If you want to survive in construction, you have to make a profit, and that only happens when you price your jobs correctly. The correct way to price your jobs is to create an accurate estimate, then apply your markup. Michael will explain what markup is and how to calculate the correct markup for your company. He’ll also discuss some of the common mistakes made when calculating and applying markup.
Michael Stone, author of the best-selling book Markup and Profit; A Contractor’s Guide Revisited, has more than five decades of experience in the building and remodeling industry. Michael offers business management assistance to construction-related companies in the U.S. and Canada with books and training programs available on his website, as well as coaching and consulting services. He can be found on the web at www.markupandprofit.com, by email at info@markupandprofit.com or by phone at 1-360-335-1100
And this will the information you'll see this morning is not in chapter three.
Okay. What are we doing here? Hang on.
There we go. Okay. I've just gotta learn how to play the game here.
Alright. This morning, we're gonna review the reasons for failure in construction, being profitable versus being competitive, and then we're gonna get to calculating your markup.
And I'm gonna throw in this stuff up front because too often people see the math of a markup and then they want to come back with, well, nobody can charge that in this town. We're too competitive here. That kind of stuff. Alright. So what we're gonna do is is I'm gonna give you some background of why the markup is what it is and why once you set it, you can't cut your markup on any job regardless of the size. Anyway, so I'll give you a little background as we go along, and you'll be able to see this and judge for yourself what you want to do.
Reasons for failure in construction.
There are six major reasons in cons why people go out of this business. Three actually, there's three major reasons and three minor reasons.
Reason number one and the largest one that takes out over ninety percent of all contractors is not charging enough for the work or service they provide.
That will that will take out over ninety percent of all the people in this business.
I can give you statistics all day long on that, but essentially what happens is when people start a construction business, the first year, one out of three won't make it to the end of the first year. And two out of four will not make it to the end of the second year.
So we got a pretty high failure rate in this business.
Second reason that construction companies go out of this business is lack of use or improper use of change work orders.
Change work orders should be outlined, written, signed, and paid upfront before any work is done. Following that rule, you very seldom will have trouble with change work orders, but it is a rule that's seldom followed in this business.
And, most of the time, you know, in I would guess probably one in three jobs, we end up having fights between owners and contractors, over exchange work orders that we're left to the very end. And that simply doesn't work.
Number three reasons, failure to use or improper use of contracts.
It's amazing that the contractors will learn how to build a building and do a great job of it, but they won't learn how to write a good contract.
We still get people calling us complaining because the customer won't pay. And when I asked to see the documentation for the job, they don't even have a contract written. It still goes on. And I'm not talking small jobs, fifteen, twenty thousand dollars jobs.
I'm talking jobs in the hundreds of thousands of dollars that are started and worked on and no paperwork. Okay. Those are the top three that'll take out somewhere between ninety and ninety six percent of all the construction the construction companies that go out of this business. Alright.
Now we have four and three more. Too many employees for work produced.
Okay. That's the fourth reason that causes problems.
The fifth reason is improper payment schedule on contracts. And both of those, four and five, will contribute heavily to lack of cash flow through your company. If you're having cash flow problems, chances are it's gonna be number one, four, or five that will cause those problems.
Okay. And then lack and number six, lack of profitable sales.
You know, you can set your you can set your sales goals. You can set your markup, do everything you want, and everything can be perfect except if you don't make enough sales, you're going to go out of business because there's no mind to pay the bills.
So if you combine all those things here, you're gonna account for probably ninety eight percent plus of all the reasons construction companies go out of this business.
Now there is an underlying, reason that contractors, have financial problems, and it boils down to be, the profitability of a company versus the company trying to be competitive.
Alright? And the high rate of failure in construction is a result of contractors trying to be competitive, just like it says on the screen there.
Alright?
Being competitive is optional. Being profitable is not.
And, you know, there's no yeah, but here.
You're either making money or you don't. And if you don't, you're gonna be out of business. And it usually when companies are losing money, it takes anywhere from three to nine months for them to fade out and go away.
And we've been watching this now since I started studying why construction companies go out of business in nineteen sixty nine.
And invariably, these are the issues that come up most often.
Okay.
Profitable versus competitive is the difference between market based pricing and cost based pricing.
We're going to talk a little bit about those two and why you need to get your arms around those two. And this will tell you or show you why you may be having some financial problems in your business.
Market based pricing is based on the sale of mass produced goods, clothing, food, vehicles, books, etcetera.
Lawyers, doctors, dentists, those are all market based pricing, businesses.
Okay? Their percent of profit is based on their total sales where they can go in and have a call day what we call a loss leader sale, or cut their prices on some particular phase of their business or product that they're selling.
And this, in turn, generates more sales because more people coming in to buy in more of the product or other additional products that have their correct markup on it. And so what happens is that, when you have a loss leader sale, and I'm gonna demonstrate one here in just a minute, the company will, not always, but for the most part, they have loss leader sales because they want to generate more profits. So let's take a look here at a good example. This would be of soups.
Campbell Soup Company makes a product called bean with bacon soup. It's probably one of their top selling soups that they have. They sell, you know, literally worldwide.
Campbell's Soup sells the bean with bacon soup to the supermarkets where you go shopping or the, you know, the grocery stores for about a dollar a can, and they in turn mark it up one point two to one point three, which means that they're selling it for a dollar twenty to a dollar thirty.
Okay? That's pretty much, if you go nationwide and check your prices, that's pretty, pretty common. and we know this because we, you know, we do our seminars virtually all over the United States, and I always check and, you know, what's a can of soup cost? And, you know, most people can tell us.
Okay. So we have a grocery store manager that's profits are down a little bit. And he says, well, we need to get our profits up. So he calls contacts the IT department and they put on the internet on their website that they're gonna have a soup.
They're gonna have a sale on Campbell Soup, Friday noon to Sunday noon, and you can buy up to twelve cans for a dollar a can, which means they're selling it for what they buy it for. And so this will generate a bunch of sales into the store. People will come in specifically to pick up the bean with bacon soup. And of course, when they're in there, they don't just pick up the bean with bacon soup.
They pick up a whole bunch of other stuff. And when they come out of the, out of the, get to the checkout line, you know, they've got a whole bunch of our, items in their grocery cart. And when they, when everything is totaled up and they're paid for, the profitability from the store goes up because the people have bought a bunch of other items that are still at full markup and it more and offsets the loss leader sale of the one dollar a can for Campbell Soup.
Okay? And there's a number of other things you've all seen. Vehicle sales are the same thing when they advertise one particular, say a Ford F-one hundred and fifty pickup, Ford Motor Company. There may be a dozen dealers in your area, and they will advertise, this vehicle for sale. And some people come in and they like the Ford f one fifty and they buy it. And there's people that don't like it. And they'll walk around the parking lot and they'll pick out something else and they'll buy that.
