Stock and Price Re-evaluation

[Tonyg 14]

I have been considering re-evaluating my pricing structure to better account for my stain costs. I use the AC stains and have maintained a stock of anywhere between 10 to 30 gallons at times. Some of that was intentional, stocking the typical Cedar semi or other more popular colors that I use, and and the rest being overage from jobs. For example a deck that may take 6 gallons and I need to order 10, or in the case of the current deck, I expect to need 14 to 15 gallons so I ordered 20.

Looking back over the last two years my stain costs have been running at 17%, which seems very high in my opinion, and my sf rates are not low (just my profitability). I am considering lowering my square footage rate by say 15%, and then separating actual stain costs, and ordering (and charging) per job. Now, because of cost, this may make my job bids considerably higher.

So, if you're doing hundreds of decks a year I'm sure maintaining stock is much more appropriate. The 'cost' of maintains stock is still an expense though. I may do a dozen or so decks a year and I am wondering if keeping stock and overage and using the averages, at a total sf rate, is really working out best for smaller volume.

Does anyone price their stain separately and how does the numbers come out?

[James 625]

When I buy . I buy to get the best price so that means maybe 30 to 40 5 gallon pails. I do many large decks and maintenances . My stain cost have actually gone down because of the amount of maintenances I do and hard woods. Total cost of a job start to finish can be 20 to 35%. Maintenance cost start and stay around 10% to 20 depending how old the stain is.

[Adrian 155]

We always try to order a bit more than the project requires.

Your seasons are shorter. Your shipping cost' are higher due to fuel surcharges.

If you could eliminate the shipping and handle your own P,U,&D your expenses would drop, which would allow a higher profit margin.

Im sure there are a million ways to break yours down. Just charge more!!!!! We all have to to keep up with our increased cost' of operation.

I'll let Jim take over, he's in your part of the continent.

- - - Updated - - -

Damn Jim, I knew you would field this one , but, beat my post. lol.

[Beth n Rod 1,279]

I'm with them....^^^^

Beth

[RPetry 564]

... Does anyone price their stain separately and how does the numbers come out?

Tony,

We invoice all material costs, ie: chems, stain, etc., as separate line items on all jobs. This is due primarily to NJ sales tax laws. As we pay tax when purchasing products, I can not legally, and would not morally, charge tax again to my customers. In addition, this makes accounting and sales tax reporting much easier.

The customer pays for what is used on a job. Fair to both contractor and customer.

During the season, we keep an ~ 40 to 60 gallon stain stock. We order in 30 gal. minimums, as shipping is "free" and we are in an area where Ready Seal arrives here overnight.

[Adrian 155]

Hey Rick,

Sometimes our customers actually ask for the remainder of the projects stain.

So they can do "touch ups" on their own.

Ever run into that? Do you then have to "double tax" the product so you don't take the hit?

Or is that covered in your margin?

We could lose the almost 9% on state alone.

It kind of forces us to shoot for the highest possible margin, despite what the competition does.

Thats why we are here to make $ but anticipated future operational cost' make it hard to bargain.

.....and some folks just want a bargain.

.....

[RPetry 564]

Adrian,

We often get requests for "touch up" stain while on site. I usually give them a qt. or so gratis. If they need more either we did not finish the job correctly (impossible, I am not blind!) or they want to maintain the wood themselves.

In that case they can order directly from Ready Seal or my distributor. I'm not in the retail chemical/stain business.

Any customer that wants a "bargain" for a service/product will get what they pay for.

[seymore 90]

My stain price have increased over last year and has effected my retail and contractor prices but not as much yet on my applicating cost. Older drier decks,fences I tend to charge more due to the lower sqft /gallon but it varies on the job.

I like the fact I can order a pallet of stain 120 gallons from Plano for a little over $100 the next day by ODFL trucking Co.. Now I'm ordering about 2 pallets a week already! I sell quite a bit retail now than I have over the years and growing. So having 100's of gallons on hand makes it easier for my application company to have stain on hand for jobs. Rick I'll leave touch up stain also if I think they will actually touch it up . Some homeowner would rather pay me to come touch it up when i'm in the area.

