# Starting and/or Making Good $ on a Shoestring Budget



## Paul Burns (Jan 17, 2006)

1. Can you make a living by charging $25 per hour? What are the chances that you can earn that for every work hour of the week?

2. What do you need to charge to make $50,000 to $75,000 per year knowing that everyone’s numbers are different?

If it was my goal to NET between 50 - 75k per year, this is what I'd do on a shoestring budget.

Month #1 - January

1. Vow to myself to NOT PAINT this year because I may not have time to paint AND ensure that there will be enough work/leads coming in to enable me to earn between 50 and 75k.
2. Start bidding all my work at 45.00 per hour, plus materials.
3. Deliver fliers myself to the biggest or 2nd biggest homes that are as close to my home as possible. This person only needs 6 leads per week in order to land at least 2 jobs per week. So 1-2 hours per day delivering fliers will be plenty.
4. Market for ALL the painters you can find that would be willing to work for 15.00 per hour as a guaranteed minimum PLUS piecework bonuses. I would run an ad in the local paper stating that our painters often earn over 1,000.00 per week. If you are good, you will too! That usually gets the phone ringing.
5. Hire the best 2 and keep ALL the other names and phone #s JIC.

Month #2

1. Start the jobs you sold in month #1.
2. Keep delivering fliers to get month number 3 filled with work.
2. Start thinking about earning more than 75k this year.

Months #3-11 Rinse, Repeat, and make vacation plans for Month 12

In this scenario, the owner of the company will probably earn between 60-75k whether he/she decides to continue as a craftsman (in the bucket) or chooses to partially change into a business person providing income for three people/families instead of just one.

If he/she chooses to keep painting, they would have to physically work 40 hours per week for 50 weeks.

If they choose the business operating option, they only need to work 20 hours per week for 45 weeks. And you can really call the flier delivering, exercise instead of work. They'll need the exercise since they won't be up and down the ladders all year.

In both scenarios they will probably earn fairly close to the same amount of money. However, the "in the bucket" man has to physically work his/her tail off for more than twice as many hours as the "out of the bucket" man. So the "in the bucket" person will be earning around 30.00 per working hour, while the "out of the bucket" person will be earning closer to 60.00 per working hour.

The "out of the bucket" person will also have twice as much money to spend on overhead, so they can drive a brand new truck, make more money per hour, work less hours, cuz they could pay someone else to deliver the fliers instead of themselves,..........whatever they want to do with the extra money.

One more big difference is that the "in the bucket man" has reached his pinnacle. This person will never be able to earn any more money per year. At least not anything significant. Actually, due to getting older and body parts wearing out, their yearly income will probably be on slight downward spiral for the rest of their lives.

On the other hand, the "out of the bucket" person has just gone through their first year of experiencing and learning how their income has now become virtually limitless. Even into their golden years if they choose to!

Paul


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## AAPaint (Apr 18, 2005)

Thank you, Paul. I appreciate posts like this more than words can say.:clap:


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## ProWallGuy (Oct 17, 2003)

Great post Paul!
Another POST OF THE DAY!!!!


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## Grumpy (Oct 8, 2003)

Hey. I'd like to point something out. Paul mentioned $45 an hour. This is not a magic number. You really have to know your overhead and profit variables, especially your labor burdens, to figure out what you need to charge per hour to make money. 

Everyone's hourly rate is slightly different based on the overhead and burdens unique to that company. And you guessed it every company is slightly different overhead and labor burdens.


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## Joasis (Mar 28, 2006)

The technique as a business model is what counts....I like it.


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## Grumpy (Oct 8, 2003)

joasis said:


> The technique as a business model is what counts....I like it.


I agree, I just didn't want people to go out there thinking they could make a ton of $$$ charging at $45 an hour. Some can and some can't, that's all.

Wait a minute here... If you charge $45 an hour for your work, and your 2 "in the bucket" guys are earning $30 an hour, that only leaves $30 an hour for your 1 "out of the bucket" guy. By my math after you subtract the overhead and so forth that out of the bucket guy would be better off working at Mc Donalds. 

If you intend to charge $45 an hour and earn $60 an hour that will mean you need 4 "in the bucket" workers. However figure overhead would be eaten up by 2 guys, so the out of the bucket guy could only earn himself $30 an hour, unless he works more hours to sell more jobs to hire more guys to paint more houses.

