# piecework explained



## gcajnr21 (Feb 6, 2006)

Hey all i tried emailing Paul B. but no answer so ill ask everyone here.

This might be confusing but i hope you can understand what im looking for.
Im trying to get my company started. does anyone have any saved documents on how piecework works in your company that you could send me. I understand that you give employees x amount for a job wether it takes 3hrs or two weeks to complete. im lost on figuring out how much to pay for a piece, i need a example? Maybe you could send me a sample workorder for different skill level employees working the same job.

im sorry i just learn better through visuals

-Troy [email protected],com


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## Paul Burns (Jan 17, 2006)

Troy, 

I don't remember seeing or missing your e-mail, sorry. I know that I sent out 100 or so of those packets that I have around Christmas, and then I kind of lost the spirit. 

It doesn't matter what a persons skill level is, the price for eack piece or the percentage paid to complete each piece stays the same. It is just that some painters can complete more pieces in a day than others, and they should be paid accordingly in my book.

Now the percentage that you pay will depend on your company, blah, blah, blah.. No, it should be around 30% of whatever you bid, if they are employees and get some bene's. If no bene's, you might go as high as 35%. Those numbers cost me a lot of time and money to find out. So you don't know how lucky you are! Of course that was before the internet, so, all information was harder to get then.

Now the hard part starts. If you can only pay your painters 30% and in order for you to get good painters, they will have to paid well. So now your bids will have to be higher than normal, probably, because you are only paying 30% instead of 40-50% as a lot of hourly shops end up paying.

That is why the national average for painters net profit is like 5%.

With the formula that I just suggested, it can be closer to30%/. That leaves room for hiring office people, and salespeople later on and still having a decent profit and maybe some pay left over for yourself.

Regardless of how you pay your painters, whether it is hourly, piece, or subs, the object remains the same. That is to finish the jobs for 40% of what you bid and NO more! 

That way, when you pay for materials, you are still at 50% direct costs, and have a 50% gross profit. Most painters have around 30% gross profit at the end of jobs.

You can pay subs that are legal, around 40% because you don't have all of the extra costs with subs. 

If you can follow and keep to these numbers, and couple that with a closing percentage of somewhere between 30-40% when mixing repeats, referrals, neighbors and first time buyers/callers from other advertising, then all you are left with is making the phone ring and honing your sales skills to demand higher prices for your work. It can easily be done. This is how you earn 100k the easy way! Or a lot more.

Troy. we got to the point that we KNOW exactly how much money we make as soon as the phone rings. And it doesn't even matter if we get the job or not. Cuz we know our average job price, our average close ratio, and the exact percentage that it will cost us to finish each job. There are really no variables left. There is not an hourly company out there that could claim the same thing. They can get close if they are real good, but they will NEVER know their labor costs before the jobs start. So the entire job, and every job, everybody, especially the bosses, are trying to achieve the labor costs that piecework companies already know from BEFORE the job(s) even start. What's not to like?

The part of quality going down, is a myth. We have proven it on every job for the last 12 years or so. We have testimonials stacked high. Clients are constantly complimenting on how fast, efficient and clean the jobs are. Well, if ANY paint company can pay their labor what amounts to 30.00 per hour, they will get those kind of results also. No painter wants to lose a 30.00 per hour job, so they do it right, and do it the way we teach them. Then the word spreads around through the labor community and we don't have any problems finding help. This is NOT rocket science. It is just common sense. The hardest part is knowing those percentages and they have been posted by myself at least 100 times since these bb's hit the air.
And yes, it works on all different kinds of work, with the hardest probably being new work, but that is mainly because builders won't pay enough so that your labor can earn decent money. So you/we simply market to the best jobs. Rich people with homes that are less than 10 years old and work our way down from there.
You can do old victorians too IF you can estimate the prep work. Now again, it doesn't matter if you pay hourly or by piece, if you attatch a fixed price for something, your goal is to pay a fixed amount to have it done. Hourly companies try to reach the same numbers that we do. We just KNOW what they will be, and they are gambling on every job. It makes for lots of stress when you don't know. I lived that way for 15 years and would not go back there for my life. 
Now if you bid T&M nobody can help you!  

Good luck,
Paul


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## gcajnr21 (Feb 6, 2006)

thanks paul that cleared some things in my brain on pricing but........

1.My next question would be How do you set up a piece/ or work orders? 
Say you have 2 guys on a house and the whole ext. needs paint. How many pieces would you have? i hope you understand what im asking. 
im so used to hrly pay. everybody works together to get the house painted so im confused on how you can set up different pieces. 

2.on piecework, (2 person crew) one guy gets his piece done but the other guy isn't done with his yet. what does the guy that is done do???


Thanks paul for all your time to MR. anoying. i promise once i get things figured out that i wont be buggin you as much. Maybe i can help you out one day!


