I Dont Know How You Guys Get The Prices You Do.

river rat

ive been reading pages and pages of posts on here for the last 2 weeks, and ive asked questions.
well i came to the conclusion that , hell, if they can charge these crazy high prices so can i.
so last week i had 5 bids to see.
i bid them all at around $400 a day.
i lost every damn one of em.
ive NEVER had such bad luck losing bids.
i always get 90% of all my bids. now some may say that if im getting 90%, then i should raise my prices a bit then i wouldnt have to do so many jobs.
but after losing this many, screw that. im going back to charging $200 a day.
it seems that that is all my area will bear.
now im just waitng for the phone to ring, cause right now i aint got jack.
so anyone that reads that someone is charging $500 a day - beware. maybe they are, maybe they are just blowing smoke or maybe they live in a magical land on gumdrop lane where people toss gobs of money at them just for swinging a paintbrush. but thats not where i live.

ProWallGuy

OR maybe they have learned how to SELL a job.

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ApgarNJ

big difference between 400 a day and 200 a day, why not go somewhere in the middle, if you don't think you can get bids at 400 a day, i hope that's just for you, and not for a helper also.
what area of the country are you in?

my painter is 560 a day, for two guys 8 hrs. both painters, not one helper and one painter. that averages out to 35 an hour. rates are different all around the country, you can't say that someone in the midwest is going to get the same rate as someone in the northeast in a high income area.

Vermy

looks like you don't really have urself a business, just a job where ur responsible for everything and no ones there to catch you if u fall.

Murphy

I don't see how you can stay in business at 200 a day.
Gas, insurance, taxes, tools, carrying costs. 25 an hour with probably 10 going to the govt. no way to make it work.
If you are only working 8 hours a day with your own company you may as well give up now.
I figure I probably work 100 hours a week running down leads doing estimates and lets not forget I actually have to work to make some money. And I am not rolling in the dough charging 500 a day.
Either you are in competition with a lot of uninsured guys who will work for nothing. Or you need to sell your expertise to a higher end customer.
Just my opinion Murph

maj

There you guys go again, jeez
I know exactly what river rat is talking about. His market WILL NOT support the higher rates that other places of the country does.

THERE IS NOTHING WRONG WITH THAT!!!!

And I absolutely agree with his post. I feel the same way, that if I charged even half of what some of the pros on this site claim they make, I would be out of business immediatley.
I tried that a few years ago on a series of storage units to be built. Each unit was 40' x 240' and there were 3 scheduled to be built. All I needed to do was give an estimate of my labor to construct them, since the owner was a past satisfied customer. Well, I decided to make some easy money on this job and priced it 30% higher than what I started at. Customer thought it was pretty high, but trusted me at that time. I thought I had the job. He was convinced by someone to get another price. He did and I was laughed out of the job by another very reputable contractor. To this day, I have not done anymore work for that past customer, because I got a little greedy. So not only did I lose one job due to pricing beyond my market, but also lost all his continuing future jobs.

In MY market, I MUST DEPEND ON WORD OF MOUTH. MY area will not support sneaky sales tactics & "better than though" attitudes. I GUARANTEE that you guys who preach the selling philosophy in order to able to charge more, would not last a month here. I say a month because after that there would be no one left to spread your bs too.

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R&S Exteriors

POST OF MY DAY-- MAJ




How could you possibly know what his overhead is and even if he is just making a living at least he is doing it as his own boss and not working for someone making half that.



This is good advice river rat. I would not even go in between. If I were you I would SLOOOWLY increase my estimates over a long period of time. Try charging $210. If you still get results go a little higher. When you feel your getting too low of a closing rate then back off a little bit.

That way you still have work coming in and you don't have Home Owners traching your name around town.

Brian

Everyday I bid against guys wanting $200 a day ($25 an hour). Everyday I get jobs against these guys at at twice that.

It isn't so much a matter of what people will pay as it is a matter of what you offer. Offer more value and people will pay more.

For example, offer: insurance, credit card payments, consumer education, prompt response, stability (time in business), professional memberships (BBB, NAPP, PDCA, etc.), time with your customer, etc.

If you look like your competitors, the customer has nothing but price to compare you. Look different than your competitors (offer more value) and many customers will pay your price.

I sell paint jobs for about 6 different contractors in my city. When they came to me they were selling for $25 an hour. I sell them at $40+ an hour. I get a higher price for them because I have helped them offer more value. They have done many of the things I mentioned above.

If everyone wanted the low price, everyone would be driving Yugos and eating at McDonalds. I'm unaware of anywhere in the country where that is the case. If you market to Yugo drivers, don't be surprised when they want to pay Yugo prices.

After 20 years in this business, I've learned that contractors worry more about price than customers. I know because I used to do it. When I quit worrying about price and focused on offering more value, I was able to increase my prices considerably.

I get tire kickers and price shoppers. But I also have plenty of leads. I close 40% of the jobs I look at-- this has held steady for the past 10 years. And I've doubled my prices during that time.

Generate enough leads, learn to sell, offer value, and price your jobs properly. If you do those things, the low ballers don't matter.

Brian Phillips

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jose jeminez

Are you brian with thenapp? sorry for bad ebglish.

Say I, GREAT POST!

jose

R&S Exteriors

I'm glad your doing well

Is that "value" your selling or something else. How do you know what "value" a so called "low baller" has. Many probably do as good of quality, or better, than the guy charging twice as much.

What do you mean "Price your jobs properly"

I'm a contractor not a used car salesman. I estimate my jobs at what I feel is a fair price and what the market in my area will allow without having to spend an astronomical amount of money on marketing, advertising and salesmen so that I can bring in enough leads so that a few of them are willing to hire me at twice the going rate.

I do not have to pay a fat commission to a saleman and I keep my overhead low. Let the other guys pay for a fleet of brand new trucks at $650 a month. I'll keep buying my 3-4 year old truck and pay cash.

jose jeminez

Fidel think same you as.

jose

mdshunk

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joasis

Here we go again....market area will dictate price...I think it is wonderful if some of you guys can hit a $400 day...those kind of prices here in my area is what directly allowed me to get my business of the ground. In my area, we charge $55 an hour for a crew residential, (2 guys and tools) and $60 an hour commercial. I just landed a pretty nice contract and will have one crew on one site for the next 4 months. Now for some of you, this may seam ridiculously low, but this is my market, and I make out great. And to further that thought, I generally bid the whole job, which is what GC's typically do, and we make better numbers.

Now back to a painter making $25 and a painter making $50....if we are talking comparable quality and time, who isn't going for the low bid? I haven't seen a $400 dollar a day painter here yet.

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R&S Exteriors

Same thought I had from his first post. I think there he may be a few other users as well

maj

Brian, I invite you to my area and prove to me how you are going to out price all the rest of us who have been here our whole lives. Hell, I won't even challenge you to double our prices, maybe just 25% (1/4 of what you claim). You will be laughed all the way out of town within a week, 'cause ain't nobody around here going to fall for some overpriced salesman offering up phoney promises of being twice the value because you pay your yearly membership fees to some organization that nobody gives a sh*t about.
I

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Patty

Maj?

Is this about GREED or PROFITABILITY?

There is a BIG difference.

And, I think there are TWO conflicting thoughts and opinions brought forth, here, in this thread, that should not be confused.

lxdollarsxl

I disagree, and river rat is correct, not being in an area that has the big spenders, price does mean a lot to them, and having contractors within their budget counts a lot. Here in Ky ( the part im in) to get $250 a day and your doing well. You can offer all the bells and whistles you want but unless they have it within their price range your not going to get it.

In fact i would challenge you to get the bigger bucks here, yes there is the occasional job that money isnt a problem but they are few and far between.

Like River Rat i tried to increase my rates but not by as much and the market wont take a rate of $300 per day, there are so many who are willing to take $150 a day, no matter how good your reputation is its tough to compete, as im sure it is in many places. Im not moaning about the rates here, mainly because my cost of living is much lower than in a big city, but just pointing out what good for your area may not be the norm elsewhere.

Dang maj beat me to the challenge - i must type quicker

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R&S Exteriors

I think what Maj is saying is that different areas have different cost of living and will support different amounts.

Profitability does not strictly depend on how much you get per hour on a job.

Profit is how much is left after all the bills are paid. If your in a lower cost of living area, like us, and you keep your overhead low and don’t go deep in debt then you may actually make more profit at $200 then someone somewhere else charging $500 per hour. In that case who really is the "low baller".

You can rent a nice house, in my area, for $600 - $800 a month. My sister lived near Boston a few years back and she paid over $1500 a month for a two room studio apartment. So yes to live in that area you the people make more per hour and the Contractors can charge more per hour, BUT are they really more profitable?