But when they buy the other vehicles that are not on discount, they make more money on it. And of course, then the dealership makes more money. And that'll hold true for grocery, like I said, grocery stores and car dealerships. It'll also hold, hold true for clothing stores, Brooksville, any kind of store you can think of.
And that and that's how they generate more sales for this, for their company. Now contractors sometimes believe that, you know, they can discount their work and that will attract more work to them. And you see this often in, advertising, you know, will, I seen something from Andersen Window here the other day.
And you purchased Andersen Windows, and we'll give the installation free. That's a loss leader sale.
Okay? Because they're making enough on the windows that more than offsets the cost of the labor that they supposedly are giving away, although I'd like to see their books on that to confirm that. But many contractors buy into this idea that they are, also in a market based business.
Now when they, people that believe they're in a market based business, this is some of the things that are typical of those companies.
You'll talk to them and they're always fussing and worrying about other companies' prices.
Okay?
They always adjusting their prices downward to be competitive.
They're saying or thinking we must be competitive. And they see this is all about price on these things. They use the word free in advertising. That's a big mistake.
Free only attracts people who are looking for something for nothing. Okay? So if you've got free, you know, duct tape over it, sand it off your vehicles, whatever you got. But don't use the word free in your advertising because you're attracting the wrong kind of people. Okay? They ignore the financial needs of their own company. And even worse, they ignore the financial needs of their employees.
Okay? This is one area that a lot of contractors make a mistake. You cannot ignore the finance on these of their employees.
Okay? The rationalized cost plus or T and M contracts. You should never do cost plus and T and M only on small service work type contracts.
Okay?
Feedback from clients on these companies that think this way, often, oh, their price is too high. And, you know, it's a vicious circle that they get into with between the contractor and the and the owner or building owner, whatever it is. And also, you see people and they get they buy into this method, ten percent overhead and ten percent profit, which simply doesn't work in construction.
Okay. So that's market based pricing. Okay? Now let's talk about cost based pricing.
There are only two businesses out there that fall under the category of cost based pricing that we've been able to identify.
You in construction are one.
The second one is sit down restaurants.
That's the only two businesses we've been able to identify that are cost based pricing.
Now their pricing is based on the sale of individual product or service.
And this again, applies to an construction related company.
Your percentage of profit you make is going to be based on the individual sale.
You know, my dad, my grandfather had a business from nineteen fifteen to nineteen thirty two. My dad had a business from about nineteen forty eight to nineteen seventy two.
I've had businesses, you know, this all the stuff you're seeing here is a direct result of the years and years and years of research that we've done on this.
You can't have you can't base your profitability on multiple sales. This gate's job has to stand on its own two feet. That's one of the things my brother used to say. Each job's gotta stand alone.
Okay. So what that means is that your sales price cannot be lowered on any given job. Once you set your markup, that's it. You can't cut your price on jobs. Okay?
If you do cut your price on jobs, and we're gonna talk about this more a little bit later on, if you do cut your price on jobs, what's gonna happen in most cases, you'll give away some, if not all the money you need for you to cover your profitability for a job. And if you give away all your profit, you probably are gonna be giving away some of the money you need to pay overhead.
And then guess who gets to pay that out of their own pocket? Okay? That's you. So this is one of the things that you've gotta start, you know, if you've been basing your entire sales presentation on price, then you may start want to, you may want to start take a look at this and see if we can't get that turned around because pricing is not the way to go. Now cost based pricing, the contractors that follow this line of thinking, they're aware of their competition, but they don't worry about them.
Okay? They correctly calculate markup or gross margin, and they never adjust because of competition.
They never use the word free in any advertising.
They keep a good advertising program in place three hundred and sixty five days a year. They never cut their advertising budget.
They maintain the highest pay scale for all employees. And why do they do that? Because that attracts the best employees to their company, who in turn get the jobs done quicker with fewer callbacks, with less cost, and increases of profitability for the company. So they in turn can pay the employees the top dollar. It's a circle, and it works very well.
Cost based pricing contractors that understand this concept will only work on a fixed fee contract. They don't do cost plus. They don't do time and material. They get a firm price quotation upfront.
And the good ones can all get their estimates within two percent of the sales price of the job.
They don't bill, they don't invoice, and they don't have receivables on any jobs other than those working. No billing, no invoicing means that you put it on your contract and tell your customers they must follow that payment schedule.
Because in the US or Canada, when you invoice, people think they have thirty days to pay the bill. You just did the work. Why are you waiting? Let's get paid. The minute you get done, you need to get paid. Okay?
Good contractors know when to say no. They know when to walk away from a bad job or a bad customer or a combination of both.
And they have a well developed nose for money.
By that, I mean, they ferret out the type of jobs they can do, where they make the most money. And two of them that I talk about are are, making the numbers work in construction class, which we do all over the US.
Two of those things we talk about is doing work for, house leveling.
And that is a very, very lucrative, business, not knocking the houses down. I'm talking about re leveling a house in case a corner is dropped down or something, windows and doors sticking, that kind of stuff. You're fixing those things. That's, you know, your markup on that stuff is two plus, oftentimes three and four times the cost.
Okay? And the other one is the assisted living complexes are desperately looking for people to do work for them. And it's amazing how many contractors just ignore those. Okay? But those are two things. That's what I'm talking about, having a nose for money to be able to ferret out that type of business so you can, you know, make more money for the work you do.
Let's talk about setting your profit and overhead expenses.
Okay. So we're gonna back into this markup thing now. We're we're heading down that path. So that's a little bit about the cost versus, market based pricing. and now we're gonna get into setting your profit and overhead percentages. Okay?
Your profitability for your company must be at least eight percent net profit. That's for long term company sustainability and growth. Two, three, or four percent doesn't get it. You gotta be at eight percent plus, preferably ten percent or even higher.
Many of our coaching clients, end up in the ten to fifteen percent every year, and that's where you need to be. Okay?
Now why is this true?
Here's what's going on. You notice up the left hand side here, we have the percent of profits minus four up to ten percent. And across across the screen here, we have the number of years you've been in business.
And the first year in business, you're going to have some expenses like vehicles and tools and stuff like that. And if you make it if you're one of the if you're two of the three that make it through the first year, you're gonna have some expenses. And so your overall profitability is gonna probably end up somewhere between one and five percent. That's typical, based on our studies over the years of of contractors and, how they make how much money they make.
And so let's just say the first year you're in business, you make two percent like we show right here. Okay?
