If you spend any time on message boards, you get the sense that there are a lot of questions when it comes to pricing a concrete flooring project. If you are going to create a company that is going to last, you must get away from the poker game you play with clients.
Some Polished Concrete Contractors are pricing things too high or too low. But pricing is relative and regional.
Generally, if you find yourself too busy, you are probably pricing things too low and vice versa.
Cost of Polished Concrete
There must be some reason for your pricing. To price well you must have a system for tracking all your expenses and job costing. If you are just “cowboying” your company together based on instinct you will never find out the true weaknesses, and opportunities for your company. Generating pricing starts with understanding your costs.
This requires, collecting data in the field, down to how much tape you use on a project. I used to visit job sites and run a stopwatch to see how long it took to edge 50 linear feet. This is how you need to think.
After a job is done, you need to have a system for reviewing all the factors of the expense of that job. You cannot just think in terms of the Job, but the administrative costs of it. (overhead) You must look at everything. What is the cost of worker’s compensation and taxes associated with an hour of labor?
Obviously, there is a market price or average cost out there that people expect to pay that you need to be aware of.
Assuming you have control of the quality of your projects you can look at your costs, overhead, and required profit and see if this meets the goals you have set out for income. There are so many factors beyond whether the flooring options include the condition of the concrete, stain polish, surface preparation, cement underlayment, basement floor, or anything that makes the concrete slab unique. But really you should be looking at the installed costs and the overall cost to get a real idea.
I am not suggesting you produce a general per square foot price (12 per square foot ?)for jobs. Mobilization and Administration overhead for a 400 square footage job will be the same as on for 2500 SF. I am suggesting you come up with a ‘square foot depending’ on the total costs outside of the Jobsite. I recommend you create a spreadsheet to help you get away from unit pricing. This is more of a base price for fixed costs, added to the variable cost of each added square foot.
If the price you produce is above market price, why is that? It means others either are willing to work for less than you or you have inefficiencies you need to work out. You need to work faster, you need to think about calling your vendors and getting more cost-effective pricing on materials.
The point is we are trying to create value that we can pass on to our clients, so everybody wins.
In the meantime, while you spend the long journey of collecting and analyzing data you should use a couple of cost guide tricks.
- If you are in the slow-pay environment of Commercial work(not a home improvement project), you may consider having a labor efficiency ratio of 3 to keep cash flow consistent. (for every dollar you spend on the labor you get 3 back)
- Many people take their Job project costs and double them.
Obviously, these are two general methods that may or may not make sense. But my recommendation is to create a few different models of pricing and consider them all before submitting a bid. But you will not be able to price correctly and create value until you collect and analyze your data. Without this information, you will have no idea what type of projects you should focus on and what one you should eliminate. This includes looking at what you spend the most on.
As you track cost and profitability you will uncover which projects most contribute to your success and which do not. It’s important that we focus on areas that we have proven efficiency. For those services that we do not have an efficiency, why are we doing them? Maybe they keep the team busy in between profitable jobs, but if you have a choice in what jobs to choose, knowing what is going to be the best job to accept is critical. Or you focus on finding ways to make these failing jobs better.
More to come on this topic in greater detail. If you would like to stay in the loop on this topic or other concrete polishing articles subscribe to our newsletter or give us a call.