I’m curious as to how the majority of you handle this.
do you have a standard markup for everything?
do you mark up less expensive things more and big ticket items less?
and what do the majority of you use as a percentage for your markup?
I’ve been using 25% across the board, but when I was discussing this with some of my suppliers they were telling me that most of the people around here are only marking up 10%. I started to think that maybe I’m being a little greedy and wanted to know what youse guys (and gals) thought.
I know Sonny has commented about the auto parts industry marking up 400% but I’m not them. ( although I wish I could get away with that)
Steve
S.J.MERRETTE Carpentry & Construction • Robesonia, PA
Nothing is impossible…It just hasn’t been done yet.
Replies
Hey Steve,
Hope all is well and productive.
The only answer I can give is: It depends...........
Availiability- if it's rare, hard to find or is entirerly dependant on my skills and ability to chase down something exotic, my mark-up will start at 100% and up.
If it's your everyday, get-it at a good supplier......mark-up starts at 40% and up.
And if the customer wishes to quarter and dollar me..........I mark-up my labor instead.
The point is to make money as a supplier....that's right......you, by virtue of buying something and using that product to create a collective product have in effect, become a supplier. And we know, all suppliers mark their product up.
As a fabricator utilizing many supplies, you have to add cost to insure your ability to warrant, and return to repair that product if one of the many parts causes it to fail.
In any event, mark-up is legitamate, and required.
Steve,
Use your bottom line. Thats what I do. How much I make from the job all in all. Some of my suppliers give me little to no discount off my contractor price and I know that cause on occasion I've had my wife cal in orders for me and she hadnt mentioned I was a builder.She got the same price I do...hmmm. I think with suppliers a lot has to do with how much your in their puter. Makes sence on one hand but not on the other. Why bother with high prices when I can go to the box for say 50 boards of rock and pay $6 and at my yard I pay $8 or more? The box has the order waiting for me the next day up front and a salesperson to help me load it up. I use to belong to NARI National Assc for the Remodeling Industry. They said you should make a minumum of 33% or go to work for someone else. As for the supplier telling you you should only markup 10%...DUHHHHHH..wonder why they say that......hellooooooo!!
I figure my jobs at what I wanna walk out at the end with.what I think I'm worth in comparrison to others....from what I see.
Be well
Andy
Steve,
My goal is to make money on everything I touch in terms of business. My mark up is 100% on any purchase under $50. 40% on any purchase above $50. Since I do mainly small jobs I charge a $20 minimum anytime I have to go purchase something. I agree with Mark that we are making money as a supplier. DanT
On small jobs I mark up material by 20% and labour by 30%. A local electrical contractor I contract to marks all material up by 30%.
Steve, do not go by “industry standardsâ€. Remember, our industry standards are one of the things that contribute to our 85% plus failure rate. Another industry standard is to spend hours upon hours each week to offer estimates - for free.
You have one big question to answer: What’s the purpose of a markup on materials, or subs also for that matter? Here are a three things to consider:
1. To recapture your overhead.
2. To generate net profit
3. For your willingness to assume liability(s), guarantee is just one - for those materials and workmanship and work habits of the subs while working on your projects.
What’s all of the above worth to you? It’s a “balance†game. To get you, the contractor, to supply labor, materials and subs, and assume all legal and moral responsibilities for that, what should be the dollar amount that “balances†out that equation. Your reward for assuming those responsibilities.
If you want to place yourself in the 15% of which the Mark McDonnells and Dans reside, SELL, and YOUR price, and screw the competition. However, as stated before, you can’t even do that without knowing your actual numbers - the foundation of any business.
Thanks to all on this point. I keep feeling the need to up my labor rates in order to increase my income. My materials markup has always been minimal, about 10%-15% just to cover my ass should I have miscalculated on my original measurements. Damn straight my time and effort in supplying even the most basic cabinet knob is worth a hell of a lot more than 10%! For crying out loud, half the time I can`t even get a definitive answer as to what grout color the homeowner prefers until I`m mixing the stuff right in front of them!
J. D. Reynolds
Home Improvements
"DO IT RIGHT, DO IT ONCE"
One thing I keep struggling with is when I listen to the advice here I can almost guarantee I won't get the job. as I try to make a profit I keep getting undercut by guys who are just trying to get beer money. Sticking to your guns is fine unless you're trying to feed a family.
I am at about one in six, meaning that for every six proposals I do I get one job. and those are usually because the client has not gone out for competative bids. that would be fine if I got more than one or two calls a week like I am now.
I was trying to charge for proposals on some of the bigger jobs I bid on but was told outright that they weren't interested as "everyone else gives free estimates" I tried to explain the difference and was only met with more resistance.
