Truck costs are a much larger % of income..........

[Larry Edgerton]

I just bought a new F150 this week. When I went into business twentysome years ago I bought a new F150 that was very similar, 1/2 ton, 2x4, 8'box, 6cyl. That truck cost me $11800. My new one had a sticker of $27800, but I got a $3000 rebate because I was trading in a Ranger, so $24800. In that same time period all of my other expenses have increase as much as 400%.

The problem is that when I went into business my rates were a bit high at $30 site, $45 shop. Today I am again a little high at the same rates. I have tried to raise them but get underbid by the skilsaw and hammer crowd, guys that are not carrying insurance, licences, etc.

Things are not looking so good for the working class.........

Larry

[Jason Roehl]

The good news is that the new F150 should get quite a bit better mileage (50%-ish better) than the old one. (Never mind that gas is 3 times what it was 20 years ago...)

I've actually sold jobs because my rate was higher than my competition. It doesn't happen all the time, but I emphasize my quality, longevity in business, use of quality materials, etc. over their likely fly-by-night pricing or lack of experience and quality.

But, yeah, most people have no clue what it costs to be in the trades and still put food on the table. I still run into people who think $10/hr would be fair to pay a self-employed painter (who, of course, maintains his own vehicle, tools, insurance, etc.).

[Tom Leftley]

If I read your post correctly, you went into business some twenty years ago and bought a new truck at that time.
Today the price of the truck has doubled.
Your rates were $30 and $45 hour then and they are still at that same rate today.

I am confused about your message.
Is your post concerning the vehicle cost or is it aimed at competing with unlicensed, uninsured competition?
Perhaps you could reword it and clarify it a little?

[Jerry Thompson]

Using the rule of 72 to measure inflation the price of the F-150 18 years ago was around $23,400. We all forget how money become diluted with time.

[David Weaver]

I paid two guys (local contractors who work with a nephew and who have been doing what they're doing for 30 years) a bit more than the going rate to convert a room on my house last year. I'd rather have less work done and get it done the way I want it to be done. They did a tight job and were flexible with what I wanted.

I gather most people don't do that, though. They have a loyal client list and we hear (since they're in the neighborhood) from lowest price buyers about how they're not competitive. They are when you factor in what they actually do.

I'm in a more populated area, though.

It sounds like the value of work is more of a problem than the cost of the truck. In 1985, my mother paid $16,500 for a very plain cloth seated crown victoria. I remember seeing the sticker as a kid. Using CPI (which isn't quite as good of a measure as GDP deflator, but it's a general idea), the same car would cost $36,500. Nobody would pay that for the same car now (not that there aren't comparable V8 cars for that price, but my mothers car had cloth seats, radio with no tape, A/C and power windows and locks and nothing else in it.

I'd imagine that truck dollar for dollar is a pretty good deal at $23k, but the fact that it's a larger piece relative to your rates is painful. the next generation that will be your customers doesn't care about quality. They want the biggest thing they can get for the same amount of money, so if it's made of drywall with MDF trim and gaps, no problem, as long as it's big and painted the right color.

[Mark Bolton]

Your post reads almost identical to my timeline. I bought a brand new Chevy 1500 2wd, v8, extra cab, in 89 for 11K+. I ran that truck until I couldnt run it any longer (300k miles and was only parked because a location change required 4wd) while all the other guys I knew were buying and outfitting new trucks left and right. I feel like my business at the moment (I am pretty much down to a one man show with a combination of field and shop work but this will hopefully be my last year of major field work) is doing about all it can do with me wearing all the hats and I simply couldnt fathom a payment on a new vehicle right now. Perhaps thats mainly because I dread the thought of a payment at all but still.

The rule of 72 thing, to me at least, is hogwash. Same income, less cost for goods = more disposable income that can be allocated to enjoying life, savings, retirement, and so on. Most all in the trades that I speak with are in the exact same boat. They were not living like fat cats "back in the day" they were just doing well. Now, living and operating on the exact same dollars (gross) as 20+ years ago, everything has gone up as well as all the things being added in that werent there 20-30 years ago. Cell phones, internet service (and the need for moderately fast service at that), materials, and so on.

There is a major push in my area for moving more people into the trades and the technical trades but I just dont see the dollars there to support what people need (some may say want) today.

Its a hard subject for me in that I have had feelers out for 20 years for the young people who are willing to commit to something that could provide them a long life doing something really rewarding if they are passionate and enjoy the work. But on the flip side I just dont think the dollars are there to keep them.

