Charging a Fair Price

By Michael Stone

You can be the most ethical person in the world and if you aren’t charging enough for your work, you stand a good chance of cheating someone else.


Lowball Pricing in Construction

By Michael Stone

It’s not unusual to find a contractor who sells by deliberately underpricing or underbidding jobs and making up the difference with change work orders.


Cost Plus Contract, Time and Material Contract

By Michael Stone

Why cost plus and time & material contracts should be avoided, for both contractors and building owners.


When Business Returns

By Michael Stone

At some point this health crisis will slow down and go away. When it does, there’s a good chance we’ll be doing some things differently. But some things won’t change.


Time and Material Woes

By Michael Stone

Time and Material contracts are full of risk, especially on larger jobs.


Payment Methods

By Michael Stone

I don’t think writing a check is old fashioned, but there are so many advantages to using a credit or debit card that it’s become the preferred payment method for many.


Let’s Discuss an Acceptable Hourly Rate . . .

By Michael Stone

This note is a painfully perfect example of why you shouldn’t provide details on your pricing.


Why Do You Need To Make A Profit?

By Michael Stone

Don’t confuse profit with salary or hourly wages. Making a profit isn’t optional: Your business needs profit to survive.


Overhead Differences: New Homes and Remodeling

By Michael Stone

A construction company building both new homes and remodeling needs to calculate a separate markup for each type of work.


Taxes and Profit and Markup

By Michael Stone

Michael addresses a few different questions we’ve heard recently, primarily dealing with taxes and profit and calculating your markup.


Contract Language That Puts You at Risk

By Michael Stone

Over the years, I’ve seen contract language evolve, shifting more and more responsibility to general and specialty contractors.


Transparency and Partnerships

By Michael Stone

What do you do when your partner is listening to someone who knows nothing about construction, but still thinks they knows what’s best?


Calculating Your Markup

By Michael Stone

When I teach a class or webinar, sometimes I wonder if my listeners understand what I’m trying to say. After reading some of the questions that came in during a recent webinar, I realized I missed the mark.


Pricing Mistakes

By Michael Stone

Everyone, and I do mean everyone, who has ever compiled an estimate has made a math error that put knots in their stomach once it was realized.


Overhead and Profit on Change Orders

By Michael Stone

You shouldn’t sign a contract that stipulates what you can charge, even if it’s just on the change orders.


Profit and Loss and Markup

By Michael Stone

When your books are set up properly, it’s easy to calculate your markup, and it’s also easy to compare your actual results to your estimates.


Lower Your Price, Gain Exposure

By Michael Stone

Should you take every opportunity to increase exposure for your business? 


Pricing Handyman and Service Work

By Michael Stone

There are two schools of thought on pricing handyman projects and service work: T&M or flat rate pricing. They both have advantages and disadvantages.


Single Discipline Leads, Referral Fees

By Michael Stone

The note stated, “Because I’m the middle man, my subcontractor loses out a potential project.” That’s true, and it’s one reason you shouldn’t get into the position of being a middle man.


Justifying Your Price

By Michael Stone

If your lawyer believes you have to justify your pricing just because someone doesn’t want to pay their bill, it’s time to find another lawyer.


Transparency – Or Maybe Not

By Michael Stone

Is transparency the way to go when selling? Be careful who you listen to.


Markup or Margin: Be Logical

By Michael Stone

If they tell you the formula to use will make you more profit, that’s baloney. It’s the numbers you use that determines your profit.


An Opinion on Itemized Estimates

By Michael Stone

A building owner challenges our statement that contractors shouldn’t itemize their estimates.


A Minimum Price

By Michael Stone

Being profitable doesn’t mean getting rich off your clients.


Can You Be Both Competitive and Profitable?

By Michael Stone

You can’t lower your price and expect to make up for it by selling more, because there is a limit to how much you can produce. Every job needs to be profitable.


Pricing Without Plans

By Michael Stone

It’s important to remember you aren’t in business to drive around and give out numbers. If you’re a specialty contractor, you also aren’t in business to provide numbers to architects or general contractors.


I Don’t Need Any Leads!

By Michael Stone

“I have more work than I can do. I tell new leads to call me after the first of the year.”


Pricing Small Jobs

By Michael Stone

It’s hard to remember what you’re worth, especially if you’re spending time on jobs that cost you money.


Markup Worries

By Michael Stone

Remember, you’re in business to provide a service and make a profit doing it.


Don’t Be This Contractor

By Michael Stone

 Please don’t be this contractor. Please don’t be that homeowner. 


