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    2 Replies Latest reply on Jul 25, 2012 9:06 PM by Tran Nguyen

    Bidding and pricing problems for my new business...

    Plumberman212 Newbie

        My name is Derek and I have a new small plumbing business..The problem I'm having is that when it's time to bid a price for a new job I either go to high or someone underbids me by a huge margin..I don't know where to get the info as to what the prices are for the services I provide..can someone help with this situation??..Also I have a business account set up and I use the money to live off..How do I successfully do this without accurring penalties or getting into huge debt with the

        • Re: Bidding and pricing problems for my new business...

          Hi Derek, Welcome to the Community.  You ask some good questions, and I know our community members will come out to give you ideas to solve them.  Do keep us updated!



          • Re: Bidding and pricing problems for my new business...
            Tran Nguyen Tracker

            Hi Derek,


            It seems daunting, but you shouldn't worry too much about it. In the bidding process, it is a numbers game paired with quantity. By that, I mean the bidding are based on your overhead expenses.


            So what you spend on your car to get to the worksite (gas, upkeep, insurance, etc), the tools (everything associated with it), your worker's wages (taxes included, benefits if there are any), your wage (taxes included), and so on. I would say, you need to pull these info from your last few months bank/credit card statements.


            Once you have figured out your overhead, you need to figure out how many jobs were done during that time period. Thus, if you spent $50,000 total for parts, wages, and upkeep while performing 6 jobs then, your overhead per job will be: $8,333.33


            That translates to, you cannot bid under $8,333.33 or else you will break-even or lose money. Now, with that said, you could always lower your overhead by negotiating better pricing with your vendors for parts, equipment, and tools. You can also lower your overhead by expanding (I know it sounds ridiculous) and thus, shere quantity of orders would give you a better price and the expansion would allow you to take on bigger contracts.


            As for living off of your business depends on the type of business you have. If it's an LLC or Sole-Proprietorship, the money simply passes through and you claim it all at the end of the year on your taxes. The issue with living out of your busienss account is that it becomes difficult to discern between Business Expenses (which are considered tax credit) versus Personal Expenses (which are considered nadda). I would suggest setting up an "Owner's Draw" to track your withdraw from your company's account.


            If you need further help or clarifications, please feel free to contact me. I will check back on this post to makesure I have addressed everything for you.



            Tran Nguyen

            Accountant & Owner

            Tran'sActions Accounting, LLC