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Content

Stop Pricing Like Everyone Else

⏱️ 5:47 🎤 Daniel Honan
AUDIO EPISODE
Stop Pricing Like Everyone Else
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Chapters

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  • 0:00
    Pricing Advice & Profit
    Daniel introduces the topic, questioning common pricing advice in the painting industry and its impact on painters' profits.
  • 0:19
    Are Industry Markups Too Low?
    He outlines three key questions about industry standard markups, target gross profit, and knowing when to raise prices.
  • 0:30
    Daniel Honen's Background
    Daniel shares his expertise as a CPA and former painting business owner, having helped over 500 businesses with their finances.
  • 0:56
    40% Gross Profit Is Not Enough
    He asserts that for most residential repainting businesses, a 40% gross profit is insufficient, advocating for a minimum of 50%.
  • 1:45
    Gross Profit Should Increase
    Daniel explains that as a company grows and customer acquisition costs rise, gross profit should also increase to maintain profitability.
  • 2:19
    Profitable Painter Book
    He promotes his book, 'Profitable Painter,' as a resource for understanding the numbers crucial for business growth and cash flow.
  • 2:38
    65% Gross Profit Example
    Daniel highlights Jason Phillips, a painting business owner who consistently achieves 65% gross profit by using close rates to inform price adjustments.
  • 3:11
    Close Rate as Pricing Signal
    He details how a high close rate (over 35%) can signal that prices are too low, indicating money being left on the table.
  • 3:24
    From Gross to Net Profit
    Daniel discusses how a 50% gross profit often translates to a 10-15% net profit after accounting for overhead and other costs.
  • 4:00
    Key Takeaways on Pricing
    He summarizes the core message: 40% gross profit is too low, 50% is the floor, margins should improve with growth, and high close rates can mean prices are too low.

Speakers

D
Daniel Honan
Host — CPA and former painting business owner

Key Takeaways

✦

Target a minimum of 50% gross profit for residential repainting to ensure fair compensation and cover business risks.

✦

As your business matures and acquisition costs rise, proactively increase your gross profit margins to maintain and improve net profit.

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Monitor your sales team's close rate; if it consistently exceeds 35%, it may be a strong indicator that your prices are too low.

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Do not blindly adhere to 'industry standard' pricing if those standards are resulting in suboptimal profits for your business.

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Continuously improve your sales process, operations, and efficiency to push gross profit higher and achieve 15-25%+ net profit.

✦

Understand that even with a 50% gross profit, real-world issues like estimation errors and labor overruns can reduce your actual landed gross profit.

✦

Consider the 'Profitable Painter' book to gain deeper insights into critical financial numbers for sustainable growth without cash flow issues.

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