In this article we look at a roofing business pricing method and we also offer some tips on estimating roofing prices that are accurate and profitable.
Estimating a Roofing Job – Our Method
You have to do some research into your local roofing business before you can get an accurate idea of market prices. Once you have a fair idea what other roofing contractors are charging then you will have a fair idea of what people are prepared to pay for your services. Talk to some of your competitors on the phone and call some out to bid if you have a suitable roof for them to inspect.
Once you get a lead, a good way to start is to sit down with a prospective client and really listen to what they want. Try to get an idea of their budget and any specific requests that they may have. Get a feel for what the customer is prepared to pay. You might decide to go for lower pricing for a family in a working class neighborhood but push the price a little higher for a professional couple in an upper class suburb.
Pricing by the square is the method used by most roofers. Under this system one square equals 100 square feet.
Start out by taking accurate measurements to get an understanding of the basic size of the roofing job and the volume of materials that will be required. Then you can make adjustments for how difficult the job will be for you and your crew. Take into account the pitch of the roof, height above ground level, the number of obstacles such as chimneys or skylights and any other difficulties associated with the job.
Contact your supplier and get an updated price on the shingles and other materials that you will be using. Then you can calculate the total cost of materials.
Next, estimate your total labor cost in terms of the man hours that you estimate will be necessary to complete the job. Don’t forget to allow for your own time if you will be working on the job yourself.
Then you can add an allowance onto each job to take into account the fixed costs that your business has such as depreciation on equipment, vehicle costs, insurance, workers compensation and other expenses. If your company is working on an average of four roofing jobs a month then you would add a quarter of your total monthly expenses or overheads to the price for each roofing installation job.
Finally you can add on a suitable amount of profit, make some final adjustments to bring your price a little closer to market rates if need be and finally take the price estimate to the client. Some roofers have a standard markup that they set as a percentage added on top of the total costs and others set profit levels on a case by case basis.
How to Price a Roof Job – Tips and Ideas
Roofing has its low ballers, or those that try to compete by offering insanely low prices, like any industry does. When you quote a price to a new client they will often respond by mentioning some of the other cheaper bids that they have received. Be ready to counter their argument by letting them know that there is no way that you would be able to do the job for that price and still ensure a quality replacement or installation. Don’t criticize your competitors too much in front of a prospect but make it clear that with workers compensation, OSHA requirements, your liability insurance and expenses it would not be possible to do the job professionally and legally for a lower price.
Smart customers will also get satisfaction by knowing that your business is a professional company that will be around for the next ten years or so to honor their warranty if need be. Those that charge cut throat prices are usually cowboys that often don’t last long in business.
Avoid pricing too low. You will be doing damage to your local roofing industry and be resented by other market players. There are many other ways that you can be unique and competitive without focusing on having the lowest price.
Pricing too high can also be a mistake unless you can back this up with a solid brand reputation built over many years or first class salesmanship. Your customers will always get multiple bids and if yours is way higher than the others you have to be ready to justify this.
The right price point is that one that makes you the highest profit at the end of the day so don’t be scared to try pricing at different levels until you find the one that works for you.
Don’t be tricky with your customers. Contractors in some industries have a reputation for being sharks who are out to gouge as much money from clients as possible. This strategy is only beneficial in the short term and won’t win you the referrals that are necessary to build a business in the long term. Set a clear price for the client right from the beginning and resist adding on additional charges. If you do find work that is necessary but not quoted for, such as replacing a rotting timber board on the roof deck, then let the client know beforehand. You can also collect evidence such as photos and receipts to prove to them that you came across necessary repair work and went ahead with it without asking them.
Many of your clients will expect a discount or want to negotiate for a lower price. A roofing package is a major purchase and you will leave them with a good feeling if they are under the impression that they got a good deal. Set your prices in a way that will allow you to drop them by five percent if the situation calls for it.