And after the first year, we go in through the second year and you keep up the hard work and you end up with about four percent net profit. But right in here, a lot of contractors contact a disease. It's called a lot of them gonna go buy it right now.
And what that means is they start buying new vehicles and new trailers and new this and new that, and their profits end up down here in the toilet.
Okay. And so they wake up to this someplace in here, and they turn it around. And the next year, they make good profits. And the next year, something like nine eleven happens or a hurricane happens or an earthquake happens or something happens to get our customers to stop calling us, in which case, again, the phone stops ringing. And, for those of you up in the northeast, you know that when nine eleven happened, I know contractors up there that didn't have a phone call for four and five months.
Okay? And that's gonna hurt your business.
So you're gonna have this sawtooth effect until you get your profitability at eight percent. And when you do that, you're gonna notice that the sawtooth things goes away and everything kinda levels out. The main reason is you as a business owner can then focus on running a business rather than how to get the bills paid every other week or how to pay make payroll every Friday.
Okay? Those worries distract you from the your, you know, your, game plan of running your business. And when you hit eight percent, that's when this all levels out, just as you can see right here. So that should be your goal. And there's a lot more to it, and you can read about that, in some depth in the book, Markup and Profit, the Contractors Guide Revisited that we have. You can find that on our website at markupandprofit dot com.
Okay. So we've got the profit set now at eight percent, and now let's talk about overhead expenses. Everyone in business has overhead, and I do mean everyone.
Okay? If you work out of your home or have an office in your home, you have the same percentage of overhead as the guys that, has, a business downtown on Main Street and a big storefront. Okay? The dollars are different, but the percentages are almost the same or should be. Okay? So everyone in business has overhead. So let's talk about now the biggest myth in construction.
The biggest myth in construction. I'm gonna ask you two questions here, and let's see if you can answer them. Question number one. As your volume or sales go up, your overhead expenses go which way? Up or down?
And the answer is they go up.
Volume goes up. Your overhead expenses go up.
Now question number two.
As your volume goes up, your overhead percentage of total sales goes which way?
And the answer is it goes down.
And the misunderstanding of this concept right here is what gets a whole bunch of contractors in trouble. Now let me explain that to you how this works.
And notice we have a graph here. On the left hand side, we have the dollar volume built right up here. And put as many zeros behind this side over here on the left as you need to kind of balance up where you to, kind of real, equate to where your company is. Across the bottom, you'll notice we have January, February, March, right on down, we got twelve months of the year.
Starting in January, you have certain fixed overhead expenses, fixed overhead, meaning your salary. And by the way, let me let me get off here just a little bit. The company profits are not your salary in construction.
Now a lot of CPAs don't understand that, and they'll tell you that, oh, no. We don't we don't put your we don't put your, your salary on your P and L, that your, your, your salary is your profit. Don't you believe that? And if they're telling you that it's time for a new CPA because you are effectively undercharging for your work.
Okay. That said, your fixed overhead is your salary right here. Your office, anybody working in your office that you pay them, that goes right here. If you have vehicle payments, which you should not, but if you do, they will go under fixed overhead as well.
Certain types of insurance are fixed overhead.
And the list goes on and on. I I would imagine there's twenty or thirty different items that could fall under that category right there. Now at the start of each year, you start making sales. Alright? That is represented by the red line you see right here. It says total volume produced.
So as your as your year goes on and you collect more sales, you notice the red keeps going up, and your your your red line may go off to the right may go up to a little sharper, whatever it is. But this represents the sales for your company. Now when you sell more, as you sell more, you start generating what we call variable overhead expenses. Two good examples of variable overhead would be fuel for your vehicles because the more you sell, the more driving you gotta do, and your fuel expenses go up. That's that's what represents this. That's this area right in here. This is your variable overhead expense area.
And another one would be job supervision.
If you have individuals running your jobs, the more jobs you have, the more supervision you have, and the higher your variable overhead will be for the job supervision.
So if you collect your overhead, your fixed and variable overhead, you it's represented by the blue line you'll see right here going right across.
Now as your sales goes up, as a red line goes up, that means your blue line goes up at the same time. Your total overhead goes up like this. Now you notice out here in August, September, October, it doesn't go out here and start curving down because your sales get more. It doesn't. It keeps your add on going up. It does not go down.
However, you'll notice also that the end of March, first of April, somewhere in there, if we check our fixed and variable overhead, our total for the two is about sixty four percent of our sales at that point in the year.
However, if we go over here now at the late November, early December, and check our fixed and variable overhead, you will see that it is about thirty five percent of our total sales for the year.
Now as our sales goes up, our overhead expenses goes up. But our overhead as a percent of sales goes from sixty four to thirty five percent. And that means that the overhead goes down.
And the lack of understanding of that and and that's why you hear contractors say, oh, my job was quite a bit, my job was quite a bit larger. So I was able to cut my markup because my overhead isn't as high.
See, they, what they're missing is they're trying to take their percentage on going down because of part of sales, but that's simply a function of a different angle of the amount. So if you look right here, this line doesn't bend down. So you can't cut your markup on larger jobs. And I mentioned to you earlier that I would talk about that. There you go. So sales goes up, expenses go up, but an overhead percentage goes down.
If you keep that in mind, that will stop you from ever cutting your sales price. And then the next job you go out and quote to a customer. And they say, oh, your price is too high. and you get, well, let me see what I can do. And you get busy and you're trying to figure out a way to cut your price in. That's where you get into trouble.
How do you project your sales volume? So we're coming now. We're gonna work on the market.
Alright?
Project your sales volume. You can do that from compiling your company history, and that is the hard way to do it. But it is possible if you've kept good records, you know how much you've sold in the past, and you kinda look at the economy today, and you can pretty well predict how much you're gonna sell. There is a much easier way of predicting what you're gonna sell for your company.
And that is you set it based on your own personal financial requirements.
If you've been in business less than five years, one to four years, if you'll take your personal you calculate your personal financial needs at home. Every dime you need at home, you calculate that.
Then if you've been in business less than five years, you divide that amount by point o eight or eight percent.
That will tell you how much you must the a company must sell, build, and collect so that it can afford to pay you the salary that you want.
If you've been in business longer than five years, five, seven, ten, fifteen, twenty years, whatever it is, you can adjust your percentage, eight and a half, nine, nine and a half, ten. I would step it up every two or three years as you as you can and as your company, sales allow it. You'll see that when you you divide your income there at point one o, you get a much higher income for the same volume of work. Okay.
Let's take a look at how this works. So you set your income for your home right here. This is projected income for home. And again, if you've been in business a while, eight, nine, or ten percent, whatever it is.
So let's say you want to make one hundred and twenty thousand dollars All right? You've been in business four years. So that means we're gonna start with point zero eight. So we divide one hundred and twenty thousand by point zero eight.
