Pricing a job - Replacing 5 computers and 1 server in NY State
MMCP
have been doing computer repairs professionally now for about 2 years
with my own company, however I have just encountered the first
scenario where I will have to bid on a job. I have my CompTIA, and
MCP certifications with over 15 years of experience. I have a client
who needs:
- 4 Workstations
- 1 Server running Windows Server 2008
- 5 23" Monitors (One workstation will have dual monitors and their
server will be using an old one)
- 5 Sets of wireless keyboards and mice
- 1 All-in-one Color laser printer with a high ppm (customer wants a
$500 - $600 unit)
- About 150 ft. of cat5 cabling to be ran to several offices (customer
does not want to use wireless networking)
- 1 12 port network switch
I was planning to use AMD quad core custom computers for the
workstations and a six-core setup for the server in a raid 1 array,
with 1 TB drives throughout. Most likely in an HP Proliant server.
Now, with all the parts and cabling I estimate the cost to be about
$4,500 - $5,000 in parts alone. I'm thinking my bid will be
approximately $8,000 for the total cost with parts & labor, but I'm
not sure if that's inline with industry standards. I am happy making
a $3,000 profit, and considering I run a mobile repair service I don't
have a retail store therefore I have significantly less overhead. The
customer has already informed me that they have received a bid, and
showed me some of the specs they were planning on using, of course
blocking out the prices. I noticed they had intel processors listed,
which I believe will increase their costs at least 10 - 15%, so I
believe going with AMD will keep my costs and my bid lower than
theirs. I saw the name of my competitors company, and visited their
website to do some research. My competition is a local company who
created the customers website, and they have a retail store with about
4-5 employees.
My question is.. Is my bid in line with the quality of work that I
perform and does it match the prices in the NY area? I have many
happy customers and tons of references and similar project experience,
I just don't want to underbid and make me look less professional. I
can afford to come in a little lower due to the lack of overhead, but
I don't want it to come back and bite me in the ass. I would
appreciate any opinions that some of you may have and perhaps a number
that you think would be more appropriate. I have a feeling that I may
be several thousands of dollars away from my competition and that the
customer may feel as though 'you get what you pay for.' The customer
certainly seems to believe that you get what you pay for because they
were specifying they want a $500 - $600 printer, indicating they
probably had trouble with cheap ones in the past. That is just a
hunch I got from them.
I have the necessary skills to complete the job, I just don't have the
experience in bidding these jobs, and this job could certainly help
push my business in the right direction - so I'd like to do everything
I can to get it! If any of you could help I would greatly appreciate
it! Thank you so much.
Charles Calvert
wrote in
<5e01fd1c-1f9d-4592...@f9g2000vbz.googlegroups.com>:
>Hi all. I have a question regarding bidding for a job in NY state.
[snip qualifications]
>I have a client who needs:
[snip specs]
>Now, with all the parts and cabling I estimate the cost to be about
>$4,500 - $5,000 in parts alone. I'm thinking my bid will be
>approximately $8,000 for the total cost with parts & labor, but I'm
>not sure if that's inline with industry standards.
Am I correct in inferring that you're reselling the hardware? If so,
do you know whether you need a license in your area and whether you
have to charge sales tax (and presumably pay your vendor wholesale tax
rather than retail)?
> I am happy making a $3,000 profit, and considering I run a mobile
> repair service I don't have a retail store therefore I have
> significantly less overhead.
[snip info about competitor]
>My question is.. Is my bid in line with the quality of work that I
>perform
I have no idea, as I haven't seen your work. :)
> and does it match the prices in the NY area?
I can't answer this either, as I'm not in NY.
[snip]
>I just don't want to underbid and make me look less professional. I
>can afford to come in a little lower due to the lack of overhead, but
>I don't want it to come back and bite me in the ass.
[snip rest]
My business is programming and websites, so I couldn't give you an a
direct answer, even if I were in NY and were familiar with your work.
What I can say is this:
Sit down with a spreadsheet and list out every piece of equipment that
you'll need. Include not only the hardware that will be sold to the
client, but also anything that you'll need to install the equipment
(e.g. a cable crimper). Do you have it? If not, factor in the cost
of acquiring one. Add two prices: cost and sale price (the latter for
resold items only). Make sure that you factor in sales tax, including
for the items that you're reselling, as I mentioned above.
