Profit in working

[denoginnizer]

There are two schools of thought around here about tractor work. Some folks have a price that they will do tractor work by the hour or acre . These folks will go broke before they take any less than there price and absolutely wont work for less.

The other group would rather make little profit than none at all .
What group do you agree with and why?

 

[Chuck]

I have done a little custom work in the past. I would tend more toward the first group. I always tried to be fair and figure out a price that paid all my expenses and paid for my time, usually using university rates for a starting point. For most people that was fine, but there was always some comedian who thought you should do it for less. That was fine with me, this is America and folks are always free to call someone else or buy their own equipment if they feel like somebody is trying to take advantage of them. To be honest there were also a couple that I just did not want to work with or were slow to pay and if I did the work, they paid a little extra. If you really pencil out all the expenses involved including increased repair expense and having to more quickly replace a piece of equipment that you are wearing out on their place, I don't know of many people just doing custom work for neighbors and the like that are getting rich at it. It provides extra cash flow in the short term, but if you can't make a profit at it, what's the point of doing it? I could always use the extra sleep.

 

[Running Arrow Bill]

I agree. As a retired landscape & irrigation contractor, the bottom-line is PROFIT! After you have done the same thing a few times and know how to do it, "Do you need anymore PRACTICE?" (or experience) I think not.

Regardless of what "service" business one is in, there are always customers out there that want you to do a job for them for less than your going rate. To be successful in any business venture you need to factor in a profit on all jobs and know when to NOT accept a job (if you think the customer is a jerk, slow pay, or you can't make a profit on it, etc.).

Formula:

Direct & Indirect Overhead + Cost of Job Specific Materials + Cost of Labor + PROFIT margin = "Selling Price".

Only Cost of Labor + "Job Specific Materials" = Bankruptcy

In knowledgable Estimating & Bidding, PROFIT is always considered an "Expense" item in the cost of doing business and if it is not factored in, you are working for free.