The Huddle - Episode 215. The Price of Being the Cheapest
Winning the job because you had the lowest number can feel like a victory. But what did it actually cost you?
In this episode of The Huddle, Paul, Daniel, and Jose dig into the pressure to compete on price in the flooring industry and what happens when being “the cheapest” becomes the strategy. Lower margins can affect everything from the time available to do the work right to the ability to invest in training, people, tools, and the future of the business.
The conversation also gets into a bigger industry problem: when customers are taught to shop almost entirely on price, craftsmanship and expertise become harder to value. Someone will almost always be willing to do the job for less. Building a sustainable business means giving customers a reason to choose you for something more.
There’s nothing wrong with being competitive. But if the only reason you're winning work is because you're the cheapest, it might be worth asking what you're really winning.
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Hey, what's up everyone? Welcome to the Huddle, your weekly podcast where uh we talk about forward progress in your
career. Thanks for uh joining us today. Like to
take a couple seconds here to thank the sponsors. We uh want to say thanks to Trade.
You know, get your VTI. Uh Paul's got a lot of stuff going on right now where uh
he's trying to to help the industry and I don't think
um people are viewing it that way, but
that's essentially what is going on. It's like it's going to help all of us eventually. So make sure you get your
BTI. That way when it's uh off and popping, you don't have to worry about it anymore.
We also got to thank uh the NFCT.
Huge shout out to them for uh you know being huge in uh the industry, helping
us out, spread the word and uh just being the the awesome people that
they are for uh all the training that they do and divergent adhesives
because can't glue floor down with nothing, right?
and they do got some great great adhesives. So, make sure you check them out.
We also got to shout out Pro Installer Magazine because a lot of the stuff that I have learned has been through these uh
publications. So, just make sure you're checking them out. They got a lot of good uh articles and like we said
before, if [snorts] you want to write an article, they'll probably be more than happy to
to hear you out, see what you got going on.
Goty with us today. What's up, Jorge? What's up? What's going on, guys?
What's going on, brother? See you out there working right now, man. just hitting it up. I'm still
I'm still um phase one on this project. So, I got to see if I can just get
everything positioned properly for the today and tomorrow and get out of here tomorrow. Go on to the next one.
Preparing for success. Yeah. How are y'all doing over there?
[laughter] I think uh today's it's been a a a very
unorganized busy couple of days. Like everything I thought I was going to be
able to do hasn't really went that way only because a couple phone calls,
right? Just leads you down that uh uh down that path of uh trying to to
help solve problems, which is which is totally fine. It happens. you know, and
I think uh that's kind of one of those things where
it kind of ties into our topic today because it's been on that
end before. I don't know if this project is necessarily to that extent,
but I mean, we've been on, you know, have to had to do the same things before where it's like uh you get some phone
calls and it's an emergency situation and you kind of got to go bail some people out and uh
that's where we're at with with this project. But we're talking about
pricing, right? Yeah. The topic is what? The price of
being the cheapest, right? Is that that that's the actual topic? Yep. The price of being the cheapest.
Now, that doesn't that doesn't really sound Well, let's dissect the topic real
quick. Everything that we do, there's a cost involved,
right? And and and every every company has different levels of overhead.
um whether it's just a you know individual proprietor working for themselves out of
their home, their garage or it's a very large company that you know has you know
hundreds of employees and uh and contacts all across the US
right like there's a big range there um to talk about but realistically what
what is being the cheapest in your area or what has being the cheapest really done for
you? Have you found success? Have you found failure? Have you been categorized? Uh have you been put into a
bucket with others? Right. Um I don't know. Listen, what are your thoughts on
the topic here? Um
I can't remember the last time I went cheap and I try not to be cheap. I try to be
affordable but you know still g getting the work but not giving it away and
still cutting you know cutting a little bit here and there where I can and at the end of the day I mean my whole
objective is to make as much profit as possible right depending on on the
product that I'm pushing and and um and the complexity of it but overall
I mean we we try just guide the client, give them a good a good deal, and that way,
you know, we can get get the work in and out. Um, but then again,
you know, it just depends what kind of product you're pushing, how hard is it, how many days you're going to be in the
house. Um, so for us, it's a quick in and out, a day or two in a home.
And, uh, especially for doing the rug surging and binding, it's, you know, it's a it's a half a day. Sometimes it's
more of a travel to other cities. Um, but for some things you can't be cheap.
