Price

[Russell Cissell 65]

After talking with another contractor today I became very curious about pricing. I've been specializing in wood restoration for over a decade. The price varies by region of the country and also from company to company within each market.

I am very interested to see how the prices here in the St. Louis market stack up with those nationwide.

[Deck Guy 14]

Hey Larry, you better hop on that roof cleaning in Cape before I do. LOL

Don,

I've seen a couple fail here (including a national franchise) already, which amazes me. At this point, I wouldn't even know who to call if I wanted it done. I have a logo and marketing plan (or several ideas, I guess), but no time to pursue it, and no place to find SH at a decent price locally. I have even found an affordable full-size van with a 40' boom, but no way can I leave my day job at this point. If you lived closer, I'd try to con you into letting me market and bid, you handle the work, and we both split the $$$ somehow!

I can get 10% for about $2.50 a gallon, but I was hoping to do better. I'm going to call a friend-of-a-friend who owns a local uniform company (Tipton's), and see if they buy drums or have a supplier. Even then...I just need more hours in the day!

[garcii2 14]

Mike, I would have to agree with you on that one. If somebody pays for cheap labor, they are taking a risk of loosing their money and a poor job. If someone pays good money on a contractor that has a good reputation, then they may loose a little money, but they recieved quality work. If you offer cheap labor to a company, and they referr your business, then you are stuck what price.

[PressurePros 248]

Larry, I understand how you could have misunderstood my meaning. Allow me to elaborate. The numbers tell the story. A little about me: I've been in business a lonnnng time (22 years worth of various ventures and corporate life). I have a degree in economics from what is often the top business school in the country. I've done professional sales and have trained hundreds of guys as a corporate sales trainer. I study stats and my life is analyzing numbers. I also have hundreds of hours logged in seminars and consultation with some of the best salespeople and statisticians of our time. I didn't pull that number from my rear end. If your close ratio is over 60% you need to raise your prices. That is based on analytical data and giving you the benefit that you are performing perfect prequalification with targeted marketing. The average CR for a good salesperson is 33%. Ninety is just not realistic, I don't care how good you are. It has nothing to do with profit margins or what I need to stay afloat. You are undervaluing your product. If a car salesman could offer $5000 brand new Lexus he'd close 90%. Would it be because he is a great salesman or target maketed his clientele? I am not saying that you are not a very talented sales and marketer but I AM telling you that statistically, your numbers are skewed.

Here is my arguement that you are working harder, not smarter. Let's say we each get 10 calls from our marketing campaign. You close nine jobs. I close six. My prices are 50% higher than yours. Lets put your average job at $450 mine at $675

We both make exactly the same gross money.. ($4050 from those jobs) only over the course of a season I can do 35% more jobs than you can (given equal labor force and time per deck) Using an average month of 20 work days You might do $8991 where as I would do $13,486 in gross sales.

It would cost me about $500 in marketing expenses to achieve that gross sale number. If yours cost you $100 I am still ahead by $4095.

I have abolutely no idea where you got this notion

If your theory is right, everyone everywhere should advertise anywhere and everywhere it generates the most calls without regard to a targeted demographic, and let your 60% closing rate theory increase their business. Is it possible that I just get more calls from people who are truly interested due to my ad placement and design? Or is it possible some schmuck somewhere only closes 30% of his calls, so we average each other out?

If you have ever read any post I have made on marketing (there are many spread about in the business section and in the library) you would know I advocate targeted marketing to key demographics. I get probably ten calls a week from guys asking advice on marketing. I don't say this to blow my horn but to let you know you are preaching to the choir.

Another assumption in your arguement.. your have lower overhead. I'm not even sure how this is relevant to the discussion of sales and marketing but if you are buying your chemicals from RPC and PressureTek I know I am paying less. ( I am a chemical distributor) My sealer cost averages to $.09 per s/f. I don't believe in big fancy rigs. I use a 13 horse 4 gpm cold for deck work. I have a 5.5 gpm hot water machine used for housewashing and flatwork.

It comes down to this, Larry. Do you own a business or do you own a job? At some point don't you want to sit back and let employees perform the work you are doing? Don't you want to expand your company size and earn more profit? Those things take a higher profit margin. If you are happy staying a one man operation working your tail off and disillusion yourself into believeing success is based upon a 90% closing sales ratio then you and I have different definitions of success.