[David Weaver]

It isn't about what people need, it's about what people want. I have no idea how people who have retail jobs afford a phone payment that I wouldn't make by discretion (stuff like a verizon iphone). People expect a business to have cell phone access now, but there are phone plans that people could use with non- smart phones that are only about $20 a month. Even something like republic is only $25 with data and text. And the cable seems to be a right for everyone these days, too. Same as the phones, I have no idea why people feel entitled to $100 a month of cable if it's not really in their budget.

The rule of 72 is fairly accurate. It's a numerical rule, it doesn't put conditions on how the increase occurs. It does, though, lose some accuracy at very low interest/inflation rates.

At any rate, the economy that created the environment 25 years ago was false growth, and it was based on private borrowing. It may not be current numbers that are unfair, it may be that the numbers back then were too generous.

[Mark Bolton]

The good news is that the new F150 should get quite a bit better mileage (50%-ish better) than the old one. (Never mind that gas is 3 times what it was 20 years ago...)

I've actually sold jobs because my rate was higher than my competition. It doesn't happen all the time, but I emphasize my quality, longevity in business, use of quality materials, etc. over their likely fly-by-night pricing or lack of experience and quality.

But, yeah, most people have no clue what it costs to be in the trades and still put food on the table. I still run into people who think $10/hr would be fair to pay a self-employed painter (who, of course, maintains his own vehicle, tools, insurance, etc.).

And no offense at all Jason but you are in one of the hardest trades, perhaps only equaled by landscaping or lawn service, in the eyes of the consumer. I have spent my entire career trying to educate customers on quality paint and finish but its astounding that even the ones who have openly espoused how much they loved their quality paint job, with quality paint, and how long it lasted, will in an instant say "well cheap paint is fine, just slap it up". Its just a constant process of education and sadly the customer base that is willing to even hear the pitch is ever shrinking.

I have been reading on commercial forums that there is a buzz about things coming back a bit and that high end will be leading the comeback. I personally just dont see it but Im not in any of the major markets to even have an idea.

Its a tough situation in my opinion and I have been in the process of doing much of what I think Larry has been and thats streamlining, getting to a cash basis (no debt/mortgages/high rents), "all under one roof" so to speak. The sad part about that is it puts you in a position to settle for ever lower rates for your work because of the lower overhead but I do wonder if those type operations will be the ones to make it through the long haul.

[David Weaver]

There's a lot of commercial work here. I've got no clue about residential because my neighborhood isn't an "it" neighborhood where people take out big loans and spend big bucks.

As far as the ones who talk about a quality paint job, value is the customers choice. If customers want inexpensive paint, then it sounds like you want to serve that market. I buy quality paint, my dad doesn't, and neither does FIL. both would rather put up 5 coats of behr to cover the same as two coats of sherwin williams. Their money is still green for things that they won't paint, though.

Every business sees that, including the types that work in offices - customer might want the best but they choose otherwise when the numbers show up.

[Malcolm Schweizer]

I have always driven classic cars, moslty air cooled VW's but also Willys Jeeps, and a '57 Chevy. I recently broke down and bought two new(er) Jeeps at a government auction for 1/2 the blue book. Actually I bought three, and sold one for double what I paid, so ultimately I got two Jeeps for $6500 total all said and done, with 6500 miles on one, 7000 on the other. (US Customs vehicles that they only used to drive around the airport.)

I say all of the above to set up this humorous story- I have no clue what new cars cost. I was talking with a friend who gets a car stipend at work, and he is required to own a car 3 years old or less to get the stipend. I said, "Wow, I couldn't buy a $20,000 car every three years even with the stipend." He laughed so hard he almost cried. WHAT???? $20k will buy a new car, right? Apparently I have no clue about new car prices. So I asked how much his Volvo cost, and almost died: $58,000!!!! ACK!!!! Okay, so that's a Volvo, so a new reasonable American car- $25k? He was still laughing at me. Wow. I really had no clue. He apologized for laughing and I said, "No, it's okay, I am laughing too. I never realized how out of touch with modern car prices I was."

Anyway, I would buy a new-ish car maybe a year or two old, and save a ton over what you'd pay for brand new. When you drive it away it is immediately worth less. Take my advice with a grain of salt (see above) but that's my thought- especially if it is a work truck.

