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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.


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.


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.


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.


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.


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.


Owners Supplying Their Own Materials

By Michael Stone

Should you let a client furnish their own materials?


Don’t Be This Contractor

By Michael Stone

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


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.


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?


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.


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.


Markup Worries

By Michael Stone

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


How to Calculate 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.


Renegotiating the Price

By Michael Stone

How should you respond when a client wants to change the price AFTER the job has started?


OH&P in Construction – Using 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.


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.


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.


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?


Profitable Planning

By 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.


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 …


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.


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.”


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.


Value Your Work

By Michael Stone

Your work is vital; rather than worrying about your price, recognize and sell the value you bring to a project.


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.


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.


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.


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.


Increasing Your Markup

By 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.


Cost-Plus Contracts

By Michael Stone

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


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.


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.


Can You Be Both Competitive and Profitable?

By Michael Stone

You can be competitive, or you can be profitable. You can’t be both.


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.


Paying Taxes Beats Losing Money

By Michael Stone

Paying income tax means you’re running your business well.


Guidelines for Success

By Michael Stone

Guidelines to a more successful construction-related business.


Markup vs Margin

By Michael Stone

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


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. 


A Minimum Price

By Michael Stone

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


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.


A Guaranteed Price

By Michael Stone

When selling construction services, quoting a guaranteed price protects homeowners from the price increases that happen with a too low price.


Your Price is Too High

By Michael Stone

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


Using Gross Margin 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.


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.


An Opinion on Itemized Estimates

By Michael Stone

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


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.


Advice for a New Contractor

By Michael Stone

Michael shares a note from a new remodeling firm, asking questions that are often asked by new business owners.


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.


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?


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.”


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.


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.


How to Have a Profitable Construction Business

By Michael Stone

You can’t focus on being competitive if you want to be profitable. You have to focus on profitability.


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.


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 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.


Transparency – Or Maybe Not

By Michael Stone

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


Time and Material Woes

By Michael Stone

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


Everyone Gets Paid

By Michael Stone

Over the years I’ve heard from many wives or significant others who were tired of living with no money and essentially no future for the business.


“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.


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.


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.


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.


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.


Don’t Negotiate Your Price

By Michael Stone

Don’t let your clients dictate or negotiate the price of your work.


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?”


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.


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.


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.


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.


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?"


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:


Bidding or Selling?

By Michael Stone

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


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.


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.


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.


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."


Hiring A Contractor: Truth vs. Myths

By Michael Stone

Some advice on hiring a contractor is just plain wrong.


Lower Your Price, Gain Exposure

By Michael Stone

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


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?


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.


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.


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.


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.


Beliefs That Limit Your Profit

By 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.


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