Your Labor Rate and Your Markup

By Michael Stone

Using the wrong labor rate, or using someone else’s markup when you don’t know their assumptions, is one of the biggest mistakes we see and the difference can be thousands of dollars.


Adjusting Your Markup

By Michael Stone

In Markup & Profit Revisited, we explain how to calculate your markup. We’re often asked if you can adjust your markup based on the length of the job.


Hiring A Contractor: Truth vs. Myths

By Michael Stone

Some advice on hiring a contractor is just plain wrong.


Bidding or Selling?

By Michael Stone

Are you bidding on jobs, or are you selling them? There’s a difference.


Keep it Simple

By Michael Stone

When it comes to pricing your jobs, you need to keep it simple, especially if you want to make the sale.


When Your Client Sets the Price

By Michael Stone

When your client wants a lower price, something has to change. It shouldn’t be just your price.


Cutting Prices

By Michael Stone

I can’t tell you how many times in the past few weeks I’ve had contractors tell me they are cutting their prices to get work. I even took a call from a contractor who told me we should come to his town “because all the NARI members are busy cutting their prices.”


Pricing Too Low

By Michael Stone

It is a fact of life that when you sell construction-related services, you’ll have clients tell you that your price is too high. Bless their hearts. They have no idea what would be a fair price for the work they want done, they just know that your price is too high.


Markup on Subs

By Michael Stone

A lot of contractors don’t believe they need to use their full markup on subcontractor quotes. Let me explain why that can be a mistake.


Owners Supplying Their Own Materials

By Michael Stone

Should you let a client furnish their own materials?


Know Your Value

By Michael Stone

A young fellow recently asked about his hourly wage.


Another Myth: Lower Your Markup for Larger Jobs

By Michael Stone

“I am working on designing a few jobs with the job costs starting around $125,000 and up. What is your opinion on markup when the job costs are getting bigger? I want to make sure I am staying competitive.”


The Games People Play

By Michael Stone

Why would a developer ask for a cost plus quote to replace a fixed price quote? Because he wants the very same work done at a lower price.


When Should You Cut Your Markup?

By Michael Stone

As the economy slowly improves, we are being asked to revisit issues we haven’t discussed for many years. 


Markup Materials Only?

By Michael Stone

In a perfect world, estimated costs will match actual job costs. At the end of a perfect year, total job costs will equal projected job costs. It’s not a perfect world.


Race to the Bottom, or “How Low Can I Price This Job?”

By Michael Stone

Cutting your price to get a job is a money losing approach. Over time, you won’t be making a profit and you’re only working yourself into debt.


How Much Should a Contractor Charge?

By Michael Stone

Many of our website visitors aren’t contractors, they’re clients looking for help with a Cost Plus project gone wrong, or wondering if their contractor is overcharging.


Adjusting Your Markup Based on the Job

By Michael Stone

Many contractors use a variable markup or margin to price jobs. They believe that in the construction industry you have to reduce the price to get the job.


Pricing Jobs Right

By Michael Stone

Not charging enough for your work is the major reason construction companies fail. Here are some of the mistakes contractors make when pricing their jobs.


It’s The Price

By Michael Stone

A note that came in a few weeks ago: “We have a very competitive market here . . . My husband and I both agree a lot of our problem is not charging enough for our work.”


It’s Your Business

By Michael Stone

A contractor on the east coast was frustrated with how he was being treated by architects. For starters, they were requesting a list of all his subcontractors.


I Have to Be Competitive!

By Michael Stone

You don’t have to be competitive. You have to be profitable. If you aren’t profitable, your business won’t last.


There is No Industry Standard

By Michael Stone

Don’t take any job where the client tells you how much you can charge for your work.


“I Work in a Competitive Market”

By Michael Stone

Don’t worry about what “the other guy” is charging.


Your Price is Too High

By Michael Stone

“Your price is too high” means you haven’t done your job as a salesperson.


Guidelines for Success

By Michael Stone

Guidelines to a more successful construction-related business.


Construction Pricing is Cost Based

By Michael Stone

One of my coaching clients told me recently about a client who is quite affluent and apparently has been taken advantage of by several contractors over the years.


Calculating Job Price, Don’t Borrow Your Numbers!

By Michael Stone

Over the years, I’ve learned that too many contractors determine their job price by borrowing someone else’s numbers. That can be an expensive mistake.


Did I Price it Right?

By Michael Stone

I had a “Ho, Big Macklin” moment this morning when a young fellow called. He told me he’d given a recent quote to an architect, and was reconsidering his quote.


