What Factors Affect Plumbing Cost? – Home Improvement and Repair

We get asked all the time why plumbing pricing is so different from contractor to contractor. This is an attempt to explain how pricing is calculated or should be calculated. Not all plumbing pricing will have all of the steps included in them although they should and you should have a pretty good idea why and how an estimate is achieved.
Let’s start off with the simple concept of labor and move on from there. Labor….whether you are union or non-union, has a base wage you pay, plus any fringe benefits (Fringe Benefits – are any non-wage benefits an employee receives which includes but is not limited to health insurance, retirement, unemployment insurance, life insurance, etc.) the employer pays. For the benefit of this article lets put the base wage @ $35.00 p/hr, the average amount of fringe benefits in the US is about 38% of payroll expenses which bring you to $48.30 per hour.
OK so you’ve got a raw cost labor rate of $48.30 per hour. Most companies now attempt to figure out what their overhead costs are in relation to their overall sales volume. The average mechanical contractor realizes anywhere between 15% and 21% overhead costs. By overhead costs we mean, clerical help, utilities, worker’s compensation and general liability insurance, building rent or mortgage, office equipment, fuel, tool rental, executive salaries etc. Yes the Owner has to get paid as well. O.K. so we’ll take the average of the overhead and make it 18%, that adds another $8.69 per hour for a total of $56.99. Again the above company hasn’t made any profit yet, they are just covering their respective costs. We’re going to explain profit in a bit but for now we’ll continue with labor and how a job is estimated.
When a potential consumer or commercial customer inquires about a plumbing repair and asks for a price on the phone most contractors resist a little because of prior experience with this kind of request. There are two reasons for the hesitation, #1 without seeing the repair or problem it is very difficult to give an accurate price and #2 if a price is given and the plumbing repair proves much more difficult than described it is very difficult to charge more for the project. Having said that, contractors that do give pricing over the phone will take into account what an average plumber can put in in 2 hours, or 4 hours or per day if the project takes that long. The job is not bid to the quarter hour, figuring the finest fastest man/woman in the shop. Here is an example, a customer has a new kitchen sink faucet they want installed. The plumbing contractor has to take the old faucet off and install the new. The plumbing technician gets under the sink and finds that the basin nuts is fused to the faucet and it can’t be removed with a normal basin wrench. The project just became infinitely more difficult. So what a plumbing contractor will do is try and take these things into account when relaying the price to the consumer.
It Takes Time Plumbing Tips For Fall to Drive
Another huge issue consumers have with repair work is drive time. Most plumbing technicians are paid by the hour so if they are going from one call to the next they are getting paid to drive. This time is included on each estimate. There is no way to bury that What Is A Commercial Plumber time into over head, it must be passed on to the consumer. This is also a sticking point on time and material jobs as well. You have no idea how many times a plumbing contractor hears “you were only here for 45 minutes but you charged me for an hour and half”.
Material Used on the Job
Most service companies base their profit forecast on making a profit for both the labor they provide and the material they sell. For some reason consumers DO NOT like to see 10%, 15%, 20% mark-up on the material but it has to be added somewhere.
So How About the Bottom Line
So you have the labor rate with fringes, you estimate how long your service tech will take to complete the repair and you know your overhead and you know the material costs for the job. Now what is a fair margin to make on the job? That is a question no one can really answer but I think it would surprise most to know that the average profit margin in the mechanical industry is just 3%. Most would love to make 10% net profit but it rarely happens. So everything is added up and the entire amount is multiplied by the profit margin the owner feels necessary to make it worth keeping the doors open.
Please take note, there are plenty of service people that are happy to work for wages or wages with some fringes however the costs they charge are not realistic to sustain a viable company with employees, trucks, inventory and the like.
If there are any questions you’d like to ask or comments you’d like to make please do not hesitate to comment.

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