So in some cases I can give somebody a wholesale price on that and in other cases, you know, hey, uh, I need to get
this in by tomorrow morning and I need for you to come and surge this overnight or something. Well, it's not going to be
the same price because now I got to, you know, get out of my comfort zone and and
go do something. Um, and I don't know. I just got to wing it. And that was the
issue last week. I had something in Austin and they needed it done right away. And it's like, "All right, I'll be
there in the morning. Uh, but it's right smack downtown Austin in a high-rise
condo." And, you know, I I thought I was scared. I thought there was going to be no parking
and no, everything came out good. Actually, everything came out good. It's not like San Antonio. We're we're an older city, so we don't have like nice
uh highrises. They're all old school, so the garages are separate. somewhere else you got to walk. So, no, everything was
good, comfortable. I mean, I charged a good price and, you know, it is it is
what it is. And and um I came out with some good profit, but
I don't understand why people would charge cheap in some circumstances, you know. Uh but I I don't have that
mentality anymore. I I try to make profit where it where I should.
I don't know about you guys. Well, you understand you understand your value, right? And the amount of time and effort it puts uh that you put in to
having the skill set and the knowledge base that you have, right? That's that that's hard to to
it's hard for anyone who is very involved into their craft to look at it like I want to be the cheapest. I want
to be the most affordable. Right? Instead of I want to be the best. I want
to be one of the best. I want you to look at me as the professional, right?
Like there there's a fine line there, I think. And uh and when we started, um it
was we were given a work order with predetermined prices on it, right? And and we didn't know any better, right?
That's how the industry was uh when we came in. So, were we the cheapest? I I
don't know. We were priced according to whomever was giving us the project.
Um but as we started learning more and getting busier and busier and being put
in a position to where we could select our work, we started understanding uh
how much money it was actually taking for us to to get out there um every day
and and do what we were doing and then how much money we were leaving on the table or how much money we weren't
asking for. And that's the thing, right? cuz cuz Rollins says right here,
it's uh not how much money you make, it's how much you can keep. And there's too many people out there that look at
that dollar amount and that's all they're looking at is how much money is coming into their pocket and not how
much they're paying out. Um,
correct. [snorts] Um, I I did a breakdown with an individual a couple weeks ago who had a
one lump sum. uh I'll keep names out of it had a one lump sum and I'm like
okay yeah that's uh that's pretty good for the amount of time that that he had listed it but
um how much was taxes you got to deduct that percentage how much fuel did you spend in that time how much was your
supplies how much you know like how much time did you spend running around or talking on the phone doing the uh uh the
front office type work for that as well as the install right there's just a lot of overheads, right?
Yeah. There's there's a lot of variables, right? So, a dollar amount doesn't necessarily
a large dollar amount doesn't necessarily reflect the amount of work that actually goes into it or the amount
of of work and effort you've put into being efficient and proficient at that
discipline. Does that make sense? Yeah. Um, so
I don't know if I would ever, Me personally, I don't if we've
if we've been the cheapest, um, it was never intentional.
Um, we just always tried to be where we felt we needed to be.
Um, I don't know if our pricing was ever really market driven rather than uh
effort or workmanship or knowledge driven, but
um, in a sideby-side comparison our value
is typically a lot greater than what we worked next to as we
um, became more educated and and learned how to do more things in the industry. Yeah. And Rollins says right here too,
right? And that it's one of the topics that I wanted to bring up too. It's that winning every bid should never be your
goal. You do not want 100% of the things you are throwing out there, right? And Ron says if you get every bid, you
are pricing too low. Yeah. I mean,
unfortunately, so let's go to commercial, right? Uh commercial work. Unfortunately, um
in that dog eat dog world where um our our [snorts] sector flooring is kind of
uh looked at unless we have some kind of specialty artisan type pattern or design or product we're working with.
Dollars and cents are expendable in the flooring, especially in the commercial world. And it sucks to say it like that,
but it's that's the sad truth. And
if you're winning every bid, you're missing something. And if you're missing something, you're you're you're
hurting yourself, right? And when you're hurting yourself, you're not giving yourself a chance to grow. And a lot of
generals out there, regardless of of how trusted they are, that they're more than
willing to exploit that over and over and over and over again until you catch on. Um, [snorts] and I don't know, like
I want to say I don't know or don't feel or think that is intentional, but some of that's got to be intentional, right?
