[MDHpainting]

Here's a blog post that goes into the psychology of pricing and how you can apply that to how you price your jobs. Everything here is based on hard science: bit.ly/1jOAdUH

 

[Drewker]

Many many thanks. :notworthy:

 

[Gough]

Here's a blog post that goes into the psychology of pricing and how you can apply that to how you price your jobs. Everything here is based on hard science: bit.ly/1jOAdUH

Interesting blog post. Hard science??? Not so much. Psychology and economics are the classic "soft sciences".

 

[chrisn]

don't much like this part

Package A includes: power washing, scraping, spot priming, one coat of mid-grade paint.

:no:

 

[Gough]

don't much like this part

Package A includes: power washing, scraping, spot priming, one coat of mid-grade paint.

:no:

It's real expensive if you want us to do it fast, we can save you a lot of maney if we do it half-fast.:whistling2:

The approach seems a lot like the "jewelry-store model" for pricing, AKA, "mark it up to mark it down".

 

[zoieah]

Curious estimator

I have a question. What do you charge for an interior wall primer and two coats per square foot of wall and what do you charge for linear foot of interior trim primer and two coats including caulk, sand and fill nail holes?

 

[Schmidt & Co.]

$3.50

 

[Susan]

I have a question. What do you charge for an interior wall primer and two coats per square foot of wall and what do you charge for linear foot of interior trim primer and two coats including caulk, sand and fill nail holes?

Right around seven bucks. Mostly. If I'm paying, I only pay myself 6.

 

[Handcraft]

Answers

Contractors who don't know how to bid accurately often don't know what their production rates are. A good place to start is the PDCA Cost & Estimating Guide, which is available at google books. Below is the link:

http://books.google.com/books?id=b8...ce=gbs_ge_summary_r&cad=0#v=onepage&q&f=false

Once you figure out the production rates for any given surface, you need to figure out what to charge per hour. This is the golden question. Say your painters make $15 an hour (in SoCal this is dirt cheap), you then have to add overhead costs (such as workers comp, general liability, utilities, salaries, etc) and profit. Our base hourly rate is $45 an hour, which includes a minimum 10% profit margin, but this price leaves little to no room for error. I hardly bid a job for less than $50 an hour per worker. I have charged up to $65 an hour per painter on some projects. Our current profit margins are 10 to 20 percent,a and we are currently closing on 40% of all of our estimates.

I recommend contractors who are not a part of the Painting & Decorating Contractors of America to join asap. They have a ton of resources. If there are any other good associations, please clue me in.

 

[tigerwash]

Good post Brian

 

[PaintEmUp]

One of the most challenging aspects of running a contracting business is estimating jobs. For someone with little experience, estimating can be a rather scary endeavor (it can also be scary for someone with tons of experience). After all, the accuracy of the estimate will have a huge impact on the contractor’s success.

This, I believe, is the primary reason we see so many questions asking what to charge for a job. But such questions are misdirected, because what I (or anyone else) would charge is completely irrelevant and doesn’t address the real issues.

The price of a job is comprised of 4 basic components: labor costs, material costs, overhead, and profit. Estimating is the process of identifying the labor and material costs. We add our overhead and profit to those costs to obtain our price.

Overhead—advertising, rent, insurance, utilities, phone, owner’s salary, etc.— is completely unique to each company. Without knowing these numbers, it is impossible to properly price a job.

Profit goals are also unique to each company. Again, without knowing the specific profit goals for a company, it is impossible to properly price a job.

Consequently, any attempt to answer a pricing question in the absence of these two key numbers is essentially meaningless. More to the point, pricing questions ignore the fact that a large percentage (often more than 50%) of the job’s price should be comprised of overhead and profit. (My suspicion is that those who pose such questions don’t know their overhead, and mistake gross profit for net profit. But that’s a different issue.)

As I said, estimating is the process of identifying the labor and material costs for the job. Labor costs are determined by the type of work being performed, the production rates of the company’s workers (the time required to perform each task), and pay rates. As with overhead and profit, these numbers will be unique to each company. Material costs are determined by the type of materials required, the quantity required, and their purchase price.

For example, let us say that a painting contractor knows that his painters can prepare and paint a certain style of door in 30 minutes. He looks at a job that has 10 of these doors. He knows that his painters can prep and paint these doors in 5 hours. He can also calculate the materials required by the spread rate of the product he will use. The contractor can now determine what his costs will be for the job. By adding his overhead and profit to these costs he will have his price for this job.

While the above example is simple and uses a painting project, the same principle applies to every contracting job—large or small, simple or complex—regardless of trade.

What should I charge for X? really means: what is the total of my labor costs, material costs, overhead, and profit? And the answer to that question requires a substantial amount of additional information. Providing an answer without that information is simply a guess.

