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Average Closing Percentage

 
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Old 04-07-2019, 01:26 PM   #1
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Average Closing Percentage


Hey guys, my name is Gabriel Paulo and I run a remodeling business in South Florida, I am new to the forum and this is literally the first time I've joined one. What I would like to know from the guys who have been doing this longer than I have is the percentage of bids you actually close. About 2 years ago I was closing about 40% lately it's been down to about 20%. Any tips?
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Old 04-07-2019, 03:40 PM   #2
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Re: Average Closing Percentage


That's a tough one. It depends on several factors. For my small company I close probably about 75% or more of projects I actually look at and quote. 99% of my work is either repeat clients or direct referral from a previous client. We are also smaller and choosy about what projects we take on.

Someone new in the area and business that is selling windows for example will need to do a lot of selling to keep the doors open.

I don't think that a close percentage is as important as the quality of the sale and the ability of you or your crew to stay busy and profitable.

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Old 04-07-2019, 06:02 PM   #3
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Re: Average Closing Percentage


99 percent
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Old 04-07-2019, 06:10 PM   #4
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Re: Average Closing Percentage


While every company is different, if your closing ratio is above 55-60%, you'll want to look at if you're charging enough... if you have Capital Reserves, Emergency Fund, Equipment Fund, and are funding your families needs (i.e. - health care, retirement, college, every family is different as well, etc.) and you're still closing above 55-60%, you're in great shape...
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Old 04-07-2019, 08:05 PM   #5
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Re: Average Closing Percentage


Usually works out to 30%. I tried raising my prices a bit more this year and think Iím trying to get too much per foot. Still early in the season but I feel like Iím closing fewer than Iíd like from HA and website leads. Will make an adjustment.


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Old 04-07-2019, 08:08 PM   #6
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Re: Average Closing Percentage


I'm a one man band. I close about 70-80% Most of my work is repeat. With some referrals. Referrals tend to have a higher loss rate. I'm fine with that. My regulars who drop or reject a proposal is due to it being out of their budget, not loosing it to another contractor. When they get the funds they come back around or come up with something else they want or need.

I try to be fair and do the best job that I can. Answer questions clearly. Resolve any kind of issue that occurs. Listen to the client, be flexible.

I like having regular clients has opposed to Always looking for new ones. I have some really great ones. And yes they do challenge me in different ways.

Anchor clients. They can keep a regular revenue stream without the need of reinventing the wheel everyday or week.
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Old 04-07-2019, 08:56 PM   #7
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Re: Average Closing Percentage


We get maybe 30%, but that's quite expected. I charge enough to get us out of the rat race so the ones we do get pay the bills and more.
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Old 04-10-2019, 07:43 AM   #8
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Re: Average Closing Percentage


Quote:
Originally Posted by GabrielPaulo View Post
Hey guys, my name is Gabriel Paulo and I run a remodeling business in South Florida, I am new to the forum and this is literally the first time I've joined one. What I would like to know from the guys who have been doing this longer than I have is the percentage of bids you actually close. About 2 years ago I was closing about 40% lately it's been down to about 20%. Any tips?
I think 20% for interior remodeling is about right when you consider that for that type of work most smart customers get 3 bids. If every contractor is equal you would get 33% of the jobs you bid, but you have to factor in the jobs you will not bet because customers change their mind and decide not to do the work, at all, because they don't have enough money in the budget.

I went to give a bid for a bathroom remodel a few weeks ago. The bid was about 25 miles from my office and I did a major job for this customer a few years ago. So, I thought this remodel was a sure thing. I started adding up the items on a piece of paper and when I got to $800 the customer literally threw me out of her house and said she had a contractor who was going to remodel the entire bathroom for something like $600. So, you have to factor in the jobs where you have no control over what the customer decides to do.'

If you got 40% of the jobs you bid in the past then that was probably an anomaly.
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Old 04-10-2019, 08:40 AM   #9
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Re: Average Closing Percentage


70%+
The trick to having a high closing rate is doing a good job in the investigation and qualification process. Bouncing some budget numbers off of them and seeing how they swallow that number often prevents wasting time putting together detailed proposals they aren't going to buy anyway. When a client starts talking "apples to apples quotes" and getting competitive bids, that is generally a good time to walk away also.

Spend your time with clients that want to work with you. Take good care of those folks and they will be repeat clients and tell their friends about you.
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Old 04-10-2019, 09:16 AM   #10
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Re: Average Closing Percentage


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Originally Posted by Fishindude View Post
70%+
The trick to having a high closing rate is doing a good job in the investigation and qualification process. Bouncing some budget numbers off of them and seeing how they swallow that number often prevents wasting time putting together detailed proposals they aren't going to buy anyway. When a client starts talking "apples to apples quotes" and getting competitive bids, that is generally a good time to walk away also.

Spend your time with clients that want to work with you. Take good care of those folks and they will be repeat clients and tell their friends about you.

Well said.

I agree with that. It really comes down to the type of business you want. Relationship based or a high volume. High volume means you need to keep churning. Like a bid house....
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Old 04-11-2019, 04:03 PM   #11
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Re: Average Closing Percentage


Make sure you and your truck looks decent.
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Old 04-11-2019, 08:54 PM   #12
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Re: Average Closing Percentage


I'm highly focused on what I call in person consultation to Sold ratio. So not leads to Sold ratio, or even qualified leads to Sold ratio. But projects I go out and spend 2 hours at talking with the homeowner, educating them, talking rough #s, and later email a formal quote.

My # is 30-40%. Cacluated by:

# of in-person consultations sold
divided by
(# of in-person consultations sold + # of in-person consultations lost)

I'd love to be at 50%, I admit an arbitrary #. Most times when I lose a job I'm told that I'm $2-$3k higher than the 2nd highest bid (new deck builds). To be honest, that's a super big bummer to me. I bum hard when I'm told that. When I thought I created a positive relationship with someone, just to be told they wanted the cheapest price. Ouch.

So I struggle with that a little. If I lowered my price by $3k, I'm barely making it. I'd rather close my doors and find a 9-5 job. But my in-person consultation sold ratio would probably be 50-75% if I lowered my pricing. But let's do the math:

It takes me 21 hours of my time to manage a deck project. It takes me 9 hours to sell one job (3 consultations at 3 hours each, including driving). So that's 30 hours.

If I can sell at a 50% rate, it would be 26 hours (20 hours + 6 hours to sell one job). At $3k less profit.

So now to make that loss of $3k profit, I need to work 78 hours (26 hours * 3 jobs).

Would I rather work 78 hours and make that $3k profit total, but have a 50% closing rate. Or, work 30 hours, still make that $3k profit, but have a 33% closing rate.

Let's do the math

$3,000/30 hours = $100/hr
$3,000/78 hours = $39/hr

I don't get why companies that are booking 8 weeks out don't raise their pricing by $2k or $3k. Someone explain that to me. You're 8 weeks out, yet selling at high volume low margin, working your butt off. If we all did this, we'd all make more $ and stay just as busy. Don't take my word for it. If you're closing more than 50% of your in person consultations, raise your price and watch the profits soar.

I want to get my in-person consultation sold ratio higher, but not by decreasing my price $2-$3k.

By the way, if you were wondering: no, I do not make $3k profit on every job. These were rough #s for illustration. My definition of profit is also defined as gross profit, which includes covering for overhead costs, reserve account, my salary, and company profit. So not true profit.

Anyways, increase your price, make a higher margin, and work less.

Last edited by pathbuilder; 04-11-2019 at 10:31 PM.
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Old 04-11-2019, 10:31 PM   #13
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Re: Average Closing Percentage


Quote:
Originally Posted by pathbuilder View Post
I'm highly focused on what I call in person consultation to Sold ratio. So not leads to Sold ratio, or even qualified leads to Sold ratio. But projects I go out and spend 2 hours at talking with the homeowner, educating them, talking rough #s, and later email a formal quote.

My # is 30-40%. Cacluated by:

# of in-person consultations sold
divided by
(# of in-person consultations sold + # of in-person consultations lost)

I'd love to be at 50%, I admit an arbitrary #. Most times when I lose a job I'm told that I'm $2-$3k higher than the 2nd highest bid (new deck builds). To be honest, that's a super big bummer to me. I bum hard when I'm told that. When I thought I created a positive relationship with someone, just to be told they wanted the cheapest price. Ouch.

So I struggle with that a little. If I lowered my price by $3k, I'm barely making it. I'd rather close my doors and find a 9-5 job. But my in-person consultation sold ratio would probably be 50-75% if I lowered my pricing. But let's do the math:

It takes me 21 hours of my time to manage a deck project. It takes me 9 hours to sell one job (3 consultations at 3 hours each, including driving). So that's 30 hours.

If I can sell at a 50% rate, it would be 26 hours (20 hours + 6 hours to sell one job). At $3k less profit.