Like it's business, you know, that that that is business, right? you
you take it all in and you try to uh create this budget. And if you could find people that are are if you can find
a team that keeps you within those parameters that of that budget that you created using numbers that might not be
even be valid anymore because it came out book it came out of
a book that was published this year that says this is what it should cost.
Yeah. Um, over here on Instagram, this is what Floor Pilot says. He says, uh, I'm
saying he I this is what they say. I feel like it's more about the price of
going with the cheapest. So many clients often try to find the cheapest price, but that comes with a very high cost.
Yeah. And sometimes it's the cost of a relationship, um, a partnership, it's the cost of, you know, a a client that
you've had for years and years and then they decided they wanted to go somewhere
else, right? Like, it's hard. Well, it's that's the thing, right? You got to keep people honest, too, right?
You shouldn't just be going out and getting one price. You should always do your due diligence and get, you know,
multiple prices. And that's how you figure out who's low, who's in the middle, who's high, and then compare
things after that. And I was talking to someone um I think it was over the
weekend and they were, you know, just talking about how business is going. And I'm like, man, it's just so cutthroat in
the commercial world right now with how low some of these bids are. And I've talked to some of the other project
managers or um estimators that have had teams that are on these projects and
bidding these and getting them. And I'm like, dude, like when you see the spread
from the low bid to the next bid being like
80 grand and then everyone there's like two or three people in line within like five
$6,000 of each other and then it jumps up another, you know, 20 30 grand. It's
like how do people as consumers
actually go and say, "Yeah, we're going to take that low bid and think that
everything is apples to apples." I guess I'll never know that because
we ask for details and and we offer details and [snorts]
you know I let me let me add to what you said because I've had a couple conversations about the same thing, right? And you know there's there's a an
obvious low, there's an obvious high, right? And and I will say the conversation I had is right away the low
gets tossed, the high gets tossed, and this particular company likes to focus on that cluster and see where they're
at. Um, and then um potentially gives them an opportunity to to compare to see
if it is apples to apples. Um, or now that that to me sounds pretty fair.
Um, but on the other end, if we're looking at the um
the price of being the cheapest and you miss something um and you signed a contract that says you have to provide
XYZ and and you sit down in a meeting and you say, "Yes, I have all that figured in,
man, you are putting yourself in a bad spot as an owner, proprietor, whatever." Um
that that's that perspective. But from the other perspective of a company
who goes in with their numbers, gets selected, but then also uh determines what they're paying out to installers
and then has those installers fight for like multiple installers fight for who's going to do this project for this price.
They have five to select from and one guy says no. The next guy says no. Third guy says yeah but can you do this? The
fourth guy says of course I can. I could probably do it cheaper. Right now you have your your installer community
battling one another for no reason. And that's where sucks. Yeah. And that's where us as installers
have to realize too, right? That they're putting us up against each other like that where it's like you can't just keep
on undercutting yourself just to get projects because all it
takes is, you know, you you do that and then it's one one thing on that project leads to now I'm not making any money.
Yeah. What were you going to say, Har? I was going to say it's like going to the auction, the car auction, but
instead of the numbers going up, they're going down. And everybody's like, I can do it less. I'll do it for less. Pick
me. Yeah. All right. That's kind of kind of what [snorts] the bid market
has. We should do a video like that, right? It's it see it almost seems like, you
know, where we're going out and we're bidding to a GC and then it feels like
these other companies are going to all their installers and bidding it out to them, seeing who will take the lowest
dollar amount to do it. So that way they can just put their markup on it and then call it a day.
Yeah. Everybody's in business. um to be
profitable, right? To make money. Nobody intentionally goes out and finds work to lose money. That's I don't think that
for one, not smart business. For two, I don't think anybody ever really wants to
do that or or that mindset shouldn't be there. If it is, I don't know anybody who has that
mindset. Let me start a business just so that way I can lose money every year. Nobody ever says that, right?