Am I wrong?


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## mdshunk (Mar 13, 2005)

I've gotta admit, it is an attractive model. What I want to know is if it works? Lots of concept cars never make it to production.


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## Paul Burns (Jan 17, 2006)

Grumpy said:


> Hey. I'd like to point something out. Paul mentioned $45 an hour. This is not a magic number. You really have to know your overhead and profit variables, especially your labor burdens, to figure out what you need to charge per hour to make money.
> 
> Everyone's hourly rate is slightly different based on the overhead and burdens unique to that company. And you guessed it every company is slightly different overhead and labor burdens.


The RIGHT PRICE

Volumes of books, 1000’s of seminars, countless BB posts have been written and discussed by all contractors throughout the ages.

They are all looking for one thing. What is the RIGHT price? And most of them are talking about doing all sorts of complicated equations, job tracking, etc., to find out what the RIGHT price should be.

Contractors have heard and read all of this stuff with their MAIN thinking being how much do I HAVE to charge to make a profit! You see, they are THINKING that the lower they HAVE to charge, the more jobs they will get, and everything will be rosey.

These books, seminars, and whatever, are teaching the exact opposite of what SHOULD be taught. What SHOULD be taught, is how HIGH can I possibly price my work and still land jobs. Because when contractors (very few) charge the maximum amounts possible. EVERYBODY wins, INCLUDING the clients. As long as the contractor is good of course. 

When a contractor starts making more money, they can do all sorts of good things that they couldn’t have otherwise done. Their employees can be paid well and have insurance, retirement, etc. Their clients are happier because the entire company has now become BETTER due to the ability to afford the best mechanics in town, use the best materials, give the best guarantees and warranties, etc.

The contractor’s family life is now better. They have more time and money to spend with them so stress goes WAY down. And the same goes for their employees lives. Their clients don’t have to worry, because the contractor can now afford background checks, drug testing, and the other things already described.

I don’t care WHERE you live, your pricing can PROBABLY and should be at least double of what the low bidders are bidding. And you should continue to test HOW HIGH your pieces can go, until the market tells you to you stop. I would bet that if contractors would do this, their hourly, daily, whatever rate would be so far higher than where all of those books, and records and all of that confusing BS, that all of that stuff would become UNUSEFUL to them.

Example – A contractor studies, tracks, etc, for 2 years and comes up with a price of 45.00 per hour that he must make and bid to have a 10% net profit. So he charges that 45.00 per hour INDEFINATELY. I mean that can be 25.00 per hour if that is what all your figuring has come to. It doesn’t matter as far as what I am saying.

But someone like me comes along to 45.00 per hour town and starts TESTING th MAXIMIMUM that I can charge, and before long, with employee motivation, we are landing jobs left and right that FINISH at 100.00 per hour or more.

The thinking goes like this. The business HAS to be operated a WIN-WIN-WIN! Those 3 Wins = The Contractor – His/Her employees and/or subs – Their clients.
If ANY of those three are losing, then the contractor has a problem and it is HIS job to fix it.

Sure, a guy can go out and land a lot of work at 25.00 per hour. But what does that do for his employees? What if he could be getting 50.00 or 75.00, and shared the wealth with his employees? 

The 25.00 per hour guy can also keep his clients happy by hiring cheap labor, using lower grade materials, not having insurance etc.. But what if that same guy charged 75.00 per hour? Now he can use the best possible materials, hire the best possible labor, have the best insurances for his employees AND clients, and so on.

The trick is to try to achieve the MAXIMUM (like Mercedes) and offer a better life and a better job for their clients. Not to struggle over figures and crap trying to figure the lowest, or RIGHT amount to charge.

Paul


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## Grumpy (Oct 8, 2003)

Paul Burns said:


> The trick is to try to achieve the MAXIMUM (like Mercedes) and offer a better life and a better job for their clients. Not to struggle over figures and crap trying to figure the lowest, or RIGHT amount to charge.
> 
> Paul


No Paul, I disagree. I think the trick is knowing YOUR numbers before YOU go out and start to bid jobs. If you don't know your own numbers it's really really easy for you to underbid a job. So I do think that we should all know what the lowest ammount we can work for is. I don't encourage anyone to work for that ammount, but if you don't know what it is, you are only flying blind. 

