It is not uncommon for a painting contractor to state that he wants to make $X per day. Let’s say $200 a day, which is $25 per hour for an 8-hour day. He believes that if he charges the customer $25 per hour, all will be fine and dandy.

I hate to be the one to spoil the fun, but it won’t work out that way. If he wants to make $25 an hour, he will likely need to be charging the customer $45 to $50 an hour.

If the only cost associated with a paint contracting company were labor, the above might work. But there are many other costs incurred by a business—insurance, advertising, depreciation, office supplies, etc. If these costs are not built into the selling price they will ultimately come out of the owner’s pocket.

Let’s say a contractor decides that he will charge $25 an hour for a particular job. He gets the job and everything goes smoothly. He winds up making his $25 an hour. And then what? He doesn’t have money for advertising—it’s not in his price. He doesn’t have money to pay his insurance (if he has it)—it wasn’t in his price. He doesn’t have money to maintain his equipment—it wasn’t in his price. The only thing in his price was his wages.

When these other expenses come due—and they will sooner or later—the money must come out of his pocket. Slowly his $25 an hour is lowered as he pays these expenses.

Some may say—but I’m only going to do this to get my business going. But how will you get it going if you don’t have money for advertising, insurance, etc.? How will you build your business if you are simply working for wages? The fact is, you won’t.

Your wages are only one part of the pricing puzzle. If you don’t understand that, and price your services accordingly, you are in for a very rude surprise. What you want to make, and what you actually make will be very different numbers indeed.