Bidding low to get the job

I occasionally hear a painting contractor ask if it makes sense to offer low “introductory” prices to help build a new painting business, or “get their foot in the door”. I vehemently discourage using a low bid for such purposes for several reasons.

First, statistically 90% of the painting contractors starting business this year will fail within 5 years. One of the biggest reasons is not charging enough. A low bid will not make you money.

Second, charging low prices will develop you a reputation as the “cheap painter”, which is hardly an effective means for charging a reasonable rate. A low bid gives you an low price reputation.

Third, once you have “introduced” yourself at low prices, you will have a hard time raising your prices for past customers.

The bottom line is that low bids aren’t good for the bottom line. In the short-term you won’t make money, and in the long-term you will have a difficult time getting the prices you need to make money.

Long term success is achieved by offering superior value to the consumer. If you try to compete on price– even for a short period– you are inching toward the unemployment line. Instead of offering low prices, offer greater value.

Market your company as superior in customer service, dependability, convenience, or something else. Differentiate your company by offering better value, not lower prices. And then learn to communicate the value you offer and sell at a higher price.

If you look like your competitors, you will likely wind up in the same place they will.

The myth of estimating by the square foot

It is not uncommon for a painting contractor to ask what price he should charge per square foot. In and of itself, this may seem like a plausible question. However, the square foot involved is on the floor, rather than a paintable surface.

This type of pricing is common in new construction. It provides an easy (and I might add, lazy) way to estimate. I say this because the size of the floor has nothing to do with what is being painted.

Consider the following example: A room that is 20’ x 20’ with an 8’ ceiling has 400 square feet of floor space. The wall area is 640 square feet. There could be 80 linear feet of baseboards and 80 feet of crown moulding. If that room were divided into 4 equal size rooms of 10’ x 10’, the wall area would double to 1,280 square feet. Similarly, baseboards and crown moulding could also double.

No matter what you charge per square foot, the above example shows that the floor has little bearing on the actual work. But if you charge according to the floor area, your price will not accurately reflect the actual work to be performed.

Estimating paint jobs isn’t rocket science. But it shouldn’t be done with blind guesses, tea leaves, or Ouija boards either. Many factors need to be considered when pricing a job. And the size of the floor tells us nothing about those factors.

You may think, “But everybody does it this way. It can’t be that bad.” First, everybody doesn’t do it this way. Second, 90% of the painting contractors starting business this year won’t be around in 5 years. So if you want to do it like everybody else, you are probably going to wind up like everybody else—burned out, disillusioned, and broke.

Tea leaves make a nice beverage. Ouija boards can be a fun party game. But neither is a good method for making important business decisions. And neither is estimating by the floor area.

How should I…?

I frequently see contractors ask how to deal with a particular situation regarding a job. Typically, the question involves a product choice, preparation methods, or something similar. These are legitimate questions, and seeking the input of other professional painters is a good approach. However, these questions are often asked just prior to starting the job. In other words, the contractor has bid the job and is now attempting to address specific issues regarding the job.

This is the wrong time to be addressing these issues. How could he possibly bid the job accurately if he is uncertain what product to use or what prep to perform? In short, he can’t.

An estimate is the total of labor and material costs to perform the job. If the contractor does not know either, his price is not going to be accurate. This type of estimating is extremely risky, and those risks extend far beyond the potential financial issues.

For example, what if the customer prefers a particular product? What if the customer expects certain preparation? In other words, what if the customer’s expectations are different from those of the contractor? When such issues are not addressed prior to the start of the job—and in writing—there is a good chance that the customer’s expectations will not be met.

Unrealized expectations are one of the primary causes of disputes between customers and contractors. The contractor must identify the customer’s expectations prior to submitting an estimate. Doing so allows him to: 1. Establish reasonable expectations if the customer is being unreasonable; 2. Estimate the job accordingly.

Customers do not purchase professional painting services every day. Their expectations may be based on something they have read, the advice of a friend, and simply fantasizing. Those expectations may be reasonable, or they may be completely insane. But we don’t know until we discuss this with the customer. If the customer’s expectations are unreasonable, we can educate the customer as to why. If our attempts at educating the customer are not successful, we can avoid future problems by not submitting an estimate.

2. If the customer’s expectations are reasonable, but perhaps involve more work, we can bid accordingly. Suppose the customer wants all of the paint removed from her doors. While not necessary, it can be accomplished. You will want to include this in your price.

It is generally quite easy to determine the customer’s expectations. All you need to do is ask. I often ask the customer what kind of quality he is looking for. I explain the options and let him choose. Sometimes I will give him separate prices for these options. In either case, I am careful to specifically state what is and is not included in the estimate.

I doubt you would buy a new truck without identifying what is included. You shouldn’t sell a paint job without doing the same.

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