Tendering... Pricing...London...

[GEOM_SOLUTIONS]

Hi All,

Im looking to make the step from subcontracting for electrical firms to setting up my own company and pricing directly for the main contractor/client...

I have carried out smaller jobs/House rewires and found pricing fairly straight forward and easy... 9 times out of 10 making the job profitable and worthwhile!

I have a few rough ideas on what electrical companies charge per man-per day but would appreciate some help. a day rate for a gold card sparky is anywhere between £200-£250 directly to the contractor... i assume a recruitment company would charge anywhere between £300-£350 for a spark per day to the client. Am i right in thinking that the electrical contractor would charge the client anywhere between £400-£500 per day or is this a ridiculous figure?

I have heard of a few companies charging this price as they have to pay for numerous managerial/administration staff, salesmen, vans, insurances, offices.. could confirm this for me from experience....

Day rate per man per day?
Percentage mark up on materials?
Price per point?
How does payment work.. eg do you get paid a sum upfront... paid halfway... paid every month..?
Do i need a certain amount of cash in the bank to tender certain jobs?
Anything else i really should know before the leap?

Mucho gracias..

Geom

P.s. If anyone wants in feel free to contact me..

 

[Welchyboy1]

The price companies charge largely depend on their overheads, the bigger the company the greater the cost to run it before any profit is made

Obviously you need plenty of working capital if your going into business

There is usually a long timeframe between starting a contract and receiving a first cleared invoice payment, again the bigger the company you work for the longer it seems to take them to pay you, and it will generally be on their terms as well

Be careful, there are alot of sharks out there looking for small businesses to gobble up!

 

[45140]

Some answers for you

Hi All,
Im looking to make the step from subcontracting for electrical firms to setting up my own company and pricing directly for the main contractor/client...Ltd Company is a good call. Liability limited to £1, and many Companies prefer dealing with them also

I have carried out smaller jobs/House rewires and found pricing fairly straight forward and easy... 9 times out of 10 making the job profitable and worthwhile! ….Will be a lot different dealing with large Companies and not pleasant in many cases to start with.

I have heard of a few companies charging this price as they have to pay for numerous managerial/administration staff, salesmen, vans, insurances, offices.. could confirm this for me from experience....
I have a few rough ideas on what electrical companies charge per man-per day but would appreciate some help. a day rate for a gold card sparky is anywhere between £200-£250 directly to the contractor... i assume a recruitment company would charge anywhere between £300-£350 for a spark per day to the client. Am i right in thinking that the electrical contractor would charge the client anywhere between £400-£500 per day or is this a ridiculous figure? Agency charges can be higher than you would get because the Agency removes a lot of the paperwork and administration that a working Ltd Company will bring so you cannot rely on going into that area of charge. They also remove a lot of legal and tax liability issues from the main contractors, as well as giving them a workforce that can be switched on and off at a minutes notice. Far different employing a Ltd Company
I have a few rough ideas on what electrical companies charge per man-per day but would appreciate some help. a day rate for a gold card sparky is anywhere between £200-£250 directly to the contractor... i assume a recruitment company would charge anywhere between £300-£350 for a spark per day to the client. Am i right in thinking that the electrical contractor would charge the client anywhere between £400-£500 per day or is this a ridiculous figure?
Understand your logic and reasoning, but this is the wrong approach an the wrong calculation. You need to work out what it will cost you run the Company, together with the amount of pay you want to take home. Add in the tax element.

To that you need to add on the costs of premises, potential business rates, cost of buying / renting and running a van, including likely diesel costs, van and contents insurance, van racking, security measures for the van - maybe a secure facility, sign-writing on the van, meters, calibration costs, Ltd Company insurances and trade memberships, business cards, advertising, a dedicated telephone line - and maybe an answering service. You will need time to work out invoices and collect money and do the accounts - this could take up a lot of evening/weekend time. Allowing for weekends, bank and public holidays and two weeks per year leave, plus an allowance for being sick means you can only realistically work around 232 productive days a year assuming you are busy everyday. Best assume you may only be 50% busy in first half of your first trading year, and maybe 75% in the second half. No-one can ever be 100% busy on the tools or you will go bankrupt within a year. so take all these costs and work out what the daily figure is averaged out over say 150 days. This will give you a daily rate as a starting point.

Day rate per man per day? Makes you vulnerable and is insecure
Percentage mark up on materials? Say 15% on trade price
Price per point? Wont work that way, potentially they will provide a work-bank and ask for a fixed price
How does payment work.. eg do you get paid a sum upfront... paid halfway... paid every month..? Usually 30 days after presentation of invoice, however it is not unknown for a Contractor to group all invoices for month 1 and deal with them in month 2 and pay at end of month 3. This is where you need to understand what each Companies sub-contractor payment policies are and allow for them. One way around this is to "factor" the invoices, basically you "sell" the invoice for a % of face value - lets say 75%. Factor Company pay you immediately and then collect the money on your behalf. That keeps your liquidity up otherwise you run out of money to live and cannot afford to buy materials to complete the work and bill it !
Do i need a certain amount of cash in the bank to tender certain jobs?
Anything else i really should know before the leap? Ideally you need to have sufficient "working capital" available to you so as not needing to rely on being paid for the work you are doing today for the reasons set out above. A good working capital would be anything from say 50% of your anticipated annual costs. You can fly by the seat of your pants - many do - but its an uncomfortable place to be, especially if you have a wife, mortgage and kids. Also know your clients - some will only want to work with a Company that clearly has its own existence , e.g. premises, website, telephone answering facility and trade membership, and unless you are known, a Registered Office address at your accountants, or worse your home will send out all the wrong messages to the larger clients. Company procurement departments do due diligence checks to ensure they are not dealing with someone working from their spar bedroom. Nothing at all wrong with that but procurement people are on salaries and don't want to damage their career by engaging someone who falls down financially

Mucho gracias..
Sorry if this appears negative. It is not meant to. Plenty of good advice there from someone who has done it and been there and has the scars to prove it. You NEED above all to go in with a clear understanding of the risks, and best of all the ability to see if it is not working out before going bang. Harder to come back from there.
Geom

P.s. If anyone wants in feel free to contact me..