Pulling numbers out of a hat and hoping it covers your expenses is a great way to be seen at bankruptcy court.


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## Paul Burns (Jan 17, 2006)

Grumpy,



I'm talking about AFTER you surpass the KNOWN numbers. When you are 25% or beyond that point, then it all becomes unuseful.

Paul


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## mdshunk (Mar 13, 2005)

mdshunk said:


> I've gotta admit, it is an attractive model. What I want to know is if it works? Lots of concept cars never make it to production.


I still have this question. Does this concept work?


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## Paul Burns (Jan 17, 2006)

mdshunk said:


> I still have this question. Does this concept work?


Yes, they are FACTS, not concepts anymore.

They work like a CHARM!

Paul
p.s. Short and concise!


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## Guardi Pro (Mar 15, 2006)

That's info is all great but tell me this. You stated your pricing should be double of the low ballers. Then how do we get the work? In our area we have vans of immigrants that will work for 6 to 8 bucks an hour. They have signs up rooms painted for $99 dollars. And you think our company can charge more than $25 an hour. Not going to happen. 
*SEE MY POST ON 2ND PAGE OF THREAD: IN ANSWER TO A CLOSED.*


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## donb1959 (Dec 9, 2004)

I understand the concept of maximizing your price per job. I think we have done that in our area. This area too is wall to wall paint contractors. We market quality and professionalism, and this is why we generally run middle to top on our prices. But if I go out and try to double what others are bidding I'm not going to land jobs. I know the saying work less, and make more, but we also need a steady inflow of jobs.


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## Gordo (Feb 21, 2006)

Grumpy said:


> I agree, I just didn't want people to go out there thinking they could make a ton of $$$ charging at $45 an hour. Some can and some can't, that's all.
> 
> Wait a minute here... If you charge $45 an hour for your work, and your 2 "in the bucket" guys are earning $30 an hour, that only leaves $30 an hour for your 1 "out of the bucket" guy. By my math after you subtract the overhead and so forth that out of the bucket guy would be better off working at Mc Donalds.
> 
> ...


I was doing the math in my head earlier and it did not make sense to me either Grumpy.

This is assuming the out of the bucket guy is taking care of OH, taxes, WC, payroll, etc.

I like the business model Paul.

Personally, I think one can make a whole lot more money than Paul says.

With all the talk around here about closing percentages, I would like to say mine is very low (10%) compared to everybodys.

Pauls model will work to get the foot in the door, but eventually the rates he stated will have to double (as a percentage) to really live and run a 'comfortable' business. I know this from personal experience. My business is legit. Now other guys I know who do not pay taxes, WC, and aren't licensed are a different story. They can afford to charge half of what I charge.

The key to being successful in the long term is being very expensive. You should be making a good wage for your area ($70k min.) then have net profits close to your wage ($70k). The wage will be good enough for you to buy things like houses, cars, whatever on credit. The net profits will be like gravy on top of that (this money you put in the bank in short-term investments). 

One last important thing is YOUR BUSINESS SHOULD BE FUNDING YOUR RETIREMENT BEFORE TAXES!

Remember, I am a small (two employees)construction/remodeling co. and it can be done.

Your potential clients ,as well as your existing ones, will think 'Man, they are expensive', but you know what? THEY need to pay for the service that THEY cry for. All others can keep crying because THEY get what THEY pay for. Cheap=Cheap.

Thanks Paul for bring up one of the most important aspects of business.


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## mdshunk (Mar 13, 2005)

Guardi, DonB, and Gordo's response causes me to think that this system Paul proposes will work best in a major market. Reason being, in major markets, trade licensing and strict code enforcement make for a more level playing field. It would be downright difficult to compete with 99 dollar per room paint jobs from immigrants in smaller markets. Plus, in major markets, you have a little more population density working in your favor. 

With regard to being really expsensive though, some people have no idea what normally stuff costs. I know that I've done some 100 dollar repairs that I could have just as easily charged 1000 dollars for, and the customer would have been equally as satisfied. This series of posts has my head spinning.


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## Dave Mac (Jan 30, 2006)

Thanks Paul, 

dave mac


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## KellyPainting (May 30, 2006)

*how 2 sell at higher margins than your competitors.*

If somebody says, " Hey, your price is high," say, Yes. You bet.
Our price is high. In fact, Let me tell you why it's high. It's because we provide you with quality and this service and so on....

