Daniel HonanFounder, Profitable Painter CPA PLLC · I help painting contractors increase profits & cash flow while reducing taxes♦ Bookkeeping ♦ Tax

Painting Biz Owners: Know how to price your projects while focusing on a high gross profit margin.

Name: Painting Biz Owners: Know how to price your projects while focusing on a high gross profit margin.
Uploaded: 2024-01-16T18:05:29+00:00
Duration: 56 s
Channel: Daniel Honan
Description: In this concise instructional video, the speaker advises small painting business owners on pricing strategies to boost profitability and close sales…

16 Jan 2024 · 1 min

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In this concise instructional video, the speaker advises small painting business owners on pricing strategies to boost profitability and close sales efficiently. He emphasizes delivering on‑the‑spot estimates and attempting to close immediately, noting that this improves closing rates and customer acquisition. The core pricing method involves calculating total labor cost (hours × hourly wage including taxes and workers' comp) plus material costs, then doubling that total to set the customer price, thereby targeting a 50% gross profit margin. An example is provided: 100 hours at $35/hour equals $3,500 labor, plus $750 materials equals $4,250 cost; charging double ($8,500) yields the desired margin. The speaker warns that underpricing is a common mistake for new painting businesses.

Chapters

You need to make sure your pricing is dialed in. Hopefully you're delivering the estimate on the spot and trying to close on the spot, because that's going to really increase your closing rates. You'll be able to more efficiently acquire new customers. Probably one of the biggest mistakes that smaller painting businesses do, especially starting out, is they underprice themselves. One easy way to understand what you need to charge is add up how much time it's going to take you to do the job, how many hours, multiply that by how much you'd have to pay a painter to paint that house. So let's say it's 100 hours of work. You have to pay somebody $25, $30 an hour plus payroll taxes, workers' comp. Let's say it's $35 per hour when you include that burden. First times 35 is $3,500. You have materials of $750. So $750 plus the $3,500 equals $4,250. So that's what it's going to cost you to produce the work. To get the price that you need to charge your customer, you basically need to multiply that by 2 and charge them double of what it's going to cost you. That's going to allow you to get a 50% gross profit margin.