[CoastalHydro 14]

Ok, I know this is an old thread but I'm reading all I can so i can get the knowledge and hopefully add this onto my business model in the near future. There was a question that surfaced a few times in this thread that I coudn't find where it was answered. When you throw out a $ per sqft, does that include the cost of materials (stain, stripper, etc) or are those costs added onto the estimate at the end?

Thanks.

[seymore 90]

Ok, I know this is an old thread but I'm reading all I can so i can get the knowledge and hopefully add this onto my business model in the near future. There was a question that surfaced a few times in this thread that I coudn't find where it was answered. When you throw out a $ per sqft, does that include the cost of materials (stain, stripper, etc) or are those costs added onto the estimate at the end?

Thanks.

My staining prices are materials included but there are times when extra charges are needed to protect stone,concrete etc.When it comes to cleaning charges not all jobs are the same. So you need to price them as to what is needed to clean them..IE Stripping,brightening,light cleaning etc.I price cleaning seperate from staining prices per sqft/Lft decks/fences.

You know your cost of labor or materials and you should charge to atleast cover those cost and the kind of profit you want to make.

[Greg R 82]

We bid material (stain only) seperate from the bid. Outside of that be bid out jobs by the square foot on the floor, framing and lattice and by the linear foot on the railings systems. Every deck has its challenges so you have to factor in a PIA charge on some :)

[RPetry 564]

Same here. Materials are estimated but billed on quantity used. Seems the most fair to both customer and contractor.

[MMI Enterprises 289]

In reading back through this I learn so much yet can not decide on pricing...

Seems Larry is at $.90, Ken at $1.35 , etc., etc. ..

Some say use 3, some say use 4 as multiplier for railing linear ft...

Then we got Russell suggesting a rail easy way with his add 6ft. method.

Works out to 672sq. ft. on Larry's 300' floor spaced (500 tot) deck. So it becomes real easy how sq. ft. price poll is way subjective to methods of guestamating..Russels sq. ft. calculation method would result in a sq.ft price of $.67 cents.....huge differences here..

I really like the guestamating suggestion mixed with them 5 things to think about in a business model...

Awesome thread!!

[bigchaz 157]

The differances come mainly from the fact that saying sq ft is really dependent on your measuring methods. Some people measure just the floor area and bill 3 or 4 dollars a square to cover all the other wood. Other people measure every side of every board and stringers, spindles, posts and charge much less.

[Deck Guy 14]

The bottom line is to know what you need to make, be competitive, don't leave any money on the table, and perfect your methods so you can make more per hour.

Even the sq. ft. pricing can leave two different competitors making vastly different amounts on the same deck. If I can finish the example deck in a total of five hours, and it takes someone else eight hours, I can make more money even if we charge the same amount.

[MMI Enterprises 289]

The sq. ft. result of Russels method would be out of range of other bidders if the rate was towards a higher avg. of around $1.

In such case of using that method it might not be wise to leave the figures on the table but rather to just leave the end quote amount for the customer.

Get too much into distractive talk about sq. ft. with customer and then someone's integrity at measuring will come to question and they confused.

It really in the end is all about customer deciding on the end amount and having a good understanding or expectation of what your doing to their surfaces.

[jeffex11 121]

I'm drinking my coffee getting ready to do a big job today and reading all the posts. I'm charging my laptop so I can check the radar before I make the decision to go ahead and stain today. Its clear that pricing is regional. I've found over 16 yrs. that using a sq. ftg. measurement to price services is the way to go. Another benchmark for me has been the realization that in my market the price you can get for washing a house is a simple formula. For a $300,000 house [value from zillow.com] you can get $300 to wash. It allows me to give ballpark prices on the phone to qualify a customer. If they are still interested then I do a site inspection and give a final price. I price decks per sq. ft. and add for height, ease of access, city or well water, and other time adding issues. I measure the deck floor sq. stg. to make my price. 10X20 deck =200 sq. ft. X $x.xx per sq. ft. Many times I do a drive by price if I'm busy and try and push the threshold of what I can charge. I like to get 3 of 5 bids. Throughout the season I adjust my pricing to keep bookings 2 to 4 weeks out. Right now I'm booked out 6 weeks so I gave a drive by price for a deck and ranch house at about $100 over normal rates . I can always call her back later in the season if she balks and drop her price $100 [back to normal] and reel her in if I get caught up. Pricing is an art if your busy and a science if your competing for work.