And that means the company must sell, build, and collect one million five hundred thousand in sales, so that the company can afford to pay you that kind of salary.
Now, if you're not you don't have those kind of expenses, you say, I can get by in sixty thousand, and I've been in business eight years. Okay? And we're gonna pay ourselves ten percent of our sales. So we take sixty thousand divided by point one o, which is ten percent. And that means the company must sell, build, and collect six hundred thousand in sales to support your sixty thousand dollar habit.
That's the way it works. Okay? Real simple, but that's a good way to that's a good way to do it. And that way, you can keep on top of your numbers.
Now if you do a good job of reviewing each year between November fifteenth and December thirty first, if you do a good job of reviewing the past year and making projections for the next year, you will find, using this formula here along with everything else in in that, in that exercise, you'll find that you'll do very well. Now you can find, two papers that we have written, parts one and two, on year end review and next year's finding on our website. You can go in there and go to the search feature and just type in, year end review, and it'll come up. And if you follow those two papers, you'll find that your business does much better because you it's a you know, it's a you've got a game plan and you know exactly where you're going.
Now you're not gonna get it done in a week or two. It takes about six weeks to do a good review of your company and planning for next year. But the end result is that a lot of many of our coaching clients are call me in, September and October and tell me they've already hit their sales goals for the year. So that's, that's well worth the time.
Alright. Let's get to mark calculating our markup. That's where we're heading with all this.
Now assuming your overhead and your profit numbers are correct, and by the way, Karen Mitchell is coming up in a future webinar here. Karen is probably one of, if not the best, CPA that we found in the country for construction related accounting.
Okay? And Karen and I have been over virtually every number we've got in here, and she agrees exactly with our process, what we're doing here. So if you have a profit loss statement and we got to assume here that those numbers on your P and L are correct, all right, then the way you calculate your markup is your total sales divided by your job cost or cost of goods sold equals your markup.
Now your markup times your job cost equals your sales price. Those are just the exact same thing. Okay? Markups are always calculated using job costs where gross margins are always calculated using sales price. But gross margins is another issue. So we won't get into that here.
Okay. Now we're gonna take this a little bit slower because I tend to rip through this pretty quickly.
We're gonna slow it down. So let's assume you're doing a, say, a remodel job or maybe you're a specialty contractor, whatever it is, and you're gonna do an estimate for a small job.
Your labor is calculated. Now this is fully burdened labor rate, by the way. This should be on your estimate.
Is ninety five sixty. That's your labor rate for this for this particular job.
Your materials are fifty seven zero five.
Your subcontractors are forty three eighty four. And your other costs are a thousand five hundred sixty dollars for a total of twenty one thousand two hundred nine dollars That is our job cost or cost of goods sold, if you will.
Now we're going to assume for talking purposes here this morning, we're gonna just grab one point five zero as a markup, which, by the way, is your minimum markup you should be using as a remodeling contractor. Not one point four eight, not one three five, one point two o, one point one five. None of those. One point five o is your minimum markup for remodeling.
And I'll go into that in a bit, why that's why that's true. Okay. So when we take our formula, markup times job cost equals sales price, we take our markup, one point five o, right here. We take our job cost of twenty one two zero nine right here.
So we take one point five o times twenty one two zero nine, and we get a sales price now of thirty one eight fourteen.
Now keeping in mind that a markup, that one represents your job cost, this number right up here or these numbers right here or in particular this number right here. That's the one. The point five o represents your overhead and profit.
Now if you've calculated your Okay.
Okay. Now let's go to let's go to calculating our market. How do we get that one point five o figure right down here in the corner? Okay.
Let's assume you've got a small company and you're doing five hundred thousand dollars a year, and your overhead is twenty five point three three percent or one hundred and twenty six thousand six hundred and fifty dollars And normally a remodeling contractor, you're gonna be, you know, twenty four, twenty five, twenty six percent on the low end, and it can get high as I've seen, overhead, expenses for remodeling come through at fifty one, fifty two percent.
So, normally, if you're somewhere between, I would say, twenty five or twenty six low end, thirty one, thirty two, thirty three percent high end, you should be right in that ballpark. You should be good. If you're outside that range, as long as you have a good reason for it, that's okay. But if your overhead, if you're claiming your overhead is fifteen percent or twelve percent or something like that, you better look at it.
And a good place to look would be in the markup and profit book, pages twenty eight, twenty nine, and thirty. And we review, your overhead expenses for your company and the percentage they should be of your total sales in-depth in there. We have some charts and graphs and things you can go in and look and kind of compare where you're at, to what's what I would consider to be the industry normal.
Alright. So we have a profit of eight percent. We talked about that earlier for forty thousand dollars Now, how do we come up with the market? Okay. We take our dollar volume sold built and collected as five hundred thousand. We place it down here under volume.
We divide that by our job cost. How do we get our job cost? We take our overhead expenses, which we've listed right here, and we take our profitability that we're projecting. We add the two and subtract it from our dollar volume sold, built, and collected just like it says. Subtract two and three from line one, and we get three hundred and thirty three thousand three hundred and fifty dollars Those are our job costs. That's the money we have to get our jobs built.
Okay. So we take our volume of five hundred thousand. We divide it by our job cost to thirty three three hundred and thirty three thousand three hundred and fifty dollars. It equals our markup, which is one point four nine nine nine or always round up one point five o.
Okay? You always round up your markup. You never round it down. Now I'm gonna show you why.
If you have five hundred thousand in sales right here and your job costs are three hundred thirty three thousand three hundred and fifty dollars, that gives you your one point four nine nine nine markup.
Alright. We're gonna round that up to one point five as we should. Now let's go back and take our job costs times our markup. And waste time, We get we get we're in and fussing about pricing, so we want to round our market. Well, we'll round it down to one point four nine instead of up to one point five. We'll round it down to one point four nine times our job cost, and we end up with a sales price for the year of all of our jobs at four hundred ninety six thousand six hundred ninety two dollars.
Now if we do what we should do, which is take all of our job cost times a rounded up markup at one point five o, we get total sales of five hundred thousand twenty five dollars. Now look down here at what happens when you lower your markup to one point four nine. You give away three thousand three hundred and thirty three dollars or leave the money on the table as I said.
This is why you always round up. Now if you've got if you wanted, if you don't want that three thousand three hundred and thirty three dollars, I'll raise my hand volunteer it. You can send it to me. I'd be glad to take it. I'm not a bit bashful about money.
Okay? This is why even you're rounding up one ten thousandth of a point.
Alright? Tenths, hundreds, thousands, ten thousands right there. One ten thousandth of a point, you're rounded up. It's nothing.