Add to this list every task that you're going to have to perform, no
matter how small. Include any management and support tasks like
ordering the equipment, meeting with the client to plan the
installation, etc. Assign a number of man hours to each task. Add
everything up, multiply by your fudge factor (because you probably
underestimated) and then multiply that by your hourly rate.
You should now have a total price for the resold items, a total price
for any overhead (equipment that you keep) and a total price for your
labor. If that works out to around $8,000, then I'd say that you're
charging the right price. If not, then you need to adjust your
estimate.
If your competitor is smart, they've already gone through this process
and the difference will be in the cost of the hardware and the cost of
the labor. If your hardware is less expensive and your hourly rate is
lower, then you'll beat them.
I wouldn't worry about it too much. Knowing what your competitors are
charging can help you avoid being out in left field, but you shouldn't
inflate your prices to match theirs, or you'll eliminate a
differentiator that might otherwise get you business. Having
moderately low rates is actually a good thing in today's market.
--
Charles Calvert
Moderator - alt.computer.consultants.moderated
Submission Address: ac...@celticwolf.net
Contact Address: accm...@celticwolf.net
Tony
"MMCP" <mnels...@gmail.com> wrote in message
news:5e01fd1c-1f9d-4592...@f9g2000vbz.googlegroups.com...
> Hi all. I have a question regarding bidding for a job in NY state. I
> have been doing computer repairs professionally now for about 2 years
> with my own company, however I have just encountered the first
> scenario where I will have to bid on a job. I have my CompTIA, and
> MCP certifications with over 15 years of experience. I have a client
> who needs:
>
> - 4 Workstations
> - 1 Server running Windows Server 2008
> - 5 23" Monitors (One workstation will have dual monitors and their
> server will be using an old one)
> - 5 Sets of wireless keyboards and mice
> - 1 All-in-one Color laser printer with a high ppm (customer wants a
> $500 - $600 unit)
> - About 150 ft. of cat5 cabling to be ran to several offices (customer
> does not want to use wireless networking)
> - 1 12 port network switch
>
Nice project, if you can get it and then execute well and follow-up well
with it. Need some help? I've got nothing better to do. :)
> I was planning to use AMD quad core custom computers for the
> workstations and a six-core setup for the server in a raid 1 array,
> with 1 TB drives throughout. Most likely in an HP Proliant server.
Are you a System Builder? (From the immediately preceding, I gather you
are not because you seem to be looking for advice on what to build).
Don't underestimate the startup time to become one. You don't want to end
up looking like the guy who orders all the stuff and then shows up onsite
to try and figure out how to put all the stuff together.
>
> Now, with all the parts and cabling I estimate the cost to be about
> $4,500 - $5,000 in parts alone.
You DO plan on knowing EXACTLY what the parts and materials will cost you
and the client before you offer your proposal, right? Are you a reseller?
If not, it's easy to become one. You don't have to be one, though, unless
you plan on making profit on the systems as your products. You can
procure the parts on the client's behalf and assemble them for client.
You will have to buy the parts at retail, and not from a distributor.
> I'm thinking my bid will be
> approximately $8,000 for the total cost with parts & labor, but I'm
> not sure if that's inline with industry standards.
Not really possible to say without knowing what the project entails. It's
not just assembling some computers and plugging them in. It's a project!
(And maybe contains sub-projects and follow-up projects and service
agreement and... well, milk it for all it's worth, but don't offer
unnecessary things).
> I am happy making
> a $3,000 profit,
Wouldn't we all be!
> and considering I run a mobile repair service I don't
> have a retail store therefore I have significantly less overhead. The
> customer has already informed me that they have received a bid,
Oh, they are "shopping you". Rule number one: MOST solicitations will
come from people looking to get something for nothing (or something
almost as absurd). Don't get into a bidding war. Think long and hard and
work long and hard on your proposal and then present your fair offer to
the client. Your proposal will be different that the other guys'. Let
them choose.
> and
> showed me some of the specs they were planning on using, of course
> blocking out the prices. I noticed they had intel processors listed,
> which I believe will increase their costs at least 10 - 15%, so I
> believe going with AMD will keep my costs and my bid lower than
> theirs.
Rule number two: If you have to compete on price, you're not in business.
You're giving away the store, that's why your customers "love" you.
> I saw the name of my competitors company, and visited their
> website to do some research.
It never hurts to do competitive analysis. But what makes you think they
have only one other prospect?
> My competition is a local company who
> created the customers website, and they have a retail store with about
> 4-5 employees.