NEVER be ashamed of having a high price. Your high price makes a statement.. _A statement that your product is better_. Tell your customer that you are cheaper, and he or she will beleive it in every sence of the word. Tell your customer that you cost more and he'll 
wonder why.

Owen Young, who is credited with building General Electric once said..
Whom would you rather compete against? a crook or an idiot?
It's not the crook we fear in modern buisness; rather it's the honest 
guy who dosen't know what he's doing. The people or company's who don't know what they are doing are the ones who foul up the works, and fundamentally, they are the ones giving away their products and services by cutting their prices.
* Price cutting is a self inflicting wound.*
In 1978, Jimmy Carter deregulated the airline industry. This meant that the airlines could charge any price they wanted. How many raised prices?
answer: NONE how many kept the same prices? NONE they all in varrying degrees, began to cut prices.

How many airlines have filed for bankrupsy since deregulation? 100's


Most buisnesses fail. They start off, expand alot or a little and then they die. Statistically, 16 out of 17 buisnesses that start in the U.S will fail.Most of them in the first 2 yrs. The average life expectancy of all buisness in the U.S is estimated at 7.5 yrs. So if your following me the truth is that if your buisness isn't 8 yrs old ... the odds are that it will not be.

Thomas J. Watson, the builder of I.B.M wrote in the first paragraph of his book " A buisness and it's beleifs....

Of the top 25 industrial corporations in the U.S in 1900, only 2 remain in that select company today. One remains in it's original identity, The other a merger of 7 corporations on that original list.


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## donb1959 (Dec 9, 2004)

I consider myself expensive, as do many of my customers, but I deliver value for the dollar. However, if I am way higher that anyone else, I will be dismissed out of hand, and the customer will feel raped. One can sell themselves to a point and get the jobs, but if youre outrageous the customer will simply dismiss you.


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## Brushslingers (Jul 28, 2006)

donb1959 said:


> I consider myself expensive, as do many of my customers, but I deliver value for the dollar. However, if I am way higher that anyone else, I will be dismissed out of hand, and the customer will feel raped. One can sell themselves to a point and get the jobs, but if youre outrageous the customer will simply dismiss you.


Been there, got an email from a client once "We will not require your services, thank you."

heh, race is on, later.


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## Grumpy (Oct 8, 2003)

Guardi Pro said:


> That's info is all great but tell me this. You stated your pricing should be double of the low ballers. Then how do we get the work? In our area we have vans of immigrants that will work for 6 to 8 bucks an hour. They have signs up rooms painted for $99 dollars. And you think our company can charge more than $25 an hour. Not going to happen.
> *SEE MY POST ON 2ND PAGE OF THREAD: IN ANSWER TO A CLOSED.*


Sell on quality. Set yourself apart. When people say you are more exposnsive, whipe your brow and say good. Do a better job than them, stop selling on price and build a reputation. Also stop targeting the type of customer that chooses contractors based on price.


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## George Z (Dec 23, 2004)

Today's e-mail:

_"Thanks. I’m afraid your price was a shocker. Will have to check with first bidder 
to see exactly what he was including (I did not meet with him at the time)"._

If I don't get any of these I 'll start to start to worry


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## George Z (Dec 23, 2004)

There is a big component of Paul's technique that
is the missing link here. It has been working for us:

We charge $45.00 now, but often the actual rate is close to $60.00.
How? Many Jobs finish 25% or more quicker than budgeted.

The extra 25% production is the extra money employees make.
That 25% increase in sales comes without a 25% overhead increase.

The key is to have that cushion in your pricing.
After that production is achieved, do not adjust your pricing
to the new production rates thinking you will win more jobs.
It would be like pulling the rug under your employees feet.
Your employees have to be on board for this or it won't work.

25% increase in production is an example.

Grumpy, that is how the $30 per hour per practicing painter is achieved. 
So the margins are not what you suggested with two painters.
Anyway, 50% margins are the norm with that model


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## donb1959 (Dec 9, 2004)

Now that I can get my mind around. Just like my day rate of $500.00 plus a 15% markup. There are many times when we will finish the job quicker than what I have estimated, thus increasing the day rate, I just haven't initiated the bonus for the employees yet, which I very much want to do next year. So, George..what you're saying is that if you finish the job ahead of schedule, the employees pocket the difference? I have to get my mind around how that works.