It's minuscule. It's like that. But look at the difference it makes in your sales for the year. And your customer doesn't know.
They have no way of knowing unless you tell them what you shouldn't do.
Okay. Let's keep going.
What's the right markup for your company?
Alright. New home construction.
The minimum market for new home construction, the survivability market for new home construction is your cost times one point two six.
Now remember, I've been studying why construction companies go out of business since nineteen sixty nine, Okay. And have been focused on the numbers in particular since nineteen eighty in this business.
Our research has shown over and over again that your minimum marker for new home construction needs to be at one point two six.
Okay? And it can range all the way up to one point four five before it will have a decided effect on your sales.
What's the average around the country based on information put out by the National Association of Home Builders and other groups that specialize in new home construction, the average contractor in America charges one point one five times their cost, a full eleven points less than they should.
Is there any doubt in your mind why construction companies fail?
And believe me, the big guys have the same problem. Okay? During the last recession of two thousand eight, two thousand nine, okay, we lost about forty percent of the, you know, the great big home builders that do two thousand five hundred homes a year or more. They make the same mistakes the little guys do. You would think with licensed CPAs on their staff, they'd know better. They don't.
Okay?
Let's go to specialty trades.
Specialty trades being electrical, plumbing, roofing, siding windows, doors, concrete, that kind of stuff.
The minimum markup for a specialty contractor would want to be one point three five.
I've seen specialty contractors use markups all the way up to three point five.
Okay? The average around the country, as best we can tell from our research, the average specialty contractor marks this stuff up one point two o a full fifteen points less than they should be.
Let's talk about remodeling, and this will probably apply to most of the people here. Your minimum markup for your work. I'm not telling you what to mark up your work. I'm telling you what your minimum needs to be.
Minimum markup for remodeling company across the country is one point five zero times your cost.
We have coaching clients that mark up two, two point five, three, three point five, up to four times their cost and get it all day long. Okay? Now what is the average markup across the nation for remodeling companies? This is from comp this is from associations like NARI and some of the other people that focus on remodeling.
The average in around the nation is one point two five, a full twenty five points less than they should be.
And if you're looking at these numbers, there's no doubt about why I said right up front, okay, that over ninety percent of all construction companies failures is due to the company not charging enough for the work they do. There's your numbers right there that will prove that.
Okay?
Now, I want to make sure everybody understands this. Quite often in our two day classes, guys will come up and say, Michael, the town I live in is way more competitive than anybody else. Okay? We can't charge those prices.
And my standard response is, how in the hell do you know you've never tried?
Okay? These prices work across the nation. I've taken sales calls in all states, all over the place, and use the same markup. In fact, most of the time when I take a sales call for another company, I have I add five points to their markup and go out and can sell it just as well as anybody else.
Price is in the mind of our right up here. It's not out there with the customers. It's right up here. Okay? And if you let it get the best of you, you're gonna end up selling your job short.
Now here's a little trick that you can use to make darn sure that you don't undercharge for your work.
What most contractors do is they set their markup based on their smallest job and then try to lower it as the job gets larger.
If you're smart, what you will do is you'll set your job your markup based on your largest average job, whatever it is. Now maybe you don't have a hundred and fifty. Maybe your average job is fifty thousand. Whatever it is, you gotta rework this graph right here to suit suit yourself.
So if you set your markup at one point five for a hundred and fifty thousand, then on the jobs that are less than that, a hundred to a hundred and fifty, you use a one point five five markup.
And job seventy five to a hundred, you use one point six.
All the way down the line here, down to the jobs under ten thousand, your markup should be times two. If you use those markups like that, you're gonna do okay. You're not gonna get rich, but you'll do okay, and you'll keep your bills paid, and you don't have any cash flow problems.
That's the smart way to set your markup on your business.
Now where does your markup go? In your Clear Estimates program.
Notice right here.
Goes right in there. A one point five markup will show up as fifty, fifty and fifty. Now one more point here that we strongly recommend you use one markup across the board for everything. You don't use variable markups. A Lot of contractors do that, and they end up short at the end of the year.
We have done studies with our coaching clients that when you use one markup across the board for everything throughout the whole year, you will make more money than another contractor working right across the street from you that goes out and uses variable markups. Like, how on material he'll use one point five. On labor, you'll go one point six. The subcontractors use one point two. People that use variable markups like that will never make the same money that a contractor will make if they use one markup across the board and never and never and doesn't change it.
Okay.
I got one more slide here on on incorrect formula for markup. Now you can't put this in your program or maybe we could figure out a way to do it. I don't know. But this is a formula that's been hanging around now for several years, and now the US government agencies are starting to pick this up and use it. So if you do work for any governmental agency, city, county, state, parish, or federal government, and they come at you with this formula right here, job cost plus overhead plus profit, hand it back to them. And if you're smart, you'll walk away. Okay?
This formula right here was, somebody figured this out way back when, and it started out with some of the big, big companies like Macy's and, you know, when they had contractors come in and do work for them, they said, well, this is how you're going to price your work. And the contractors didn't think it through. And they said, okay, fine. Not a problem. Now let me show you what happens when you use job cost plus overhead plus profit equals sales price, as opposed to job cost times markup equals sales price. Let me show you what happens here.
Using the same numbers we had above, five hundred thousand, overhead of twenty five, all these numbers are the same numbers. I don't change the numbers.
You take your job costs plus overhead. So here's your job cost, twenty one thousand two hundred and nine, plus twenty five point three three percent overhead, which is this number right here, fifty three point seven two. Add those two together, and we have a subtotal of twenty six thousand five hundred and eighty one.
Plus profit.
We take our subtotal of twenty six thousand five hundred and eighty one, add eight percent profit, which is twenty one point two seven.
And we have a sales price then for the job at twenty eight seven zero eight.
Now take this same job cost and plug it into our formula we gave you earlier at twenty one two zero nine times one point five markup gives us a sales price of thirty one eight fourteen. Look at the difference here, gang.
Three thousand hundred and six dollars on that job right there. You're giving away. You're leaving it on the table. Nine point seven six percent less money on the exact same job.
I had guys say, oh, that's not that much. Oh, yeah? Let's take a look.
That means if you drop your total sales for the year nine point seven six percent, that means you're now selling four hundred and fifty one thousand two hundred instead of five hundred thousand, Which means you lose all of your forty thousand dollars profit we've got listed right up here and eight thousand eight hundred of the money you needed for overhead. Now remember earlier I said that if you give away some of your profit, you chances are you're gonna get away all your profit. If you give away all of your profit, you're also gonna give away some of the money you need to pay overhead.