>
> My question is.. Is my bid in line with the quality of work that I
> perform and does it match the prices in the NY area?
Not enough info to determine. That said, know thyself and realize that
this is only one project and the info you are looking for (what your
products and services are worth) will be "revealed" to you over many
projects.
> I have many
> happy customers and tons of references and similar project experience,
That last part doesn't seem to jive with the questions you are asking.
(Just an observation).
> I just don't want to underbid and make me look less professional.
Professionalism and pricing are orthogonal.
> I
> can afford to come in a little lower due to the lack of overhead, but
> I don't want it to come back and bite me in the ass.
How could it do that? Do you need help with contracting, project
planning, engagement management, business consulting, business
establishment or process improvement? I may have services to offer you!
> I would
> appreciate any opinions that some of you may have and perhaps a number
> that you think would be more appropriate. I have a feeling that I may
> be several thousands of dollars away from my competition
Are you overly concerned about the competition instead of your own
capabilities?
> and that the
> customer may feel as though 'you get what you pay for.'
Remember Rule one? Could the potential client be one of those types? If
so, they're already planning to use and abuse you and everything you do
will be noted as being substandard and your life will be made so
miserable so that you will end up doing the work for free just to get the
hell out of there! (A bit facetious, but just a bit).
> The customer
> certainly seems to believe that you get what you pay for because they
> were specifying they want a $500 - $600 printer,
Hmm. When I SPECIFY a printer, the specifications are things like: type,
speed, capacity, cost of ownership, etc. It's hardware. You DO get what
you pay for. Want that speed and capacity? Fine, it costs that much more
then. Etc. It's not a game (some "clients" do love to play games though).
> indicating they
> probably had trouble with cheap ones in the past. That is just a
> hunch I got from them.
From the info so far, it seems they may be playing you like a fish, OR
neither client nor consultant knows how to go about the project at hand.
(?)
>
> I have the necessary skills to complete the job,
Perhaps under the direction of another consultant? You seem to be asking
for "business in a box".
> I just don't have the
> experience in bidding these jobs, and this job could certainly help
> push my business in the right direction - so I'd like to do everything
> I can to get it! If any of you could help I would greatly appreciate
> it! Thank you so much.
>
Whadday think Charles? This guy a troll? One of those Craigslist-like ads
trying to get something for nothing?
MMCP
> "MMCP" <mnelson...@gmail.com> wrote in message
Thanks for your response. Ignoring your comments regarding my ability
to the job and my competence as a professional, leaves your post
somewhat helpful. It is not necessary for a professional to
completely understand the entire financial aspect of a project, to
have the skills and knowledge to complete the job. Most technology
savvy individuals are good with just that - technology. Most of them
do not have great social skills, or have the know how to bid jobs. To
which I am slowly learning, hence the reason why I asked the question
I did.
It is quite possible the client may be playing me, and I had
considered that the moment since I walked out the door, however, I
learn the best through experience. If this is one of those
experiences then so be it.
I did appreciate your comment regarding the the client may "use and
abuse you," because I've ran into several clients already who have
become problems. But for everyone 1 client, I have at least 10 great
ones. Although from the start this client threw up several red
flags. I did not like his attitude from the get-go. He was 45
minutes late to the appointment, and then when he arrived, we spoke
briefly and then he handed me the competitions bid details and said
"let me make this easy for you." Definitely caught me off guard with
that one. I certainly don't enjoy bidding for jobs, as I never seem
to have a problem getting them anyways. If I didn't feel as though I
was being used, perhaps I would feel different about the situation.
No troll here. Simply a fellow professional trying to build his
already successful business.
Charles Calvert
<icoCp.3846$cs1....@newsfe15.iad>:
>> The customer has already informed me that they have received a bid,
>
> Oh, they are "shopping you". Rule number one: MOST solicitations
> will come from people looking to get something for nothing (or
> something almost as absurd).
I'm not sure that I agree with this, but I suspect that it depends on
how you find your clients. If you're using the computer gigs section
of Craigslist, then this statement would be correct. If you get them
through referrals from existing, good clients, then it wouldn't.
> Don't get into a bidding war. Think long and hard and work long
> and hard on your proposal and then present your fair offer to the
> client. Your proposal will be different that the other guys'. Let
> them choose.
I agree with this very much.
>> and showed me some of the specs they were planning on using, of
>> course blocking out the prices. I noticed they had intel processors
>> listed, which I believe will increase their costs at least 10 -
>> 15%, so I believe going with AMD will keep my costs and my bid
>> lower than theirs.
