Woodworking Business

You are not logged in. [ Login ] Why log in
(NOTE: Login is not required to post)

The T and M curse.

5/25/15       
Matt Calnen

Several builders I work for that prefer I work on a time and material basis for various reasons. It seems that while you can't lose money, you also can't make better money by bidding it correctly. I am one of the smallest shops in the area(2-4 people, 1600 sqft shop). I my shop rate is also competitve, if not the lowest, around. While I feel my shop rate is set correctly, I almost always make more money on bid jobs. I was just wondering how other shops handle situations like this. Thanks

5/25/15       #2: The T and M curse. ...
David Waldmann  Member

Website: vermonthardwoods.com

If you always make more money by bidding, then you need a higher rate on materials and/or labor when billing T&M.

This is borne out by the fact that you say your shop rate may be the lowest around. Why? Are you worth less? Not suggesting you are, in fact - the opposite. You are worth more, so charge accordingly and then your T&M jobs will be as profitable as your bid jobs.

This may require you to either A) adjust your labor component in your bid jobs, or B) use a different rate for bid versus T&M. I would suggest (A), since it would appear that you always give yourself a bigger cushion than necessary on bids.

5/25/15       #3: The T and M curse. ...
Matt Calnen

That's good insight. I have been in business for 5 years. I opened my own small shop as no one was hiring at the time. I have watched many good woodworkers be bad business owners and fail, something I want to avoid. My shop rate is low, as I watch my overhead like a hawk. I have always felt if I could be the best value in town, I would always have work. I am always trying to learn more about running a good business and woodweb has been a godsend.

5/25/15       #4: The T and M curse. ...
Larry

I 2nd David on this. Many small shops fail to charge what the market will bare. Do you have any aspirations to advance? It costs! How is your retirement account doing? If you are getting most of your bid jobs, you are too cheap. Low overhead is often a stagnating recipe.

5/25/15       #5: The T and M curse. ...
rich c.

I guess your post tells me that you don't have a correct handle on your labor. Somewhere you are overestimating labor, materials, or both. Most shops would kill for a steady diet of T&M.

5/26/15       #6: The T and M curse. ...
Matt Calnen

But isn't that why we make more bidding jobs? I usually add 15 to 20% from what I call my realistic estimate to cover for errors, mistakes, etc. Am I doing this correctly? How do others figure there bids?

5/26/15       #7: The T and M curse. ...
David Waldmann  Member

Website: vermonthardwoods.com

I said "it would appear that you always give yourself a bigger cushion than necessary on bids."

You said "I usually add 15 to 20% from what I call my realistic estimate..."

So raise your rates 15-20%, don't add a cushion to your bid jobs, and then both types of work should come out about the same.

As to "Am I doing this correctly?", only you can answer that. There is no right or wrong way as long as it's legal. But if you are making more money one way than the other you ought to change the way you're charging on the less profitable jobs, IMO.

5/30/15       #8: The T and M curse. ...
Skillet Member

To me the difference is risk. With a T & M job, theoretically you should be able to always make your projected profit margin while covering your overhead expenses since the customer is willing to take the risk if the project takes longer to complete than anticipated or material prices increase. On a bid job, you are the one taking the risk of the job going over budget so you should receive a greater reward for assuming that risk. With that being said, I think you should raise your shop rate, that is probably why you are being asked to do work on a T & M basis. Make sure you have everything covered.

5/31/15       #9: The T and M curse. ...
Matt Calnen

That's kind of what I was thinking, I just was wondering what others thought. I did just raise my shop rate by $5. I think I am on the right track. Thanks to all that responded


Post a Response
  • Notify me of responses to this thread
  • Subscribe to email updates on this Forum
  • To receive email notification of additions to this forum thread,
    enter your name and email address, and then click the
    "Keep Me Posted" button below.

    Please Note: If you have posted a message or response,
    do not submit this request ... you are already signed up
    to receive notification!

    Your Name:
    E-Mail Address:
    Enter the correct numbers into the field below:
     

    Date of your Birth:



    Return to top of page

    Buy & Sell Exchanges | Forums | Galleries | Site Map

    FORUM GUIDELINES: Please review the guidelines below before posting at WOODWEB's Interactive Message Boards (return to top)

  • WOODWEB is a professional industrial woodworking site. Hobbyist and homeowner woodworking questions are inappropriate.
  • Messages should be kept reasonably short and on topic, relating to the focus of the forum. Responses should relate to the original question.
  • A valid email return address must be included with each message.
  • Advertising is inappropriate. The only exceptions are the Classified Ads Exchange, Machinery Exchange, Lumber Exchange, and Job Opportunities and Services Exchange. When posting listings in these areas, review the posting instructions carefully.
  • Subject lines may be edited for length and clarity.
  • "Cross posting" is not permitted. Choose the best forum for your question, and post your question at one forum only.
  • Messages requesting private responses will be removed - Forums are designed to provide information and assistance for all of our visitors. Private response requests are appropriate at WOODWEB's Exchanges and Job Opportunities and Services.
  • Messages that accuse businesses or individuals of alleged negative actions or behavior are inappropriate since WOODWEB is unable to verify or substantiate the claims.
  • Posts with the intent of soliciting answers to surveys are not appropriate. Contact WOODWEB for more information on initiating a survey.
  • Excessive forum participation by an individual upsets the balance of a healthy forum atmosphere. Individuals who excessively post responses containing marginal content will be considered repeat forum abusers.
  • Responses that initiate or support inappropriate and off-topic discussion of general politics detract from the professional woodworking focus of WOODWEB, and will be removed.
  • Participants are encouraged to use their real name when posting. Intentionally using another persons name is prohibited, and posts of this nature will be removed at WOODWEB's discretion.
  • Comments, questions, or criticisms regarding Forum policies should be directed to WOODWEB's Systems Administrator
    (return to top).