Of the 72 or so regular advertisers in the papers around here over half start their adds with the words, Free estimates, and the rest have it in the body of the text elsewhere.
I probably need to try and sell the house and move to a better market but that's just not in the budget.
Any words of wisdom you guys could share?Steve
S.J.MERRETTE Carpentry & Construction • Robesonia, PA
Nothing is impossible...It just hasn't been done yet.
I think a discussion on material markups has to be taken in context with how you do your "bottom line" figuring.
For instance - One guy might only add 10% to material costs. And maybe he adds 10% to his labor cost. But when he totals up the job, he might add 40% to cover profit and overhead.
The next guy might add 40% to his labor and material costs, but only add 10% to the bottom line to cover overhead and profit.
I think guys around here typically add 10 to 20% to materials, and hope to make a 10% profit. But I'd also say that they're leading the pack by quite a bit in the 85% failure rate - It's more like 95% here.
Truss Designer Extraordinaire
Steve,
I know how ya feel, but perhaps you need to take a good hard look at why you`re not getting a larger percentage of jobs from proposals. When I honestly look at why I did or didn`t get a particular job, it rarely comes down to cost being the sole determining factor. I tend to be right in the middle of the pack when it comes to project costs. Those jobs I "lose", are lost because I wasn`t attentive enough, or I didn`t pursue them enough, or I didn`t present myself properly. There have been jobs where my numbers were at the high end, but I was able to land them because I wanted them more and I tried harder. I was diligent returning phone calls, supplied ample references and perhaps even "danced" a little better than the guys with lower numbers. The ONE thing I have learned having my own business is that I need to be just as good a salesman as I am a carpenter if I want to attract specific clientelle. I HATE that end of the business! I do not enjoy spending endless hours a week trying to convince others I am "THE MAN" for the job.
Hold your ground on your pricing. Dust off the overalls, buff the exposed portion of your Timberlands, and stand firm with a sincere smile and a hearty handshake. Now, let them know why your estimate isn`t the lowest and hang tough. If they truly want the best job, they will hire you. If not, so be it. J. D. Reynolds
Home Improvements
"DO IT RIGHT, DO IT ONCE"
Steve,
You gotta find a middle ground for fighting that poison pill of free estimates.....
For me, it's an off the cuff, ball-park figure.....anything further will require a design deposit because...............get this.........
An estimate is a form of a DESIGN SERVICE!
But, the reality of your situation, as I see it, is your simply stuggling with the blues of getting a referal base out there sans a marketing budget.......and the only way I know to hurry up the proccess is to insist.....make it an expectation, of that customer your doing a job for right now, to generate 2 good leads that will turn into jobs that pay.
Concentrate on only the job at hand and require that the outcome of that job leads you to 2 new jobs.
If ya can think of an other shortcut.....please let me know......
And don't ever compare or compete with guys staying in beer money! Those dudes are dead...they're hearts just havn't stopped beating.......
I'm kinda confused. Obviously I'm not a salesman working as a contractor. I seem to get mixed signals from folks here. on one hand I'm told that I come across as being too desparate and on the other hand I'm told that I need to be agressive on the sale.
So which is it? do I pretend that I'm real busy and that I will do the job if they want when I can fit them in, or do I give them the hard sell which to me comes across as someone who IS desparate for work.
I do have some excellent references in the short time I've been at it. I have one client who has actually invited me to bring my potential clients to their home to show them the craftsmanship and attention to detail that I put into my work. When I go on a sales call I have a three ring binder with pictures of things I've done and I have a list of referrals that I offer to people but no one seems to be the slightest bit interested in any of that. I don't understand. I would think that people would want to see an example of your work or check you out with previous clinets to see if you are a man of your word and do good work. hell, half of them could care less whether I've got contractor's insurance. what's up with that?
this year I'll be advertising in the yellow book. let's hope that draws a better clientel that the merchandiser/pennysaver has been bringing in. I wear my t shirts (see attachment) everywhere except for sales calls where I wear embroidered polos. I'm trying but maybe just not the rght things.Steve
S.J.MERRETTE Carpentry & Construction • Robesonia, PA
Nothing is impossible...It just hasn't been done yet.
Steve, if I ever hire anything out (never have in decades except prescriptions, surgery and dental work) I'll look for somebody like you. I may be too old in a few more decades to DIY and may have to and will remember your comments.
For what it's worth as a DIY, I'd pay somebody $60/hr for quality work & supply the materials before I'd pay $20/hr and 100% markup.
Art B.
