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Contractors, stop pricing by the foot!!! How to price your jobs. - YouTube
Channel: Successful Contractor
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i bring you
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cody wyoming welcome today i have a
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special episode
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of successful contractor and we're going
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to talk about
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why you should price each job
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individually and treat it as its own
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unique project rather than trying to
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cookie cutter stuff together
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and have a perfect price or per square
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foot price
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or simplify matters just to make your
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bidding process simpler because in the
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end
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you're going to lose and your customers
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are going to be disappointed
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the hill behind me this is what we deal
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with every day
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this is not ideal digging conditions for
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doing fence now if you're coming to us
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from
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other trades you know those projects i'm
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talking about where they're just
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a complete nightmare this would be the
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worst of the worst trying to build a
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fence up this hill
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and we do it all the time if i'm going
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to do that
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the price is going to be a lot different
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than if i'm on straight flat farm ground
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and so we'll talk about some of that
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coming up on successful contractor
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i'm mark olson luke gibson and i have a
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combined 50 years in construction as
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fence contractors
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in that time we've both experienced
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failures and success
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we travel the country talking with other
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contractors who share their experiences
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in hopes that their stories can make you
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a more successful contractor
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the fence behind me is probably the most
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ideal conditions that we could ask for
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on a fence project and i'll talk about
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some of the things
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what made this the ideal fence as you'll
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notice
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somebody's come through here because
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they're building the house on this side
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of the fence
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and located again and so we've got some
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nice locate marks if you would have
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taken that fence
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that's right here which just so happened
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to be the property line
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and if that fence was right here where
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i'm standing four feet over
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the cost of that fence would have
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skyrocketed because then all of a sudden
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we have to contend with all these fiber
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and gas lines and electric lines and
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stuff that run in this utility corridor
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so just that one fact could add a couple
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thousand dollars to the cost of your
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project just because of the extra labor
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it takes
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to dig the holes by hand versus using a
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piece of equipment
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some other things that made this project
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really nice for us is we didn't have to
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get rid of any of the soil we could
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basically
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dig the soil up just spread it out on
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the ground because there's no grass on
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either side of the fence
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this is a dirt lot on this side and this
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is a dirt lot on this side so we can
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just spread the dirt out
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and let it lay right where it is now if
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this is a grass yard on one side or the
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other or both sides had grass yard and
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this is a dividing fence between two
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yards
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then we've got to pick up all that dirt
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not only we have to pick it up we've got
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to haul it off and find a place to
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dispose of it
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that can add cost this fence was a
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pretty good project
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and you can see that we had a long run a
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fence
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and there's no gates gates are another
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thing that can add a lot of cost
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if you've got a little bit of fence
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maybe 50 feet you're going to do a
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little bit on your back line and then
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you've got two gates on either side and