[Beth n Rod 1,279]

Pssst! Hey Jeff, please add a signature when you get a minute...

;)

Beth

[Deck Guy 14]

Throughout the season I adjust my pricing to keep bookings 2 to 4 weeks out. Right now I'm booked out 6 weeks so I gave a drive by price for a deck and ranch house at about $100 over normal rates . I can always call her back later in the season if she balks and drop her price $100 [back to normal] and reel her in if I get caught up. Pricing is an art if your busy and a science if your competing for work.

Sorry, but I will not lower a bid after presenting it. When I bump them because I'm busy, I'll go 25%, but that is the price...period. If you start negotiating price, where does it end? Why can't you go down $200? At least that's what I would ask you.

For example, I had a bid from Terminex for termite control at my house. He was nearly twice the price of local non-franchise operations. As I was considering my options a few days later, he called and offered to lower his price by $500.00 if I committed to him that day. That just made me realize what a scam it was in the first place. And here's the kicker...I was actually considering using them anyway, based on their reputation! In other words, they had a BETTER chance at my business when they were higher priced! Who could imagine that?? Negotiating his price cost him the sale!

Ken can give you some help on understanding his theories and methods, but he has the right idea. I am closing fewer jobs, but making more this year after increasing my pricing by a good bit.

I also am making a genuine effort at upselling, and it has reaped big rewards for me. Plus I got to dust off the surface cleaner that had been leaning against some shelving in the garage. It paid for itself the first time I used it. I started on some deck maintenence for a return customer, noticed some green stuff growing on his house (got the housewash), then offered to clean the patio below the deck (used the surface cleaner), then booked him for his driveway and three car garage at a later date after he saw it in action. Can you say CHA-CHING! That's how I make money in this biz.

[KandC 14]

Russell,

I live over in the past Eureka and I have read that the normal price around here was $1.35 a sq ft. but have been unable to get that.

Hey don,

I am ken I own K and C Power Washing in conway, AR. I say you where just a couple hours from me. When we both get a little time i would like to talk to you and compare some stratiges for cleaning. My number is 501-328-3988 and my e-mail is kandcpowerwash@sbcglobal.net. Hey dose having a web site help you get more buissness?

Nice to meet someone in arkansas.

Ken

[jeffex11 121]

OK HOW DO I ADD A SIGNATURE . Dropping an inflated price is part of the ART of pricing and marketing. I've been blessed with too much work at this time and have even given some leads forward to others. Networking works both ways. My stratedgy is to let price slow the work down and when things settle down go back to normal , pricing will follow. the context of lowering a price back down $100 would be on a $6-$800 deck not a $2-300 deck. It is call an oppertunity cost or fee for putting yourself in line for service. If they go somewhere else so be it I can't get to them anyway. Nothing ventured , nothing gained! supply and demand Economics 101.You got your way and I've got mine. I never pretend to tell anyone how to price or practice thier business. This is a discussion board and I simply am sharing a pricing stratedgy that works for me. I heve gained new info on this site and hope I've offered some.

[jeffex11 121]

lets see if it worked ?? sorry for the non-post

[Beth n Rod 1,279]

Hooray! You got it! :)

Beth

[MMI Enterprises 289]

Apparently this thread was brung ttt via poll voting.

Just wanted to note to viewers that this thing should be thought of as dated. Is kind of a shame that as time goes on the original figures of the year it was presented will be tainted. The $1 rate is surely old due to cost increases.

[FGDave 14]

Sorry, but I will not lower a bid after presenting it. When I bump them because I'm busy, I'll go 25%, but that is the price...period. If you start negotiating price, where does it end? Why can't you go down $200? At least that's what I would ask you.

I can answer this. I would tell you, I gave you 100$ off, I can't pay you to do your work now can I? I can take off the 100, all I ask is you tell your friends about us.( Now he tells his friends your a great guy and he tells them the discounted price, which is the normal full price) So it snowballs.

