Professional Painting Contractors Forum banner
1 - 4 of 4 Posts

· "Member"
Joined
·
10,719 Posts
Good post Brian but ........ What about the market value of a job. The market should have a direct influence on what a companies overhead should be. If you are simply over pricing jobs based on a high profit margin or because your overhead numbers are too high then you have to adjust to stay in business. I think that most that ask for "the going rate" are usually trying to find the market price for the type of work they are looking to price.
 

· "Member"
Joined
·
10,719 Posts
NEPS,

This was orginally written for another forum and I was asked to post it here.

I am not sure what you mean by market value. Nor am I sure that I understand how the market has a "direct influence on what a companies overhead should be."

I can understand how certain aspects of a market will have an influence on overhead. For example, if certain costs of doing business are abnormally high in one market, that would certainly drive up overhead. But even those costs will vary from company to company.

But the real issue is: in general there is no "market price" for the work we do. There may be something approaching that in certain segments, but certainly not in the residential repaint segment. New construction seems to have a narrow range-- which one might call a market price-- but even this isn't a rigid number. I may be wrong, but I think Scott to attest to this.

I know guys in Houston who swear that nobody will pay more than $25 an hour for a painter. To them, $25 an hour is the going rate or market price. At the same time, I can cite many contractors in Houston getting $40 to $55 an hour in Houston. How can this be, if the going rate is $25? Clearly, the going rate is not $25. More to the point, there is no going rate.

Each company's pricing is unique to that company. My overhead is unique to my company. My profit and income goals are unique to my company. My production rates are unique to my company. The same is true of everyone's company. If our price is labor + materials + overhead + profit, and 3 of these items are completely unique to each company (and unknown to me), how could I or anyone else who doesn't know these numbers possibly give an answer? The truth is, they can't. All you can say is what you would charge. That might make for interesting regional comparisons, but it is useless as far as pricing a particular job.

What one's competitors charge is irrelevant to what one needs to charge to make a decent living. If someone can't sell at the price they need to sell at, they have a sales issue (assuming they know what that price is). But they won't improve their income or profit by basing their price on what others charge while remaining oblivious to their own costs and income goals.

Brian Phillips
There is a difference when competing for commercial or new construction work. There are so many variables that can have a direct effect on winning or losing a bid. The market (what the average price of competing bids are coming in at) is crucial to have a pulse on. It also works to increase your margins.

If there is less work available and more companies competing for the desired job the price will be driven down. The money needs to be absorbed somewhere and that would mean shinking the overhead. It is simple supply and demand.
 
1 - 4 of 4 Posts
Top