There is a classic example right there of exactly when that happens. Right there, you got it. Okay. So if you're taking notes, you'll see that stuff.
Anytime anybody asks you you do job cost plus overhead plus profit. I have even seen a couple of cases where architects have asked contractors to submit their quote bids using that formula. Just, you know, just tell them no.
Here's my price and hand them one price. And how you get that price is none of their business. That's proprietary information.
This business of transparency is just absolute suicide for a contractor. And if you haven't run into it yet, you know, keep on with the transparency and disclosing your numbers and you'll see what I mean. Okay? I want you to keep in mind, I'm not being mean or nasty here, but I've been at this fifty seven years in construction. And I've seen about every scheme and scam you can think of of architects, engineers, building owners, homeowners, governmental agencies, you name them, trying to scam contractors out of the money they're rightly rightfully due for the work they do.
Okay? And this is one of this formula right here is one of them right here.
Okay. Now, couple quick things, and then we'll go to questions and answers.
We have our newsletter and our blog. Our newsletter comes out every Wednesday morning. You can sign up to the newsletter right here at markupandprofit dot com.
And on our website, we have over nine hundred plus articles, that you can go to and read, no charge, and help you with just about anything you can think of. It'll be in there. We've also got a relatively new forum that we started. It's called construction business owners group dot com.
And if you are a building, if you are a construction company owner, we would welcome you to that group. We encourage you to go and join.
And let's see what else we got here.
Oh, I mentioned to you, this is the inlet. Here's another book right here. Profitable Sales, A Contractor's Guide. You may want to take a look at that. That will help you when you know what your markup is, and then you can go out and sell your jobs, and you know you're gonna do very well financially.
Okay. So with that, let's go to the questions.
Awesome. Thanks, Michael. I haven't seen any questions that Devin was not able to get to yet, but if anyone has a question, feel free to ask it here in the chat on the right side of your screen.
I do have a question, Michael.
Yes. So, so we talked about payment schedules kind of at the very beginning there. Do you have a suggestion on the number of payment schedules? What kind of retainer we should take upfront?
You know, how many payments are typical for a contract.
Mhmm. You betcha. Alright. If on short contracts, less than two weeks, you should have three, maybe four payments.
You always get a down payment. You get a payment on the first Friday of a job. And then depending on the length of the job, you should have one more payment maybe in the middle of the job and then one at the end of the job. One of the things you want to always do is make sure your final payment is never more than about two.
And for real small jobs, they can be as high as five percent of sales price of the job. But on any any job over about five thousand bucks, it should be kept at two percent max, max, and that's for your final payments. Now as far as your rest of your jobs go, the larger the job, the smaller the down payment, but I wouldn't in no case, would I do less than twenty percent. Twenty percent down, and then you want to get a payment at the first Friday of the job.
Now remember, we used to the payment schedules used to be one third, one third, one third. And that didn't work. And then the guy said, well, let's let's, get payment schedules when, you know, at the finish of framing and the finish of roofing and we've got the floor covering done and we've got the painting done. We'll get a payment after each one of those.
And that found they found out real quick that doesn't work either because customers are always looking for reasons not to pay them. So they switched to, well, let's let's get our payments, at the milestones at the start of something. And, again, now you're gonna get the banks and everybody else that get involved in the financing, they don't like that. So what it's evolved to, the smart contractors get a down payment, they get a payment on the first Friday of the job, and they get a payment every other Friday.
Okay? Now if you do that, which means that your payments are gonna be smaller, but you what you're gonna find is it's gonna eliminate a lot of the cash flow problems you may be having.
Okay? Now, now there's nothing wrong with that payment schedule. And, we have, contractors in California say, oh, we can only do one thousand dollars down or or ten percent of the sales price whichever is leased. Well, that's true.
But you can also get a job initialization fee. You can get a, material purchase fee, you can also get a payment on the first Friday of the job. So, you can maintain that pretty well. As far as your change work orders and stuff like that, there's no rule in California, and I've got the documentation from the state, there's no rule that says you can't get paid for your, change work orders up front.
A lot of contractors in California believe that's not true. Okay? They think, oh, no. No.
You got the state no. The state has no ruling at all on on deposits for change work orders so you can get paid. Okay? So basically, I hope that answers the question.
You know, if you got a forty or fifty thousand dollar job, you get a down payment, progress payments, you probably got, what?
I'm what?
Term yeah. Can you hear me okay?
Yeah. Everything's everything's great, Michael. Yeah. that completely answered the question. I appreciate it.
Yeah. I kinda wondered a little bit. It worked a little better if I, if I had a graph I could put up and show you. I don't have one there, but it yeah. There's that's you spread your payments out, make them smaller, and you'll find it eliminates a lot of the cash flow problems that a lot of contractors have. Okay?
Right.
Yeah. We've got some questions coming in here. Let me take a look.
Shannon, we'll just kinda go in order here. Shannon, you could find the recording for referral marketing just by going to our blog, Clear Estimates dot com, underneath the support tab. Just clicking blog.
Interesting one here. So Dominic says, how do you get over a guilty feeling you have when you feel like your sales price is too high?
Well, do you feel I don't know how to answer that.
A guilty feeling.
Oh, now if you're not in business to make money, why in the hell are you in business? That's that would be my question. Okay?
You know, this is you've got to step back out of this emotional thing and stop and think about this. Are you feeling guilty when you go to the store and pay money to buy groceries for your family?
Okay. They don't they don't feel guilty about charging you for, you know, as an example for, and I'm an ice cream nut, but Dreyer's ice cream is, you know, what, five and a half or six dollars for, you know, for half or for a pint or not a pint, but a quart. Hogan does ice cream, those little pint things like that, they charge four or five dollars for. They don't feel guilty about charging you. You got bills to pay.
Bills to pay and you gotta get over this idea of feeling guilty. This is, this is where your your focus is more on price than on selling quality, value, and service. Here's here's another answer. How long have you been in how long have you been in this business? How many years have you been training yourself to do the job you're gonna do? Okay? Isn't that worth something?
Contractors want to just go, well, I just I've been in this business thirty years and I can build anything. Yeah. Well, that thirty years is more training and experience than most doctors have. Have you ever seen a doctor back away from their payment schedule?
Okay.
Yeah. And this kinda comes back to what we talked about a couple weeks ago with Kyle Hunt in the sales process webinar is just being confident in your numbers. So if someone, you know, turns you down, there's going to be another homeowner or customer that's willing to take you on because you're you're confident in your numbers.
Well, yeah. This, you know, there's there's an interesting question or statement right there. A homeowner turn you down.
I want two out of every three homeowners to turn me down. I only want one and three. That's what I want. Then I know my pricing's right, my sales presentation's right, and I'm getting rid of the tire kickers and the troublemakers, which is that will be the two of the three will be a problem for me to deal with. I don't need it.