If you if you got too much money from another business, then that's what you do. Well, well, yeah. Yeah, there's
that. Uh, but the fact is is that like you said it
great, Jorge, you don't go to an auction and then go in reverse, right? Let's see who could get the lowest who could give
me the lowest amount of money for uh this product or or whatnot. And
like Daniel said too about putting us up against one another. And that's really what it is. I don't think that the market really intended for that to
happen, but everybody likes to save money. Um, but everybody also wants to get
the best possible bang for their buck, the best possible product that they can. Um, and
unfortunately in the world that we live in, the more affordable product is some of
the hardest products to work with. Which means that the skill set required for
that inexpensive product has got to be a lot higher than the skill set for a very
wellput together product. Um, so at some point you're was it
you're stealing from one just to have the other, right? But it's always going to end up being that that balance,
right? You're paying more more labor for a lesser product or more product for a
lesser labor. I don't I don't know. Um,
I just know that there are some stores out there where I go and look at material and the material cost is pretty
up there and I can pick up I'm just going to use carpet for example and I can pick it up and hold it to a light
and I can I can see through it, right? I can feel it, see through it. I
can I I know what I'm working with. But then I look at that dollar amount per square foot and uh the the literature on
that product is put in a way that is appealing to the
public. Um but if you ever really want good feedback, ask an installer who is a
professional in that discipline what they think about it. Um
I know you're laughing about that, right? I could just one looked at a a project that's had wool carpet installed
for, you know, a glue direct wool carpet installed for what 30 plus years.
Um, and they're like, "Hey, yeah, we were hoping to get another, you know, 30
years out of the next install, too." And I was like, "Oh, this was made differently back then."
Um, the world was a different place back then. Like we can find you product like that,
but the product that is very comparable to what's here now is going to be
substantially more expensive than what samples you have on your table. Yeah. And they they don't not only that
is they also look at what they paid 30 years ago and then they're like it should, you know, be around the same.
It's like that ain't the case either.
Rin said he must have installed that wool carpet. He pro probably did, bro. It was a nice pattern. Nice pattern match. A little
small one inch by one inch pattern throughout this whole place. Um I don't know. There was probably a good
40,000 square feet of wool carpet. It was a nice little project.
Um but what's the real meat and potatoes of the topic, you guys? like
uh that besides it being flooding the market being cheap is easy to sell. It's it's
when you're not and then you have to actually let them know the value you provide and
not just being price driven. And you know, we've been on that side of things,
too. And I mean, I'll give clients the credit for asking when they're like, "Hey, this person will do it for this or
will you come down on price for this?" And it's like, look guys, I gave you the best price I could already. Like, I'm
not I can't take anything else off. Like, this is what it this the price is
what it is. And it it's either like, all right, move on to the next one, or I've
had it where it's like, contract will be to you tomorrow, right? Um, you know, we remember that we
just had to, man, these have been coming up lately like these last minute emergency. I don't have any more time or
my guy bailed or whatever. Um, but a couple weeks ago I had a project pop up
and I gave a a price um to go in and fix some issues
and uh the client emailed back was like, "Well, how many guys you going to have here? How many hours is it going to
take?" And um you know my my initial reaction was
well I'm sorry you feel that it's priced high you know like I I I'm sorry that you feel like that
but this is what's involved. This is what it's going to take. Um
and then you know I gave her an explanation. I didn't justify cost. I gave her an explanation on what steps we
were taking and what we were looking for and and what we would uh offer as far as a remedy and fixing uh the issue. I I
didn't didn't try to justify any numbers or anything like that. I said, but I did at the end I said, however, at the end
if we don't need to explore this route right here, I am more than willing to
offer you a discount or credit you back um anything that isn't warranted.
Um but I don't want to do what I don't want to do is get started and then tell you I need more money because this is
what we found as we already got going. I said I'd rather give it back to you. Um, and then
she she came back with the um, well, I own several properties and I can give
you more work if you give me better pricing right now.
Who hasn't heard that one? Yeah, that's what I was going to say. That's it's like that's what everyone says. Like,
I'll be your friend ready for you right now. I'll be your new best friend for like a
month. We've had practice at that one right there, brother. So, my response back to her on that was um Well, that's awesome.
I'm glad that that that you have other properties and and we'd be more than happy to entertain uh giving you
estimates for for some of your other properties as well. But let's just start with this one right here, right? If we
are awarded your project and we help you out and you like what we provide, um then let's sit down and talk about your
other properties. And then if we have an ongoing relationship then we can talk about offering discounts for volume of
work. But until then I have to look at this as a single project and that's
where these numbers are going to stay. And
didn't hear anything. Apparently there was some issues with her communicating via email. She text me was like, "Hey, I
tried to accept your proposal last night and you just kept giving me error and error." And I was like, "Oh, like I
didn't think you were even responding to be honest with you. I was already trying to schedule other people and other projects." And
we ended up making it work. She got her new client to to come into the property and move in on time and there was no
hiccups and she was very thankful. I did offer or give her a discount for items
that we weren't that we didn't use as promised. So now only time will tell to
see if the nice guy approach and and and
being honest uh really works out. Otherwise, maybe I just should have just left it at
the the other number and just build for that and kept it that way. I don't know. We'll see. Regardless, she told me that
that was more than she ever anticipated. And that was uh more than she was quoted
by two other companies. And you know, the a-hole in me wanted to
say, "Well, call the other companies then. Why you why you trying to bargain with me? They just call them."