So now to make that loss of $3k profit, I need to work 78 hours (26 hours * 3 jobs).

Would I rather work 78 hours and make that $3k profit total, but have a 50% closing rate. Or, work 30 hours, still make that $3k profit, but have a 33% closing rate.

Let's do the math

$3,000/30 hours = $100/hr
$3,000/78 hours = $39/hr

I don't get why companies that are booking 8 weeks out for decks right now don't raise their pricing by $2k or $3k. Someone explain that to me. You're 8 weeks out, yet selling at high volume low margin, working your butt off. If we all did this, we'd all make more $ and stay just as busy.

I want to get my in-person consultation sold ratio higher, but not my decreasing my price $2-$3k.

By the way, if you were wondering: no, I do not make $3k profit on every job. These were rough #s for illustration. My definition of profit is also defined as gross profit, which includes covering for overhead costs, reserve account, my salary, and company profit. So not true profit.

Anyways, increase your price, make a higher margin, and work less.
You need to close the distance between initial consultation and closing... It's hard to understand how you're spending 2 hours with a customer for a new deck build and not able to walk out with an increased percentage of sales that night... IF you ask for it... they're at their peak buying interest at that point and as you've said, you've spent the time to build the relationship...

Final computer drawings, etc. can be completed and/or changed AFTER you've signed the contract if need be... I assume they've already got a visual with your hand drawing... They can made any changes they want, that's why we have Change Orders... the important thing is you've removed them from the market...

For a guy who seems to have a strong handle on your meeting/close numbers, I would think you'd be able to put together a price list for new deck builds, along with a contract that you can use that night and fill-in the numbers to take them off the market... I saw your other thread... have you considered that other companies maybe in fact, are closing them while there, and that's why you're not hearing back from them? They've made the choice and are moving on... How many two plus hour consultations do you think people want to sit through? In your case, you get them all hot and excited about your products/services, and then say "let me get back to you"...

Removing steps in the sales process will also allow you to have less meetings, etc. changing your profit needs (which should NOT include your salary - that should be in the Labor or Overhead numbers - Profit is what you pay your company)... but your Profit needs is determined by your business needs... that said, if you set yourself up to close that night, you've gone from needing 9 hours to 3... extrapolate that out, and even at a 40-50% close on the first night, I think you'll find it'll get you to your goal without sacrificing the needed Profit for your business...
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Old 04-11-2019, 11:10 PM   #14
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Re: Average Closing Percentage


The busier I get the higher my prices the less I close. It's a supply and demand principle.


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Old 04-12-2019, 05:07 AM   #15
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Re: Average Closing Percentage


Quote:
Originally Posted by KAP View Post
You need to close the distance between initial consultation and closing... It's hard to understand how you're spending 2 hours with a customer for a new deck build and not able to walk out with an increased percentage of sales that night... IF you ask for it... they're at their peak buying interest at that point and as you've said, you've spent the time to build the relationship...

Final computer drawings, etc. can be completed and/or changed AFTER you've signed the contract if need be... I assume they've already got a visual with your hand drawing... They can made any changes they want, that's why we have Change Orders... the important thing is you've removed them from the market...

For a guy who seems to have a strong handle on your meeting/close numbers, I would think you'd be able to put together a price list for new deck builds, along with a contract that you can use that night and fill-in the numbers to take them off the market... I saw your other thread... have you considered that other companies maybe in fact, are closing them while there, and that's why you're not hearing back from them? They've made the choice and are moving on... How many two plus hour consultations do you think people want to sit through? In your case, you get them all hot and excited about your products/services, and then say "let me get back to you"...

Removing steps in the sales process will also allow you to have less meetings, etc. changing your profit needs (which should NOT include your salary - that should be in the Labor or Overhead numbers - Profit is what you pay your company)... but your Profit needs is determined by your business needs... that said, if you set yourself up to close that night, you've gone from needing 9 hours to 3... extrapolate that out, and even at a 40-50% close on the first night, I think you'll find it'll get you to your goal without sacrificing the needed Profit for your business...
Closing while there would be a dream. To be honest up front, I've never done that. Many times for new builds I can come up with the price on the spot in a few minutes. And it's accurate. Some times I share that with the homeowner, sometimes not.

Do homeowners really make a $20k decision on the spot? And that's great if some are able to do this once in a while, but can it be done systematically, 50% of the time as you've stated?

I can see it now..."let me think about it", "I need to talk to my wife", "I'm getting other quotes", "I need to see if I can get approved for financing", "I have one other quote and you're high". I've heard these all before.

