How to Make Killer Profits on Flooring Every Time
GROW RESTORATION BUSINESS BY MAKING KILLER PROFITS ON FLOORING EVERY TIME!
Why are contractors afraid of flooring? Why are so many happy to shy away from it? Why are they happy to let it go to a flooring contractor who will take care of selections and scheduling for them allowing the contractor to rid themselves of the inconvenience
BECAUSE THEY HAVEN’T YET FIGURED OUT WHAT IT TAKES TO MAKE MONEY ON FLOORING!
I am going to tell you exactly what to do to make killer profits on flooring each and every time! But first a little background.
My personal experience as a restoration contractor confirms the results of my current research. I reviewed scores of estimates and received input from estimators and restoration company owners from around the country.
My research leads me to conclude that flooring typically represents approximately one-third of the average total repair bill. That average cost for an insurance related damage repair rebuild is approximately $10,000 and if you add up all the line items for FCC AV in each room you will find that the total typically equals about $3,300 or so. That is approximately one-third of the total repair build for what the contractor will be paid for equipment, material and labor to install carpet. If you are dealing with tile or hardwood the percentage will likely be even higher.
Since you find flooring on nearly every damage repair job nailing flooring is absolutely vital to making killer profits on the job as a whole. If you haven’t figured out how to make money on flooring and therefore just give it away to some retailer you lose the single largest profit making part of your job. And if you do this every time, well – how crazy is that? You are not in business to simply break even so killing flooring is critical to your business success!
Our goal is to reach 50% profitability on each and every rebuild job every single time so focusing on one-third of the budget representing a single building material is huge! Many contractors give away their flooring to a flooring contractor or supplier who will provide selections for the contractor’s customer and will schedule the installation. Many do this for a small referral fee that rarely exceeds 10% or just a few measly hundred dollars. You won’t get to 50% profitability this way by giving up large profits.
Other contractors opt out for the convenient use of retailers such as Home Depot, Lowes, Carpet One, or other retail stores. What happens when a contractor sends a customer to a big box retailer – the customer asks “How much do I have to spend?” An ethical response is to tell them how much Xactimate allows for FCC AV material. In your area let’s say the material allowance is $2.34 per SF or $21.06 per SY. What happens next – the customer spends every penny and a nickel more for their carpet selection. Am I right?
Here are 3 important keys for you to understand and take charge of if you want to earn killer profits on flooring:
KEY #1 – EVERY TIME A CONTRACTOR SENDS A CUSTOMER TO THE SHOWROOM YOU LOSE BIG TIME WITH THE CUSTOMER SPENDING EVERY PENNY OF YOUR POTENTIAL PROFIT!
Your customer will spend the entire material allowance and then some, every time!! You know this is true.
KEY # 2 – THE ONLY WAY FOR A CONTRACTOR TO MAKE KILLER PROFITS ON FLOORING IS TO TAKE THE SHOWROOM TO THE CUSTOMER AND LOCK IN YOUR PROFITS!
When you take the showroom to the customer with great looking multiple presentation boards you don’t have to tell them what your wholesale price is for carpet costs, instead you simply show them FCC AV carpet selections or whatever grade carpet you have in your estimate. Show your customer lots of selections by presenting 3 or 4 boards with different textures, patterns, and a ton of wonderful colors to pick from. Each board represents the quality of an FCC AV carpet grade so everything is right and above board but you are able to buy that carpet for 45% – 50% below retail.
KEY # 3 – THE SOURCE OF YOUR CARPET BOARDS ARE SUPERIOR WHOLESALE DISTRIBUTORS WHO ARE SELLING YOU THE CONTRACTOR FCC (AV-, AV, AV+, OR AV++) CARPET (AND OTHER FLOORING) AT WHOLESALE PRICES AT A 45% – 60% DISCOUNT BELOW RETAIL.
You can buy your flooring material from the same wholesalers your retailers are buying from before they mark up the flooring and take ALL your profit.
One wholesaler sells AV tile at a 60% discount over retail. Think of your potential profit on a large tile job – it could be gigantic.
One of my client contractors told me earlier this week that through the enormous material savings and controls on labor he made a 70% profit on a large carpet job. Incredible- but true!
What he did you can do too!
Keep in mind sourcing retail materials at wholesale prices is how contractors make money. If you rely on Overhead and Profit alone for your profit margin, you’ll go out of business. The better your sourcing on more and more materials the higher your per job profit will be. The higher your per job profit the better your cash flow, the stronger your cash reserves, and the more personal wealth you will earn.
Finding wholesale distributors who sell flooring such as carpet, tile, and hardwood directly to contractors is the key to your profit success. By the way – I just happen to know superior wholesale sources for each of these flooring materials.
So now you have saved 45% or so on the materials – what do you do with the labor?
Xactimate pays $56 an hour for flooring installation in Denver and St. Louis contractors are paid $46 an hour for flooring installation. Xactimate employs hundreds of people who gather information from local economies regarding current material and labor costs and, as you know, updates their price list every month to represent shifts in each local marketplace.
How much are you paid in your market for flooring installation? What if as a Denver contractor you decided to NOT pay $56 an hour for flooring installation and decided to offer your installer something less? The difference between what you are being paid and what you are paying is your profit.
Now assemble your profit from material along with your profit from installation and you discover how to make 40% – 50% flooring profit on the single largest line item on your repair estimate.
Let’s take the middle ground of 45% profit on a typical $10,000 rebuild where flooring represents one-third ($3,300) of the total job costs and you can see that you have earned a $1,500 profit on a single job. Compare that with the poultry 10% or $330, or less that contractors typically settle for as they pass flooring along to someone else. If you do that you stand to lose about $1,200 on each and every job you complete. Multiply the loss by 100 jobs completed annually and you have forfeited $120,000 of profit that could support cash flow, cash reserves, and your personal wealth building. How would you like to have that $120,000 back in your pocket where it belongs?
Visit me on my website for more valuable information about making killer profits on flooring and other important information for restoration and remodeling contractors at www.growmyrestorationbusiness.com or call me for a FREE 30 MINUTE CONSULTATION and let’s talk about what it would take to grow your restoration or remodeling business.
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