Invoicing - Part 6: The Benefits of Knowing Your Crew Base Rate
Often times when working on a job, you'll get asked for a quote for a future job. Heck yeah, thats awesome! But how can you be quick without undercutting or overbidding the project BUT efficient enough to keep the potential clients interest?
... Enter, crew base rates.
See what it's like from a clients perspective when asking for a quote and how you can maximize crew base rates to secure more jobs, keep prices accurate, and create better customer experiences.
How are we going to do better estimating, which is really what this boils down to. We need to analyze when should I give an estimate on the job and when should I not?
I would propose that you really probably shouldn't give an estimate on the job if you have to do, like, 19 different trades. If you're one of those guys and you're going to drywall, you're going to do painting, you're going to do a demo. I would say, let's not give that proposal right out on the jobsite. But I would also say if you are just the painter or you're just, you know, doing service work, in those situations, it's actually quite easy if you build it out right to come up with a crew base rate and then be able to give estimates right on the jobsite because you know what you're doing.
We would always advocate for our clients to, if you're a larger contractor and you need to do multiple different things, go out, talk to the client on the job, get all of your measurements, all of your numbers, do a really good discovery. Come back to the office, let's get all that information organized and in the system and then send an estimate.
But if you're someone who has a regular crew, you're always doing the same things over and over and over, you're going to look super slick at the site, right, when they ask for a number. Honestly, do you know how many times I've asked a painter for a number and he's been like, I'll get it back to you. And I actually don't even get an estimate back from them? I think you can really dial in a crew base rate and be able to give accurate, right numbers on the job better than every other guy that's come out to give a bid on that job.
Being on the receiving end of estimates, just like you said, the painters. It's rare that I get like a line item estimate where it shows me, hey, here's the amount of paint that we're going to need, here's here's, you know, the potential supplies and then the hours of the team's going to need to do it. It's rare that I get it. And when I do, I almost always go with that person because I feel confident that they know what they're doing because they trust their numbers, they're detailed, and they can produce it pretty quickly.
That's a really good point. I'm also going to add on to that point that if you are one of those guys that is just struggling to keep a business going, if, you know, let's keep going with the paint analogy. And you are a painter. You're a great painter. You really know your stuff. You buy high quality paint, you've got a great crew and they know what they're doing. But you came from another company and you've just been doing this for a couple of years and you've never really sat down and thought about all of this. You may even have a really good idea within your own head of what that billable rate should be. Maybe you have within your own head a great idea of what that base crew rate should be. But there's a couple of problems with that. One, that's going to change over time. Material prices go up, labor shortages cause labor prices to go up. All of that can change. And if you're not really following the data and watching the data on a regular basis, what that number is in your head might not always be right. So that's one thing. And the other thing is, the reason that you're struggling and you're only getting four hours of sleep at night is because it's really, really hard to take that information out of your head and just translate it into someone else's head. I can't flip a cord into Dwayne's head and same information. But if you have a really good data tracking system that you've established, then not only are you able to give amazing estimates on the jobsite to that person that's asking you for a bid right then and there, they could sign on the dotted line rather than having to go back to your office and maybe never get them a bid because you're so busy, you forgot to send it back out. Giving them a bid, they've signed on the dotted line, and it's a really accurate estimate of exactly what you're going to do.
Well, think about how many other estimates that person is getting. You think you're the only contractor that showed up to their house to give them a bid? What are the chances that you get that customer when you walk out of their house? Because there's been plenty of times when I've hired contractors on the spot, like I went with this guy because he was on time, he knew what he was doing, he provided information and it was within the ballpark what I was looking to do. And they started the next day.
Part of what I was seeing a little bit earlier, too, is now it's a scalable, repeatable process. So the guy that's doing that, that comes to your house, and he might not be the owner of the company. Maybe he's just a sales guy that the owners hired. Maybe he's a foreman of a crew, whatever that position is. But you're able to translate accurate data down. It's a scalable, repeatable process that anybody else in your organization can now take and run with. You can trust that they're going to be giving accurate estimates out in the field as well. All the way you can have that level of trust is if you have the right data and you're tracking it properly.
That's a great that's a great point. Having these numbers makes everything so much easier. It’s transparency for your customer, it’s accuracy in estimates, and it's just making money as an organization so you can continue to treat your employees better.
To recap all that. You want to know what your billable rate is for every guy on the job. We then need to put those together, put a crew together, average out those rates, and come up with a really great crew base rate. Always be tracking that and keeping that information within your system, so that you know your crew base rate is always accurate. And then, whoever needs to go out and get those jobs, send them out and let them create those estimates and bring the work in.
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