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## Double-A (Jul 3, 2006)

Brush, I get those too...

From a recently lost job via email.



> Thank you again for the gift certificate for Sunny William's Steakhouse. Joe and I need a nice dinner out after all we've been through just gathering estimates.
> 
> We didn't have a chance to talk yesterday, but I wanted you to know that we decided to go with <_contractor I used to work with_>'s company.
> 
> ...


This was for a 650 sq/foot renovation/addition. It was priced well over 100K. Their architect sent out 17 sets of plans for bid. 

p.s. The gift card was for a referral - from a client we never worked for!


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## Gordo (Feb 21, 2006)

donb1959 said:


> I consider myself expensive, as do many of my customers, but I deliver value for the dollar. However, if I am way higher that anyone else, I will be dismissed out of hand, and the customer will feel raped. One can sell themselves to a point and get the jobs, but if youre outrageous the customer will simply dismiss you.


Oh well, they aren't the one who knows your numbers. For all we know the other guy could have been a hack charging $15 HR.


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## Gordo (Feb 21, 2006)

George Z said:


> Today's e-mail:
> 
> _"Thanks. I’m afraid your price was a shocker. Will have to check with first bidder
> to see exactly what he was including (I did not meet with him at the time)"._
> ...


Yeah George, we get that alot too. As a matter of fact, just about every price I give to a client is met with "Oh my!".:laughing: 

The ones that respond back (like in your case) are the ones you can start to reel in. You, at this point, will be able to start differentiating yourself from the competition.

The ones that do not have the courtesy to even say thanks but no thanks usually are offended. Oh well, this is business and so far we have stayed busy for 11 years on word of mouth.

Back to the subject, $45 an hour seems low for an established co.

That was my rate 6 years ago and I was still hanging on.


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## Gordo (Feb 21, 2006)

Double-A said:


> Brush, I get those too...
> 
> From a recently lost job via email.
> 
> ...


FIrst time I heard of a lost bid to a coin flip. Damn!

This example just shows everybody that service and attention at least got you to a 50/50 chance of getting the job. Even being the highest bidder.


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## George Z (Dec 23, 2004)

Gordo said:


> Yeah George, we get that alot too. As a matter of fact, just about every price I give to a client is met with "Oh my!".:laughing:
> 
> The ones that respond back (like in your case) are the ones you can start to reel in. You, at this point, will be able to start differentiating yourself from the competition.
> 
> ...


Gordo, I think the rate could be higher too.
What makes better is the "actual rate" achieved per job.
A job is supposed to be 60 hours and it takes 40.(margins still same)
No, I would not adjust production rates to be more competitive.
Sort of like a built in bonus (add on at time of estimate).
I hope I am making sense.


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## Double-A (Jul 3, 2006)

Gordo said:


> FIrst time I heard of a lost bid to a coin flip. Damn!
> 
> This example just shows everybody that service and attention at least got you to a 50/50 chance of getting the job. Even being the highest bidder.


I just had to laugh when I got this. This is a first for us as well. I just chaulk it up to knowing we did our best and the other team just got lucky. That's a far cry from striking out in the 9th with tie score, 1 man on and 2 outs.


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## Paul Burns (Jan 17, 2006)

Grumpy said:


> I agree, I just didn't want people to go out there thinking they could make a ton of $$$ charging at $45 an hour. Some can and some can't, that's all.
> 
> Wait a minute here... If you charge $45 an hour for your work, and your 2 "in the bucket" guys are earning $30 an hour, that only leaves $30 an hour for your 1 "out of the bucket" guy. By my math after you subtract the overhead and so forth that out of the bucket guy would be better off working at Mc Donalds.
> 
> ...



Grumpy, If a person is estimating their work @ 45.00 per man hour and has 2 painters working, that = 45.00 X's 2 painters = 90.00 per man hour worth of work being produced. The owner/outo f the bucket guy actually has 60.00 per working man hour left at the end of each hour.

A BIG factor in our systems is that we use pieceworker's or variations of "pieceworkers" and sometimes subs. When we bid our work @ 45.00 per AVERAGE PAINTER man hour, it is more common than not for them to FINISH jobs TWICE as fast as the AVERAGE PAINTER estimate given would do the job. When that happens, the 45.000 per man hour actually jumps to 90.00 per man hour and the pieceworkers are also compensated DOUBLE for their achievements.

