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The Contractor Coaching Partnership Blog

Estimating for Profit & Markup Workshop for Contractors and Remodelers

Posted by Mark Paskell on Wed, Sep 02, 2015 @ 10:02 PM

You know the drill; the consumer asks you to price their remodeling or home improvement project and then after you give them the price on cue they say; "your price is too high". You look at them and think they have no idea what goes into a project.

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If you have confidence in your pricing you will likely stand your ground and not drop your price or ask them to take out some work.

But what happens if you don't have confidence in your price because you have an inconsistent estimating process or you are not really sure of what markup you should be using?

A Remodeler has an AHA moment about his estimating....

In a recent workshop we went through an estimate for a basic bathroom. We provided an estimate done on a yellow pad using the SWAG (Scientific Wild A$$ Guess) method. Then an estimate on a Excel Workbook with formulas and a planned markup. The project price covered cost of goods sold (COGS), overhead and net profit. In the class a few remodelers shared that they have been leaving out items using the yellow pad method. One gentleman had the sirens go off in his head and said I am missing things.

 

A few weeks later this one  remodeler came to our CSL CEU training to learn more and he shared with the class..."before I went through the estimating exercise with Shawn and Mark I believed that the price for a basic bathroom gut and remodel should be 14 to 15 thousand. When I looked at the Excel Workbook estimate of $21,000 I was surprised to see how many things I was leaving out using a yellow pad. With a new awareness that I was leaving out numerous items I sold the same bathroom I was losing money on for 21,500." 

This contractor for some reason fell into a trap where he believed a basic bath was worth 15,000 without really itemizing all the items he should be covering. Often times contractors resort to winging it when it is time to prepare a price for a project and rely on what they believe someone might pay or what they heard someone else say a project is worth. This is dangerous and causes things to be missed and profit to be lost.

In our estimating workshop we share proven strategies, tools and examples to help you develop a sound estimating approach and process. It is vital to capture all the costs, cover all the overhead, and include planned profit to arrive at the correct price.

The summer is coming to an end and there is a huge consumer demand for remodelers to complete work before the holidays. Common practice when demand increases is to raise our pricing to earn more profit.