The Formula for Profiting On In-House Labor, by David Hunt

[Jim McClain]

This is a thread for discussion of the article, The Formula for Profiting On In-House Labor, by David Hunt (Dobby Tappet). Your comments and questions are welcome. You may also rate the article by selecting a rating in the drop-down box above right.

Excerpt from: David Too many flooring companies allow the "prevailing wage" to set their labor rates. This is, in effect, allowing the low-bidder to set a revenue cap that, for those who seek to provide true quality workmanship, may very well fall below our costs. This, in my view, is a recipe for failure.

Please read the article here: http://www.thefloorpro.com/articles/...ouse_labor.php and join us in the discussion below.

[Nick Arrera]

Well written Dave .. I was always and still under the impression that the stores hired subs to avoid paying health ins , [etc] .. Plus if a sub botches a job he pays for it .. Anyone else have any thoughts on this ?

[Lo Down]

Nick, we are in a weird trade. There are times when a small shop needs 2 guys this week, seven guys for two weeks, 4 guys the following week. It has been busy here this summer, but often the demands for the number of guys needed on a given day or week can change rapidly. I don't know how a shop could hire on an erratic basis, especially considering the cost of insurance or other benefits.

[Nick Arrera]

You have a valid point Lo , But i'm speaking of the big stores .. take Empire cpt , in my area they have 100 trucks loading every morning .. they also have about 1000 law suits against them .. At one time i had 26 apartment complexes and after two years i could tell you how much cpt each one was going to need for every month ..
it helped alot to make sure i had enough rolls of cpt , and the man power to do the work .. this making everyone a sub is all about not paying any bennys , and being able to get the cheapest hack out there to under bid you ..

[William Mear]

lowdown I would have to say the problem is scheduling. Most stores will bring in a extra sub or two because they sold a few extra jobs for the week. If they would take the time to schedule the jobs out they could use just one crew.

Problem there is the AMERICAN consumer with the I WANT IT NOW COMPLEX.. UNTIL WE CHANGE THAT I DON'T SEE ANY OF THIS INDUSTRY GETTING BETTER.

[tony lamar]

Thanks Da...err uh... Dobbey. Very informative, as are most all of your posts.
I especially liked this thought:

"Third, and probably not last of all, regardless of what you charge, be it at, above or below the prevailing wage in your market, the most important step to profits is knowing why our rates are what they are and that what they are is adequate to allow us to operate a profitable business."

I would like to add that, you and several others, have played a big part in my changing the way I think about what, why, and how I charge for my services.

Long live the forum!!!

[selvalee]

Let me go at this from my end, inspections,,, I can promote and promote, and do 25 a week plus,, I have done this in the past,,
but, figure the cost? and taxes?

you leave on Monday morning, sometimes Sunday evening, and come in on Friday night,, David has helped me a few times "get home" keeping me awake on the long drive home,,,, YOU ARE A GOOD MAN, MR. HUNT!,,,,

if I spend 14 hours a day on the road, and do , lets say, five a day,, at 150 per,,, does that sound like a lot of money? but, break it down,,, what is that, $750 a day? but, wait, we don't always get 150 per, to do that many, we may have to work for a brokerage service at 100 per claim, no matter, lets stay on the high end,,,

750 a day, or, lets say, more realistic, 3000 a week, but, add in to that Mon - Fri schedule of 70 hours, another 16 to 18 hours writting reports on the weekend, and making calls to schedule the next week,,, how many hours am I working?

gas,
meals,
motels,
car maint.,
phones,
taxes,
training,
what else can I add to this?

so, maybe, after all this, I net, maybe, lets say, 1200? for, 80 plus hours of work?


gee, maybe I make 15 an hour,,

now, if I cut the travel, the motel rooms by limiting my territory, cut out eating out, less gas, less maint. for my car,,, and my taxes goes down with less volumn,,, I can do 10 to 12 a week within a hundred miles of my house, and guess what, I make just about the same! and, at only about 40 hours a week, and, I have a life again,,,, I think one of the biggest things you guys can learn from David is not how to work, but, how to "work smarter" to make more... for some reason, all of us in this biz seem not to use our minds to much sometimes,,, maybe, we should listen and think, work smarter, work better, better quality, make more,,, David, is some of what I saying/asking what you are also talking about or am I off on another wild ride thru the dark night of an old hippie,,,,

now, my point, why not do fewer for more money for people who pay more?
The mills control the price of inspections, so, why not move away from them? I am,,, and enjoying it more and more!