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Discussion Starter · #1 ·
Have you had any success selling high end products like DiVinci slate or Lamarite, or even high end asphalt like Grand Manor?

If so did the customer respond to marketing piece that offered it?

Or did they ask you to quote on it?
 

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Soon, yes. And I can't wait. I'd love to do more of this stuff, with cedar prices on the rise in the past few years it almost became equivelant from Divicni vs mediums. Davinci is still less than slate but when isntalled Davinci is twice the cost of a asphalt shingle roof.
 

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I get around 10 % going with the Best option out of the Good-Better-Best method.

Thats 10 % more than if I did not offer it.

Question to all guys who offer upgrades.....

Do you just add the cost of the upgraded price for the materials, or do you mark up each category selection a bit more than the previous lower end quality selection offered?

Ed
 

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Discussion Starter · #7 ·
3 profit levels

I get around 10 % going with the Best option out of the Good-Better-Best method.

Thats 10 % more than if I did not offer it.

Question to all guys who offer upgrades.....

Do you just add the cost of the upgraded price for the materials, or do you mark up each category selection a bit more than the previous lower end quality selection offered?

Ed
I have 3 profit levels.

You will recall the conversation we had about mark up. Net profit gets added on last. IT should be differant based on the quality of the product.

Standard
Premium
Luxury
 

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Since I apply a variable of 45% once labor and material have been factored... the more expensive the material the more profit. I was at a certainteed round table meeting yesterday and they suggested doubling your profit for the better and tripling for the best. That might be a little bit excessive, if I need to make $1k a day for 3 tabs(good), I don't need to make $2k a day 30 year architecturals(better).

I suppose the theory here is that if architecturals cost 20% more than 3 tabs, and I am marking up that 20% difference that's really an extra 9% profit for the company(45% of 20%)... and if grand manors are 200% the cost of 3 tabs, that's really an extra 90% profit for me (45% of 200%). So I am nearly doubling my profit per day from good to best. Therefore, I also have the most roof for negotiation on my "Best" product lines.

To those that think 45% is low, marking up labor to cover for overhead is a topic for a whole other thread. I was just using the numbers above to explain my increased profit margins on the good-better-best theory.
 

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Discussion Starter · #9 ·
Net Profit not Gross Profit

I was at a certainteed round table meeting yesterday and they suggested doubling your profit for the better and tripling for the best. That might be a little bit excessive, if I need to make $1k a day for 3 tabs(good), I don't need to make $2k a day 30 year architecturals(better).

I was just using the numbers above to explain my increased profit margins on the good-better-best theory.
First you have to define what you mean by profit. Are we talking about gross profit or net profit?

Some contractors believe that they are making a profit just because they made a sale.

Net profit = Sales - direct cost - overhead

I think they are referring to net profit when they say you should be able to double it.

I no longer offer 3tabs so Landmark would be the standard product for me. The next level up would be Landmark Premium and last would Grand manor or some other High End product.

For example if you make a 5% net profit on Landmark you should be able to make 10% net profit on Landmark Premium, and 15% on Grand Manor, according to their theory.

This is another reason why net profit should be added on last, because it’s going to be different for each product. Here’s how:

  • figure labor and material cost
  • Mark up labor and material to cover overhead
  • Add on net profit to get your price, you will have 3 levels of net profit.
We are only talking about a theory developed by manufacturers, it’s only a theory. They really don’t know how to help you sell or make a profit.

They think they know our end of the business but I beg to differ.

If they did understand what we are trying to do they would have a simplified warranty program. Try showing that SureStart Plus chart to a homeowner and see if they understand it. It won’t help you make a sale, it will probably cause you to loose a sale.
 

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Jack

I think you're right on the money about net profit. That is why it can be harder to sell the high end if you figure everything at 45% gross. Just the increases in prices this last year can distort this number.

I disagree with you about SureStart Plus. I'm 100% sure that it has help me close some sales.
 

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When I am talking about pricing jobs I am talking gross profit. Net profit is what I get to take home. I don't think of net profit in terms of %. I think of it only in terms of dollars and cents. I know how much it costs me per day to run my business, therefore I can always factor on that operating over head into a job. If the job took 2 days and we didn't hit enough gross profit to at least cover that number, there is no net profit.