Transparency

By Michael Stone

Transparency, as I understand it, is opening your books to your potential clients and showing them all the numbers pertaining to a job you are quoting.


Using Old Prices for a New Job

By Michael Stone

I received a note from a contractor. He took a call from a potential client for a job he quoted 9 months ago. They want to do the job but at the same price.


Should the Government Be Pricing Your Jobs?

By Michael Stone

A building inspector in a city in Ontario, Canada has gone out of his way to tell two different home owners that their contractor is charging too much for his work.


Pricing is First Step to Positive Cash Flow

By Michael Stone

It’s a basic principle: Cash flows into your construction business when you sell a job. Cash flows out when you pay the costs of the job and your overhead expenses.


A Bait and Switch Scam?

By Michael Stone

Last weekend I passed a billboard on the side of the road. It loudly declared, "We will build your new home for $32 a square foot."


Dealing with the Trades

By Michael Stone

He asked a sub for a quote on a job, and it was higher than expected based on past jobs. When he asked, the response was, "Well, I just wanted to see if it would stick".


The Job Price Isn’t Negotiable

By Michael Stone

I wrote a Blog post for another company recently stating that I didn't think it very smart to negotiate the price of your work. A reader agreed with me and said:


One markup, and only one markup

By Michael Stone

Wandering through construction forums, I've recently read posts commenting on the markup that sales people should be allowed to use.


Your Price Isn’t Negotiable

By Michael Stone

I heard about a scam a local building owner is pulling on his subs. He has several properties and is apparently worth a considerable sum.


Recover Overhead and Profit in your Labor Rate

By Michael Stone

There are four basic ways to charge for construction services. These are fixed fee or lump sum pricing, Time & Material pricing, Cost Plus, and using an hourly rate.


Surprises on a Construction Job

By Michael Stone

A homeowner commented on a forum. He’d been told to add $3 – $5K to a job just to cover the extras that will come up. He was under the impression this is normal.


Every Job Must Stand on It’s Own Feet

By Michael Stone

Jack Welch said, "The value decade is upon us. If you can't sell a top-quality product at the world's lowest price, you're going to be out of the game."


Price Your Services Fairly – Then Hold Your Ground

By Michael Stone

She got a call from a guy about cleaning 300 feet of his driveway. When she told him her minimum trip charge ($300), she heard the famous, "Your rates are too high!"


Lower Your Prices, The Economy is Down

By Michael Stone

The idea that contractors should cut their prices because the economy is in the toilet doesn’t make sense.


Selling On Price Alone

By Michael Stone

I was reminded again recently of the need for in-house training on what it takes to pay the bills in a construction related company.


Competitive Bidding on Construction Projects

By Michael Stone

Bidding work just to keep busy and keep employees working is financial suicide.


“Transparency” or Proprietary Information?

By Michael Stone

Someone once said, “No man’s business is safe while the legislature is in session.” Here is another example.


Price Fixing in Construction

By Michael Stone

During a recent survey, comments were made about price fixing. They referenced the Sherman Antitrust Act and association warnings about the appearance of price fixing.


Markup, Margin . . . Does it really matter?

By Michael Stone

If you read the two previous blog posts you know markup and gross margin. Today we'll look at one of the major mistakes made when calculating the sales price.


Using Gross Margin to Price Jobs? Better Use It Correctly

By Michael Stone

Yesterday markup – today gross margin. Let's look at using your gross margin to calculate the correct sales price for your work.


Markup vs Margin and Why You Should Care

By Michael Stone

There’s a lot of confusion over using markup vs margin to price jobs.


Ask the Right Questions and Make the Sale

By Michael Stone

Our blog article “A Fair Price For Your Work” hit a nerve with a number of contractors. In a follow-up comment, I listed two questions for every potential client.


Cutting Your Markup to Get Jobs

By Michael Stone

Both companies sold jobs in the mid six-digit range. Both used a markup of 1.20 times their cost. When I asked why (nicely of course) they both gave me the same answer.


A Fair Price for Your Work

By Michael Stone

I often hear construction-related business owners, when they talk about the price of their work, express a concern about “being fair” with potential clients.


Profitable Selling

By Michael Stone

In an earlier blog post, I said lowering your price is financial suicide. If you can’t cover your overhead and make a profit, you’ll be out of business AND in debt soon.


Lowering Your Price?

By Michael Stone

This week, I’ve seen estimate sheets from three different companies with markups of 30% or 35%. These percentages added to their job costs are simply not enough.


Labor Rate for Construction

By Michael Stone

I’m frequently asked for the “industry standard” rate per hour for various types of work. There isn’t an industry standard markup, and there isn’t an industry standard hourly labor rate.


Gouging?

By Michael Stone

An earlier post of ours is getting a few homeowners riled up. The post discusses homeowners who have contacted us, unhappy about the prices their contractor is charging.


Charging Enough for your Work

By Michael Stone

At a recent seminar I did, one of the young guys came up to me after class and said, "I can't markup my work as much as you say I should, no one would buy from me."


Cost Plus (C+) Perspective – Good for a Construction Business?

By Michael Stone

A slightly different perspective on Cost Plus contracts that provides two more good reasons why Cost Plus contracts should be avoided.


Construction Prices for School

By Michael Stone

I glanced at the headline of our local w …

Construction Prices for School Read More »


Why Should I Make a Down Payment?

By Michael Stone

As a contractor, you need to know that the homeowner is both able and willing to pay for the work being done.


Fixed Price Quotations or Itemization?

By Michael Stone

I read an article telling general and specialty contractors to give itemized estimates. Oh joy. It talks about goodwill, trust, comparing estimates, and other tripe.


Using a Variable Markup to calculate Construction Job Price

By Michael Stone

A young lady told me her husband is using a variable markup on jobs. He marks up labor 3 or 3.5 times and materials 1.5 times. He adds 10% to subcontractor quotes …


Costly Errors

By Michael Stone

My plan was to discuss approaches to set …

Costly Errors Read More »


Set Your Own Price for Construction Work

By Michael Stone

We recently received this note. He seems to be a nice chap, and we exchanged a comment or two. He discusses the world of commercial and industrial construction work.


Overhead, Profit in Construction – Using the Figures Wrong Hurts Your Business

By Michael Stone

Adding overhead and profit to job costs to calculate sales price is a mistake. Contractors should use a markup calculated for their construction business.


Is My Contractor Overcharging Me?

By Michael Stone

We have had two e-mails in the past week from homeowners asking about the “Industry Standard” for pricing, wondering if their contractor is overcharging them.


Helping Others

By Michael Stone

A long-time friend and coaching client received a letter from a young plumber just getting started, mailed to local general contractors hoping to obtain business.


Do Your Job

By Michael Stone

Often we get phone calls from contractors worrying about what a customer will say when they present their price for a job.


Quality, Value and Service – Or Low Price? Pick One

By Michael Stone

I have had several discussions of late with contractors who can't accept that they should sell quality, value and service instead of trying to play the low price game.


Price Your Construction Jobs Correctly

By Michael Stone

If you are tired of starving because you have enough work but don’t have the money to pay your bills, heed these words.


Cost Plus, Cost+, Time and Materials, T & M

By Michael Stone

A coaching client was working with a potential customer who wanted a remodeling job on a cost plus basis instead of a fixed fee contract.


Estimated Time for a Construction Project

By Michael Stone

If your employees consistently take longer than you estimated, you need to change your method of estimating. The human body can only work so fast.


Calculate Your Job Price

By Michael Stone

A reminder to avoid any contract with an owner, architect or anyone else that has language that states you will charge your job costs plus overhead plus profit.


Definition of Terms – Construction Accounting

By Michael Stone

Time for a quick review of some terms: gross profit, net profit, owner’s salary, owner’s wages. Owner’s salary is overhead, owner’s wages are a job cost.


Calculate Markup on Sub Work?

By Michael Stone

A contractor called, wondering about the markup he should use on items from specialty contractors.  If he applied his markup, it might raise the job price too high.   


Your Markup Isn’t Fair!

By Michael Stone

We got a call last week from a company whose customer had arbitrarily decided that the markup used on their job wasn’t fair. This was a Time and Materials job.


Gross Profit for Remodeling

By Michael Stone

If I’m a remodeler making a 44% gross profit, I’m doing great, right? It depends. Your gross profit means nothing if your sales will not support your overhead expense.


Customer Furnished Materials

By Michael Stone

A recent note said, "The client wants to furnish all the materials. They are going to give me the money to go buy the materials, should I add my markup on the materials?"


Time and Material Contracts – Price Too High

By Michael Stone

A contractor dealing with a Time and Material Contract is hearing constant complaints about his price. Instead, give a firm fixed price quote upfront.


Underbidding a Job

By Michael Stone

“I’m a contractor and underbid a house. I’m almost done and just figured that out. I can’t afford this loss. What can I do besides bankruptcy?”


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