Rates and Pricing

[Jayrod1]

I'm new to this business and need some help with pricing my services. I am in south Mississippi and am wondering what the going rate is for a CTL running a mulching head? Also general bucket and landscaping work? Any help will be greatly appreciated.

 

[Bliz]

Jayrod1, I am in the same boat. Just got a new Cat 289D CTL and am trying to figure out what to charge. Eventually, I will figure out my true cost to operate this machine, as we have done with all our other equipment. One word of advice I got years ago I still follow is, "don't follow the standard, set it." I am quite sure we will bill our Cat out at about $85.00/HR. We get $80.00/HR. for our Cat 305.5E excavator and have never heard a word about the price.

 

[Shimmy1]

Here in ND, a mini ex like a 304CCR or 305 gets $100/hr. We get $95/hr for our T770, it's same size as a 299 Cat. I can't give you any idea on the mulching head, I would probably charge enough so I could bank the purchase price in a year or two, plus whatever wear parts involved. This could depend on how much use it gets used, too.

 

[KSSS]

I price my TR320 at $95.00 my 6 ton Takeuchi mini ex at $95.00 and my SV300 wheeled machine at $90. When I run the mulcher hourly which I try to avoid I run it at $175 an hour. Sounds like a lot but they don't run cheap.


The setting the standard advice sounds good, but seldom is reality unless your bringing something new to your area. Your market and the competitors in it set the pricing (which can include you). If you determine to set your standard pricing at 20% percent over your local market for the same product, your not going to move as much dirt as your competition or you may not move at all depending on how much work is available, all things being equal. You can find a way to do it better and offers the customer more that justifies the price premium or do it smarter than the other guys and increase your margins within the price cap established by your local market. That's is reality.

 

[Bliz]

I price my TR320 at $95.00 my 6 ton Takeuchi mini ex at $95.00 and my SV300 wheeled machine at $90. When I run the mulcher hourly which I try to avoid I run it at $175 an hour. Sounds like a lot but they don't run cheap.


The setting the standard advice sounds good, but seldom is reality unless your bringing something new to your area. Your market and the competitors in it set the pricing (which can include you). If you determine to set your standard pricing at 20% percent over your local market for the same product, your not going to move as much dirt as your competition or you may not move at all depending on how much work is available, all things being equal. You can find a way to do it better and offers the customer more that justifies the price premium or do it smarter than the other guys and increase your margins within the price cap established by your local market. That's is reality.

KSSS, I totally agree with your assessment. However, I was of the impression in Jayrod1's area he didn't have a lot of competition or he would simply ask them. In my area if I wanted to know what the competition was charging for a tri-axle it would take me about 20 minutes to get 3-4 quotes. As for pricing, I can tell you that our larger excavator (160 size) is as much as $35.00/hr. more than some of our competition and we do twice the volume of work they do. On septic systems, in the largest county in the state, we have done twice as many (legal) septic systems as our closest competition over the last 15 years. My point was to do top quality work, take good care of your customer's needs, and build a relationship that insures you will do their next job and hopefully a job for their friends. If you can accomplish these goals, your price will be somewhat secondary. I realize some customers want the bottom line figure and to do that work you may have to bend on your pricing. I sense you are a seasoned contractor, so I am probably preaching to the choir. Given that Jayrod1 is somewhat new, at least to CTL work, I simply was trying to impart a philosophy that has worked well for us over the years.

On equipment rates, for years we did what most contractors do, and that was charge what they are charging. A good contractor in any field of construction has got to establish his true cost of operating his business and each machine or he is simply guessing and hoping he has made money by the end of the year. I found over the years we were occasionally doing some aspect of earthwork for less than it was costing us, but because we came out OK on the job, I never knew until I established my true cost for each machine and task. My advice to any new (or old) contractor would be to keep track of every task you do, by some form of measurement, and your machine costs to establish a data base for future bids. Believe me, we are far from perfect when it comes to this, but we keep working hard to make it better.