    Carefully review your message before clicking on the "Send Message" button - you will not be able to revise the message once it has been sent.

    You will be notified of responses to the message(s) you posted via email. Be sure to enter your email address correctly.

    WOODWEB's forums are a highly regarded resource for professional woodworkers. Messages and responses that are crafted in a professional and civil manner strengthen this resource. Messages that do not reflect a professional tone reduce the value of our forums.

    Messages are inappropriate when their content: is deemed libelous in nature or is based on rumor, fails to meet basic standards of decorum, contains blatant advertising or inappropriate emphasis on self promotion (return to top).

    Libel:   Posts which defame an individual or organization, or employ a tone which can be viewed as malicious in nature. Words, pictures, or cartoons which expose a person or organization to public hatred, shame, disgrace, or ridicule, or induce an ill opinion of a person or organization, are libelous.

    Improper Decorum:   Posts which are profane, inciting, disrespectful or uncivil in tone, or maliciously worded. This also includes the venting of unsubstantiated opinions. Such messages do little to illuminate a given topic, and often have the opposite effect. Constructive criticism is acceptable (return to top).

    Advertising:   The purpose of WOODWEB Forums is to provide answers, not an advertising venue. Companies participating in a Forum discussion should provide specific answers to posted questions. WOODWEB suggests that businesses include an appropriately crafted signature in order to identify their company. A well meaning post that seems to be on-topic but contains a product reference may do your business more harm than good in the Forum environment. Forum users may perceive your references to specific products as unsolicited advertising (spam) and consciously avoid your web site or services. A well-crafted signature is an appropriate way to advertise your services that will not offend potential customers. Signatures should be limited to 4-6 lines, and may contain information that identifies the type of business you're in, your URL and email address (return to top).

    Repeated Forum Abuse: Forum participants who repeatedly fail to follow WOODWEB's Forum Guidelines may encounter difficulty when attempting to post messages.

    There are often situations when the original message asks for opinions: "What is the best widget for my type of shop?". To a certain extent, the person posting the message is responsible for including specific questions within the message. An open ended question (like the one above) invites responses that may read as sales pitches. WOODWEB suggests that companies responding to such a question provide detailed and substantive replies rather than responses that read as a one-sided product promotion. It has been WOODWEB's experience that substantive responses are held in higher regard by our readers (return to top).

    The staff of WOODWEB assume no responsibility for the accuracy, content, or outcome of any posting transmitted at WOODWEB's Message Boards. Participants should undertake the use of machinery, materials and methods discussed at WOODWEB's Message Boards after considerate evaluation, and at their own risk. WOODWEB reserves the right to delete any messages it deems inappropriate. (return to top)


  • Forum Posting Help
    Your Name The name you enter in this field will be the name that appears with your post or response (return to form).
    Your Website Personal or business website links must point to the author's website. Inappropriate links will be removed without notice, and at WOODWEB's sole discretion. WOODWEB reserves the right to delete any messages with links it deems inappropriate. (return to form)
    E-Mail Address Your e-mail address will not be publicly viewable. Forum participants will be able to contact you using a contact link (included with your post) that is substituted for your actual address. You must include a valid email address in this field. (return to form)
    Subject Subject may be edited for length and clarity. Subject lines should provide an indication of the content of your post. (return to form)
    Thread Related Link and Image Guidelines Thread Related Links posted at WOODWEB's Forums and Exchanges should point to locations that provide supporting information for the topic being discussed in the current message thread. The purpose of WOODWEB Forums is to provide answers, not to serve as an advertising venue. A Thread Related Link that directs visitors to an area with inappropriate content will be removed. WOODWEB reserves the right to delete any messages with links or images it deems inappropriate. (return to form)
    Thread Related File Uploads Thread Related Files posted at WOODWEB's Forums and Exchanges should provide supporting information for the topic being discussed in the current message thread. Video Files: acceptable video formats are: .MOV .AVI .WMV .MPEG .MPG .MP4 (Image Upload Tips)   If you encounter any difficulty when uploading video files, E-mail WOODWEB for assistance. The purpose of WOODWEB Forums is to provide answers, not to serve as an advertising venue. A Thread Related File that contains inappropriate content will be removed, and uploaded files that are not directly related to the message thread will be removed. WOODWEB reserves the right to delete any messages with links, files, or images it deems inappropriate. (return to form)