A common sales practice in any sales is to high/low a potential customer.

Coming down off a price simply shows a willingness to work with people, and appear to "cut a deal". Which is done in all businesses of any kind.

Especially now. Times are hard for everyone and a money can be made from lower prices and higher volume, taking less time to do a job. People are more concerned with bottom line than anything. Quality will take a back seat to job cost and speed. Those who adapt will over come, others will fall to the waist side.

Now is not the time to get rich, but to just keep going until the economy picks back up.

[bigchaz 157]

Responses in red

I can answer this. I would tell you, I gave you 100$ off, I can't pay you to do your work now can I? I can take off the 100, all I ask is you tell your friends about us.( Now he tells his friends your a great guy and he tells them the discounted price, which is the normal full price) So it snowballs. Or the more likely scenario: He doesn't tell anyone and you lose 100 dollars

A common sales practice in any sales is to high/low a potential customer.

Depends on how you present your service or product.

Coming down off a price simply shows a willingness to work with people, and appear to "cut a deal". Which is done in all businesses of any kind.

No it shows you're a sleazy businessman and reinforces the customer's idea that you were ripping them off with the initial price. Grocery stores and gas stations don't cut me a deal, neither does my company

Especially now. Times are hard for everyone and a money can be made from lower prices and higher volume, taking less time to do a job.

Or money can be made by working less, and making more

People are more concerned with bottom line than anything. Quality will take a back seat to job cost and speed. Those who adapt will over come, others will fall to the waist side.

Correction: some people are more concerned with bottom line. My customers are concerned with a quality job that will last coming from a company with customer service that backs up our claims to professionalism

Now is not the time to get rich, but to just keep going until the economy picks back up.

Best year ever...can't imagine what happens when the economy "picks up"

[fireandrain 39]

ditto. everything Charles said.

[big mike 14]

FGDave,

Your's is a recipe for going out of business. Good luck. Also agree that this poll is hurting anyone who does wood refinishing. When will we all learn not to post pricing on a public forum?? Newbies use these as pricing guidelines and end up getting called lowballers. Do us all a favor and erase this thing Beth.

[FGDave 14]

Responses in red

I can't quote your answers for response...

Best year ever? I do 90% new home construction. The USA is at a 17 year low in housing and value of the dollar vs other currencies. DUDE! Do I need to go into economics 101 for you? Have you gased up lately?

Sleezy? Keep thinking that. 18 years experience shows me different.

Every one wants to feel like there the only customer you have. And they want to feel like your giving them a special deal.

Lose 100$? did you read the first post? He said the price was 100$ over top of normal. So you get the normal price instead of jacking it up and being sleezy with a high price.

I wouldn't move to Charlotte if I were you guys. Price and speed rule around here. Its all about production. You have to be fast cheep and good.

Out of business? HAHAHA please tell me another. The south had the worst drought in decades last year. Most pressure washers in the area went under in a big way. NOT ME! I am still doing well even with 85% of business down. I usually have 10+ crews out working every day. But the 17 year low in new home sales cut that back. I have 20+ builder accounts. So I'd call that not even close to going under, and any of my customers will tell you we're very professional, reliable, on time, and the highest quality of work around. And on service repairs we also have a limited life time warranty(no body in my business can do that)

I do in 2 hours what most take 4 to do and produce better quality.

Want to attack me? Bring it! I am not your fly by night low balling drunkin redneck.

[Celeste 341]

Okay Carolina Boys - let's back up and remember we're in the same profession, all trying to achieve the same goals.

Charlie has a very very respectable business up here, as do we and I'm pretty much agreeing with the don't lower prices.

Charlotte is a very different demographic - period.

You don't have to tell us about the drought - it was HERE, way worse than further south. The PWNC made HUGE strides in keeping a lot business working. With that said, be a part of the solution, not part of the problem. If you have 18 years of experience in both pwing and business, you can bring something to the group.

But, bottom line is, let's don't air this sort of stuff in public.

Celeste

PS - Please put a signature in (see posting rules)

Edited July 25, 2008 by CarolinaProWash
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