Steve,
I think there is a difference between seeming desperate and aggressive sales. Desperation in my book is when you show up and seem to have no distinct idea how the job should be done, you just want the job and will do it in any manner the customer wants. This may not be what you want to project but maybe thats what comes through. With my personality and I suppose my maintenance background I envision myself as a problem solver. I offer my opinion on how to proceed. If they want a more value oriented approach I offer something else. I do so until I am no longer willing to do the job or am not comfortable doing it their way. Sometimes I do the job in a manner I would not recomend but it is still safe and sound work. I make it clear that it is not my preference and what limitations I put on the work done in this manner.
I don't charge for estimates but if I don't get a job then I won't do another for those folks for free again. I also don't "bid" jobs as I know there is no way I will be low bidder so I work at explaining why I am the best during the first meeting. Of course keep in mind the bulk of my work is under 1k and is primarily repairs.
One thing you might try to generate some cash and some exposure is an idea I have been holding since last summer and plan to use when I add a second employee. I was installing a new mail box in an upper middle neighborhood. As I left I started noticing how many ugly mail boxes there were. When I thought about it, I was struck by the fact that I don't know who you would call if all you wanted was a new mail box. And I'll bet they don't either. My plan has been to print up a flyer with 3 mail box options and a set price and walk the neighborhood (or hire a few school kids to do it) hanging them on every door that needs one. I thought the same thing would work for garage doors and storm doors. Worth a shot. DanT
Steve, you can sell jobs without being desperate, you just sell your strengths. Many times you will see someone post here and the advice will be don’t cave, but that doesn’t mean don’t sell. Hard sell? If you don’t like my work you don’t owe me a dime. Hungry is good, people "eat" that up.
Use your references with a wink and a nod, they are there if asked for, that’s all. Most of my clients are pre-sold, and I can’t remember the last time I had to provide refs. As for photos? I don’t even own a camera, the only photos I have is from when peeps sent them to me.
I think the way you are generating new leads results in the sort of lead I don’t even call back. Penny saver and yellow page? Total pita and sales to close ratio is a killer. If that is where you have to be, be cheap and fast, volume works and you get work by working. Take your penny saver ad and offer a pre-season discount until the end of May. Follow up on your last jobs and hint that you are booking work.
I don’t know your area, but what doors are you knocking on? Guy, I don’t even know you, what are your strengths? This isn’t about what you want to do, it sounds like it is about finding work. What have you done that seems to be easy to sell? Who did you sell it to? How did you find them? Who else is working and why?
Even when I was desparate I never showed it. Things were always great as far as the client was concerned. Even if I had no jobs lined up I told the client I'd check my schedule to see when I could get started on their job. No one wants a loser, or what some would consider to be as a loser. Desparateness (is that a word?) to me is a loser when he shows it.
So they don't care about photos. Guess why? In 31 years I've only been asked for references less than 5 times.
They don't care about the because they care about "you", or rather, their "perception" of you: Your character; your apparent knowledge; your personal appareance; how you carry yourself and your command of our language. Ask yourself what the above says about something verses photos. In this case a picture is not worth a thousand words. The words are worth more than 1000 photos.
That's why sales people who are successful know that the 1st thing a sales person learns is that they sell themselves first second and last. Everything else is conversation. My selling style is that I'm not agressive. In fact, I'm very laid back. I don't want to "sell" them on me. I want them to "buy" me. I do that by selling myself. By creating their "perception" of me that they want me. Figure that one out.
Hey, it worked on Barb 39 years ago so I stuck with that sales style. (-:
Once again Sonny, you've hit the nail on the head.
Customers smell fear when you walk into the room. I'm reminded of a very good job I got a few years ago that I pretty desparately needed. I had a partner at the time and as we were driving to the first meeting he was asking me what our pitch was, how we were going to get the job, bid the job, do the job etc. My reply was that I was going to have a nice chat, and maybe make a friend. I got the job and we split up.
Personally, I probably like first meetings alot. It may be a cheap parlor trick but I don't look at it as a sales call.
Your prices should be higher than your competition but competitive based on the package you provide. Think about it, everytime someone hears that you gave a higher price ( and believe me they will) you raise the threshold for them. I want people to say I'm expensive, but worth it.Tom
Okay guys maybe that came out wrong. I'm booked through the first half of may but I want more. I want to be booked for a two months solid at least. I'm doing door replacements and window replacements and my old standby rotted door jamb repair but I want bigger and better. I want to land a decent remodel. I am frustrated in the fact that I want more and more. I'm not happy until I can start calling the shots. This is not about desparation, it's about finding better clients and bigger projects. I've got some people lined up to work as subs so that I can actually take on an addition if it came along but I'm not getting those projects yet.
At the recent HBA legislative breakfast I met a few real estate agents and handed out cards like there was no tomorrow. I'm networking and getting heavily involved with the HBA. it's probably just a matter of time but I don't want to be patient
I just want it all and I want it NOW!