Which we've we've said in the past, but I don't think that was directly to a client. That was when we were working as
labor only for other uh flooring stores. Correct.
Call them. I don't try to say that, but sometimes it it just
when you've had one of those weeks or one of those days, it's hard to always be optimistic and nice. That takes a
little bit of practice, too.
Yeah, Mr. He seems to know that job. Thank you, brother. Uh, thank you for
helping us out and and you know, that's part of the network, too. The Trade Tat network right there, uh, coming through.
Um, shooting out a message, maybe a phone call saying, "I have this in the works. We're are you available?
If I can't cover it, are you available? I don't want to cover it. Are you available? This this is up your alley.
Are you available? What would you need?" Um and great communication um through
the trade tap network with Kendall as well. Nice.
Kasa Jose is here. Jose de Jesus. My amigo.
Yeah, I just talked to him the other day too on the phone. He messaged me and was
like, "Hey, how you been?" So, I called him when I was leaving the office. I think it was the the day after you were
texting me and uh you were like, "I need to tell you this right now so I don't
forget." And then I was like, "Hey, what are you talking about?" And then you were like, "I forgot.
You got him or me?" No, me. Oh,
I ended up calling Angelica and I told her my whole story. I was talking to her for like 45 minutes and she's like,
"Yeah." So I was like, "Remember because I'm going to forget."
[laughter] She's like, "I got you." Now, has there has anybody ever had an
experience where being the cheapest has benefited long long term? Right.
I mean, it does in a sense when I used to work for like uh fire and water restoration people um
you know, doing stuff. Yeah. Well, not because of the volume because they're really like super
inexpensive materials that are going to go in like paper thin sheet vinyls and
like carpet in a 20 ounce to 30 ounce,
you know, it's something really just crazy, you know. Um, you know, you can't
charge a you can't charge some of these people a lot because one, they're not going to one, they're not going to hire you. And two, people like my dad at some
point, they were scared to kind of leave. Some people, they're like, "No, well, they're giving us a lot of work. Why why do you want to leave them?" And
he's like, "We could." Another thing is like, "We could be working for somebody who pays us less." And I'm like, "Yeah,
but we could be working for somebody who pays us more." I go, "But if you want to fill in the
time, no problem." You know, they're just filler filler jobs. And it always seemed that when I didn't have any kind
of work at all, maybe that day or for the next three days, they'd call like, "I need this now." And I'm like, "Yeah,
I'm free. Let's do it." Um, but other than that, most of those were my dad's
kind of clients and I worked for him, so I had to respect what he
what he uh did. Now it's like, "Nope, we're not working for them or I'm not working for that
person and this is the way it's going to be and it works out." I'm not saying I'm
not cheap. I mean, I'm not going to say I'm cheap. I'm just, like I said, depends on
the material. Not the cheapest, right? Yeah. Not the cheapest, but not not the
most expensive. I understand that some of the people I work with have to make profit also, you
know? So, yeah. And that's the one of the biggest
factors that a lot of people overlook I think is
uh I've seen numbers where of what they're paying some people and then also
what they are getting and just that separation in between and then anytime
they that the installer asks for more they just get upset.
But yeah, it's it's shouldn't be like that either.
So, I mean, sometimes when you're that that lowest cost, that's what's really hurting you. And it's not only hurting
you, it's hurting everyone area, right? Yeah. It's hurting your region, right?
like at some point somebody's reporting their annual income uh as a business and you know it creates these averages in
your region and some people are are are big time some
people are not but um you don't want to flood the market with
uh by misleading um clients or even other installers. You don't want to to
flood the market with people who just don't understand the business aspect because it doesn't do anybody any favors at the end of the day at the end of the
year. If if you're the one guy who's uh charging pennies on the dollar while
everyone's at a buck a square foot, you know, who's who's the real issue there, right? Right. Who's the real
says right here? He he knows people laying BCT in Atlanta for 45 cents a square foot.
