A Guaranteed PriceBy Michael Stone
When selling construction services, quoting a guaranteed price protects homeowners from the price increases that happen with a too low price.
Paying Taxes Beats Losing MoneyBy Michael Stone
Paying income tax means you’re running your business well.
Increasing Your MarkupBy Michael Stone
Like many of you, I read industry magazines to keep up on new ideas. Much of what I read is good, but a recent article titled “Strategies for Increasing Your Markup” requires a comment.
Value Your WorkBy Michael Stone
Your work is vital; rather than worrying about your price, recognize and sell the value you bring to a project.
Profitable PlanningBy Michael Stone
As the business owner you’re taking risks, so you deserve to be paid a fair salary and make a profit. This is how it gets done.
Renegotiating the PriceBy Michael Stone
How should you respond when a client wants to change the price AFTER the job has started?
Is Cost-Plus the Solution to Underpriced Jobs?By Michael Stone
Both fixed-price and cost-plus contracts carry risk. Is cost-plus the solution?
Should I Change My Markup If I’m Not Making Sales?By Michael Stone
Should you change your markup method if you aren’t making sales? Don’t spend hours fiddling with numbers; invest the time in your sales skills.
Beliefs That Limit Your ProfitBy Michael Stone
Owning and operating a construction business requires a strong will and self-direction, but those qualities can also lead you to hold on to beliefs that limit your profit.
How Do You Measure Success in Construction?By Michael Stone
Our goal is to help contractors build more profitable businesses, but how do you measure success? How do you know your pricing will result in a profit?
Charging a Fair PriceBy 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 ConstructionBy 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 ContractsBy Michael Stone
Why cost plus and time & material contracts should be avoided, for both contractors and building owners.
When Business ReturnsBy 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 WoesBy Michael Stone
Time and Material contracts are full of risk, especially on larger jobs.
Payment MethodsBy 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 RemodelingBy 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 MarkupBy 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 RiskBy Michael Stone
Over the years, I’ve seen contract language evolve, shifting more and more responsibility to general and specialty contractors.
Transparency and PartnershipsBy 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?
How to Calculate MarkupBy 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 MistakesBy 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 OrdersBy 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 MarkupBy 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 ExposureBy Michael Stone
Should you take every opportunity to increase exposure for your business?
Pricing Handyman and Service WorkBy 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 FeesBy 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 PriceBy 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 NotBy Michael Stone
Is transparency the way to go when selling? Be careful who you listen to.
Markup or Margin: Be LogicalBy 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 EstimatesBy Michael Stone
A building owner challenges our statement that contractors shouldn’t itemize their estimates.
A Minimum PriceBy Michael Stone
Being profitable doesn’t mean getting rich off your clients.
Can You Be Both Competitive and Profitable?By Michael Stone
You can be competitive, or you can be profitable. You can’t be both.
Pricing Without PlansBy 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 JobsBy Michael Stone
It’s hard to remember what you’re worth, especially if you’re spending time on jobs that cost you money.
Markup WorriesBy Michael Stone
Remember, you’re in business to provide a service and make a profit doing it.
Don’t Be This ContractorBy Michael Stone
Please don’t be this contractor. Please don’t be that homeowner.
Your Labor Rate and Your MarkupBy 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 MarkupBy 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. MythsBy 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.
When Your Client Sets the PriceBy Michael Stone
When your client wants a lower price, something has to change. It shouldn’t be just your price.
Pricing Too LowBy 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 SubsBy 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 MaterialsBy Michael Stone
Should you let a client furnish their own materials?
Another Myth: Lower Your Markup for Larger JobsBy 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 PlayBy 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 JobBy 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 RightBy 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 Your BusinessBy 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 StandardBy 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 HighBy Michael Stone
“Your price is too high” means you haven’t done your job as a salesperson.
Guidelines for SuccessBy Michael Stone
Guidelines to a more successful construction-related business.
Construction Pricing is Cost BasedBy 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.
TransparencyBy 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.
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."
The Job Price Isn’t NegotiableBy 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:
Your Price Isn’t NegotiableBy 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 RateBy 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.
Price Your Services Fairly – Then Hold Your GroundBy 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!"
Selling On Price AloneBy 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.
“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 ConstructionBy 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 or Margin . . . Which is Better?By Michael Stone
Are markup and margin interchangeable? Is a 1.55 markup the same as a 55% gross margin?
Using Gross Margin CorrectlyBy 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 MarginBy Michael Stone
There’s a lot of confusion over using markup vs margin to price jobs.
Labor Rate for ConstructionBy 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.
Is It Gouging or a Fair Price?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.
Using a Variable Markup to calculate Construction Job PriceBy 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 …
OH&P in Construction – Using Figures Wrong Hurts Your BusinessBy 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.
Price Your Construction Jobs CorrectlyBy 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 & MBy 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 ProjectBy 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.
Definition of Terms – Construction AccountingBy 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.
Customer Furnished MaterialsBy 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?"
Underbidding a JobBy 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?”