You know, I can see this. Now most of your kids on this program can't, but I can say I'm coming up on seventy seven. I don't need any more problems, especially with customers.
Okay? Buy customer, I take a customer, I want good customers. I want chairs and a fair price. If they want to pay it, great. If they don't, I'm I'm getting on my horse and head back for the stable.
Okay? Mhmm.
Interesting one here from Kendall. How do you avoid showing where your markup comes from when the financing bank requires a sworn construction statement with lien waivers, for suppliers and subs?
In our book, markup and profit, it shows you how to do that. We've got a section in there on how to take your numbers, break them down, and put them in a form that the banks will accept.
My personal feeling is I wouldn't, you know, I would tell the homeowner that, you know, this is personal. If, you know, if your contractors don't want to do it, that's fine. But I wouldn't, you know, if they, the bankers want me to fill out those kind of forms, I'm gonna tell the homeowner I'm gonna charge them for them. Either that the homeowner can do it or I'm not gonna do it all and walk away depending.
But you don't, you don't let the banks tell you how to run your business. Remember that. Okay? But if if you want to do business with them, then there is a, I forget what page it's on, but it's in the, it's in this book book right here, markup and profit.
And there's a system in there on how you can readjust your numbers so that it's successful to the bank.
that comes with it's under, insurance work, I believe, is where it is. But it works for the banks as well.
And then a a quick one from Brook. Is a roofing contractor in the skilled trade or are we talking remodel?
Roofing contractor?
Yes.
That's a specialty contractor.
Okay.
Okay. But now here's the thing on roofing.
Roofing contractors will have a higher markup item per item than electrical contractor because your risks are gonna be a lot higher. Okay? And, you know, you're gonna be up on roof working and in adverse conditions, much more so than electrical or plumbing contractor. Although every trade has, you know, some problems. but roofing contractors, you're gonna have higher insurance rates, so your markup's going to be higher.
Okay? But, if you're doing remodeling, that would mean that, to me, that's two trades or more. So if you're doing roofing and you find rot, and you've gotta do demolition, and you gotta tear the sheeting off, and maybe you've got some, stick frame trusses. And, you know, not the not the manufactured trusses, but stick frame trusses, you have to, you know, cut out some cords and stuff like that, and they're rotten.
and maybe even go down and reinsulate. Now you're in three or four trades right there. Now you become a remodeling contractor. But generally speaking, roofing contractors are, you know, they just stick to one thing, and they and their and their markup.
I you know, if I were in the roofing business, I would not use a markup of less than one point four times my cost. And I have a number of roofing contractors that I that I coach and all of them are in fact, a couple of them are at one point five.
Okay. We've got a couple here, just a couple of our folks in California saying they can only collect a thousand dollars for their retainer.
I said that.
Yeah. Yeah. So so Michael touched on that. And I've also heard some things like, you know, you can only collect five hundred dollars a day in California. I don't know if there's some interesting laws going on.
No. And that would have to be a local law. It's not a state law.
I've got I've got the state laws for California right on my computer. That might be without the contractor license, for more handyman Oh, yeah.
Yeah. Yeah. Yeah. That's what that is. It's it's the small job. So they can only go up to five hundred dollars a night more than that.
Okay. And then one here, are there other ways to calculate your markup without good historical numbers to work off of.
Yeah. I I discovered that. You figure out what you want to take out of the company and just work it backwards from there.
Right. And that's what we talked about when we were looking at the one to four years divided by eight percent. Is that right? Okay.
Perfect. So that should answer your question there, John. Let's see here. We've only got a couple minutes left.
While we're waiting, you know, I want to caution everybody that, you know, it's real easy to get all hung up in this pricing because everybody else in town, oh, I get the lowest bid and, you know, customers are always talking about prices and things like that. And you can't buy into that pricing thing. You've gotta figure out what your job costs are, which is done by good estimating and job costing, by the way. You need the good job costing so you know your estimating databases are correct.
And then when your when your estimates are correct, you've gotta come up with, you know, what it costs you to run your business, what your profit you want to make, and that should be no less than eight percent.
And if you put those numbers together and say, this is my price, you know what's interesting when I take on coaching clients, most of them come to me with a markup of one point one five to one point two. And within thirty days, I have their markup at one point five. And guess what? They're selling more work to the same crowd because people start realizing that, you know, when they're too cheap, there's something wrong. So they're not afraid to pay a little bit more money and get a good contractor. And that's what the higher price represents is a better contractor.
So, you know, try it. You'll like it.
But here's it.
Yeah. So here's a good one from Bob. So he works with an architect who, wants the estimate broken down very specifically, basically, for the intent to be scrutinized by the architect and the client and then compared to other builders. He wants to know your thoughts on that.
Why get involved with those people?
I'd say, you know, there's no nice way to say it. I would I'd just tell him, hey. I'm giving you a lump sum price for the job. If you want that, fine.
If you don't, then call somebody else. Because I'll get you I'll guarantee you that when he's giving prices out to this guy, I doubt he is getting one and three. And that should be your minimum from any architect you work with. If you're not getting one in three, just tell him, hey.
You know, I'm not your numbers guy. You want that, you go hire somebody else or you're paying me for it. And your time should be worth at least a hundred and fifty bucks an hour to provide estimates or prices and stuff like that to these architects. These architects think that's all you got to do is drive around and give out numbers.
That's not why you're in business.
You're in business to provide a service and make a profit doing it. And if anybody tries to derail that, then walk away from them.
Right.
We've got one here from Mark Brandon, who's actually been a customer of ours for for quite a while. He's wondering if the recent trend in transparency, has been a bad idea. You know, what are your thoughts on giving itemized estimates with itemized pricing?
Why would you do that? See, this is the thing I do understand. I have written and you know where most of this transparency crap comes from? It's promoted by the editors of some of these trade magazines we have.
Remodeling magazine, professional remodeler, professional builder, home builder, all those magazines. All that stuff comes from the editors. They want to promote this transparency thing. What they're trying to do is take care of the home or building owner out there instead of taking care of the contractors.
And I have written articles of that, like, on professional remodeling, man. We wrote an article about that. Don't get involved in transparency because the only thing that's gonna be transparent, is your way out of business. Okay?
It's none of their business where your proprietary numbers are. If they want itemized things, let them go down to Home Depot or Lowe's themselves and do all the time. You spent years learning this stuff. Why should you give it away?
That's just nonsense.
This idea that, well, I've got to have transparency. If you want transparency, then get out of get out of box of, Kwik Seal, you know, that you use for covering pots after dinner at night. Okay?