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you want a double drive gate each one of
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those gates the cost per foot of a gate
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is exponentially more than the cost per
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foot of defense
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so the more gates you have and the
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shorter run offense the more it costs
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we were able to bring a concrete truck
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to this whole thing drive around this
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entire project with a concrete truck get
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to all of it with our machines
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and so we didn't have the extra labor of
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wheel barrowing concrete which takes
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time and money
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we didn't have any short load charges
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because it wasn't uh
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it wasn't a 10 section fence it's
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i think this fence is about 400 feet
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long altogether
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so instead of having 10 posts where we
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have to order a minimum of
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three yards of concrete or mix it by
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hand
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we were able to just bring the concrete
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truck in and order exactly what we
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needed and not get charged for short
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load charges
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or something like that now what i'll do
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is i'll take you over to some other
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projects and show you some other
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projects that we've done in the past
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and how those would have cost and did
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cost much more than this did per foot
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for the exact same fence in different
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conditions
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you saw the other project over in powell
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and i've brought you to a place that's
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very near and dear to my heart
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this is a part of cody wyoming that is
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notoriously horrible
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i mean everything about it's horrible we
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actually lost the customer that we did
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all this stuff for
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was a builder that wanted us to charge
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the same price per foot no matter where
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we were at and cody
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and couldn't understand that we just
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couldn't do that and make money
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and it was all over this subdivision
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here so what we ended up having is
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the rock that's on that hillside right
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over there
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that hillside is just full of trash and
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garbage and i think they leveled out
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some of this property
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and the boulders that are here are like
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this you can run into any kind of just
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horrible digging conditions here
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not to mention we have a utility
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corridor that runs right down this way
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and it's there again luckily enough
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we've got a utility locate right here
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that says the gas lines right here
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that means that not only do we have all
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these rocks to contend with here
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because we're within two feet of the gas
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line we have to hand dig all these which
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means we have to get out bars and
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shovels
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and hand dig the holes rather than use
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equipment that's made for doing this all
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the way through there i've got a utility
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box
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right here i've got electrical there's
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telephone here and then there's gas so
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we have all the utilities here
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and then other special things like right
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down here guess what we're doing
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we're putting the fence next to a fence
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that's not easy either
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all these things drive up cost the size
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of this yard i'm going to guess
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this yard's probably got a 200 foot
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fence
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and i see one two so there's going to be
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at least three gates on it
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all that stuff drives up cost so this is
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almost the exact other end of the
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spectrum from the project we looked at
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in powell
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and when somebody calls up and they say
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i want a fence can you give me a price
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if i was going to price everything like
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it was over on that project in pal
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i would lose money on every single one
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of those that's why we bid every single
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job
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specific to what it is no two projects