BTW I like to stay around 50-60% on net margin when I can on jobs doesn't always work out that way but I try hard to...

[Greg R 82]

We bid the finish as a separate line item as well for both sales tax and mark up purposes. In Indiana we have to collect sales tax on the stain only. The remainder of the labor and chems do not require us to do so. With regard to cost yes you just have to charge more especially if your ordering in small quantities. We usually bring in 240 gallons at a time to insure adequate stock and save on freight costs but we're dedicated wood so I know we'll use it quickly. I would suggest keeping your pricing the same and just adding in the stain as a separate line item. You might be surprised as too what the market will bear :)

[Tonyg 14]

So. I think then I will break out the stain in my rates. I'm still a little unclear now whether 17% stain cost is high or low. If costs are running 35%-40%, how much of that is stain, or of what percentage to revenue?

Thanks guys. I appreciate your experience and knowledge

[James 625]

PT decks take more oil but can be done faster. Hard wood decks take less oil but are more labor intensive. Cedar is in the middle. Severe strip jobs take more stripping product and labor.

[RPetry 564]

... I'm still a little unclear now whether 17% stain cost is high or low. If costs are running 35%-40%, how much of that is stain, or of what percentage to revenue?...

Tony,

As Diamond Jim mentioned, depends on the wood species and condition. As you are in Virginia, I would assume most of your wood is pressure treated pine.

I just quoted a typical clean/partial strip, old neglected PT deck/gazebo yesterday. The estimated stain cost worked out to ~ 14% of the total job cost. This is two separate applications on horizontal and one heavy oiling on the vertical wood. A 2 year maintenance on this job will take a lot less stain, generally about 60% of the quantity used in the initial restoration.

[Greg R 82]

So. I think then I will break out the stain in my rates. I'm still a little unclear now whether 17% stain cost is high or low. If costs are running 35%-40%, how much of that is stain, or of what percentage to revenue?

Thanks guys. I appreciate your experience and knowledge

The % isn't out of line in my opinion as a sum of the invoice. Our % fluctuates a decent amount with a low of 10% to a high of 25% depending on the project. Fencing for instance generally has a lower cost per sq ft for labor yet eats up a whole lot more material than a deck. As long as your profitable on the retail end of the stain (another good reason to bid it out separately) that's all that matters. From there just make sure your making what you need to make on the labor end. We have a decent mark up on our stain products to the customer as well but I know when we use AC there's not much there to be made due to the expense.

[Cyclone 25]

Does anyone price their stain separately and how does the numbers come out?

I've all but stopped doing decks but when I was doing them, I looked at the cash turnover between buying it and getting paid as well as the markup and I stopped providing it altogether. The rates I was getting for AC from the stain shop versus what the homeowner could get it for was so close it wasn't worth my time.

If I needed 6 gallons I'd have them get 2 pails and offer to buy any unused. I'd also suggest they keep the extra for a recoat of the horizontals. Sometimes I might have 1-4 gallons myself and I'd have them just buy 1 pail.

I'd have them order it and stick it under the deck for me. I know this might sound cheap but I didn't have to sit on thousands of dollars in stain waiting for the rain to allow me to get my cash flow back.

[Tonyg 14]

The % isn't out of line in my opinion as a sum of the invoice. Our % fluctuates a decent amount with a low of 10% to a high of 25% depending on the project. Fencing for instance generally has a lower cost per sq ft for labor yet eats up a whole lot more material than a deck. As long as your profitable on the retail end of the stain (another good reason to bid it out separately) that's all that matters. From there just make sure your making what you need to make on the labor end. We have a decent mark up on our stain products to the customer as well but I know when we use AC there's not much there to be made due to the expense.

Now that I've got a few years under me I want to hone in my numbers better. I know with the coverage varies widely, and I've only seen one ipe deck and one redwood fence, so yes PT is all that I see. I went back over the last 2 years and compared my averages.

Again, I appreciate the direction