And that's one of the issues is that they're going out and doing that and then they're making these companies
think that that should be the norm. But that's without brushing the sides of
the VCT. That's no brushing, [laughter] no cleaning the edges. It just like
with no sweeping the floor. No sweeping the floor. Just glue it and go. And nondirectional, right? Upside down,
left, right. It don't matter upside down. Yeah.
You're going to wax it anyway. Yeah. You got to strip and seal it anyway.
It'll blend right in. No. No par. We're not even using the pyramid on this one. We're just going to
just drop them left to right, right to left. That's the 45 cent job.
But if you want it done right, might charge you a buck over a buck, you
know? Right. Yeah. Handle says he doesn't even do hard surface, but that's ridiculous.
Also says residential carpet for $2 a square yard. I mean, you see it all when
you're when you're doing horrible, terrible. Some some of some of
those numbers, right? like uh like you said the volume Daniel um
if you have a project that is wide open 100,000 square feet you can be more
flexible on on some of your your pricing right so your square foot price might actually appear to be the cheapest um
well yeah I mean that's the difference of doing you know it's it's different when you're doing a 10,000 foot room
opposed to 20 offices that equal10 10,000 square feet, right? But they they
try and put it into a category where it's just like it's this many square feet. Well, I don't care if it's that
many square feet. If it's all individualized offices, it's still the same amount of work as if it was
if it wasn't, right? Every office is its own project. Yeah. Pretty. I mean, it's as
in a closet sometimes. Yeah. [laughter]
Seriously. Like like that's a good that's a good conversation point too. Like this is pretty cut up. Like every
time I come through a doorway, I have four walls to cut in instead of this one room that has four walls. Um
there's different ways to look at it. if if someone's not not um great at communication or explaining themselves
or or or relaying information or conveying their their perspective to a client or a
builder or a GC, then chances are they're just going to accept
whatever is there. And and and that's one of those things too, right? Because you talk about
cost versus value and you have to know that they don't equal each other and
that you can provide more value
and things that aren't that don't just cost money, right? Your you being on
time, you getting things done when you say you're going to get them done. It's not just a a cost thing. And that's I
think too many people are caught up on clients just looking at that number and
think being like, "Oh, I'm just taking this because it's the lowest cost." When it's not always that. Sometimes they'll
look at numbers and be like, "I'm still going to use this person because I know the value that they provide." You just
have to put yourself into that category where they start looking at you like that.
And that takes time
and consistency. 35 cents a square foot.
That's $3.15 a yard for some pattern match carpet.
Yeah. I mean, it's not unheard of. I've heard of those numbers before, man. I'm like, what?
You know, um, not not to like put personal business out there, but there's I was on the road today and and got some
emails. I forwarded them. Daniel called them, said, "Hey, could you help me out and respond to this right here?" And,
um, the response to the response was like,
"This is, oh, thank you for following up. this is what you charge
what you would charge and that's where that's where when
you're when you're looking at numbers you have to realize that not every project is created equal so when you're
um talk priceless right we've had this before where people are like just give me a price list we'll we'll run with it
and it's like I can't give you a price list because every project is individualized where again 10,000 square
foot is way different than 10 rooms at 1,000 square foot. Yeah. And I think uh the end of I mean
we did provide a template at one point to to people but the first time we hit
the situation where it was like you know 1,000 square feet and under is this price 1,000 over 1,000 square ft to
5,000 is this price. And we were like 1,0 ft. And they're like, "Well, we just went with the lower price since it was
pretty close to a thousand." It's like, um, so you asked me for a template.
We're 10 feet over the template and you're deciding for me what I'm going to get paid.
Ah, it's time to rip that template out. Yeah, we're not doing that anymore.
Um, yeah, that's almost literally what happened with the template that tried to create. I'm like, no way, dude.
And that's where it kind of brings me back to I'll bring Larry Nelton into this where you know we've had him in the
office um before and he was like we need to get try and get it to where everything is priced out like almost
like a mechanic shop right where it's like all right if it's this then it's going to take this amount of time so it
should be priced at this and I'll be honest that's a great great idea but to
get everyone to do it is probably never going to And years ago we we did try, right?
Larry Melton's a smart dude. And you think about it, right? Because not everything is going to take that
amount of time. You going to get a haircut. They block out
an amount of time, right? Like when I get my haircut, she blocks out what, 45 minutes or something, and I'm in and out
of there in probably like 25.
[snorts] What the heck are you doing, bro? You're getting tools, man.
I'm getting some tools, baby. Trying to sew here. