Price/Economic struggles... Help


#1

Hey Guys, I would appreciate any and all feedback on this.

Until this past week the economy has not affected my sales or my prices. This week I lost a lot of jobs because of price. It is too much so I know I need to lower my prices. Until now, this area has not been affected as much with the economic down turn. The homeowners I target are usually middle to upper class and they are starting to feel the pinch so I have decided to lower my prices. I have been one of the higher guys in the area, and up until now it has worked because I sell quality and have never focused on selling a price. I already have redone my books and have lowered my prices enough to make my price competitive with the others but still slightly higher. Heres the problem.

I figure everything on a job to a certain percent. A certain labor, materials, and overhead. Since I am a realativly new company (around 5 years) I focus nearly all the money I make towards going back into the company. I most likely pay different than most of you guys and I do pay very well for this area because I need to keep the good help. The only problem is now that with these lower prices I will be selling jobs at, the percentage of the job that goes towards labor will be too high and taking away from something else. I personally do not make that much. Only enough to pay my mortgage (less than 2 grand) every month but the company does pay for everything in relation to the company itself

I do not want to let anyone go and I do not want to tell my guys I need to pay them less but I am worried that I will not be able to sustain as well as I have been if something does not change. I am not afraid I will go out of business because of all those jobs I lost to price most of them said they wouldve gone with us because of our presentation and time spent wit them.

Have any of you guys had this situation happen already? If so, how did you deal with it? Also, how do you pay your men or women? Hourly, Salary, Square? I have been charging 330 a square for one layer walker tear off. That was the upper middle price of this area. Some were as high as 360-370 and some were around 240-250 but those are the guys who never get seen again.

Just any ideas on how to make it through this economic storm? Some of you have been business long enough you have already dealt wit this. I havent. I wish the Gov’t would quit telling people to be scared spending money.

Thanks for the help guys.


#2

I am in the same boat it’s hitting hard and I already had to drop my prices and lost my best employee.I couldn’t keep him busy enough so I have been trying to think of something and there isn’t many options. I have even thought of moving. Things always get worse before they get better.
Joshua


#3

I know a lot of guys that are scaling back employees pay. I haven’t done it to my 2 main guys, but I have done it to part time help. It’s not what you want to do, but the economy is neccesitating it. I’ve taken a substantial pay cut too, so it’s not just my employees bearing the brunt of it, and that’s what you have to make them understand.

As far as price goes, If I charged anything near $300 a square for a one layer tear off, I would go out of business very quickly, and that’s materials and labor. I am in central VA and we have a very plentiful illegal work force which is part of the problem. I know guys who will do 3 tabs one layer tear off for 185 bucks a square. And some of these guys, while they don’t have a great track record, will go back and fix problems. I can make good money if I charge 240-250 bucks a square, but lately I’ve been charging 215-220 to get my foot in the door and some signs in the yard. I also have a home office and only run 1 crew so my overhead is almost nil, except insurance. It’s not easy right now but if you like what you do, you must do what you have to in order to stay in business. Things have no where to go but up and the ones who are left standing in the end will be all the better for it.


#4

I pay my roofers hourly and more than most roofing shops. It would be very bad for team spirit if I droped there pay. Please resist the temptation to lower your prices , it can have a disastrous effect on your big picture down the road. prices on material have spiked at an all time high, it will kill you to drop your number. I cant go under four dollars per square foot for any basic shingle reroof. Push harder sell quality and focus on the details that make the difference.


#5

I agree 100% with RooferJ

If you drop your price 10%, yoou will have to do almost 50% more work to make the same money. Think about what that will do to quality control.


#6

I hear what you guys are saying about not dropping the price. I am still able to sell one or two a week but that is not enough to keep everyone busy. As of right now I am lucky that I had a lot of work signed up for spring earlier in the year.

RooferJ- Thanks for that input. I know what you are saying and I am trying to hold out on lowering anything. Its a tricky situation.

Shanglenailer- If I charged only 200 a sq, I would be paying people to do there roofs in this part of the country.


#7

It must be nice to know exactly what the other guys are getting per square. Yes, you can take a 30 square /$9,000 job and say $300 a square but that seems too much like a guess considering no real factors: I & W, valleys, chimneys/ penetrations, ridge vent ect ect.

I personally love the 40 square 12/12’s that are all cut up and I get my price. However, In lean times that is not the best choice at all. Heres why:

40 square all cut up $400 a square = $16,000.00 done in 5 days = $3,200 daily gross income.

On a walkable roof we can do 20 square per day, be in the $250 a square range and bringing in a gross of $5,000 dollars per day.

I wouldn’t drop to that extreme but seriously I am only trying to give you my point of view. Pick and choose your work if you can and I know some of you might be saying you get what comes in so this year we are beginning a Canvassing Program targeting the neighborhoods WE want to be working in.

Another strong point for doing smaller, easier jobs in a “Residential Market” is the greater chance of more referral work. Safely saying on average when we ask for leads, we usually get one or two per job, now when you are doing 3 or 4 houses a week your chance of the best leads REFERRALS triples.

Banging out the little houses fast brings both moral to the crew and really pleases HO’s by a non prolonged visit.

Work smarter, not harder.


#8

You might be better off to lay-off some guys and only do a couple of roofs a week. If you lower your price, that is coming straight out of your pocket. You already said that you don’t make much as it is.


#9

its like this,
materials cost a hundred a sq. on average.
so people are doin it happily for another hundred.
you have to compete. you match other companys
prices. its a time in are world were people are not
buyin the were so much better than the next guy we
charge twice as much. thats not workin any more.
it has been proven that cheap labor can put roofs on
and make em work. roofing used to be a well respected
work of art. now its just another easy job to do.
so you either do it fast, easy and cost effective or you dont do it at all.

gweedo


#10

Well to reply to everyone,

VTRoofer- I do only target certain neighborhoods that roofs average 25-30 square and take a few days to complete. The Work Smarter Not Harder has been my philosphy since I started doing this trade. The roofs you are talking about that are around 20 sq or less so you can do it in a day or two are mostly out of my target neighborhoods.

To the outlaw roofer, I think you misunderstood. I Personally dont make much money. Most of the profit I get from the job goes back into the company in one form or another. If its a new truck or trailer or more and better tools or different forms of advertising.

Gweedo is right in every word he said. It really is like that now. Times have changed from when I layed my first shingle.


#11

since when are material only 100 per square ? my shingles alone cost almost that. hey what about nails :stuck_out_tongue:


#12

HI,

I agree with ya J. If we lower our prices we give up what little price increases on the labor side that we have gained over the last decade or more. Secondly how long will it take to get those prices back. In addition I personally feel as though we will see hyper inflation within the next 4 years. Manufactures raise their prices that doesn’t mean we lower our prices.


#13

what do you want me to tell ya.
i get 3tabs for 63 a sq.
demensionals for 72.
at bradco.
20-30 bucks for the rest.

its what it is.

gweedo.


#14

Bam-
Not sure how many guys you have but we roof in 4 man crews. 20 square off and on walkable roof every day.

Thats 5 square a man.

7 AM we are climbing on the roof.

11 AM the shingles are boomed up onto a dried in roof with lines popped.

Lunch and dump run one hour, sometimes if it is real hot 2 hours including time to jump in the river.

Shingle the roof. 3 guns and one slinger.

Everyone gets paid for 10 hours even if done in if it takes 8.

Materials and dumping $ 2,500.00
4 men $20.00 plus tax & Insurance= $40.00 (and this is a high number) x 10 hours = $1,600.00

Total $4,100.00 divided by 20 square = $205.00 per square. That is what it costs for us to roof a walkable house.

I am making money at anything over be fine at any amount over the cost of doing the job if I am steady.

At $220 a square at this rate plus the company is making $300.00 a day plus the $200.00 for the labor . Work a 4 days and you paid your mortgage.

Every day you do not get to work, you need to make that much more to offset the off days so try not to stay at home. Kudo’s to those who get their money on every job and stay covered up with work. For the rest of us, don’t loose money but be competitive.