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## Paul Burns (Jan 17, 2006)

Troy,

How do you estimate? To me, the more you can break down a job, the more accurate it will be. I have a feeling that the reason that most people don't pay piecework, is that they don't break down their estimates at all. I think they just walk around a job, look at the difficult things, compare in there mind to another similar siae house they did and whether not they made money on it, and then sit in their truck, take down a few notes, and go back home and sit there and think about what NUMBER that particular person will buy. Then they write a number on some sort of form and mail or fax it to the potential client. I also think that a lot of people do just fine like that, for a while. Mainly because if they are a fat enough at answering the phone and getting the estimate in the prospects hands, the prospect might by simply out of convenience.

But you can't really pay your empoyees a fair wage like that. The reason for that IMO goes back to the point of hiring the painter(s). I believe that MOST paint contractors try to hire the cheapest, best painter, they can get their hands on. So they might look in the paper, see ads for painters and offering an average of 15.00 per hour, and they put in an ad just like it. Now, once they hire these painters, their object is to squeeze as much productivity as they can out of them for the money they are paying them.

So if this theoretical contractor that I described above happens to land that job for 5 thousand dollars, he whole being begins to figure out ways to get that job done as inexpensively as possible, so that he/she can put as much money as is left over in his pocket.

Some of these contractors will ust the fear of losing their job tactic, some use the whip, and oops I dropped the hammer trick, some will try the ol pat on the back trick, some will even give a cah bonus every now and then and HATE every dollar of it. People will try just about anything to get jobs done right, for the cheapest costs, UNLESS, they are making a LOT more money than they could at any other job of the same type. Even then, some would rather work for half the money, if the boss is that much of an A-ho.. But that is rare for someoe to leave a 50-100% more pay job. I mean there just are not tha many jerks that can stay in business that long.

So anyway, this contractor gets this job and (100) more that are similar to this one, and estimates them all the same way and he has 3 painters, or 3 painters on each crew. Does he pay them all the exact same 15.00 per hour? Does he make his/her pay amount judgement by how long they say they have been in the paint business? Do the guys that have sprayed Polymix automatically get more or less pay? Can a painter with only 3 years experience produce more quaity work than a painter with 20 years? Have you ever heard of a painter that does twice as much work as his fellow painters? If you asked that painter that was twice as fast, would he say that he gets paid twice the hourly amount than everyone else? Have you ever hired a painter that was almost unbelievably fast on their first day, then a little slower on the second day, and on the third day that same painter was moving almost exaclty as fast as the other painters on the job? Why would that be? Do the painters you hire, usually adjust their speed to the fastest painter on the job, or the slowest? 
How do you know who is ready or deserves a raise? Is it an annual thing or are there other factors involved and what do the painters have to in order to receive raises? Why do painters NEVER seem to care as much as the boss/owner? Could it be because that they don't get rewarded like the boss does? Why are salespeople some of the most highly paid people in the world? Why don't bosses pay salespeople by the hour?

You answer these, and I'll answer yours. No, just kidding, just let me know how you estimate and pick a couple of others.

I am not talking about how I think YOU or anyone else on this board operates their business. I am just saying that I THINK this might be pretty close to MAJORITY of paint businesses out there. If I am correct, or anywhere near correct, then at least 51% of them do not have even one part of a system or thought process that would allow them to pay piecework. But they do just fine. And I certainly would not want to change them! 

Paul


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## gcajnr21 (Feb 6, 2006)

I've never estimated a house before

Paul i have never had a business of any type. i recently was laid off when i got my finger caught in a belt sander. I worked for my uncle as a remodeler, we painted all the time. since my injury ive thought about starting my own paint company. Im going too. Im working on starting it business right now. im on these boards to learn. i just got done reading E-myth it was great, but anyways you seem to have not answered my questions. im a beginner and have not been poluted to mainstream small business failure. I want to be were you are!!!! I want to do piecework but i must understand it fully. 

If you could reply simply to my last post.

here it is:

1.My next question would be How do you set up a piece/ or work orders?
(I need a example or Visual)Say you have 2 guys on a house and the whole ext. needs paint. How many pieces would you have? i hope you understand what im asking.
im so used to hrly pay. everybody works together to get the house painted so im confused on how you can set up different pieces.

2.on piecework, (2 person crew) one guy gets his piece done but the other guy isn't done with his yet. what does the guy that is done do???


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## JMGP (Mar 29, 2005)

Troy,


You MUST estimate using "Production Rates" in order to successfully empliment a peicework system into your business... You MUST have a price for EVERYTHING...

I know many (friends) painters that estimate the way Paul has discribed... I have tried to explain to some of them HOW to esimate using production rates and tried to explain to them HOW to figure there own production rates... ALL of them looked at me like I had 3 eyes or changed the subject.... so I dont bother with them anymore...

Once you fall into the "guestimate" estimating... I guess its hard to break away from it... if it is working for them Great!...

You want your estimates to be as consistant as possible...you want to MAX out your profits on EVERY job... and using production rates ( I believe) is the only way to do that... Production Rate Estimating is the TRUE way to estimate painting...

It will take some time to figure your production rates out because you dont have any experience.. you dont really know "how long" it will take you to paint different substrates...

If you dont understand Production Rates... you may not understand the peicework system that Paul uses.. AND if you dont have a Production Rate system...the Peicework system will probably be usless to you...

I know these probably are not the answers you want...

I dont use a peicework system YET... I am working on it... and yes.. Paul gave me the idea from reading his posts on another board...they are FULL of information...

My advise to you Troy is to start out estimating using a Time+(Labor)+Overhead+Materials=Cost system "for now"... you will win some and lose some in the begining..

KEEP TRACK on how long it takes you to set up/clean up, prep/paint, equipment used, how high, how hard, etc etc... each style of door, window, walls, ceiling, crown, and everything exterior, etc etc... once you have enough historical data... you will be able to figure your production rates...

You will not be able to just jump right in business using any old production rates... and trying to explain a peicework system might just confuse you for now... Thats just my own thoughts... 

Anyways... I hope I made sense... I will try to answer any questions you have and try to help as much as possible... and Im sure I speak for most of us here...

Thanks for your time...

Joe


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## Dave Mac (Jan 30, 2006)

I dont operate with piece work, but I like the theory, so Im gonna take a shot at answering your questions, and Paul can correct me.

example 

1 guy gets paid say $15 per window, and is responsible for the prep on all window.

1 guy gets paid $15 per linear foot of boxing (boxing 3 ft wide)

1 guy gets paid $30 per 100 sq ft of siding

same guy for windows might get the doors as well.

Guy doing the siding might make more per hour because he is spraying, wich might make other painters want to learn how to spray.

So basicly you have to have a production rate (that your painters agree with) for every single thing you have to paint. wich isnt as hard as it sounds. 

this is a very basic example. hope it helps somwhat. 

dave mac


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## George Z (Dec 23, 2004)

Let me get a shot as well.
Based on production rates(your painters, not your's if you have employees), 
every item has a time to it.

Let's say one piece is one manhour.
If painter completes 8 pieces a day he gets paid 8 hours.
The fun starts when painter completes more than 8 pieces in a day,
and gets paid for 10-12 or whatever hours during an 8 hour day.
I think that's Paul's system, but we'll hear it from the horse's mouth.
Car dealership charges a book suggested 1 hour to change an alternator
but somehow a mechanic changes and gets paid for changing two.


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## Paul Burns (Jan 17, 2006)

Troy,

It's late. 

We use quick books pro right now for our estimating form. You can customize it to your own......

Ours has a column for the type/exterio interior, decj, whatever. A columns that describes the work being performed/rear soffits rear windows, etc. A column for estimated hours that each task is estimated to complete, which gets multiplied by an hourly rate that set in QB and the sum is in the final column. At the bottom of the form, the total of all the individual prices is shown in it's own individual box. Then there are all the other boxes, feilds, etc. to make it look pretty and track different things.

So it goes something like this;

Wash entire home 8 - 400.00
Prepare all rear woodwork 10 - 500.00
Paint all rear soffits 2 coats 8 - 400.00
Paint all rear windows 2 coats 16 - 800.00

Total = 2100.00

Jim and Bob wash the house and put both of your initials next to wash house. Jim, prepare all woodwork and initial. Do the same with the soffits. Bob, you paint all of the windows and initial. Jim, you will paid for 22 hours regardless of when get finished and Bob you will be paid for 20 hours. Just remember, all of the work has to pass our company's and the homeowner's quality standards, or you'll keep working on them until they do pass.

Whoever finishes first can either take the rest of the day off, or go wash the Jones house, or I'll pay you 2 hours to change the oil in the van, or....... whatever.

Usually, the painters work all of that stuff out themselves. Once they start making a lot more money, they will split things up. Like if ther soffit guy ends up making a lot more than the window guy, they just agree to split both items rather than waste time fighting about it. Actually, that is how it almost always works, and why we like 2 painter crews the best and so do the painters. If someone is real bad, you will know right away because they are either terrible painters, or hard to get along with, or some other reason that you wouldn't want them on your payroll anyway.

Or, you can do hourly plus, where everybody gets their regular hourly pay, but they know the budgeted hours before they start and if they finish sooner, they get to split whatever is left over, or something like that.

