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Old 03-09-2013, 01:19 PM   #1
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Default Does 'going rate' reign supreme?

I see a lot of threads about "what do you need per hour" to run your business but doesn't the 'going rate' for a particular area trump what a person thinks they would like to make?

In other words, if the going rate is $1.00sqft in anytown USA you need to build your business around that #.
Sure a snob can get $1.25 and a hack will do it for $.75 but you're still slave to the going rate.

I just never understood telling guys "Well, how much do you want to make in an hour or day?"
It seems irrelevant.
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Old 03-09-2013, 01:29 PM   #2
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Are you just talking new construction?

I don't think many res reprint home owners know the going rate or how it's applied to their circumstance.
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Old 03-09-2013, 02:00 PM   #3
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On the flip side, I view the going rate as irrelevant. It may apply in commercial work where service becomes a commodity but the fact remains that 2 out of five people buy on price alone and everyone is going to offer a different job and/or service. There is one universal going rate for new business owners that think market pricing is more important than making what they need to make.. it is called the "going out of business rate".

What's the going rate for a car? or a shirt? Or a restaurant meal?
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Old 03-09-2013, 02:21 PM   #4
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In a general sense the 'going rate' is the market rate, or what the market will bear. That is not going to be a static rate as a free market will flow. The problem is that their perception is their reality.
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Old 03-09-2013, 02:47 PM   #5
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The other thing to consider is the "going rate" /hour is based on "who's" hour??? Productivity comes into play big time. Many times one company may have a higher "going rate", but be more productive and efficient thereby actually making the overall cost lower. Brings to mind the "Slowpoke Painting Co."..."We're Slow, But We're Expensive"

I agree with Ken...it becomes pretty much irrelevant. I will say though, I am continuing to see more and more of the "going out of business rate" out there. Sometimes I think it's a race to see who can exhaust themselves and go broke first...
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Old 03-09-2013, 02:57 PM   #6
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As it deals with my company, the going rate is what I feel I need to make per hour or day, plus materials, overhead, etc.
I run solo and mostly residential repaints.
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Old 03-09-2013, 04:39 PM   #7
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Quote:
Originally Posted by PressurePros View Post
On the flip side, I view the going rate as irrelevant. It may apply in commercial work where service becomes a commodity but the fact remains that 2 out of five people buy on price alone and everyone is going to offer a different job and/or service. There is one universal going rate for new business owners that think market pricing is more important than making what they need to make.. it is called the "going out of business rate".

What's the going rate for a car? or a shirt? Or a restaurant meal?
Well that makes sense.
But isn't a toyota tercel about the same price as a honda civic or a mitsubishi mirage ? No ones going to pay 30K for one.
Same with a meal. Applebees, Chiles, everything is 8.99 -12.99.

The going rate dictates, and is established by the sellers of their product. They might not think they need to compete with the other sellers but they have no choice. (OK a little flexibility obviously) A race to the bottom? Maybe but not necessarily. Maybe but if a job in your area costs $1000.00 and you do great work, what happens when a hungry kid does it for $700.00 and does equally great work? You can ignore him but only for so long.
A walmart effect, if you will.

I dunno, taking business advise from me would not be the best idea
But I think going rate forces us to 'sharpen our pencils' more then we like to admit.
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Old 03-09-2013, 05:02 PM   #8
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That was exactly the point I was trying to make when asking a general question about going rates for "a car". If someone never saw a car before (let's pretend they were frozen for 150 years) and asks "How much should I expect to pay for a car?" The answer could be $20,000 or $200,000.

The going rate is dependent upon what the product is offering NOT what people are willing to pay for it. I may be only willing to pay or afford $50K for a car. I doubt Porsche cares about that. I am not their market.

Markets can definitely be driven down and commodotized (sp) with a saturation of goods or offerings. But there is always someone willing to do something for less. The guy in your example that charges $700 may be outbid by a 70 year old handyman that paints to have something to do. If the $700 guy is legitimate, he will be out of business thus succeeding in the race to the bottom.
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Old 03-09-2013, 05:29 PM   #9
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good point Ken,

comes back to the apples to apples comparison.

I do certainly hope that I am above the "going rate" for a dining room to be hung.

That's because the going rate does not include each sheet of a grass cloth to be trimmed individually so that the panels are equal across each wall, or for a damask to be positioned so that the elements are balance on the focal wall.

