Knowing your numbers for labor rates and profit margin is so important, for many reasons, which I’ll get to in a moment.
First, let me share with you one of my favorite things to hear a client say and Steve’s amazing reply.
This is one of my favorite parts of going on the estimates with Steve.
“So the final cost is XYZ for your painting project, Mr. Moore,” Steve would say.
“Can you do any better?”
The customer smiles, chuckles, and says, “Okay. When can you start?”
I LOVE that! Can you do any better and then ADD 10%! It’s funny because the customer would, by this time, have been explained the value of hiring us, and would know how we reached our numbers, that they are final, but still feel the need to ask.
Sometimes, though, it went South,
I recall one serious potential client who was not at all happy about our price and said, “That’s gouging!”
To which Steve when straight to the facts, “Sir. I operate this business legally, paying our skilled painters a fair wage, protect them, you and us with all the proper insurances, with very fair, 20% profit margin. Do you really think that 20% is gouging?”
The potential client backed WAY off, stumbling over himself for his ignorance and
He hired us and became another Raving Fan.
What is the secret to all these projects still being awarded after such words??
Because Steve KNEW our numbers backwards, forwards, inside out, around, and even in his sleep.
Steve very clearly communicate how we arrived at each number and made it a practice to do so as we are going over the estimate numbers and value of the experience they would get if they hired us.
Do you know what happens when you cut your price and offer discounts?
The client (even if they do not say it out loud) has more proof that you were over charging him/her and your actual price is much lower.
You lower your value.
You lower your team’s value.
You let the customer think you were gouging them in the first place.
You slowly go out of business.
If you don’t know your numbers, you haven’t an inch of ground to stand on when justifying your price and you give all the power to your customer while you slowly go out of business, or bare minimum, chasing final checks every week just to make payroll.
Maybe not this month at the close of a good season, but for sure coming this cold winter.
You MUST Know your numbers or your customers will tell you what they are and they will slowly put you out of business.
If you would like to find out how to know your numbers, we have this information in our free Estimating Bundle. Enjoy!