Accurately pricing a job is not rocket science, but it shouldn’t be based on conjecture, blind guesses, or another company’s numbers either. Certainly accurate estimating takes effort, but owning a successful business isn’t easy. Asking what to charge for a job is asking for a short cut, but there are no short cuts to success.

Such questions about prices for a job are inappropriate, because they ignore the many factors that determine the price. Providing a price in response to such questions is also inappropriate, for the same reasons.

It is a documented fact that 90% of small businesses fail within 5 years. Of those that make it 5 years, another 90% will fail within the next five years. Which means, 99% of small businesses fail within 10 years. One of the primary reasons for failure is not charging enough. Contractors are as guilty of this as anyone.

There seems to be no shortage of hacks willing to work for dirt cheap prices. Nor does there seem to be a shortage of replacements when they inevitably fail. One of the most effective means for avoiding failure is to know your numbers. Asking what to charge for a job is simply an admission that you don’t know your numbers.

I hasten to add that there is nothing wrong or inappropriate with asking how to price a job. But how to price is different from what price to give. Learning the process is a good thing. Looking for an easy way out isn’t.

Putting paint on the wall is a trade skill. Pricing a job is a business skill. A skilled craftsman does not necessarily make a good businessman, because different skills are required. The owner of a contracting company does not necessarily need to have trade skills, but it is imperative that he have business skills if he is to succeed. The longer you wait to obtain those skills, the closer you move to joining those 99%.

Brian Phillips

Jimmy first of all - I doubt anyone could get that much money for that work - and you are high as a kite if you think you can do all that in 2 hours.

Recoat times themselves are 2 - 4 hours.

 

[AlphaJohn]

Great post! Brian Phillips nailed it. You need to know your expenses before you can properly give an estimate. Most companies aim for 50% while some aim for 30-40% to cover their overhead and profit. I worked with 3 different painting companies trying to learn how to bid. All three companies had different systems of giving estimates. The most accurate way to charge is the amount of time it takes to complete the job (charge a daily rate) and material cost which normally contractors get at a discount and charge customers retail. You can always pass the discount on to loyal customers etc.

In reference to the early post painting a single empty room in 2 hours can be done if its prepped right and its the same color. Remember 90% of any paint job is preparation. So if there is furniture to be moved that also takes time to move it back.

Look forward to seeing more posts!

http://www.alpha-paintinginc.com

 

[thoma]

There is a lot lot to learn about from those posts here.
It looks like I have missed a lot...

................................................................................................................

Painting & decorating Services London
Painter Decorator London

 

[Chicago Handyman]

To find out, you START bidding. If you get jobs and make enough money, whatever enough is for you, and the customers speak well of you, then you are bidding at the correct amount.

This! Just get out there and do it. you never know who you are bidding against. i have my formula. sometimes im the lowest, sometimes people beat me by 30% - are they licensed and insured? i have no way of knowing. I just know what I need to come away with a good profit.

 

[sd021]

Here's a blog post that goes into the psychology of pricing and how you can apply that to how you price your jobs. Everything here is based on hard science: bit.ly/1jOAdUH

Very late on this but that was a great blog post, learnt loads thanks!

 

[Superiorpnp]

Painting Company VS The Single Guy ...

Wow, if your article here is not dead on! But you know what Our painting company is facing its not being able to charge better rates its having to compete with the new guy that thinks he is going to become a painter after painting his home.

You would not believe how many times I have seen Jobs that would cost 1.25 per sq ft. and the guy the comes in by him self charges .25. How do you compete with that one?

- - Painting Company

 

[chrisn]

Wow, if your article here is not dead on! But you know what Our painting company is facing its not being able to charge better rates its having to compete with the new guy that thinks he is going to become a painter after painting his home.

You would not believe how many times I have seen Jobs that would cost 1.25 per sq ft. and the guy the comes in by him self charges .25. How do you compete with that one?

- - Painting Company

market a better clientèle

 

[limitless6890]

So if I may as why is square footage irrelevant to estimating? Couldn't figuring out a minimum you would like to make per square footage and add other factors in depending on the job. I have been painting and home services for awhile and I just decided to start my business so I'm asking because I'm brain storming to find a good system for estimating.
Thanks for any replays in regards to my post.

 

[limitless6890]

Here's a blog post that goes into the psychology of pricing and how you can apply that to how you price your jobs. Everything here is based on hard science: bit.ly/1jOAdUH

Very late on this but that was a great blog post, learnt loads thanks!

That link didn't work.

 

[PaintDrop]

Thank you very much for the info.

PaintDrop

www.paintmywall.com.au