[Mark Bolton]

It isn't about what people need, it's about what people want. I have no idea how people who have retail jobs afford a phone payment that I wouldn't make by discretion (stuff like a verizon iphone). People expect a business to have cell phone access now, but there are phone plans that people could use with non- smart phones that are only about $20 a month. Even something like republic is only $25 with data and text. And the cable seems to be a right for everyone these days, too. Same as the phones, I have no idea why people feel entitled to $100 a month of cable if it's not really in their budget.

The rule of 72 is fairly accurate. It's a numerical rule, it doesn't put conditions on how the increase occurs. It does, though, lose some accuracy at very low interest/inflation rates.

At any rate, the economy that created the environment 25 years ago was false growth, and it was based on private borrowing. It may not be current numbers that are unfair, it may be that the numbers back then were too generous.

I agree with you completely about the need/want factor. That said, I feel our society almost nearly as a whole has bred a generation of children where the vast majority of them simply know no bounds with regards to needs and wants. Adults as well but I opt to focus on the future, the adults are about lost at this point. Their every want and desire has been met from the get go because for whatever reason parents are so unwilling to see their children do with out anything and everything they desire. This is what I was speaking of with regards to the young workforce today. I have had numerous young people work for me. Still in trade school on co-op programs, fresh out of trade school, in their 20's, and any one of them could have the world by the ****s if they would just tightened their belt, put their head down, and go. But it just doesnt happen. As a young person I'd have basically killed a man for a 20 dollar bill (meaning some of the jobs I did for 20 bucks were worth hundreds if not more) and that 20 dollar bill (which rule of 72 or not) I will argue is more valuable than ever at that scale because they are so hard to come by, and they simply see no value in it because they have been provided everything without much effort of their own.

Im not on a kid/youth bashing thing here honestly. I truly feel its a paradigm shift in the way children have been parented for the last 20 plus years of semi-affluence. They are going to have a hard time but as a reply in another thread stated, its always best, no matter how hard, to let them (and adults as well) suffer the consequences as opposed to trying to take those consequences away from them to protect them.

I really dont agree about the rates of 20+ being out of line. I was not living high off the hog then, and Im not living high off the hog now. Virtually every customer I work for likely makes substantially more than me annually and I am not in a ritzy area.

The pay is the same, and the dollar is worth less because everything has gone up. It can be number crunched any way fit but 45/hr then and now is the same. About 80k gross into your business if your able to take vacations, holidays, and work full weeks every week. That is to say if your lucky. Ive rarely been in the vacation world. So thats the same gross then as it is now. The truck costs 2.5x, the fuel costs 3x, tires 2-3x, batteries and maintenance 4-5x, and so on, and so on. Im just the villiage idiot but I dont need any rule of 72 to see that there is far less left over from my gross that matches 3 decades ago. Then we go to food, electric, heat, taxes, and so on. They are all the same.

[Mark Bolton]

I have always driven classic cars, moslty air cooled VW's but also Willys Jeeps, and a '57 Chevy. I recently broke down and bought two new(er) Jeeps at a government auction for 1/2 the blue book. Actually I bought three, and sold one for double what I paid, so ultimately I got two Jeeps for $6500 total all said and done, with 6500 miles on one, 7000 on the other. (US Customs vehicles that they only used to drive around the airport.)

I say all of the above to set up this humorous story- I have no clue what new cars cost. I was talking with a friend who gets a car stipend at work, and he is required to own a car 3 years old or less to get the stipend. I said, "Wow, I couldn't buy a $20,000 car every three years even with the stipend." He laughed so hard he almost cried. WHAT???? $20k will buy a new car, right? Apparently I have no clue about new car prices. So I asked how much his Volvo cost, and almost died: $58,000!!!! ACK!!!! Okay, so that's a Volvo, so a new reasonable American car- $25k? He was still laughing at me. Wow. I really had no clue. He apologized for laughing and I said, "No, it's okay, I am laughing too. I never realized how out of touch with modern car prices I was."

Anyway, I would buy a new-ish car maybe a year or two old, and save a ton over what you'd pay for brand new. When you drive it away it is immediately worth less. Take my advice with a grain of salt (see above) but that's my thought- especially if it is a work truck.

Much the same boat here. My girlfriend gets a kick out of going clothes shopping with me and we walk in a sporting goods store and I see an underarmor shirt and I say man, I cant believe people pay like 40-50 bucks for a shirt. She has the same reaction as your friend telling me "that shirt probably costs 80-100 dollars, look at the tag!!". I look and see 85.00 or something and proceed to soil my underpants.