And Dan, as far as being a problem solver, you don't know how many people I've saved from replacing an entire entry door because I was able to repair the jambs with epoxy. or was able to solve their design problems with tried and true or sometimes innovative approaches. I have people that are very grateful to me for saving them money. I also read every trade publication I can get my hands on and suck up every bit of information on new produsts and techniques. I have actually had old timers come to me on sub jobs I did asking me for advice or how to solve a problem. now if that doesn't say I wreak of confidence and knowledge I don't know what does. I also purvey that aire to my clients as well. I am there to solve their problem or do their project with the knowledge resource unparalleled by the others.
Still it doesn't always work and I don't like to lose!
Steve
S.J.MERRETTE Carpentry & Construction • Robesonia, PA
Nothing is impossible...It just hasn't been done yet.
Amen, Steve!
Mike Rimoldi
Hey Mike how ya doing? I hope things are working out for you. drop me a line either here or via email and let me know.Steve
S.J.MERRETTE Carpentry & Construction • Robesonia, PA
Nothing is impossible...It just hasn't been done yet.
Sorry, you can't have it all NOW! It's like love. It takes a while to develop, and because it is a form of love. The form of love that everyone wants to have when hiring one of us, or anyone else for that matter. Sum it up in three words - Peace of mind. It's the same thing we want when we hire a mechanic, or an appliance repair man, etc. Trust! Credibility. Stable. A can do it person. Dependable. Here's the keys. Take care of it.
It takes time to establish a reputation. We've talked a lot here over the months using that word - "reputation." So what it is? The answers to that question is your #1 business goal. It's a long term goal and never stops being improved - by you. But it's acquired my short term jobs, small crappy ones and large crappy ones, short great ones and large great ones. Bottom line is it's determined by you - attitude - and one job at a time.
So what do you want your reputation to mean to others when they see, hear or or meet Steve Merrette?
One word of caution. Once you've obtained one hell of a reputation, it's also one hell of a job to maintain it. That requires unbending principles, fortitude, consistency, and once in a while reviewing that reputation and setting it up there - again, as the unending goal to reach for, never quite satisfied with where it's at.
You are a very fortunate person while at the same time you are one of the few with a lot of courage - the self -employed. You now have total control over your life including who you will give permission to that impact your life.
At sometime in the future, then this time in your life will seem like a blur. Remember these "trials" of your fortitude as a construction newbie. And remember your obligation to help others, who at that time in your life as a successful person, are going thru what you are right now. Then you can help another but also remind that person of the fact that the development of a "reputation" comes with a price as well. Many of us here paid it, and now enjoy it.
My older brother is here now until we leave for Michigan later this week or next week. We were just talking about the necessity and value of the philosophy of "compare and contrast". A square means nothing to us unless we are aware of the existence of ####trapezoid, rectangle or triangle - contrasted shapes. Ditto for successes. We need to grovel so we can compare and appreciate the other end. Being broke makes us more frugal when money starts coming in. Love compared to loneliness. Dependence verses independence. You get the idea.
It sounds corny but I believe that God makes us humble for a reason. Everything in good time, little cricket. What's the saying? You must crawl before you walk. Knee pads help.
just wondering Sonny......I REALLYYYY like you a lot and respect so much of what you say and have to offer....question though.....bottom line,,, have you made oodles of money...as in......gotton real weathy.....financially?
Only started making "real" money after I moved here, and actually starting about 8 years ago. That was when I changed my attitude about me, business, my business, business, our industry, business, my clients, business and finally, business.
Unfortunately, now that I'm a "senior citizen" I've only had a few years to take advantage of that attitude. But sigh, I'd die happy if a few of my peers developed the "attitude" much earlier than I. Which brings me to another realization about all of us.
I just returned from picking up my 2000 Sonoma from the dealer for the 30,000 maintenance check up and a new battery cable (free). The total cost for this particular 30,000 check up was $389.95 plus tax, but mine ended up being $364 and change because I already had the fuel filter replaced - a credit to me of $59.95 plus tax.
For those of us who want to make money instead of spewing out the typical BS like: "I love what I do" (I do too). "I make enough to get by." And the rest of the "rationalizatons", we should all emmulate the auto industry. They define the word "business" - to turn a profit, and a damn good one at that.
Unlike us who do one big job for a customer and then forget about them, dealerships sell us one big product, and then "connect" that product to future services to keep the guarantee validated. Mo' money. Mo' business. Mo' referrals. Mo' personal contact. I spend a minimum of $700 annually with them so far for these routine maintenance "inspections'" and maintenance done. If only 150 other new car/truck/SUV owners per dealership do that, that transfers into $10,500 per month, minimum, and at about a 20% (or more) net - that's NET - profit. That's about $2800 monthly - minimum, and again - NET profit.