Is the "going rate" for quality? Or for that picture I posted of the hacked trim?


Perhaps in drywall and mudding, there could be a going rate for a level 5 finish. But in this industry I have not seen standards that define any type of prep and application.

According to Craig's list, the "going rate" is $99 a room.



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Old 03-09-2013, 05:31 PM   #10
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Maybe you hit the nail on the squarely on the head, Ken. A lot of us here would like to think of ourselves as the 'porsches' of painters - but the majority of our market is only purchasing Chevys.
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Old 03-09-2013, 06:07 PM   #11
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Quote:
Originally Posted by plainpainter View Post
Maybe you hit the nail on the squarely on the head, Ken. A lot of us here would like to think of ourselves as the 'porsches' of painters - but the majority of our market is only purchasing Chevys.
That's probably true. So one has to look at their market and decide where they want to be. The more people in a pool, the less anyone is going to stand out.

Bill brought up the key points to tie it all together. If you are going to be Porsche, you have to create your market and deliver on the goods.
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Old 03-09-2013, 06:58 PM   #12
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I've come to the conclusion, that the only way to be a 'porsche' in this market is to have networking connections with high end designers and architects and such. If you advertise direct to market, there is no way you are going to reach high end market. If they hire a designer, then they are high-end clientele.
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Old 03-09-2013, 07:07 PM   #13
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Quote:
Originally Posted by plainpainter View Post
I've come to the conclusion, that the only way to be a 'porsche' in this market is to have networking connections with high end designers and architects and such. If you advertise direct to market, there is no way you are going to reach high end market. If they hire a designer, then they are high-end clientele.
Dan, although linking up with designers (SOME designers) can ensure a higher clientèle (yes, a generalization), I think it also has to do with HOW you market yourself to the general public. By HOW you market, I mean the words you use, not the medium you use to convey the message.

The car analogy works here. All auto manufactures use the same media: TV, radio, print, internet, etc. But do you see the Chevy buyer visiting a Porche or Mercedes show room ? And Porche buyers do not look at Chevies

Likewise, with the correct presentation of your marketing, you should be able to encourage your target market to call, while dissuading the others.



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Old 03-09-2013, 07:12 PM   #14
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Quote:
Originally Posted by daArch View Post
Dan, although linking up with designers (SOME designers) can ensure a higher clientèle (yes, a generalization), I think it also has to do with HOW you market yourself to the general public. By HOW you market, I mean the words you use, not the medium you use to convey the message.

The car analogy works here. All auto manufactures use the same media: TV, radio, print, internet, etc. But do you see the Chevy buyer visiting a Porche or Mercedes show room ? And Porche buyers do not look at Chevies

Likewise, with the correct presentation of your marketing, you should be able to encourage your target market to call, while dissuading the others.
The magic word here is, Marketing, it's an overused term especially on this forum. Nobody here actually, markets, we advertise. Porsche can afford to market and acquire a high-end clientele, we on the other hand are stuck in the advertising zone.
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Old 03-09-2013, 07:19 PM   #15
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Let's not pick at straws, Dan.

we use words to advertise. Chose them carefully, is all I'm saying.



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Old 03-09-2013, 07:38 PM   #16
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I bet the Porsche driver also has a Chevy, or two.
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Old 03-09-2013, 07:42 PM   #17
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Bill every painter in the world brags about being high end and quality workmanship, in reality I can train just about every facet of what I do to a teenager - the only thing that is worth money is my ability to cut a straight line, and most painters are giving that away.
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Old 03-09-2013, 07:48 PM   #18
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- the only thing that is worth money is my ability to cut a straight line, and most painters are giving that away.
If your paint skills exceed in value the business you have built and the service you offer, then you are a high dollar technician. Nothing wrong with that, Dan.



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Old 03-09-2013, 07:52 PM   #19
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Dan,

I am very happy to realize you have all the answers.



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Old 03-09-2013, 07:56 PM   #20
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Quote:
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I've come to the conclusion, that the only way to be a 'porsche' in this market is to have networking connections with high end designers and architects and such. If you advertise direct to market, there is no way you are going to reach high end market. If they hire a designer, then they are high-end clientele.
Interesting. Our experience here had been very different. Most of the jobs that we've done for the designers and architects in the area have been nightmares. Lots of hand-holding and meetings. We've had better luck with referrals from our A-list clients.
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