So now you have 2 painters producing 90.00 per man hour worth of work, each. The painters are paid 30.00 per hour X's 2 men = 60.00 per hour direct labor costs. They have produced 180.00 worth of work though. So although the "out of the bucket" guy is paying this HUGE (to some) amount of 30.00 per man hour for their direct labor, the out of the bucket guy still has 120.00 left over. Example - 90.00 per man hour x's 2 painters = 180.00. 

180.00 per hour minus 60.00 direct labor costs = 120.00 for the owner/out of the bucket guy. Deduct another 60.00 per hour for labor burden and overhead, and the out of the bucket guy is left with 60.00 per each hour worked, roughly.

I hope this clears things up a little. 

Paul
p.s. I had to re-read your post several times before I understood what you were saying. Because of ME, not you. I would suggest that others do the same when talking about numbers. Although it is just 5th grade math, it still takes thought and time to fully understand. Hell, I had to edit this several times. It is so natural for me, that I thought I could just type it out AGAIN. I was WRONG, again! LOL


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## maj (Mar 13, 2006)

Paul Burns said:


> Grumpy, If a person is estimating their work @ 45.00 per man hour and has 2 painters working, that = *45.00 X's 2 painters = 90.00 per man hour *worth of work being produced. *The owner/outo f the bucket guy actually has 60.00 per working man hour left at the end of each hour.*
> 
> 
> 180.00 per hour minus 60.00 direct labor costs = 120.00 for the owner/out of the bucket guy. Deduct another 60.00 per hour for labor burden and overhead, and *the out of the bucket guy is left with 60.00 per each man hour worked*, roughly.
> ...



Your definition of man hour is different than mine. For me.... 1 man hour is.... one man, one hour. The way you use it in this example would be 2 man hours for me. So even if you had 10 guys working at the same time for $45/hr, then it would be $450/ man hour?


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## Grumpy (Oct 8, 2003)

The bottom line is this: You said each painter can earn $30 an hour and you said the boss can earn $60 an hour having two painters working at $45 an hour per painter. Do the math yourself, it can't be done. 

$45=$45=$90

$90-$30-$30-$60=-$60

Hmmm looks me me your company operated for a loss of $60 per hour. What about overhead?


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## Paul Burns (Jan 17, 2006)

Grumpy said:


> The bottom line is this: You said each painter can earn $30 an hour and you said the boss can earn $60 an hour having two painters working at $45 an hour per painter. Do the math yourself, it can't be done.
> 
> $45=$45=$90
> 
> ...


I edited my post. The PIECEWORK factor that we have been using since 1994 (so it comes natural to me) has to be factored in. See it so mormal to me, that I usually just figure that 2 guys will approximately 1000.00 worht of work per day. Sometimes 20% lower, sometimes 20% higher. But that is the BASIC thoughts that I have used for over 10 years now. BEFORE that, I never made any money, for the very reasons that you are talking about. Once I implemented piecework. my life and business changed forever.

Paul
p.s Please re-read my post to Grumpy as I had to edit it to make more sense. Estimates and ACTUALS as FINISHED are two completey different numbers.


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## George Z (Dec 23, 2004)

Grumpy said:


> The bottom line is this: You said each painter can earn $30 an hour and you said the boss can earn $60 an hour having two painters working at $45 an hour per painter. Do the math yourself, it can't be done.
> 
> $45=$45=$90
> 
> ...


Grumpy,
Maybe I can explain what I understand:

Effective per hour charged to customer is $90.00 x 2 = $180.00

Direct labour cost is $30.00 x 2 = 60.00

Gross profit is 180-60 = $120.00

Paul said: *"60.00 per hour for labor burden and overhead"*

That leaves $60.00 per hour for net profit and ownwer salary.
Unless the owner's salary is part of the above overhead(I don't think so), net profit woul be even more.

It makes sense to me.
I guess the materials are an add on. (only 10% in painting)

The biggest problem I would have is bidding at half the production rates.

By the way, a variation of this is working for us for a few months now.
Just that my painters can increase production by 25 to 30%


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## Paul Burns (Jan 17, 2006)

George Z said:


> Grumpy,
> Maybe I can explain what I understand:
> 
> Effective per hour charged to customer is $90.00 x 2 = $180.00
> ...