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are the same
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every project's got its own unique
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conditions and it's important to
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remember that
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and this is just a really good example
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of that both are six foot solid white
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vinyl privacy fence same material same
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everything
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but two completely different costs
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that's why we call
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pricing by the foot the socialism the
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fence world
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because no two projects are the same and
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somebody's gonna get a great deal and
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somebody's gonna get hosed and usually
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even if you go on the average price i'd
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be lucky if i broke even
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and that's why we don't charge by the
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foot
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you ready for story time story time so
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what you're looking at right here
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is some guard rail and we did the fence
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as well
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so two young naive contractors
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back in about 2003 got called by the
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local
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concrete company who was doing some
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construction at the time
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and they wanted somebody to come do the
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fence for them and so we just
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willy-nilly
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oops i'd let the cat out of the bag we
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yeah it was me
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anyhow so we bid this job kind of side
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on c
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not really knowing what we're getting
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into just kind of lobbed a number out
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there we're like that sounds like a lot
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of money that'll be good we'll go get
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that job
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and let me tell you what what a pain
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this was so
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we ended up digging all these holes
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which i mean look at the hillside over
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there and the rock and
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the whole area is just covered in trash
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i mean it's nothing but rock
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and a little bit of sand there's no dirt
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no dirt at all
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it's all river bottom garbage and this
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is what we deal with so
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we bid this job ended up having to come
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in here and dig the holes so we dug all
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the holes and they were worried that if
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we dug these holes to this really nasty
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rocky ground
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after the asphalt was poured and we
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didn't have all those rocks out
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or the asphalt was laid that it would
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just crack up the asphalt and make it
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look like garbage so they made us dig
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all the holes one time then we put some
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rebar in there horizontally
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so hopefully we could use a metal
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detector and find our holes again then
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re-dig them after the asphalt was
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or the asphalt was laid it was an
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absolute nightmare not only did we have
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to do all the guardrails but then we had
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to do all this fence here
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and i just remember that being one of
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the experiences where we're like well
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that sounds like a lot perfect we'll
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make great money
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and you just can't do that it's never
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going to turn out well
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know your costs have a budget know what
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you're getting into before you do it
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or you're going to end up on something
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like this where it's nothing but a
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complete nightmare
[503]
and you wish you never bid the project i
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guarantee it i don't know
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we were so bad at construction back then
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and knowing our numbers that i
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uh we probably didn't have job costing
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but if we'd
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been able to look at a profit and loss
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on this project i guarantee you we lost
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thousands of dollars and basically paid
[519]
them for the joy
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of fighting these horrible conditions so
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let that be a lesson to you
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every project is its own project no
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going into what the budget needs to be
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and have a budget this is not like the
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next project that i'm going to do
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for guardrail that's somewhere over here
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i can move this project
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two miles that way and it would be great