That's that's a transparent thing I can think of. My numbers, as far as my overhead and profit, are none nobody else's business. And if they want to look at my estimate sheet, they should pay me for it. I had to work to put that estimate together. Why should I give that away?
Architects don't give their work away. Okay?
These magazine editors don't go work on their magazines for no charge. And who's to say I should give all my work away? Who's who says that? Contractors get walked on all the time.
And I say, don't do that. If they want you to work, and that's when you're providing information to them, you're working. I don't care how you twist it, you're working. Get paid for it.
If they don't want to pay it, walk away. That's not your type of business.
Right. Good customers will pay you because they know that they want the job done right. They're gonna have to pay it for a price for it. Good customers, that's what you're after. K?
And that kinda leads into another question here asked by Matt, that I think everyone can relate to is, should you charge for the estimate or should you charge for the agreements that come after the estimate?
Well, if you're using a design agreement like we talk about in, hang on a second. We've got a a book I wrote here, profitable sales, a contractor's guide. We talk in there how, you need to be working off a design agreement where you go out and you ask the four basic questions from the owner and find out, you know, what they what what they want to do, when they want to do it, who's gonna make the buying decision, and what's their budget for the job. You get those things set, and you say, here's how we work.
And then you move into a design agreement where you're getting paid to, number one, do the design, then draw the plans, then do the estimate, and then write all the paperwork and bring it back to the customer and say, here's what we're gonna do for you. Alright. I'm gonna give you a day or two to review it. Alright.
Now I'm gonna come back and sit down. We're gonna go through the whole thing. If it's good, you're gonna sign it. You're gonna get me a check for our down payment.
And tomorrow morning, we're off, getting materials sorted and getting off and get the permits done. That way you're getting paid for the estimate, which is a much better way of doing it than going to telling a customer, well, I'm gonna charge you one hundred and fifty dollars to come out and look at your job and I'll give you an estimate on it.
That's gonna turn off an awful lot of people because, you know, our buying public is, you know, they think that contractors are, will work for nothing and a lot of the flaky ones will. And so the answer is not a charging for an estimate. It's developing a design agreement that the customer is ready to sign on to and getting involved in. And, of course, your design agreement will run anywhere from forty eight percent of the sales price of the job. And so these things are covered in both of our books, and there's a number of articles and stuff on the Internet that you can read. But it is an agreement. It's a proper way to go.
Perfect. And, Michael, we won't eat too much more of your time.
So we'll just need one more question here.
Sure.
Yes. We've got one from John who does new builds, specialty, and remodels. So he wants to know, should he use a different markup or the same? We talked about obviously the three different markups for new home, specialty, and remodeling. But should he use a different one or should he blend it all into one?
No. You need to keep each division you do, new home construction, remodeling, specialty work.
Number one, I would question why you would do that because it's too much of a distraction. You need to focus on one thing. That's where you're gonna start making money. But aside from that, if you do do new home construction and remodeling, you need two separate markups. That way you can keep all your numbers separate and you know exactly where you're at. New home construction is less expensive to do than remodeling. And one of the primary reasons is that your time as a remodeling contractor will be four to five times as much for a given job than somebody building a new home for another, for another person.
Okay? So your cost right there alone is going to be much higher because you have more of your time involved with your customer. For every hour you spend with a new home, buyer, you're going to spend four to five hours with a remodeling buyer.
Great.
And this is one of the reasons that I talk about in the markup and profit book that contractors should not try to do new home construction remodeling because very few of them have the discipline or the system set up where they can keep their numbers completely different. As an example, if they're building a remodel job over in this part of the town and right next door, they're building a new home, they'll go to the lumberyard and pick up a load, and there's no way they're gonna distinguish the difference between the two. Thereby, they're not gonna be able to come up with the exact cost at least of those two jobs. They lump them together, and they never know where they're at. And that's why you can't do that. It takes a lot of discipline to keep remodeling and new home construction separate. But if you do it, you know exactly where you're at, and you know if you're making money or not.
Right. Yeah. Just one more quick one here from Carrie.
So she's saying that for your remodeling bids, you just give a total price, no detail of any kind. Should we still have the, you know, the items on the estimate, obviously, but, you know, no individual pricing? We we talked about this a few minutes ago.
Yep. I I wouldn't give into the pricing. If you're doing it if you do a design build agreement, when you come back with your proposal, it lists everything you're gonna do and your price on there for the work you're gonna do and your allowance amounts, that kind of stuff. But I wouldn't go in any more detail than that, you know?
Yeah. Just stop and stop and stop and think about this. I've been in this business now. I started estimating jobs in nineteen fifty four with my father.
Okay? Now that's a little older than most of the people on listening have been alive.
During that period of time, I found less than five people that could read my estimate sheet when I completed it that were not in construction.
Less than five.
Alright? So they want itemization.
That says to me, oh, they know what they're looking at, and that's baloney.
Nine hundred ninety nine out of a thousand people could not read my estimate sheet or know if I gave them a breakdown of my job but transparency as they call, they have no idea what they're looking at. Absolutely none.
K?
So Right.
Stop and think about it. They don't know what we're doing. If they knew here's the thing. If the customer knew and could read your estimate sheet, they wouldn't need you.
Mhmm. They wouldn't. They could do it themselves.
Well, awesome. Yeah. This is, we'll we'll kinda wrap it up here. We'll let you go, Michael. But, this has been a fantastic turnout, fantastic presentation. We had over two hundred contractors join us today, which was awesome.
A lot of questions in here about your products, Michael. So all of that can be found at overhead and profit dot com.
Just Did you want to speak a little on that?
Hang on. Go right to our website, and you can find everything on our website that you want. Okay? Perfect.
Yeah. Then Clear Estimates is also gonna send out just, you know, quick, you know, blog post about what happened today, what we talked about.
It will also include a couple links to, what Michael referenced a few times, which is his book, Markup and Profit Contractors Guide. He's also got a markup calculator on his website, and then various classes. They do training, coaching, consulting.
So we'll get, we'll get that information out to you as well. But thank you so much everyone for joining us. Thank you, Michael. This has been a fantastic presentation. We really do appreciate to get you coming out. You know, we we couldn't be happier with with the presentation here.
Okay. Gang, go sell something.
Absolutely. Absolutely.
Help.
Alright. Thanks, everyone. Thank you, Michael. Thank you, Devin.
Yeah. This has been fantastic. And we'll see you guys for the next one, which is April ninth. We're gonna be talking with Karen Mitchell, who Michael also knows and has worked with about, some accounting best practices just in time for tax season, which we're all very excited about.
Well, thanks again, everyone. And, with that, we'll go ahead and end the webinar here.
Okay. Bye bye.