#15

VT - I get what you are saying and they way you are putting it does make sense. My labor costs would be higher than what you put because of what I pay the guys I do have. I only have 4 and it took me what seems like a trillion to find those 4 so I pay them well to keep them. My foreman gets a percent of the sale price of the job. The other guys get paid hourly and square between 16-21 hourly and 21-30 a sq depending on pitch and shingle of course. I can afford to lower my prices by 10% and still keep things and prices nearly the same. LIke I have said, I was trying to make more money so I can invest it back into the company itself and expand but that may have to wait. I want to get back on the roof once in awhile anyways. This other side of the business is not all I thought it was cracked up to be when I used to give my old boss sh*t about always geting to cruise around in his truck with the AC on.

LIke Libery Roofing,I do feel like there will be a big boom within the next few years. Just gotta ride out the storm I guess.


#16

You do have to ride out the storm. RooferJ, I see your point, but when you are looking a non-profitable business in the face you have to seriously consider options. If you have never been there then you don’t know. Here are some options

  1. Lower your prices, but keep same quality, net less profit

  2. Lower your guy’s pay-this is not a dick move, provided your pay is also lowered. It is a sign of the times.

  3. Figure out a better way to reach those who have the highest potential of being your customers, which is risky because it costs more upfront.

#4-Keep prices where they are and maybe things will come around. But maybe not. If you do this, be ready for the potential to also have no work or go out of business.

This is just the way it is. This is for any struggling business, in any economy. Some people say “I can stay home for free.” I say, Some profit is better than no profit, and if you have a mortgage you won’t stay home for free for long. If you truly love what you do, then make it work. You might just have to wait to build that addition or get that new car or even put more money into new tools or advertising. As long as you can pay your bills and are happy its all good. Life’s short don’t take it too seriously.


#17

Oh I forgot-about riding out the storm. If you’re in a storm do you just stand in it? or maybe find something to deflect the rain & wind or maybe seek shelter?


#18

Dude- You are paying your guys 30 bucks a square labor plus paying taxes and comp on them? Yes, compensate for those that make you money but come on!

Most guys that can roof 2-3 square per hour all day and at $30.00 per square they are raking in $480.00 a day! Do you make $2,000.00 per week? Are they paying for their laborers out of that?

Do you provide tools and compressors, ladders, trailer?

In my experience, the best employee shows up every day but needs a little money mid week. Those are the ones that you won’t be bidding against next year.

Mr. Foreman making $2,000.00 per week next month he could very well be your competition.

I am sure he is thinking in the back of his mind exactly what you did when your old boss was riding around in the truck. Like you he probably does not know the all that is involved behind the scene. Not many do.

Summary: I agree with Shangle. I am under the impression you are way over compensating and what cream coming off the top for you has a chain reaction down the line in terms of bonuses and then restructuring the pay rates.


#19

If your foreman makes 2 grand a week or 104,000 a year I would never quit working for you…

That 30 a sq is very rare and only on anything 12 pitch or steeper and with a 50 year shingle. Usually only get on a bundle and a half an hour. My labor is only 20 percent of my total cost of the job. It never goes over that. My whole problem is that the plans I had this year to expand will have to be put on hold if I change my price. I can still do quite well with where I am at.

I pay well because having quality drug free employees costs money. Thats the truth. Last year I doubled sales. None of my guys have ever made 480 a day. All I was saying is that I have people in this area who are selling so low that there is no way they can make any money. 200 a sq for materials and labor is impossible and no quality reputable roofer in this area could survive off of that and that is hard to compete with. Thats why I posted orginally, to find out what you guys think is a way to possibly compete with these guys because some of them are targeting the same homes I do.

Bottom line is majority of people look at the price. If you can get what you “think” is the same quality install and same product for cheaper then why not to do it? Of the 7 or so other companies in this area that I would trust to roof my own home they are all asking around what I was for a square.


#20

Most prices in my area are under 200 a sq. for tear off and put back 30yr archs. It costs me that in direct labor and material. That doeasn’t account for fixed overhead and profit.

I don’t worry about what they are charging. I know what I need to do the job and charge accordingly.

I close at about 50%. I’m almost always the high price. Don’t let your competition price your jobs for you!