I'd presume, to many of those, you could say I need to:
- Make sure husband and wife are there for the first meeting
- Offer financing
- During the pre-qualify phone call, what... tell them you're going to ask for their business during the first meeting? Prepare them for the impending ask?
- ?

But how would you go about, as you've stated, "if you ask for it". How do you ask for someone to make such a large investment on the spot? Do you offer a discount "today only you get 10% off if you sign now"? That would feel to me a hard sell, tricky sales tactics. What am I missing?

My normal Workflow:

Pre-qualify on phone, in person consult, email quote, call or email as followup every few days. Most of my sales, looking back, are with homeowners that followed up with me, not those that I've pestered every few days "hi, just following up as I haven't heard back".

I've heard different approaches:
- In-person 2nd meeting to give price (I'd feel, tho, I get the same responses: "ok thanks, this is higher than I thought a deck would cost, now I need multiple quotes")
- Call and give price over phone
- Ask the homeowner how they'd prefer to receive the quote (call or email)
- And now, from this thread, 50% of the time you should close a lead on the spot during the first meeting. Is closing on the first night for those with cheaper pricing? Those that target transactional sales, selling by price? Or can it be for those that are relational, not selling based on competitor pricing, but based on offering a value, and building that relationship?

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Last edited by pathbuilder; 04-12-2019 at 05:16 AM.
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Old 04-12-2019, 11:08 AM   #16
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I live just a few towns away and tried to research you, but could not find your company. You target a very upper bracket client so my instinct is your better competitors are getting the better leads. Without a strong online presence to help validate who you are, especially with wealthier clients, you are probably getting the leads that others are not chasing. I am sure you will say you have a strong word of mouth, as well as your competitors do too. But then these wealthier clients are probably comparing you to the other company and the other company is winning. My instinct also tells me the people who do not go with you come up with whatever excuse they need to, but not the truth that they really can not see who you are. The people in Coral Springs, Parkland, Boca, Wellington, etc., all can not keep up now, so use these comments as a way to help check your marketing or you will continue to see a slide as the other competitors get stronger. Good luck.
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Old 04-12-2019, 12:20 PM   #17
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Re: Average Closing Percentage


Tracking closing percentage is a tricky endeavor. If your percentage is dropping you need to analyze why. But before that you need to understand why you were tracking so high previously. That's where it gets tricky. Are you the influence or are their outside factors. Are you analyzing time of year over many years? Are you comparing to other indexes? Meaning, have you ever tracked it with the economy? Stock Markets?

Here is how I approach it. I get a phone call. I listen to what they want me to do and determine if it's a good fit. There are many variables to consider. Is it something I am proficient at, profitable and seeking? Do I need filler work? Could it be filler work? What is the client's budget? Does that budget meet my financial wants and needs? Do they sound ready to pull the trigger or are they looking for direction?

Point being, you will find so many factors that impact your closing rate. Worry about closing the right deals than how many you are closing.
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Old 04-12-2019, 02:03 PM   #18
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Re: Average Closing Percentage


Has anyone tried offering a discount if the homeowner signs during the first meeting?

We were shopping for blinds and this one-shop guy comes out, friendly guy, would trust his work. He offered a 10% discount if we signed that day, before he left. We didn't sign, not knowing if his price was reasonable or not (turns out, it was reasonable). And we did not get back with him, nor did he ever followup with us.

What are the reasons you give or create for a homeowner on why they should sign during the first consultation, instead of them shopping around?

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Old 04-12-2019, 02:26 PM   #19
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Has anyone tried offering a discount if the homeowner signs during the first meeting?

We were shopping for blinds and this one-shop guy comes out, friendly guy, would trust his work. He offered a 10% discount if we signed that day, before he left. We didn't sign, not knowing if his price was reasonable or not (turns out, it was reasonable). And we did not get back with him, nor did he ever followup with us.

What are the reasons you give or create for a homeowner on why they should sign during the first consultation, instead of them shopping around?

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Iím trying to break the habit of giving discounts for any reason
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Old 04-12-2019, 03:09 PM   #20
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Iím trying to break the habit of giving discounts for any reason
I gave that up years ago, as well. For one, I think that it immediately cheapens myself and makes it obvious that we could have afforded to do the job for cheaper but overbid it. It sends the wrong message and immediately makes the deal about price. If a 5 or 10% discount is what got us the job, then I sold the thing wrong from the get go.

Secondly, my employees, my overhead, my mortgage company, Etc don't give me any discounts just because I gave a customer of mine a discount.

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