>
> Rule number two: If you have to compete on price, you're not in
> business. You're giving away the store, that's why your customers
> "love" you.
Also agreed.
[snip]
>> I just don't want to underbid and make me look less professional.
>
>Professionalism and pricing are orthogonal.
Agreed, with the caveat that pricing and the _perception_ of
professionalism are not necessarily orthogonal. Clients will
frequently assume that price is an indicator of professionalism until
they find evidence to the contrary. The way in which you dress, your
punctuality and your manners also contribute to this, again, until
they have evidence to the contrary.
[snip]
> Whadday think Charles? This guy a troll? One of those Craigslist-like
> ads trying to get something for nothing?
No, I think that he's in the process of learning more about being in
business. We've all been there. In fact, I'm still learning, even
after 13 years. :)
Charles Calvert
wrote in
<afd4ebf5-1254-4118...@q30g2000vbs.googlegroups.com>:
[snip Tony's comments]
> I did appreciate your comment regarding the the client may "use
> and abuse you," because I've ran into several clients already who
> have become problems. But for everyone 1 client, I have at least
> 10 great ones.
That's usually the way of it. Also if you do an analysis, I'll bet
that you'll find that the PITA clients are the least profitable as
well, because you end up spending more unbillable time, giving them
more discounts, more freebies, etc. A lot of consultants find that if
they drop that 10% of their client base, they become a lot more
profitable.
> Although from the start this client threw up several red flags.
> I did not like his attitude from the get-go. He was 45 minutes
> late to the appointment,
Did he apologize and have a good reason? If not, that's an indicator
that he won't respect your time.
> and then when he arrived, we spoke briefly and then he handed me the
> competitions bid details and said "let me make this easy for you."
Big red flag. That's not respectful of either you or your competitor.
He shouldn't be handing out copies of their bids without their
consent, and he should be willing to spend the time with you to
explain the requirements of the project. What if your competitor
misunderstood something? You could give an incorrect bid based on
that and lose money or have other problems.
> Definitely caught me off guard with that one. I certainly don't
> enjoy bidding for jobs, as I never seem to have a problem getting
> them anyways.
Not everyone who asks for a bid is shopping on price. Some of them
are using it as 1) a way to document their process of finding a vendor
2) a way to weed out the people who aren't competent enough to put
together a plan and create a bid from that 3) a way to weed out those
who aren't serious about pursuing that business.
Having said that, yes, some of them are just shopping on price.
> If I didn't feel as though I was being used, perhaps I would feel
> different about the situation.
If your gut is telling you that this client is going to be a problem
and not treat you professionally, you might want to listen.
Tony
> On May 23, 3:41 am, "Tony" <nos...@myisp.net> wrote:
>> "MMCP" <mnelson...@gmail.com> wrote in message
>>
>> news:5e01fd1c-1f9d-4592...@f9g2000vbz.googlegroups.com...
> flags. I did not like his attitude from the get-go. He was 45
> minutes late to the appointment, and then when he arrived, we spoke
> briefly and then he handed me the competitions bid details and said
> "let me make this easy for you." Definitely caught me off guard with
> that one.
I would never accept such a "hand out" for it could be seen as giving
direction and that's for employees rather than contractors. If there is a
project that I will be responsible, then my processes have to be
followed, such as my contracting process, gathering requirements, etc.
Also, seeing how someone
else would develop the solution before I have developed my own take on it
could color my otherwise superior offering.
Tony
> On Mon, 23 May 2011 02:41:15 -0500, "Tony" <nos...@myisp.net> wrote in
> <icoCp.3846$cs1....@newsfe15.iad>:
>
>>> The customer has already informed me that they have received a bid,
>>
>> Oh, they are "shopping you". Rule number one: MOST solicitations
>> will come from people looking to get something for nothing (or
>> something almost as absurd).
>
> I'm not sure that I agree with this, but I suspect that it depends on
> how you find your clients. If you're using the computer gigs section
> of Craigslist, then this statement would be correct. If you get them
> through referrals from existing, good clients, then it wouldn't.
>
I've been considering posting there with something to the effect of: "To
all you losers posting on Craigslist trying to get something for
nothing... get a life!". Unfortunately I have to service some of those
"clients from hell". That would be "the rock". The "hard place", then,
would be those who try to resell you as their personal lotto ticket
instead of getting a fair wage for their services. Need one wonder why
the economy is tanking?