And note - we take our problem to the dealer, and then have to go back again to pick up our problem when it's ready.
Why do you think the appliance industry emmulated them and started "service contracts?"
And where is our industry? Still trying to get paid for a lousy Proposal or trip charge. Talk about an incompetent industry when it comes to business accumen!
I've said it before. Our industry operates in the dinosaur age as far as the business aspect.
And so many of us think we're so smart just because we have trade skills. We should all go to "Dealership University."
Hey Sonny,
Great anaology with the auto industry. I am also an ASE Certified mechanic and I know exactly what you mean.
Do you think the problem is that the construction industry is that it is seen as just that, an "industry" and not a "profession"? What I'm getting at is that folks see contractors and the like as a notch below doctors, attorneys, accountants, etc. when it comes to be a bonafide careeroccupationprofession. I've mentioned being a contractor on some of the job message boards I've been frequenting and you'd swear I have the plague. No one can believe that many of us are educated, can read and write and do this as a profession and not just becuase we own a few tools and a truck. Unfortunately, I'm almost ashamed to put it on my resume as potential employers read it and right away assume I am some hammer-swinging, cat-calling stiff that was just self-employed because I can't work for someone else. Basically, no one views it as a "real job". With these views imposed upon us as contractors, we then as a group therefore act one notch lower when it comes to running our businesses like a profession.
I think if contractors across the board all adopted many of the more professional tactics (paid consultationsestimates, minimum charge rates for the smallest of jobs, etc.) it might be easier for our group to move into the current age of how business professions operate.
Am I totally wrong with these views or is it just a product of living in a larger metro area where the pride of knowing a trade or craft have long vanished? When we lived in Germany, the feelings were the exact opposite.
Mike
Edited 4/17/2002 7:15:16 PM ET by Mike
Mike, you're partly right. We've had this discussion here before, and recently on the JLC forum.
Business people go into business to make, dare I say the filthy word - money. And yes, many of not most of those same people do love what they are doing for a living, so we can cut the crap right now about those who whine as I mentioned before. There is another thread here about "money is not everything." Yea, right. It just pays for everything - everything!
Also as stated on the JLC forum, our industry makes it far to easy for someone to enter it. In others, you either need a lot of money , a Certificate like lawyers or doctors, or there already exists in the public's eye, a sense of a "formal" profession like a CPA. In other words, there is no formal indoctrination or preparation or formal training to become a "contractor." Got tools and a truck - you're a contractor!
I don't see it changing in my life time. OK, now I'm ready to get my head bitten off.
Sonny....you have always been my man. Well spoken, articulate and when you can help it...you write short letters....lol. You DO have a lot to say and its all correct...no doubt and I get where your coming from.....One huge obection though.......is your age....I dont think your even 60 so why you a senior citizan? Dont much matter how old you are my friend...I'm 51 and cranking em out.....jobs that is..and I love what you said about craftsman etc etc.......its all so true and money keeps ya young....in so many ways....I use meditation as a form of youth containment...keeps me in a place of truth beyond the BS. Youve always been right about charging for estimates but youre gonna have to run that number till the day you die and I KNOW you will ......and youre RIGHT...and someone needs to..spose your elected brother. Volunteer? Duh....ha! You are sooooooooo right but its never gonna happen and you know why......Car dealerships and appliance people supposidy are professional....and we...well...some of us are just putting ads in the paper for the first time..unlicensed...unskilled..etc etc....thats what people think so...... so ya gotta add into your price the time you spent figuring things out......yeh sure....I DO love my work but I cant get my ring off my finger today cause my hands so swollen from work..Duh....No Sh*t Sherlock. I know I know. Sounds really great when I say I'm a craftsman that loves his work but guess what...as I think you mean...its an inauthentic way of saying I aint gonna charge for my time. Well, we need to charge . Authentically. How ever we can get it "realistally"! You rock Sonny........be well my friend
Andy
Andy, I had a very difficult time following your last post. what was it exactly you were trying to say? Sorry.Steve
S.J.MERRETTE Carpentry & Construction • Robesonia, PA
Nothing is impossible...It just hasn't been done yet.
Steve, you say you want "bigger and better" and you want it "now", so why not give the customer what they want? do these customers you save money for call you for the big jobs? What do you say on your cards? are you a "rotted door jamb guy" or are you a remodeler?
Sonny has the right idea , make that first meeting a "fun meeting", weed out the tire kickers and don't show fear. Ever had a customer that had a pet?, make friends with that pet and you're IN!
People TRUST their pets and if their pet likes you, THEY'LL like you!! But do it gently and don't TRY to get the pet to like you , just be nice and respectful to it (or the kid)and THAT will win them over.
The rest is easy cause they trust you and what you say. Well, maybe not easy ,but your well on your way to a sale. BTW , my closing rate is 8 out of 10 , really!!, and ALL my work is referall work.
Go to the niche you want to be in, don't advertise as a door fixer or carpenter if you want to do kitchen or bath or whole house remodels, SAY that's what you are; a remodeler. And then go out and charge like you deserve it , cause you do!!
good luck !
Geoff
Geoff, it says very little on my card other than company name, my name, address and phone numbers. I wouldn't be able to fit all that I can do on a card. I know what you're saying though. I'm just itching at the bit to get in over my head. I have a client now who I'm finishing the basement for, actually he did most of it but just doesn't have the time to finish the details and trim work. he owns a pretty good sized company that specializes in fire and water damage restorations. we had worked together on a charity job fixing a neighbors house to make it ADA compliant after he fell and became paralyzed and got to talking and he asked me if I could finish it for him. I'm doing it T&M and he's letting me do all the creative detail stuff I alway wish other cleints would pay for. it's a dream come true. best part is everyone who's see's what I've done is commenting left and right about how good everything looks (he entertains quite a bit) and my name is being credited for it. I'm hoping that brings in some higher end stuff.
As for Sonny's comment about reputation... When a job needed to be bid for a historic restoration one of the builders I've subbed for called me because he wanted "someone who does very fine detail work." that says something about the reputation I'm working on. (BTW that proposal is out and awaiting the owners approval) I may not be fast but I do it right every time.
I just finished a job today for a local church and the priest commented (I don't know if this is good or bad, but) that he noticed that I took my time and payed attention to the little details and that the job looked terrific. this was on a fixed bid so it wasn't like he felt he was getting milked either I believe rather that he got his money's worth.
I'm a nit picker for details. it's a blessing and a curse all at the same time.
Time will tell. after all technically I officially went into this business 100% full time 8 months ago.
If I seem a little ambitious and full of myself it's probably because I am.Steve
S.J.MERRETTE Carpentry & Construction • Robesonia, PA
Nothing is impossible...It just hasn't been done yet.
Steve,
I understand your trying to save a customer money by repairing the door jamb rather than replacing the door. But your in business to make money not do charity work. Chances are the rot goes further into the floor and joists. So why not sell a new door and repair the rot below? This will turn it into a full day project and the owner now has a beautiful new door to look at every time he comes home not to mention the neighbors that can now see your work. Pretty tough for anyone to see your patch. If your competition is selling doors and you sell a less expensive patch you may be marketing yourself to cheap customers and you cant make it doing that. These same people will call you back looking for a cheap fix. Don't forget your markup on the door, it's probably a lot more than the patch.
You probably won't get it now but your work will pay off in the long run. You will do a jamb repair some day and that person will hire you to build an addition on his house. Or his brother-in-law will. Keep up our standards and it will happen. Of course then there is a whole 'nother set of problems that you will have. Just more fun.
Steve,
Ok I read the first five post and skipped the remaining 30 or so.
To give you an idea about my mark-up, it usually depends. However I ALWAYS mark-up materials as much as I do labor. If work is slow I only mark-up both by 30% just to keep work flowing. When things are busy I mark-up 50%-60%.
It's simple macroeconomics supply and demand. Meeting what the market will bear. So mark-up may be different depending on your conditions and area.
Material is never ordered, delivered and possibility returned by itself. Procuring materials can be a job by itself and you need to be compensated for it.
Scott R.
I have strarted several different busineses. One thing I have learned is to only listen to myself. Noone knows your story. This is much to brief for any one here to mount advice for you to lean on. The thing that bothers me in these forums is the world is not the same. Graphic regions are plagged with indifference. Sonny is succesful because of what and how he does it, but also where he is working. For him to come to my town, I can only chuckle, to what he would be dealing with. Also, if he put on another hat and became a builder here, { where carpenters build complete houses for 15 dollars an hour on a regular basis} He would find his pricing a lonely road. But he is in a much better business than a builder , at least here he would be. For those small jobs are still the hardest thing for a homeowner to get done. Carps dont call back on door replacements here because they are making 15 an hour. The thought hasnt crossed their mind to think out of the box and charge more for the demand of getting a very small job done. So they are grinding their way through life wanting to be builders here and never being able to afford to buy their wife a new car. A good sub told me the other day that every builder in this town he knew was poor, in his thinking. That may be a little extreme , but none are comfortable.
I have done much better leaving their poker game.
Tim Mooney
Tim, I get the prices I get not because of where I live or what my niche is, nor the average income of Naples residents.
In the small town in Michigan I lived for 13 years, for competitors, I had a few other remodelers, several roofers and several siding/window replacement companies. Our area was comprised of mainly farmers, blue collar workers and Chicago people who owned cottages on the many lakes in our areas. In other words, no weathy people.