I’ve seen some "big" guys, even in my area,( who bragged about how much they charged per hour) file for Bankruptcy and go belly up. Must not have been too profitable. Probably the fleet of new trucks and machinery and the salesmen and the marketing and advertising budget, etc

donb1959

My overhead dictates that I make $500.00 per day, plus my matierial markup in order to make a profit. It really doesn't matter what the market will bear I have to make that amount. Believe me I don't land all the jobs I bid...not even close. And I know if I were to drop my prices I could land many more. I also know that I can sit on the couch and not make money instead of bustin my humps on a job I know that I'm gonna lose money on.

If you know your overhead, and know you can turn a profit at $200.00 per day, then thats the rate you charge. However is you don't know your overhead and are losing money, then what's the point.
You must live in an extremly small town, with no larger cities nearby if you don't advertise at all. Not sure about "sneaky sales tactics" I tell the customer exactly what I will do at exactly what price, and everything is outlined in my contract. "Better than thou" I am head and shoulders above what most contractors in this area are.

If you are closing 90% of your jobs at $200.00 per day and making money money that excellant, but if your'e not making money, then you will not be in business at this time next year. If I were to start closing 90% of my bids there's no doubt I would increase my day rate by at least 25%

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realpurty2

Oh how I wish I could step into that challenge. Nothing personal Maj, nothing at all, but that's one I would enjoy standing toe to toe and proving you wrong. Now hear me out.. I'm not saying that your methods are wrong, or that you are wrong but rather that I could prove to you within a month's time that it could be done. Since I can't up and move, start a business in your area, and formally back up my opinion, I'll just have to tell you here why it could be done.

How could I win such a challenge on your home turf, with your friends and clients, your exact market conditions as my obstacle? By finding as much about you as I can find, what you do, what's included in your price, your good points and your bad... then offer more than you do. This is in the painting thread so to keep Grumpy content and not be like Paul, let's use painting as an example. The $200 a day guy may have low overhead and live in a lesser market area, but a $400 a day guy could still take away some if not eventually all of the lower guy's business by offering more.

We've all talked about quality and value, but just how far do you take it in your bids? Sure it cost more time and materials both for a painter to tape off every detail before painting, and some are good enough that they can skip that step and be fine. Some will track right in on the carpet with boots on to keep their overhead lower by not worrying about floor protection except in the area where they are painting, some cover their feet with booties or paper the entire pathway they will be traveling while on the site. But to a homeowner, when it's presented that your company doesn't skip those small steps just to offer added protection to their home and not take chances with their investment, most HO's will sign with the guy who covers those bases, even if it cost more. It's not "phoney promises" when you really do give the client all the extras that justify you charging more than the guy who doesn't.
The association memberships don't offer anything of value to the customer that they can see on the walls, but often, they associate trade organizations with education and honors, thus, having them is not always a waste and something no one gives a **** about as you say. It's just another way of promoting confidence. Trust in the contractor has a huge berring on signing a job, so the more you can do and show to earn their trust, the more they want you to do the job. The more they want you, the more they are willing to pay. I'd be willing to bet that you've increased your prices since you first started because now your in demand. You got yourself to a position of demand going a different road (using previous jobs and word of mouth to build your reputation) but it is no more correct or wrong than the contractor's who build their reputation in other ways.

We live in a market much like you mentioned being in, slow pace, hometown farm country where your name means everything. Our rates are not what they would be if we lived in California, but for our area, we are one of the higher priced contractors. We are booked with signed contracts through Febuary if not March and more calls coming in every day. We have one work truck and one van, both older and in need of a good paint job, we don't work out of a fancy showroom and the only trade association we belong to is NAHB because it's the only one with a local meeting. Why are we able to charge more than our competitor's who have 3 story offices, new fleets of vehicles and 100+ employees? Because we give the clients more services for their money. The thing too many of us miss is in order to provide a service to the HO, we have to think like a HO sometimes. We've all bought a service before, and if we were honest, we'd all have to admit that we didn't always buy from the low bidder. We made our choices based on who offered what we were looking for and gave us the most for our dollar.
Shew that was long... sorry guys, Maj got me started. lol It's all his fault. Never issue a challenge.. I don't back down.

Many times on this forum we all have argued our opinion on quality, value, low-ball bids, contractor's skills, this and that and how it relates to pricing. We've stood our ground on whether the market dictates the price or if the price dictates the market. The debate will never end.

Lastly... if you want your opinions respected and your way of doing things to be acknowledged as a possible option, then give those of us who do things differently the same respect. You can't get on here and bitch because someone does something different and expect not to get bitched back at when you insist our way is BS just because it's different than yours. (No maj, that wasn't directed at you, it's at all of us because everyone here has done it sometime or another)

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