I am aware of truck prices only because several locals tell me what they have paid. When I hear of people buying brand new extended/quad/4 door pickups, 4wd, possibly diesel, and paying 50-60-70k I am just flabberghasted. And of course many of them rarely if ever see a pebble or a sheet of anything in the bed. Its just crazy, but like the ol' John Prine song "Thats the way the world go round".

I too am a fan of particular year jeeps and grand cherokee's. Some of them are just bullet proof and sherman tanks. They will run forever. That said, maintaining older vehicles is a costly endeavor at times and when you have to factor that cost, and your man hours, into the cost of your business for me at least it can get a little trying. Its not to say having a new vehicle guarantee's you reliability, lemons are everywhere, but thats always the hope.

I for some reason have a hard time getting my head around paying 20-30k for a pre-owned car. Its just a personal hangup. I guess for some reason I always think of being at the ends of the spectrum. 10K or less and I work on it, or I happen to be on a good streak and buy new. I'd imagine Im overlooking the sweetspot in the middle there somewhere. I just cant see many average cars being worth 30-40-50k.

[Larry Edgerton]

Your post reads almost identical to my timeline. I bought a brand new Chevy 1500 2wd, v8, extra cab, in 89 for 11K+. I ran that truck until I couldnt run it any longer (300k miles and was only parked because a location change required 4wd) while all the other guys I knew were buying and outfitting new trucks left and right. I feel like my business at the moment (I am pretty much down to a one man show with a combination of field and shop work but this will hopefully be my last year of major field work) is doing about all it can do with me wearing all the hats and I simply couldnt fathom a payment on a new vehicle right now. Perhaps thats mainly because I dread the thought of a payment at all but still.

The rule of 72 thing, to me at least, is hogwash. Same income, less cost for goods = more disposable income that can be allocated to enjoying life, savings, retirement, and so on. Most all in the trades that I speak with are in the exact same boat. They were not living like fat cats "back in the day" they were just doing well. Now, living and operating on the exact same dollars (gross) as 20+ years ago, everything has gone up as well as all the things being added in that werent there 20-30 years ago. Cell phones, internet service (and the need for moderately fast service at that), materials, and so on.

There is a major push in my area for moving more people into the trades and the technical trades but I just dont see the dollars there to support what people need (some may say want) today.

Its a hard subject for me in that I have had feelers out for 20 years for the young people who are willing to commit to something that could provide them a long life doing something really rewarding if they are passionate and enjoy the work. But on the flip side I just dont think the dollars are there to keep them.

That is about right for me as well. I the bubble days I bought and paid for a large commercial building, which I sold a couple of years ago because I could no longer justify the $20K+ annual cost of owning it, even with no payments. My house and shop are on one property now, paid for. I sold my old home at a loss just to make life simple because the market shows no sign of coming back here. There is no work in my area so I am having to range farther from home than I like, hence the need for dependable transportation that is easy on fuel. The Ranger was an experiment to see if I could get by with a small truck in the 25-30mpg range. It was just too small, but for 72,000 miles it sort of did the job. I had a large older truck for bigger loads, but when you figure the economics of two trucks, it just does not work out. I am losing about 5mpg with the new truck, but gaining a lot of capability and have no need for the second truck. It hurt, but I paid cash.

Mark, I wish I could keep a truck around for that long, but somewhere around 150K the rust starts to interrupt that plan. Can't pull into the kind of places I work on with a rustbucket, just will not fly. Now if I lived down where you are...........

It would be hard for a young guy starting out that is wanting to do work that will be restored rather than remodeled. People just don't seem to care about their homes the same way, at least the generations younger than us, with a few exceptions of course. And lets face it Mark, the up and coming generations do not want to hire guys our age. We are yesterdays news, no matter what we have to offer. My customer base is pretty much the same generation that I started out with, again with a few exceptions. Problem is they are all retiring, and you know how people get when they retire. Lets just say "frugal".

This may be my last truck, and I did not want to be stuck with the one I had, so I bit the bullet. Its a decision that I have been arguing with myself about for a couple of months. Hate spending money on such a poor investment.