George,

Thank you. I'm not as you know very good at WRITING what I mean. FARRR from a wordsmith! The only things that might be a little different is that we estimated on an AVERAGE painters production. AVERAGE meaning every painter in the country! Or as close to that as we can get. The other thing is that 45.00 is just a sampe. Those are NOT the actual pricing that we use today. However, they would still work. It is just that our painters and I would not make wuite as much money. I TRY to MAXIMIZE our painters earnings. I figure our painters and our clients satisfaction BEFORE considering my own benefits. But it all comes out equally in the end anyway when you don't have variables, or very few, if at all.

Paul


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## Grumpy (Oct 8, 2003)

The number soriginally stated were $45 per man hour. 2 workers. 1 owner. Now we are talking about $180 an hour which, by my math, is 4 workers. What happened to two workers?

I'm not going to argue this anymore. You can rework the numbers all you want. Your original statement is not accurate, and you have simply adjusted your subsequent statements to justify my questioning of the inaccuracy. I agree with the theory, but the theory only. It appears to me many of the details used as a foundation to substantiate the theory are flawed. The theory is true and valid however.


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## Paul Burns (Jan 17, 2006)

Grumpy said:


> The number soriginally stated were $45 per man hour. 2 workers. 1 owner. Now we are talking about $180 an hour which, by my math, is 4 workers. What happened to two workers?
> 
> I'm not going to argue this anymore. You can rework the numbers all you want. Your original statement is not accurate, and you have simply adjusted your subsequent statements to justify my questioning of the inaccuracy. I agree with the theory, but the theory only. It appears to me many of the details used as a foundation to substantiate the theory are flawed. The theory is true and valid however.



Grumpy,

I'm sorry, but it is NOT a theory and I did NOT adjust the numbers to FIT anything. We have been using this very model every day since 1994. I can show Quick Books reports and IRS satements to PROVE every word.

Many people have followed my posts over the years and adopted this system themselves. I used to even have one e-mail framed in my office fom someone that went from rags to riches virtually overnight using these systems.

Paul
p.s. I NEVER edited the first paragraph of my original post to Grumpy. I only edited the piecework explanation parts below that. So the ORIGINAL numbers did NOT change. Only my explanation of them. I NEVER mention FOUR painters!


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## Paul Burns (Jan 17, 2006)

*Copy of 1998 Post*

Below is a copy of the post from the guy that ended up writing me the personal letter that I had framed, but the glass broke and I threw it away. You can get a VERY GOOD idea of what he is talking about when you consider him as one of the first that I knew about that adopted our sytems. And that I lived in VA at the time.

I really don't want to argue this point anymore either. I am just VERY against LIARS or being accused of being one myself. 

Of course the format changed and looks more normal in copy in WORD, so if you want faxed to you, let me know. 

Please read below if you care.


[ Follow Ups ] [ Post Followup ] [ Contractors' Message Board ] [ FAQ ]