Oh, one more thing, Sunstrand, our largest factory, had three shifts and when not working many of their factory workers did remodeling and roofing jobs after work and on weekends.
So, consider the ability as to why was I able to close about 80% of my sales calls just for roofing alone when my prices were at least 25% higher than my competitors who did roofing as a living. How was I able to develop a business staffing 26 people?
If people buy price only, the USA would have only one dealer for each auto brand, one restaurant chain and that would be McDonalds, one retail store chain and that would be Wal-Mart, and only Kias would be sold through out the land.
My main sales here are to condo associations thru their respective property management companies and my competitors charge between $35 to $55 per hour. So how am I able to obtain $80 to $125 per hour? Recently I had a property management company call me to do a job for an old client of mine when I routinely did work for this client thru this particular prop. mgt. company.
The president of this condo assoc. told me they they were fed of having to deal with the "caliber" of people they started using after they terminated my services because I was, in their perception, too expensive. I told her and the prop. mgt. agent that I would do this project but after that I was not taking on any more clients on a regular basis. "But we used to be one of your clients." she said. My reply was: "That's correct. But you made a 'choice' to stop using me and now I've made a choice of no longer taking on any additional clients."
Recently I had a call from a client in a condo association I service and from a man I did personal work for. He wanted to gut is kitchen remove a couple of walls and wanted to discuss design with me. I told him I no longer did larger remodeling projects. He said: "Yes you do." I replied: "No I don't". He reiterated: "Yes you do. You can do it during the summer while we're back in Ohio. Just email me a couple of optoinal plans and a ball park price. We can finalize it over email//fax and/or telephone and go from there. We just want it done before we come back in October."
I'm doing the project - at my price. No competition.
You see, I've learned that "margins" - not "volume" - is the #1 game of business. So I sell my precious time to those who recognize the value of my time and what it represents. So, I'm not taking on any more clients who represent more regular weekly services. I am in the enviable position of being in demand. And don't get me wrong. I'm not touting my own horn. I am not a master carpenter., nor a master painter. I am not a super salesman. I'm not a high pressure salesman. In fact, I'm a laid back salesman. I don't even consider myself to be a highly successful contractor.
I am, however, a businessman who is a master at determining what my clients want and servicing them in the manner they want, when they want it, how they want it, and then some. And yes, if I moved to your area, within one year I could get at least 50% more than you do, and for the above reasons.
As Mr. Steinmetz says in his book "How to Sell at Prices Higher than Your Competitors", and I quote and in the caps he uses: "PRICE IS VIRTUALLY ALWAYS MORE IMPORTANT IN THE MIND OF THE SELLER THAN IN THE MIND OF THE BUYER."
As a metaphor, let me say that a "good man" is a "good man" regardless of where he lives and is soon recognized as such. People like to deal with good people. Don't you?
Pick the favorite place you like to buy clothing, or restaurant, or favorite mechanic. Are they the cheapest? Are you wearing the cheapest shirt, shoes, car, truck? Do you live in the cheapest house? Is the TV or stereo you own the cheapest you could find? How about tires? do parents send their kids to the cheapest colleges. We any of us take the cheapest vacations? Do we own the cheapest computers?
Refer back to the sentence above all in caps.
It's true.
Once you learn "why" it's true, you too will be in demand - at your prices - wherever you live - regardless of the ecomomy or your competitors pricing.
OK, this is another long post, but worth what I'm trying to get across.
This afternoon I visited with the property management company that drives about 90% of my business from condos. We discussed my inspection of a few concete stairways with about 7 treads each that had paint peeling. The reason is not important. The prop. mgt. co. owner (husband & wife team) couldn't get the original painter to go back. She said: "They had a falling out." She only asked if I would do her a favor and do it quickly. After she walked out of his office, I asked the maintenance manager if they would have to flip for all or part of the bill to redo 3 out of the 18 stairways that were done. He admitted they would eat about half of my price.
She nor he ever tried to chisel me on my price and in fact, they told me to do what ever it took on a T&M basis, knowing it would be at least $80 per hour. I assume that they hired or recommended the painter that screwed up and he would not go back to fix his work. I told the maint. manager I would eat their half. He protested. I insisted, and said I'd stop working for them he didn't let me do this.
"Sonny, you're a jerk." some of the readers here are saying right about now.
This woman and her husband SELL me and my services to every condo association they represent. They also SELL my site visit inspection fee, my SCA fee and pay me withn a week whereas typically condos pay in 3-4 weeks. I get so much work from them it's difficult to handle it all. What is a sales person worth to me annually? Mine is FREE!
Lets say at the worse, the final bill is $1000. Is my $500 an investment or an expense?