 

[KSSS]

I hear what your saying. It brings up a good point in that as the cost of new machines in every class and configuration has increased up to 25% in pricing due to Tier 4i and T4F over the last 5 years or so, the cost of replacing your current machines has gone up. Knowing how contractors are, no one (at least here) is factoring that into their pricing. If they ran their 580M series 1 at $80 an hour than when the they buy the latest N series, the rates will likely stay the same. That becomes tough when competing for jobs or bringing in new customers because not everyone knows their costs. I understand the idea of doing quality to work above the competition to justify a higher price, but when quality contractors are all that are left standing after the toilet flush of 08-2010, that becomes increasing difficult. It comes down to the small things in my view in these cases. Being the type of company that customers want on their jobs, quality work, no low life employees, reasonable pricing (does not mean lowest, just reasonable) and easy to work with which mostly comes down to personality.

 

[Bliz]

KSSS, I couldn't agree more. You also bring up a great point on factoring in a future replacement cost over and above just the operating cost of the existing machine.

 

[movindirt]

Here in ND, a mini ex like a 304CCR or 305 gets $100/hr.

Wow, thats quite a bit for a little 5 ton hoe, around here 160 size machines are only $125-$130 a hour.

 

[monster76]

A quick google search might help i google backhoe service in my area and these guys popped they have been in business for a very very long time http://www.chucksbackhoe.com/equipment.html

 

[CM1995]

Determining a local rate also depends on other factors. Labor and insurance rates, fuel costs and most importantly taxes. Taxes paid will vary widely from state to state and even local municipalities. City business licenses in my area vary from $75 to $300 a year in addition to the state business license, state privilege tax, business property tax and so on. Then there are the payroll and income taxes.

 

[Tones]

Running a mulcher will double your fuel bill. Then you have to allow for the fact that your will track wear will half, teeth will last about 500hrs depending on what brand your running and ground conditions. Years ago I ran a RC100 and the mulcher rate was 80% more than the bucket rate and needed every penny of it.

 

[CM1995]

I agree Tones. Haven't ran a mulcher but just a bush hog attachment will burn more fuel than using a bucket.

 

[Shimmy1]

Wow, thats quite a bit for a little 5 ton hoe, around here 160 size machines are only $125-$130 a hour.

Yeah, it's been kind of a battle around here for the last 10 yrs or so. Nobody had a problem paying $85-95 per hour for a good skid steer, but complain, complain, complain when getting the bill for a 200 excavator for $135. But, when fuel started going up, mouths stayed shut. Now, it has pretty much been accepted. $90 for the skidder, $100 for 5 ton, $120 for 120, $140 for 160, $160 for 200.

 

[Equip Junkie]

I am obviously in Canada and so my rates will be different. When I started my business I contacted local business. I told them right off the bat what I was doing. Most guys here are working almost exclusively in the oil and gas industry. Rates seemed to vary hugely. I picked a price in the middle. After the first year, I increased my prices by about 20%, some to help with the extra cost of fuel and insurance, but also because I noticed my rate wasn't working. I am presently charging as follows: T770 - $120/hr, Tandem gravel truck - $110, Delivery - $100, Labour - $35, T770 with mulcher - $150-170 (depending on customers requirements) (Teeth extra if rocky soil). I haven't gotten any complaints about my rates. The mulcher definitely uses way more fuel.

Some local guys are cheaper per hour for their machines, but charge for attachments (on site: used or not), trailers on site, vehicles on site, operator extra charge......... Had one guy start a new business up last spring and he was offering his brand new CTL Kubota at $60/hour. Others in the area are $125 for there MTL. There is a huge variety in prices. I have found that if I offer a good service at a reasonable rate, customers do most of my advertising and no one has complained about me raising my rates.

Best of luck with starting up. First couple of years are really a challenge.

Equip

 

[CM1995]

Had one guy start a new business up last spring and he was offering his brand new CTL Kubota at $60/hour.

Equip Junkie with the rates you are getting locally to operate, you won't have to worry about that guy very long.

Locally these are the rates I bill for a skid steer and labor but I hardly ever do hourly work.

$85 an hour for tracked skid steer, 4 hour minimum
$27.50 for labor
$100 per mob, can be more depending on distance.

 

[Shimmy1]

Equip Junkie with the rates you are getting locally to operate, you won't have to worry about that guy very long.

Locally these are the rates I bill for a skid steer and labor but I hardly ever do hourly work.

$85 an hour for tracked skid steer, 4 hour minimum
$27.50 for labor
$100 per mob, can be more depending on distance.

CM, the minimum is where we get the line drawn on us. Competition is fairly strong, and around here, nobody seems to like to pay that minimum. They all expect to get charged for time spent. The excepted reasoning is we're all supposed to take care of the little jobs so when the big one comes around, we can get that too. Most of the time, it all works out. But, some days kinda suck when you run around all day for 4-5 billable hours on a machine and maybe a few hundred for the mobilization. Thankfully, most guys have a day or close to it when you pull in.

 

[Canuck Digger]

I think your price point is/should be somewhat determined by your skill level with the machine you have. I've seen a lot of guys show up on a job site with a new shiny machine, yet you can tell the skill level isn't there. Generally "new to the game" = charge a bit less to get the contracts/jobs. Once you get established and the phone rings, you can charge more, not because your phone rings but because you're much better at what you do. I always tell my/prospective customers, it's not how much I charge you an hour, it's what I can get done in that hour. Right equipment/skilled operator makes all the difference. Too many people look at the $ per hour instead of productivity in that hour.....

 

[CM1995]

CM, the minimum is where we get the line drawn on us. Competition is fairly strong, and around here, nobody seems to like to pay that minimum. They all expect to get charged for time spent. The excepted reasoning is we're all supposed to take care of the little jobs so when the big one comes around, we can get that too. Most of the time, it all works out. But, some days kinda suck when you run around all day for 4-5 billable hours on a machine and maybe a few hundred for the mobilization. Thankfully, most guys have a day or close to it when you pull in.

Shimmy that's the reason why I don't do much hourly work. I can make more doing contract hard bid work. The clients want a hard number for the work spec'd in the contract, anything outside that scope of work is an extra or a change order.

 

[therealjohnboy]

In Oz I run TR270, Tak 145, Tandem Tipper. $100 per/hr +Tax, $45 extra for attachments i.e. Breaker, Auger, Chain digger, Brush hog, etc. And always charge 4 hr min depot to depot. Never advertise and do the best job I can for my customers. been running 13 years on word of mouth and never been quiet. Plenty of competition but they treat customers like walking wallets and rarely do repeat work due to the bad taste left behind. Being pleasant ,fair, flexible and co-operative is the key to success in our industry. There are plenty of cheaper operators around but I defer the question of my rates by offering to come see the job and work out the most cost-effective way to tackle their job. I offer to ball park the job and work on hourly rate or can provide a fixed quote if thats their preference. People understand that a fixed quote will be dearer as it allows for any issues that may arise. All jobs have a rock clause stating the quote stands plus what ever rock time is incurred.
At $80per/hr Ive worked out I'm only working for wages, so may as well run someone else's gear. Bear in mind our fuel rates are around $1.60 per litre bit cheaper at present though $1.30 per litre.

 

[CM1995]

I offer to ball park the job and work on hourly rate or can provide a fixed quote if thats their preference. People understand that a fixed quote will be dearer as it allows for any issues that may arise.

My customers are just the opposite, they want a hard number for the job based on the plans and spec's provided, any "unforeseen" condition is treated as a change order.

8 times out of 10 we could do the job cheaper by the hour but the corporate types need hard numbers for their budget meetings.:cool2

I do primarily commercial work.