[540]
but right here
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this is this is special and that's what
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you run into
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we'll run into parts of our parts of a
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yard
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where part of the yard will be nothing
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but dirt but then the other part of the
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yard will be nothing but rocks so
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that's up to us as contractors as we
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kind of know where the good areas and
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the bad areas are and we're bidding that
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into the process what we don't want to
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do do exactly that thing where
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we're trying to hit the customer and
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make them responsible for all those
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things that we should know as a
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contractor
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we don't have rock claws we don't have
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hand digging clauses we don't have hard
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digging clauses
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we don't have utility clauses we don't
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have any of those clauses i've
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heard of people doing dog crap clauses
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like if we come to your yard and we
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accidentally step in a pile of dog crap
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then we're going to charge you for that
[582]
too that's ridiculous
[584]
that's not what our customers are
[585]
looking for they're looking for us to be
[587]
professionals
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and know the cost going in so that when
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they get to the end of their project
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they get a bill for exactly what they
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expected
[594]
because we did our job and that is what
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i challenge you to do
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i'm here with scott shootman smooth edge
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custom cabinets and fine home building
[602]
in powell wyoming and he's going to talk
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to us a little bit about what goes into
[606]
home building and why home builders
[607]
don't like to price things by the square
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foot because there's a lot of cost
[611]
that sometimes we don't think about that
[612]
go into things and each project is
[614]
unique
[615]
so this is one of the houses you guys
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have been working on
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and you guys have done a whole bunch of
[621]
the houses in this neighborhood the one
[622]
next door
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just about all these all of them we've
[624]
done them all and
[626]
i'm sure that there's some that are the
[628]
same square footage are very close to
[630]
the same square footage yes the price is
[632]
not the same
[632]
correct why what we do is is we can
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start off with a base price obviously
[637]
when you're pricing stuff all customers
[639]
want some sort of pricing that they can
[641]
start with
[642]
so you can start with a brace square
[643]
footage price and once you start with
[645]
that basic
[646]
square footage price you start with
[647]
basic items so you know
[649]
that's going to include your your basic
[651]
house from there
[653]
what's going to happen is is that you're
[655]
going to have a customer that says well
[657]
i want quartz countertops and quartz
[660]
countertops
[661]
are going to be in addition so it's
[662]
going to cost more money you're going to
[664]
have a customer that comes in for
[666]
instance this home next door
[667]
it has humidifiers built into the
[669]
furnaces of the house
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so therefore that's an additional cost
[673]
that house
[674]
is unique because it has a built-in it
[677]
has a built-in
[679]
kitchen bench with it so that takes
[681]
obviously more time
[682]
more labor more material so depending on
[685]
the things that the customer decides
[686]
that they want in the house is going to
[687]
change the square footage price
[689]
and therefore you can't just say here's
[691]
a base price
[692]
and this is what your home will cost and
[694]
then your customer comes and says well
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i want this and this and this and this
[698]
and why can't i get it from the same
[699]
square footage
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well that's because those things are
[702]
additional costs
[703]
to the house so you can't just give it a
[705]
square footage price
[707]
you can start with the base price to
[708]
give your customer a feel for what your
[710]
base price is for your houses
[711]
but then adding those things it's gonna
[714]
that's gonna make it custom for your
[715]
customer
[716]
is going to increase the square footage
[717]
price you have heated floors
[719]
and you know in your bathrooms and we
[721]
have taller ceilings a nine foot wall
[724]
versus an eight foot wall
[725]
the steeper the pitch of the roof that
[727]
adds cost if they want to really ornate
[729]
roof line correct yeah exactly and
[732]
and those things all add costs
[734]
additional costs that are you know
[736]
custom fit to you know the customer but
[738]
they they can't just be a baseline price
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because all of those things are
[742]
additional costs to me which
[744]
are things that the customers wanting as
[746]
a custom price so therefore as a custom
[748]
price
[748]
um you know the custom things require
[751]
custom price
[752]
but scott i just want to know how much
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my house is going to cost
[755]
just give me a price per square foot
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shoot it to me over the phone we'll get
[758]
started tomorrow
[759]
it doesn't work like that it doesn't
[760]
work like that so that's correct and the
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way that we work is
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is that what we try to do is we try to
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bring our customers
[767]
in-house in into our showroom and we try
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to march them through all of those
[772]
things from start to finish
[773]
so we start at the base of the house
[775]
we'll walk through the build of the
[777]
house with regards to construction
[778]
size with regards to roof pitch windows
[782]
and then we'll talk about the exterior
[784]
part of the house the rock how much rock
[786]
the types of garage doors that you want
[788]
and then we're going to go to the
[789]
interior and we're going to talk about
[791]
cabinets and countertop and flooring are
[792]
we going to put a fireplace in do you
[794]
want heated floors
[795]
all of those things and what we're going
[797]
to do then from there is we're going to
[798]
develop a price
[800]
based on what the customer has picked so
[803]
once those things are done
[804]
then we create a price and then you can
[807]
take that and then you can say okay
[808]