Larry

[Larry Edgerton]

I have always driven classic cars, moslty air cooled VW's but also Willys Jeeps, and a '57 Chevy. I recently broke down and bought two new(er) Jeeps at a government auction for 1/2 the blue book. Actually I bought three, and sold one for double what I paid, so ultimately I got two Jeeps for $6500 total all said and done, with 6500 miles on one, 7000 on the other. (US Customs vehicles that they only used to drive around the airport.)

I say all of the above to set up this humorous story- I have no clue what new cars cost. I was talking with a friend who gets a car stipend at work, and he is required to own a car 3 years old or less to get the stipend. I said, "Wow, I couldn't buy a $20,000 car every three years even with the stipend." He laughed so hard he almost cried. WHAT???? $20k will buy a new car, right? Apparently I have no clue about new car prices. So I asked how much his Volvo cost, and almost died: $58,000!!!! ACK!!!! Okay, so that's a Volvo, so a new reasonable American car- $25k? He was still laughing at me. Wow. I really had no clue. He apologized for laughing and I said, "No, it's okay, I am laughing too. I never realized how out of touch with modern car prices I was."

Anyway, I would buy a new-ish car maybe a year or two old, and save a ton over what you'd pay for brand new. When you drive it away it is immediately worth less. Take my advice with a grain of salt (see above) but that's my thought- especially if it is a work truck.

The prices that used work trucks are bringing actually make a new one with a warranty a better deal up here. We only have about six years before the salt gets them so if I buy one three years old for 50% of new cost I am getting the worst half of the miles for the same money. Keep in mind the truck I bought is as cheap as they get. Crank windows and all. I used to go South to get one but the increased expenses of cross country travel have taken the shine off of that prospect. I actually was looking at a low mile used one in Texas, but when all was said and done new was cheaper and a lot less headache. I drive over 30K miles a year currently, but hope to change that soon and stay closer to home.

Larry

[Mark Bolton]

That is about right for me as well. I the bubble days I bought and paid for a large commercial building, which I sold a couple of years ago because I could no longer justify the $20K+ annual cost of owning it, even with no payments. My house and shop are on one property now, paid for. I sold my old home at a loss just to make life simple because the market shows no sign of coming back here. There is no work in my area so I am having to range farther from home than I like, hence the need for dependable transportation that is easy on fuel. The Ranger was an experiment to see if I could get by with a small truck in the 25-30mpg range. It was just too small, but for 72,000 miles it sort of did the job. I had a large older truck for bigger loads, but when you figure the economics of two trucks, it just does not work out. I am losing about 5mpg with the new truck, but gaining a lot of capability and have no need for the second truck. It hurt, but I paid cash.

Mark, I wish I could keep a truck around for that long, but somewhere around 150K the rust starts to interrupt that plan. Can't pull into the kind of places I work on with a rustbucket, just will not fly. Now if I lived down where you are...........

It would be hard for a young guy starting out that is wanting to do work that will be restored rather than remodeled. People just don't seem to care about their homes the same way, at least the generations younger than us, with a few exceptions of course. And lets face it Mark, the up and coming generations do not want to hire guys our age. We are yesterdays news, no matter what we have to offer. My customer base is pretty much the same generation that I started out with, again with a few exceptions. Problem is they are all retiring, and you know how people get when they retire. Lets just say "frugal".

This may be my last truck, and I did not want to be stuck with the one I had, so I bit the bullet. Its a decision that I have been arguing with myself about for a couple of months. Hate spending money on such a poor investment.

Larry

No dispute here. I have a long frame 1 ton dump with behind the cab utility box sitting in front of my shop right now that unless its brutally necessary it never moves. Running a vehicle daily that gets more than 3x the mileage has saved me more money than I can imagine. Being in a rural/remote area helps and hurts. I understand what your saying about rolling into a high end home with a jalopy (something I have never run but could easily get away with here) is not good business sense. That said, perhaps you could cultivate the eccentric, crazy, talk to the clouds type, craftsman who does visionary work but shows up with an old horse drawn wagon and a couple mules.. The detractor (and it sounds like your suffering this) is anything and everything is a minimum of an hour away. It racks up the miles for sure. Even with that my annual fuel costs are nothing that brings me a ton of joy when I cut them by a hefty percentage.

Its hard. There is no second guessing that.

I have often thought about the prospects away from this business and they are not bright by any means. I think there are some chances, but more than likely I would have to be willing to stay away for long periods for lucrative work. I think the harder factor, and I dont mean this to sound romantic, is "caging the lion". After so many years out in the open it would be a major adjustment to go into the box. That said, it might be comforting.