It’s more important than ever to sell at higher prices. If you’re reading this, you most likely own a painting business. What that means is for every dollar you make, 40 to 60% of your sales goes to pay for labor and materials. That means you have only 40 to 60 cents of every dollar to cover all the costs of running a business, and still have a net profit.
Labor is in Short Supply
Labor prices have gone up more in the last two years than in any decade since World War Two. There is a major shortage of skilled labor, due to the aging-out of the Baby Boomers. The US Department of Labor claims that for the last two decades, for every five skilled laborers leaving the trades, there has been only one new person coming in. That means hiring good workers is more competitive right now than in any time in almost the last century. To recruit, hire and keep good employees, it is going to cost you a lot more going forward.
Materials are Going Up
The trades have enjoyed a relatively very low inflation rate over the last couple of decades. As of 2021, however, that seems to be coming to an end. COVID has turned the supply chain on its head, and there are many other forces at work conspiring against you.
Everything is costing you more, and raising prices is going to be the only answer. If you don’t raise your prices, gross margins will fall, and that comes directly out of your profits.
Many Low-Cost Alternatives
You’ve got college kids, handymen, siding guys, and of course everybody’s favorite, good oil’ “Chuck in the Truck” or “Stan with a Van.” These types of non-professionals are driving down prices at a time you’re facing higher prices on labor and materials. They have no employees, no insurance, no taxes, no workers comp to worry about. All this adds up to the fact that you can’t compete with them on price.
In Absence of Value, Customers Will Choose Low Price
I recently had a call from a painting contractor in Virginia. He was upset that he lost a recent estimate. It was a past customer who went with a quote that was half the price of his own $30,000 bid. There is a right way to sell that job. I have clients who close that sale all day long. But they know how to sell the value of what they offer.
Time To Up Your Sales Game
I’m getting more calls this year from contractors wanting to train sales estimators than in the last 5 years combined. When I ask” why?” they all point to the same answer,
“It’s going to get harder and harder to sell as the economy tanks and I want my guy’s to be ready for it.”
What are you doing to prepare yourself, and your team to handle the coming storm?
My book The Painting Contractors Guide to Doubling Sales, even if You’re Twice the Price is a great start.
Grab your copy here. https://contractorgrowthstrategy.com/book/