9 percent of my jobs don't involve an actual signature. If they call my office to schedule the job, that's the signature.


love
nick
 
The majority of our work is commercial and it is amazing that we rarely get a signature. Reading what Nick said made me laugh, reminds me of out standard business procedures...the 'regulars' call, we show up, do the work, then send a bill. 30 days later we get paid. It is typically based on time, but I break it out by job, not showing time. We aren't as in depth as others, as chipper and grinder costs are included into the line item (which is usually a set cost per tree). It is only when we rent equipment that that is itemized on the bill.

The newer customers do usually get a lot more communication. As long as I have an email stating 'go ahead', I'm good without a signature.

There are always those new sketchy people that you do want a signature, but they sign the estimate, no contracts.
 
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  • #13
After just a few years in biz, I will not set foot on a job until my proposal/contract is signed. I feel that it protects both parties to establish exactly what is (and isn't) going to be done, and what the total cost will be. It is definitely tempting to eliminate this step, but I have sat down with enough clients to sign the previously emailed (and verbally accepted) proposal only to find them reading the document for the first time. I worked for a tree service that rarely had signed proposals and the callback rate was insane... Just my 2 cents of course.
 
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