I however do not add either gross nor net into a job as a line item. I use a % to markup labor and materials. I think double check the number and make sure the % is enough to cover the expected days to complete the job. I will then use which ever number is higher to submit my bid.



It's obviously harder to sell a job at 45% markup since the gross profit from a 3 tab to a grand manor is literally double. When most jacks are out there estimating their jobs the way a commercial manufacturer told me "sell the materials at cost. You make your money on the labor." Pssshhh! Yeah right!


As far as the sure start goes, it's all or nothing. Go with the 5 star or just get the standard warranty. Having three levels of upgraded warranty is just way too much and not necessary. It's taking the good better best too far. I don't even approach my customers with anything other than the 5 star coverage.
 

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Discussion Starter · #13 ·
How did it help?

Jack

I disagree with you about SureStart Plus. I'm 100% sure that it has help me close some sales.
Did the 5 star help because they wanted better coverage or was it the literature that helped?

The point I was trying to make is that chart with all the warranty options is too confusing.
 

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Discussion Starter · #14 ·
When I am talking about pricing jobs I am talking gross profit. Net profit is what I get to take home. I don't think of net profit in terms of %. I think of it only in terms of dollars and cents. I know how much it costs me per day to run my business, therefore I can always factor on that operating over head into a job. If the job took 2 days and we didn't hit enough gross profit to at least cover that number, there is no net profit.
Does your formula for gross profit factor in "rain days". I would guess we get about 200 days per year with good weather.

Correct me if I’m wrong but basing your prices on gross per day would require you to know how many days of good weather you are going to have per year.

I’ve kicked the idea around a few times of doing it your way but I think it might make my prices unrealistic.

I however do not add either gross nor net into a job as a line item. I use a % to markup labor and materials. I think double check the number and make sure the % is enough to cover the expected days to complete the job. I will then use which ever number is higher to submit my bid.
I think there are better ways of doing it, which we discussed in your thread about mark up.
 

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Does your formula for gross profit factor in "rain days". I would guess we get about 200 days per year with good weather.

Correct me if I’m wrong but basing your prices on gross per day would require you to know how many days of good weather you are going to have per year.

I’ve kicked the idea around a few times of doing it your way but I think it might make my prices unrealistic.



I think there are better ways of doing it, which we discussed in your thread about mark up.
365 days of overhead divided by 200 actual working days... so yes it does factor for rainy days. On average we have 225 working days per year. This is factored over 15 years in the business, where I took my former bosses numbers and kept rolling with them.

Pricing unrealistic? I'm not the highest and not the lowest. In that CT round table I discussed earlier, there were 10 guys and I was the 3rd highest, right where I want to be. The lowest guy was literally half the price of the highest guy, and the lowest guy was 5k less than me.
 

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Discussion Starter · #17 ·
Synthetic Slate

Which do you prefer Lamarite of DiVinci?

Have you ever installed either one?

I think I should start showing prospects products something other than asphalt shingles. I need to determine what to offer.

You have to have a system that you can follow every time. You don’t want to offer too many options because they may get confused.

You also have to have samples and literature available to show the prospect so you have to limit the number of choices somehow.

Which one would be easiest to sell & install?

Would you better of to offer steel instead?
 

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Grumpy,

How did you know what everybody's pricing was at the roundtable?

I have been to quite a few of the CT meetings and the subject of price was avoided like the plague.
I attended the roundtable last week. Now I see its different than the PRAC.

My # came in right at the national average.

low was $6100

high was 16,500.

mine was second highest

all the rest were between 8k and 10k

interesting meeting although I disagree with OH as a percentage of sales
that don't work well with hi-end materials or labor intense jobs
OH is a matter of time
 

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Discussion Starter · #20 ·
Symphony

I've sold quite a bit of Eco-star Majestic Slate. Certainteed has a new product called Symphony. IDK, look at some samples and decide which one you would put on your own roof.
CT requires the suppliers to stock Symphony. So far I don't know of anyone stocking it.
 
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