# Material Mark up



## Sonny Lykos (Mar 11, 2006)

Here’s another suggestion to not only make more money, but to get paid for special talents you may have. Use what I call a VPS - Variable Pricing Structure. I’ll explain:

If I get a call - last week it was two of them, I will charge y regular rate for the “normal” trade stuff, but a premium for special talents. One was popcorn that had come off due to a leak. It as on a ceiling of a condo, and the substrate was concrete. I charged them $125 or more for what took me about 1/2hr and I was there anyway doing other work. Not everyone can repair a popcorn celling where when completed, it is ot visible. On anther job, the shower above leaked and damaged the ceiling of the shower below around the can light in it. I had to cut our about an 18” square with the lite in the middle, replace the drywall, tape it’s perimeter and then skip trowel the texture to blend in with the surrounding texture.

Last week it was another ceiling an a laundry room, but the texture to be repaired was an orange peel type. Drywall patch was about 24” square.

Another job was another ceiling drywall patch in a living room, and I saved the owner monies by being able to blend in the white paint originally used so we did not have to paint the entire ceiling, hall and kitchen. They did not have the paint, did not know what brand, and as we all know, there are many, many “whites” around.

Another job was about an 8’ x 10’ slab with a crack it’s full width and one half was raised up about 1/4”, creating a liability in this condo association. the Board Pres. asked me to break up the entire slab and pour a new one. I suggested that he save his association money and let me do it my way. I cut the slab about 3” in each side of the crack. Used concrete dye and filled in the 6” void with about 3 bags of gravel mix. I got the color of the patch to match the old concrete perfectly, exposed aggregate and all. Made a good buck for myself and saved them money. His concern was that any patch would show up as a different color. It was a high end condo association. I made about $14/hr on that job. I did the cuts and my helper dug out the concrete and mixed the new gravel mix after I played with the dye and came up with the correct ratio.

For the above reason I’ll never understand why a carpenter would charge the same labor rate to cut compound cut rafters as he does just to build walls or nail up (or down) sheathing. 

If you have a really exceptional talent at a few things or even one thing, you’re an artist or artisan. And the reason is because in the world immediately around you just shrunk. In your locale, not many people can do as you do. Get paid when you use an artistic talent of that of an artisan. You did not learn it over night. Don’t be a fool; get the money.

VPS - think about it.


----------



## ch0mpie (Nov 30, 2005)

I do a lot of handyman type work and I think that changing hourly is a good way to go ONLY when the customer thinks its a "quick job". As we know there is really no such thing, but that can be difficult to explain to a ho. I usually charge an hour for pick-up and delivery of materials as well as a minimum 20% markup. 

Sales tax makes me feel nuts. I've called NYS at least three times to try and get it straight. Everytime I get a different answer.


----------



## Capt (Dec 30, 2005)

Sonny Lykos said:


> Here's what I do on those jobs where it's impossile to tell how long it will take.
> 
> "Mrs. Smith, it is virtually impossible for me to tell exactly how many hours it will take to to your job. That's now unusual, but the way most other contractors figure out a price on jobs like yours it to include a substantial contingency amount to cover themselves so they don't lose money. Personally I don't think that's very fair becasue if the job goes quicker, then I've made EXTRA mony on it.
> 
> ...


OKAY I'm getting the idea. IT also just dawned on me that when you charge a set amount for the job, you are motivated to work fast to be paid and move on. (thus faster work = more money) BUT when you work hourly, you make more money only by spending more time on the job. (thus slower work=more money)Which in a certain sense (at least for me) seems less exciting and kind of dull. (besides how many hours can one work?)
SO here is one of my new set price estimates I just made--awaiting acceptance.

Kohler Toilet $395
36'' Vanity Cabinet, Top and faucet installed. $950
Replace Bath Fan (Quiet Model) (Ductwork aside) $275 TOTAL $1,620
Price includes all above materials installed. Including Pick-up delivery disposal and all plumbing. I figured material to cost me about $675


----------



## Sonny Lykos (Mar 11, 2006)

Capt said:


> Kohler Toilet $395
> 36'' Vanity Cabinet, Top and faucet installed. $950
> Replace Bath Fan (Quiet Model) (Ductwork aside) $275
> TOTAL $1,620
> ...


Couple of questions:

1. Will yo also remove the existing vanity, top, etc.?
2. Are you changing an existing exh. fan or installing a new one?

Let me also expand a little on what I said in my last post. I always try to eliminate surprises - hidden problems. Customers don't like the extra surprise, and I don't like having my schedule screwed up. So........

"Mrs. Smith, there are one or two potential problems I may run into. I explain...........

So before scheduling your job I'd like to cut a small access hole in the drywall her to make sure the studs are OK and not rotted. I also just noticed that a couple of the floor tile around the toilet are hollow. That my be an indication that the wax ring is leaking. The wax ring is no problem since I intend to install a new one anyway, but those tile bother me. Since they are hollow, they may break or crack the nexttime someone steps here. I'd like to remove them now. It will only take a couple of minutes for me to cut thru the grout to remove them. I'l take them with me, grond off the thinset (or adhesive) and bring them back when I do the other work"

Now, a couple of potential problems have been exposed, I now look like a concerned and professional contractor, and since I've already removed the few tile and cut the drywall hole, she sure as heck is not going to hire someone else. I've also eliiminated surprises, the "You should have known that so why should I pay anything extra" talk.


----------



## Capt (Dec 30, 2005)

Sonny Lykos said:


> Couple of questions:
> 
> 1. Will yo also remove the existing vanity, top, etc.?
> 2. Are you changing an existing exh. fan or installing a new one?
> ...


I'm removing, replacing and disposing existing stuff, and I've seen what can be unexpected. This one is for a prominent realtor.

OK I like the way you verbally finesse the hidden problems potential with the customer. 
Lastly, how do you find my estimated costs?


----------



## Sonny Lykos (Mar 11, 2006)

I’d say, one long day’s of work.

So, 9-10 hours at $85/hr =$850, plus $675 (mat), plus 25% MU on Mat ($170) comes to a sales price of $1695. So.... you’re close. I would have kicked it about $200 to cover getting rid of the old stuff and becuse you’re dong plumbing work too. 

Two things. If you have them there, call “You Got Junk” and ask them what they would charge to pick up a vanity, top, and toilet. I also charge a premium when doing plumbing. 

A couple of years ago a plumber installed an owner supplied faucet (and did other things) on a high rise in Marco Island - just south of me. I don’t know when, but the Price Phister faucet either developed or had a crack in the body of the valve. Result: a couple hundred thousands of dollars in water damage in that condo and 2-3 units below. This was out of season so no one was home and the water was left on by the owner.

Owner(s) sued the plumber. His lawyer contended that 1) the faucet was supplied by the owner, 2) it was a defective faucet, so it’s not the plumbers fault. Bottom line is that it cost the plumber about $10K in legal costs and his liability carrier and Phister’s paid for the damages. It cost Home Depot, the supplier, nothing. Since then you’d be hard pressed to find any plumber around here who will install any owner supplied materials.

Anyway, I know of no other trade what poses such “potential” damage other than roofing and foundation work. So, I charge a premium for plumbing installations, and even if it only involves drains. I also charge a premium - at least $125/hr - when doing flashing repairs, for the same reason.

Finally, when younger I was impressed when I got a job for a high profile person. I soon learned hgh profile schmofile - only the “numbers’ in business are important - and they must be met. Really nice customers (most of them) will turn on you in a second when money is involved, using the rationalization: “It’s not personal. It’s just business.”

Finally, did yoru price include a sales commission for the time you spent with her looking at the job. I think I’ll scan in my estimate sheet and post it here so you can see what in include in it.

As for the way I finess the customer, what I am actually doing is getting both her and me to recognize, and acknowleged what is inolved in the "real" and "total" job. I use the term "invasive inspection" as opposed to just a "visual" inspection.


----------



## Capt (Dec 30, 2005)

Sonny Lykos said:


> I’d say, one long day’s of work.
> 
> So, 9-10 hours at $85/hr =$850, plus $675 (mat), plus 25% MU on Mat ($170) comes to a sales price of $1695.


The estimate was accepted yesterday--where do I send the consultant fees???? LOL


----------



## Sonny Lykos (Mar 11, 2006)

If we ever meet, a cup of Dunkin Donuts coffee, small ,with cream and a little sugar.

Remember, $85/hr. from now on. What I've done since I started about 34 years ago is to see if I stay booked up with work for at least 3 weeks (when I worked alone or with one or two guys). If so, I raised my labor rate by $3 and waited a few weeks (not months). If still booked up for at least 3 weeks, that rate went up again by $3. 

Here comes the tricky part. I kept doing that until I knew I was above or substantially above my competitors. The key, IMO was to continualy "brand" myself. So at a high rate, I might stay there for a few months until I felt my branding was getting my many weekly calls, at which point I started the process all over again.

In other words, as your brand name gets around, "presold" customers will start calling. As they start calling is the time to raise those rates. 

"He's not cheap, but damn, he's good, neat, and and does great work." is what you will start hearing from those referred to you. so be impecekaby neat. Call even if you only think you'll be 5 minutes late. Use 4x12 drop cloths as runners from the front door to the bathroom. Use a mat or folded drop on which you place your tools and stuff. And when done, let her see you get on your hands and knees and wash the floor with a clean rag, then get out "your own" Windex and paper towels, and make thos fixtures shine." Then stand back as the referrals come in. One more thing; when checks come in, be different and send them a Thank You " note for th check. No one - NO ONE - ever does that. 

My wife does it for my son's business, whether it's a check for $5K or $50k and you would be surprised at how many people cal her to tell her that no one - NO ONE - has ever sent them a Thank You card for just sending them a check. So if it impressed them so much that they took the time to call her about it, what do you think that they think?

Don't be a tradesman. Don't be a contractor. Don't even be a professional. Be a smart - VERY smart - business owner. Sometimes when I'm working for a widow, I bring her flowers the moring or aternoon I work for her. Smiles from ear to ear, and what does it cost me - a $15 - $20 bucks. Where are you going to get fantastic marketing or great advertising for $15 - $20 bucks? And guess what? I've had dummies - REAL dummies - say to me: "What! You dropped $20 on an old lady? Are you nuts?"

MORONS !!! These same morons don't even bring flowers to their own "old ladies" as they call their wives. So why would I expect them to understand giving flowers to strange old ladies?

Incidentally, in the occasion someone balks at what I charge them (I do a lot of jobs with no price given) and they say something like: "Gee. That only took you 3 hours." to which reply: "Well. I didn't know that your priority was to get the most done in a given time at the least dolalr amount per hour. Had you told me that up front, I would have given you the phone number of our local "Manpower" office. You can get some one there for about $12 - $15 per hour." "Yea, but they don't know what the hell they're doing, and besides, I don't want THOSE people in my home."

At which time s/he finally realize that they are not in fact hiring "time", but expertise, honesty, talent, physical appearance and everything else each of us look for when hiring our own staff.

Ahhhhh. From the mouths not of babes, but our own customers. They some times catch them selves making foolish statements.

Sorry. I got on a roll. I'll get off my soap box and stop running my mouth, er, keyboard.


----------



## Mike Finley (Apr 28, 2004)

Geeeeeeeeeeeeez...

I wish we had a "save this post" button or at least a rating button on this site.

I would rate Sonny's above post as 4 stars! :clap:


----------



## Sonny Lykos (Mar 11, 2006)

Thanks, Mike. I don't want to take what I've learned (that was right) over the decades to my grave before first disseminating it. And not being smart enough to be a consultant and who gives seminars, my only way of getting it out is thru these forums when the appropriate issues arise. Again, Thanks for the kind words.


----------



## karma_carpentry (Aug 7, 2005)

Yeah, I second that. I printed it out so I can read again in in my truck when I'm at a stop light.


----------



## Capt (Dec 30, 2005)

Sonny Lykos said:


> One more thing; when checks come in, be different and send them a Thank You " note for th check. No one - NO ONE - ever does that.
> 
> My wife does it for my son's business, whether it's a check for $5K or $50k and you would be surprised at how many people cal her to tell her that no one - NO ONE - has ever sent them a Thank You card for just sending them a check.


Believe it or not, I actually have been sending thank you cards. But for me it's the timing. I think they are best sent the day after you leave the job with your check. (I've sometimes waited longer.) Buyer's remorse is known to set in during that time window, which is a perfect time for a customer to receive a thank you.


----------



## Sonny Lykos (Mar 11, 2006)

A smart Capt!


----------



## janrickey (Jan 26, 2006)

I always get such great info and help when I read the posts.
Thanks to all!!!


----------



## asbestos (Mar 22, 2006)

*Cheese*

Some years ago my wife hired a guy to replace a couple windows. The next xmas we got a can of nice sharp cheddar made by the state university. I thought 'if I go into business for myself I'm going to do that" Well now that I am, I should.


----------



## pitterpat (Sep 25, 2005)

*Thank you notes*

I used to send Thank you cards...got away from it. I think that I will go back to it.


----------

