There are many ways for a home improvement contractor to increase his profits without diminishing his workmanship or quality of the job. Three ways are discussed below.
1. Check your material. If you are like many small or medium sized contractors, you only use a few different suppliers to get your building material. Perhaps you did some research initially, landed with these few material suppliers because it made sense at the time and you've been using them ever since. But, does using them still make sense? Are they more expensive than other suppliers that you could be using? Shop around. Tell other suppliers what you are paying now ans ask if they will beat it. Of course, you want to make sure that you are comparing apples to apples and that you are considering the entire net cost of switching.
You may also want to tell your current supplier(s) that you may be buying elsewhere. There's no harm in doing this. Simply call your sales rep and say, "Hey, just wanted to give you a heads up that I'm starting to look at some different prices of some different suppliers. It's nothing personal, but I wanted to let you know in case you there was something you could do to work with me on the pricing." Your salesman will appreciate your honesty, especially if he works on commission, as most do.
The more material you buy from the supplier, the more clout your demands will have. Still, it never hurts to ask or ask around.
2. Ask for more. This may seem silly or obvious, but it is true. Many contractors simply shortchange themselves unnecessarily. The fact is that many homeowners will gladly pay extra for quality work. They will pay extra for peace of mind and to use someone that they feel comfortable with. This isn't to say that you should charge double the market rate but before you slash your profit margin, make sure the potential customer understands what he is getting. Talk with him. Explain the work you will be performing. Walk him through it, point things out, discuss the project at length so that he has confidence in you that you will get the job done and get it done right and on time.
If you sell on price, the homeowner will only buy on price. This means that your price needs to be low. If the homeowner makes it all about price from the start, don't waste your time placating the situation. Ask the homeowner what he is looking to spend or what his other estimates were for. If you are in the ballpark, proceed. If not, it's not worth it and you didn't waste any time or resources.
Don't assume that every customer is price shopping. Some are quality shopping and will pay a price for that quality. Those that are price shopping still may become customers of profitable jobs, but you should find out up front.
3. Remember the x-factors. You never wan to minimize your profits simply because you are adding things up incorrectly. Your estimates need to account for unexpected contingencies and situations that could cost you more. Remember to account for waste and miscellaneous expenses. There is no sense in estimating things down to the penny unless you plan on running a perfect job with no setbacks or job site issues.
This may mean that you add in more extra time for your employees or that you add in for extra labor for. your subcontractors. You may figure out that you need to simply add 5% to all of your estimates to make them more reasonably profitable and less risky. Depending on the nature of your home improvement services, your x-factors may be rain delays or dumping fees. Either way, account for them in your estimates.
http://www.NIRCL.com is the National Insurance Restoration Contractors Listing. We bring together insurance restoration contractors and homeowners in need of their services.
If you are a homeowner that has sustained recent storm damage or you are a contractor that performs high quality insurance restoration work, NIRCL.com may be of service to you. Our blog may be helpful and informative to homeowners, contractors and everyday people. Visit our blog at http://blog.nircl.com
No comments:
Post a Comment