Price Painting Jobs With Confidence

⏱️ 9:05 🎤 Daniel Honan

AUDIO EPISODE

0:00

Click to jump to section

0:00

Introduction to Pricing

Daniel Honan introduces the common pricing problems faced by painting businesses and outlines the three key questions this video will answer.
1:16

Production Rates for Accuracy

Explains how to use production rates to get accurate labor hours, highlighting their importance for consistent pricing and clear crew expectations.
3:24

Mark Up Correctly

Discusses the common mistake of not marking up materials and provides the correct formula for marking up both labor and materials to hit gross profit targets.
5:08

Close Rate for Calibration

Defines close rate and explains how it serves as market feedback to calibrate pricing, assuming a solid sales process.
6:44

Interpreting Close Rates

Provides specific close rate percentages and what they indicate about pricing, from severely underpriced to the ideal pricing zone for maximizing profit.
8:21

Real-World Example

Shares an example of how adjusting prices based on close rate successfully increased a business's gross profit from 45% to 55%.
9:34

Addressing Low Close Rates

Advises on what to check before lowering prices if the close rate drops below 30%, focusing on sales process and customer avatar.
10:12

Pricing Framework Summary

Recap of the three-step framework for correct pricing: production rates, correct markup, and close rate calibration.

Speakers

Daniel Honan

Host — CPA and former painting business owner

✦

Base your pricing on accurate labor hours derived from production rates, either from industry guides or your own team's data.

✦

Mark up both labor and materials in your pricing to recover costs, account for risk, and achieve your target gross profit margin.

✦

Use the formula: Price = Direct Costs / (1 - Target Gross Profit) to ensure correct markup on all costs.

✦

Monitor your close rate as a market feedback mechanism to determine if you are underpriced or ideally priced.

✦

Aim for a 30-40% close rate, as it indicates optimal pricing that maximizes gross profit and filters out price shoppers.

✦

If your close rate is too high (e.g., 80%), you are severely underpriced and should incrementally raise your prices.

✦

Before adjusting prices due to a low close rate, ensure your sales process is solid and you are targeting the right customer avatar.

Join the Inner Circle for full access to every episode, AI-powered insights, personalized coaching, and a network of industry leaders.

Join Inner Circle →