Posted by on December 29, 1998 at 03:35:43 from : 
Comrades, 
I've got a problem. I stumbled upon this board a few months ago about the time when I was sitting in my office, head in my hands, contemplating how I was going to tell my brother, who I had only months before recruited out of the glam television news industry, that I was buttoning up shop and sending everyone to the unemployment line. Couldn't tell you how I found out about the site. PWC mag. APC. Whatever. 
It was August. I should have been creaming profits out of this business like a bad mobster, but I had somehow managed to allow my employees to run my operation into the ground. I was losing money. The taxman and my vendors wanted to know why I wasn't taking their calls. My wife wanted to know when she would get a check to pay the bills. I still had a dent in my truck from a year-and-a-half ago that appeared was never going to be fixed. In short, I was in deep doodoo. 
I came to this board and made a post that I hoped might point the way to correcting at least one of my problems. Frankly I was pretty damned desperate and the membership came through magnificently. I got in touch via telephone with one of our colleagues on the Atlantic Seaboard and made him stay on the phone with me until I got the answers I was looking for. I implemented the changes this guy suggested and immediately popped the business' head above water. I received a number of other solutions to the problem I had posed, some of which I had already tried and found ineffective, some which didn't seem all that inspired. Some, like the solution I chose, were radical, radical, radical. Every time I posed the idea to someone they said, "You can't do that! That's not right!" Or stuff like, "It'll never work. Fagettaboutit!" Didn't matter. I had no options and I adopted no option behavior. I implemented the changes and I kept reading the board. 
I kept getting more and better ideas. Some were great, some were not so great. Some worked. Some didn't. Some seemed insane, some looked scary and some I thought, "No way, no how. Not on a bet!" All of them, bar none, required me to adjust my thinking. In short, to change. Those of you out there who are parents know the truism that the only person who likes change is a baby in a dirty diaper. So, that's reality for us human beings. Change...hard. Change...scary. The fight to resist change sometimes goes so far that people end up institutionalized and medicated for the balance of their days. 
Change is necessary for growth, however. Whether it's personal, spiritual, psychic or business oriented growth, there will always come the time when one is faced with making a decision which demands they move (sometimes quite aggressively as was my case) out from the safety of their personal comfort zone. The time and circumstances that surround that period is different for all of us, but when it occurs, the need for support and encouragement from those who are most able to lend it will never be greater. 
This board is a place to create synergy. We will come across viewpoints with which we do not agree. If we choose to judge them rather than investigate them, what good will come? Investigation, especially investigation of those things which at first blush appear out of the question (I'm not suggesting for example...devil worship), leads to innovation. Innovation is the first step on the road to success, however one defines success. Additionally, innovation does not have to mean something brand new under the sun...it can mean something brand new for any one of us. 
Without a very radical, very unpopular idea from a fellow contractor in Virginia, which many, many people decried me for implementing, I'd probably be selling shoes at Fayva right now. Instead, I got to go to Mexico and learn even more "radical" stuff. Very unpopular, too. Life is fun again. Business is great. I am happy, my workers are happy, my clients are happy. 
This is my official request that we keep invective out of the mix. I think the site will be more inviting and we'll all have more fun. Thanks for your attention. 


Follow Ups:
•	Now...now... Bruce 07:44:58 12/29/98 (0) 
•	Re: Invective Rich 06:51:53 12/29/98 (1) 
•	Re: Invective Patti G - NEAPOLITAN INTERIORS 07:18:32 12/29/98 (0) 
•	Re: Invective Jim Bunton 06:51:10 12/29/98 (0) 
•	Re: Invective Paul Burns 05:11:24 12/29/98 (0) 
•	Re: Invective Mr. Bill 05:08:32 12/29/98 (0)


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## FCPWLLC (Jun 1, 2006)

Here's what it looks like to me.... Price work at The avg production rate while implementing a pay plan than will produce a better production rate(upto double in Pauls example) thus giving you a higher profit margin. I actually do a version of this myself. I bid work based on what the other company's production rates are or what a new inexperienced company's production rate might be. While my price is close to thiers, My profit margin is higher because we can produce more per hour than the avg. company. Just because I can do in an hour what someone else can do in 4 hours, am I supposed to adjust my price to match? NO!!! That profit Margin is my Reward for being faster/smarter. The problem we see everyday is that a guy comes out and starts building widgets at a rate of 10/hr and charges say $50. Well, after a while he gets faster or discovers a smarter way and can produce 20/hr. and cuts his prices thinking this is the way to get more bids. All he has done is cut his own throat and brought prices down.

A guy that is paid based on performance versus hourly will work faster, better and smarter.

I think paul is trying to say that implementing a pay plan that produces a better production rate while still pricing at the average production rate will bring you a higher profit margin. This is why he is stating that most "widget Builders" could be making double. Because there are lots of "widget builders" out there continuing to price based on thier production rates that they used to produce at. They got faster and smarter but dropped the ball when they cut thier prices based on the new production rate instead of giving themselve a raise.

Paul seems to have a system that can show a "widget builder" how to be a Marketer, salesman, business owner, which most "widget builders" don't know much about. 

Believe me, all of our industries would make a better payday if some of those pricipals were followed. Instead, the "widget builders" think that the only way to sell is to slash prices and then back up thier price cut with "I'm still making $xx.xx/hr so it's all good" If I priced my work based on how much I used to make per hour the first time I picked up a pressure washing lance, I'd be making $10/hr. The sad part is that this is exactly how the lowballers of our world are pricing.

Don't mind me though. I am a 5% er. I do things that most do not.


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