Hey, I was selling this info for 1500.00 a pop a few months ago, but I was having a problem collecting the final 500.00. Mostly because I didn't try to collect it and figured that if they didn't pay, well kharma. I paid a lot more than that to get the info myself, so take it easy on the demanding answers, please. I like to help people if I can, cuz kharma says they will help me in return, and they do, but I don't like being TOLD or guilted into sharing something. That is just rude! :furious: 

IOW's I love sharing amongst good people. But not with people that are just out to make a bunch of money. But that is another good thing about this system. Greed will destroy it quicker than anything. 

This sytem was developed for the workin man! Come Monday morning I'm right back with the crew.

Power to the painters!!

Pawl


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## Guardi Pro (Mar 15, 2006)

I use something similar from CALFORM... See post on contracts. 


Paint It!


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## gcajnr21 (Feb 6, 2006)

Paul thats so funny:laughing: what you said about me guilting you and demanding like im some sort of god or somthing. i re-read my post and its does sound like im a begger making up a lame story about my finger just to make you feel sorry and talk!!!:laughing: 

Hey! my finger and story is true! IT HURT like a mother! it cost 13,000 just to repair it from a hand specialist. My uncle is helping me pay it out cause his home owners ins. would not cover it. I should post some pics of my finger. My finger got sucked in the 1/8 gap between the sand and the housing, ouchy, it took my index finger down to the bone clear up to my second joint. No nail,flesh or tendons left, just sanded to the bone. i had a 50% chance of loosing my finger if surgery didnt take. but it did and im happy. Then i got fired


Thanks paul for the post i understand fully now. i hope to meet you someday and thankyou. ill bring you some Elijah Craig 12yr. later


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## JALAPENO TOM (Dec 1, 2005)

It's great when 8 hours are bid and the guys come in under the time. They get paid more. 
What happens when the crew goes over the number of pieces(hours) estimated? Who pays for that? 

I know of a company who tells the crew the number of hours for the job. Say it's 100 hours. If the crew finishes in 80 they get to split the difference with the company. What if it's 120 hours? Who pays for those hours over the estimate? What crew would work for free? Where's the win-win?


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## George Z (Dec 23, 2004)

JALAPENO TOM said:


> It's great when 8 hours are bid and the guys come in under the time. They get paid more.
> What happens when the crew goes over the number of pieces(hours) estimated? Who pays for that?
> 
> I know of a company who tells the crew the number of hours for the job. Say it's 100 hours. If the crew finishes in 80 they get to split the difference with the company. What if it's 120 hours? Who pays for those hours over the estimate? What crew would work for free? Where's the win-win?


Hi Tom,
The idea is that the crew gets paid a minimum hourly, similar to what they would get if there was no piecework compensation. 
Why wouldn't they want to make more money?
It really comes down to not estimating enough manhours for the job.
Also, why would the company want to share in the bonus?
Company decides before the job what the profit will be. 
If this is achieved, the company should not put it's hands in the worker's bonus or even adjust production rates. 
Maybe that's one reason employees are not 100% behind the system.


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## [email protected] (Sep 29, 2005)

:thumbup: I'll add my 2 cents worth. After painting for 7 years I had begun to drift into pricing for piecework. As an example I know how long it takes to brush a ten foot section of railings and pickets for decks. A lot of labor involved and on large decks or two story decks it can make a big difference. You really have to have some experience and the best I know is to log every job throughly. Most of us think if we're not actually doing something physical we're not making money, but the records you keep and doing the math will make amd save you lots of money. I recommend you keep a log of every job - paint codes are also handy to have as well as phones and addresses. Go through the log every now and then and call the customer when it's time to repaint. They'll appreciate you caring and it'll make you money. There's a lot more to owning and operating a business than the physical work and most business's go broke because they don't charge enough. Know to the penny how much each job breaks down and keep adjusting till you are happy. I was fortunate in taking a small business course before I started my business and created a business plan so I knew a little when I started but being willing to learn every day has helped a lot. I'm convinced piecework is the way to go and I also like to pay a man a decent days pay so he can feed his family. Do the math - be a businessman - not the cheapest -but strive to be the best.


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## Paul Burns (Jan 17, 2006)

George Z said:


> Hi Tom,
> The idea is that the crew gets paid a minimum hourly, similar to what they would get if there was no piecework compensation.
> Why wouldn't they want to make more money?
> It really comes down to not estimating enough manhours for the job.
> ...



By God I think you've got it! It's possible that others have also, but this is the first post in almost 10 years posted by someone other than myself, that sounds just like I had posted it! :thumbsup: 

Pall


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## King of Crown (Oct 12, 2005)

Paul Burns said:


> By God I think you've got it! It's possible that others have also, but this is the first post in almost 10 years posted by someone other than myself, that sounds just like I had posted it! :thumbsup:
> 
> Pall


10 years? has the internet been around that long?






just giving you a hard time. lol


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