June, 2009

Selling Installed: Part II

Every deck you build helps you streamline your pricing.

By Bob Heidenreich

Last month we talked about selling installed decks, and how a lumberyard can do that without alienating its deck contractor customers.

This month, let’s talk about pricing installed decks.

Let’s start with the question: How much does it cost to build a deck?

You might be chuckling, thinking the answer is always, “That depends...”

I’ve learned a technique over the past 20 years that lets me estimate our deck projects very accurately and very quickly, and in my company’s case, I know what it costs to build a deck.

The best way to know what any future deck is going to cost is by faithfully adding up every cost and every receipt that goes into each job you do.

And I’m not talking about just lumber: I’m talking about the cost of your labor, your fuel, and your insurance.

And don’t forget to add in all those other “hidden” costs, such as work boots for your crews, hammers, tool belts, and the tape measure that got lost or broken on the job. Add in the lumber that was mis-cut, or the lumber that walked away from the job site.

Every job we handle this way tells us a little bit more about how much it costs to build any deck. I also know what an average deck project for our company looks like, and that helps me price (and adjust our price, if we care to) both quickly and profitably.

You can do the same thing: Add up the number of decks you’ve built to date, and then divide that by the total square footage of all those decks. You now know the size of your average deck.

In the Twin Cities market where we’re located, the average deck we build is 300 sq. ft. And I also know that that deck has 72 ft. of rail on it.

By knowing those things immediately, based on my past experience, I know how much room I’ve got to negotiate with my customer. (This also helps when your prospective customer says, “Well you know, I’ve got another guy who’ll build this for $5,000.” I know that can’t possibly be true—or if it is, that that ‘other guy’ won’t be in business long because he’s losing money hand over fist.)

There’s another tremendous benefit that comes from adding up your costs on every job: You’ll be able to see if you have a crew that’s being dishonest, or too slow, or a crew that just isn’t very effective. You can use the formulas you create by looking at past jobs to make sure that every crew you have is working in a comparable way.

And here’s one final tip I’ve learned over many years of building and competitively pricing decks: I’ve discovered that most of the time when lumber walks off a job, it’s probably the homeowners are taking it. That happens because a homeowner mistakenly thinks that a load of lumber at a job already belongs to them.

We avoid that unnecessary cost by educating the customer early on—in the contract phase—that the lumber at their home belongs to our company, and that at the end of the job, we’ll be taking the excess back with us. We explain that we deliver more lumber than we’re actually going to use so that we can sort at the site.

Just this simple precaution can help you save money, and sell installed decks more profitably.

BOB HEIDENREICH is the owner of the 30-employee The Deckstore, in Apple Valley, Minn. He has been selling decking and home improvement projects for 26 years. Follow the Deckstore: twitter.com/TheDeckstore.