here's the square footage of the home
[810]
and then you can get a square foot price
[812]
for them
[813]
but it's going to be a square foot price
[814]
for him it's not going to fit the next
[816]
customer
[817]
it's going to fit that customer that
[818]
you're working with not the next
[820]
customer
[820]
now if you're building spec houses and
[822]
you're going to build all the same house
[825]
then you can have a square foot price
[827]
and oftentimes there are builders that
[829]
do that they have a model home that you
[830]
walk into and that model home says
[833]
this is the price for this exact you
[835]
know this is exactly what it is they're
[836]
going to build
[837]
12 of them exactly and if you if you do
[839]
the exact same and that's the same with
[840]
fence
[841]
if you're going to do the exact same
[842]
fence the exact same way the exact same
[845]
12 times
[846]
then it's going to be the exact same
[847]
price um if it but if you know if you
[850]
if if you change terrain for instance if
[852]
we're digging a foundation and we're
[853]
digging in
[855]
you know we know we're going to be in
[856]
the sandstone we know it's going to cost
[857]
more money to dig the foundation
[860]
if we've got to bring electrical 6 000
[862]
feet
[863]
we know it's going to cost more money
[865]
and you're a big numbers guy so you want
[866]
to know your numbers
[868]
so it would not be a good idea for you
[869]
to just say hey we're just going to
[871]
start building houses
[872]
you know our average house last year
[874]
cost us 145 dollars a square foot so
[876]
that's just what we're going to build
[877]
them for all this year
[879]
how much trouble would that cost it's a
[880]
lot of trouble because you're right i'm
[882]
a big numbers guy
[883]
and and my numbers i know we're going to
[885]
change from you know from time to time
[887]
to time now i've got a database
[889]
that i can take all of the things that
[891]
i've done and i can look and i can say
[892]
okay well here's a house that's similar
[894]
and we can start from that
[895]
but because today's prices are different
[898]
for
[898]
material than what they were a year ago
[901]
i understand the reason for streamline
[902]
the streamline purpose is to
[904]
save you time correct that's that's the
[906]
purpose of streaming that's what
[907]
everybody's trying to do is they're just
[908]
trying to say well i need to put
[909]
somebody out in the field to do all my
[910]
estimates and i need to get my estimates
[912]
done as fast and as cheap as possible
[914]
with the littlest amount of talent but
[915]
the problem is like
[917]
you do a lot of houses in burlington or
[919]
something like that 30 miles away
[920]
just that adds cost yes it does to you
[923]
know to travel absolutely so you can't
[925]
no matter what it doesn't matter in any
[927]
kind of building trade i don't see how
[928]
you can streamline
[930]
you know and tailor to individual to you
[932]
know to to streamline it that this is
[934]
the cost
[935]
you know per linear foot per square foot
[938]
per whatever
[939]
i don't i don't see how you can do that
[940]
because of the way that the market
[942]
changes each individual circumstances
[944]
change you know in the trades so often
[946]
so if you're doing that and you're
[948]
trying to sell things by the square foot
[949]
or the linear foot or whatever if you're
[951]
doing that chances are you're leaving
[952]
money on the table sometimes
[954]
you might be making a ton of money and
[956]
other times you might be losing a ton
[958]
you can't swing from one extreme to the
[960]
other each project needs to be
[961]
profitable
[963]
you can't have projects you know from
[965]
our from our perspective we can't have
[967]
projects where we lose money
[968]
where we gain money on some and on some
[971]
we just break even we need to make each
[973]
project profit eventually what's either
[975]
going to happen is
[975]
you're going to just barely break even
[977]
or probably lose money the chances that
[978]
you'll make money just
[980]
you know throwing darts at a dart board
[981]
and hoping that get hits
[983]
they're not very good that's correct
[985]
yeah that's absolutely correct so
[986]
and that's what we do in our business
[988]
each and every project is unique
[990]
and none of them are the same they've
[992]
all got different circumstances and we
[994]
bid
[994]
each one for exactly what it is which is
[996]
why we do things like site visits
[998]
we'll often get jobs over other
[1001]
contractors
[1002]
because we're exact price and sometimes
[1005]
we lose a job to a contractor but
[1007]
oftentimes i hear those customers come
[1009]
back and say
[1010]
that they they you know the contractor
[1013]
gave them x
[1014]
price but at the end of the project they
[1016]
build them this much more money because
[1018]
it costs that much more so they weren't
[1020]
even close you know so
[1021]
it would cost them even though our price
[1023]
might have seemed higher at the time
[1025]
it really wasn't higher by the time the
[1027]
other contractor because the contractor
[1029]
was streamlining a price
[1031]
for a square foot but at the end of the
[1033]
project they built them for the other
[1034]
things and then when it came
[1035]
you know when that project was done then
[1037]
our customers have seen where it's
[1039]
cost them more money than what we
[1040]
originally did usually it doesn't end up
[1042]
with a happy customer no it's not a
[1043]
happy customer seen that too the
[1044]
some of these guys and i think that's a
[1046]
big problem is they'll say well
[1048]
we'll do it for x amount per foot but
[1050]
then if we hit rock then that's going to
[1051]
be more or if we hit sprinklers or
[1053]
if we have to hand dig any holes and
[1055]
customers hate that
[1057]
no customer when they talk to a
[1059]
contractor they want to get a really
[1060]
good feel for that because that might be
[1062]
all their budget
[1063]
they don't want to get to the end of the
[1064]
project and find out they owe 20
[1066]
more than they had ever budgeted for and
[1068]
then now they've got to go beg their
[1069]
bank or put it on their credit card or
[1071]
do something else we feel like it's our
[1073]
job to help them through that
[1075]
and so that when they get a bid from us
[1077]
that's the price unless they change
[1079]
something that's a price that's right i
[1080]
should know the conditions in the ground
[1082]
i should know that correct there's a
[1083]
utility box right there so there's a
[1085]
good chance i'm gonna have utilities
[1086]
down that whole line we never
[1088]
ever have handed somebody a bill
[1091]
from something that was that we should
[1093]
have been able to tell that's that's
[1094]
that's correct
[1095]
and that's that's your job as a
[1097]
contractor your job as a contractor is
[1099]
to
[1100]
help the customer eliminate all of those
[1101]
other aspects because your
[1103]
job is to specifically navigate through
[1107]
each one of those individual items with
[1109]
regards to what your trade is
[1110]
so you know my trade is building houses
[1113]
i navigate through the ground clear to
[1115]
the air
[1115]
and so i have to know the rules the
[1117]
regulations
[1118]
soil conditions you know all of those
[1121]
things i have to know that that's that's
[1123]
what i'm doing for my customers i'm
[1124]
providing them my knowledge and so
[1126]
therefore
[1127]
um you know i think it's better for
[1129]
individual contractors to have the
[1130]
reputation of
[1131]
once you hand a price you've done your
[1134]
homework
[1135]
into a project that you know exactly
[1137]
what it's going to take
[1138]
and when that project is done the bill
[1140]
is this much
[1142]
if the customer hasn't changed anything
[1144]
well swell hey okay
[1145]
i appreciate you taking some time you're
[1146]
welcome about that because i think this
[1148]
is something we see in the construction
[1149]
industry a lot where people are just
[1151]
trying to just lob a number out i just
[1153]
want to have a number that i can always
[1154]
use and it's always good it's a
[1155]
dangerous game
[1157]
until next time you have a good dang day
[1161]
signing out
[1164]
[Music]
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