5 Tips for Earning a Profit on Every Job

One of the most important steps contractors can take toward earning a profit on every job is to forget everything they think they know about pricing jobs.

That is among the hard-earned lessons Brothers Who Just Do Gutters Co-founder Ryan Parsons shared in his fourth appearance on Pro Construction Guide PROcast, which is the industry’s only podcast dedicated exclusively to construction pros. In PROcast #67, Ryan shares practices and processes he and his brother Ken learned through years of trial and error, and which enabled them in 2015 to begin franchising their business. At the time of recording, the Parsons were preparing to open their seventh franchised store.

The list below summarizes Parson’s five core recommendations for earning a profit, but we encourage you to click here to listen to the 20-minute podcast.

• Sell hours, not units. Like many newbies, the Parsons started their business by underbidding what established gutter installers charged per linear foot without taking into account the productivity of their own crews. Even when bidding higher, they found they could not make as much profit as veteran owner/installers who could bang out the work in less time. “It took us a long time to really realize that we’re just selling hours,” said Parsons. Once the Parsons understood this, they began focusing on how many hours each type of job took and how much they would have to mark up labor to earn the profits they needed to grow their business.
• Time everything: Start timing tasks for all the jobs you do from initial client visit to preparing the estimate to follow-up visits, buying materials, pulling permits, setup and cleanup, etc. Enter the times for each task in a spreadsheet you can reference when preparing estimates. If you keep good records, you may be able to jumpstart the spreadsheet with data from previous jobs. “We actually, literally, went to jobs with basically a time clicker in our hands,” Parsons remarked during the podcast. “We finally came up with pricing that was awesome and we started to make the right amount of money on every job.”
• Budget and forecast: Know your costs and forecast your profit so you know exactly where you can adjust costs and how it will affect your margins if you feel compelled to meet or beat a lower bid.
• Have impeccable scope: Never give estimates for remodeling jobs or other multi-day projects on the spot. If you are bidding on a kitchen remodel, take the time to plan for every detail down to the SKUs for each cabinet, sink, countertop, garbage disposal, light, and tile. This may require bringing more questions back to the client, but it also builds trust that may distinguish you from the competition. Regardless, educating clients about the costs of the project ultimately protects you as a contractor and them as a client.
• Hire good people: When your profit comes from marking up labor and material, productivity is more important to profits than labor costs. A productive $20 an hour employee who shows up every day will chew through your backlog and allow you to spend more time selling. “We do such bad math as business owners,” said Parsons. “The talent that you have will totally affect what you can charge and how much you can profit on each job.”