Let me reiterate from above: "I am, however, a businessman who is a master at determining what my clients want and servicing them in the manner they want, when they want it, how they want it, and then some. And yes, if I moved to your area, within one year I could get at least 50% more than you do, and for the above reasons."
Buy the book I mentioned and read it, and pretend that your competitors don't even exist. As has been said here before, and regardless of where you live: Don't BUY their prices. SELL yours!
You said: " One thing I have learned is to only listen to myself. Noone knows your story."
Not true. Everyone has the same story, and it's the wrong story. I will not live long enough to make every mistake possible. So contrary to you, I have always, and will always, continue to learn from anyone and everyone I can, including those I dislike because even they have nuggets of wisdom. There is only one type I run from , and fast. They are the negative people of our world.
Sonny ,I just got back off vacation. But one thing I was sure of; you would be right here when I got back. I was rolling down the interstate , trying to get home , and was wandering how you would fire at me. But I knew you would answer.
The reasons I stated before is the reason I dont contract for the public any more. I am comming back though. You probably read another post of me saying Im being forced back, because of the price of real estate. I also said Im working for double the price right now, than I worked for almost 4 years ago. I have thought a lot about what you have said in earlier posts . You are a pioneer of the pricing industry, for homes. Especially if the people are as poor there as they are here . Actually you dont know. But thats ok.
Tim Mooney
Tim, you know I'm a nag and always take the bait.
Welcome back home and back to our industry. God knows we need more people as yourself who are willing to provide 1st rate services at 1st rate pricing. It's simply a win/win for everyone.
Hopefully I'll get to meet you at the Remodelers Show this fall.
I would say that Sonny missed his calling - but he is obviously putting his selling skills to work in his desired profession.
Sonny - you are spot on with your observations & explanations of the selling process. One thing I keep thinking about as I've read these postings is that when looking at a close ratio, you need to look at who your prospects truly are. My suspicion is that Sonny has a high close ratio because he doesn't go chasing customers - he qualifies them.
People buy as much as they can from people they like and as little they can from people they don't like.
Timing is important. Presentation is important. Follow up is important. Listening is important.
Probe the customer and ask the tough questions [although asking how someone intends to pay for something might seem scary, it shows you are serious about business and invariably will help you qualify some of those 'customers' right out of your pipeline].
Seano
Steve,
Two points if I may...
First, advertising....I ran an add in my local "Yellow Pages" my first year in business. It cost a small fortune and returned ONE phone call. I`m dead serious when I tell you that the ONE phone call was from a competing "Yellow Pages" ad salesman trying to steal me away from his competition. When I feel the phone isn`t ringing quite often enough or with the right type of jobs I place an ad in my local paper. This usually helps turn the tide. The only other type of advertising I do is to sponsor my kids little league teams, buy a page in the HS yearbook or similar types of local exposure. The best results I`ve had are simply pinning my business cards in my local pizzeria. The place does phenominal business and I`m constantly "reloading" the supply of cards. In total I spend no more than about $500 a year on ads other than my "uniform" T-shirts.
Second, holding your ground....of course there are exceptions. If I believe lowering my price on a particular job will more than likely lead to more work,i.e. homeowner obviously has money and house needs much work, I might be inclined to come down a bit on cost, of initial work only. Once they have seen my attention to detail, they wouldn`t dream of going elsewhere. This seems to work MOST of the time. However, a homeowner who promises you much more work in future if you`ll just come down in price on this job is a RED FLAG. RUN, don`t walk away!
Hope you find this helpful. J. D. Reynolds
Home Improvements
"DO IT RIGHT, DO IT ONCE"
When you're a small operator (and choose to be, as I am) in an area with a marginal economy (like here on the Oregon coast) you've got to define a nitch for yourself, be frugal, be a salesman, be capable of doing good work (and proving it on a few jobs that you're willing to NOT make a killing on) and do some other things like getting friendly with some real estate people who often need patch ups to improve a homesale and, at some point, get a bank approval or two (so that you're on they're recommended contractor listing). Sometimes the equipment rental places can make referrals, and a couple of years ago I got a lot of referrals from one of our local window and door suppliers.
I'm also picky about my customers. I've kind of learned how to spot the "tire kickers" and sometimes I'll discreetly ask around about a potential customer (some homeowners should, by law, be banned from ever hiring anyone to do anything)!
I don't advertize and I'm buried with work, but I had some lean years.
You sound depressed and desperate. Years ago when I was single and going through a famine with the ladies, I would get depressed and desperate and it was like I had a sign on my forehead that shouted my repulsiveness. I think finding work is similar in that you've got to accept some famine but be willing to scrounge a few meals before you can expect a feast. (pardon the mangled metaphor).
Good Luck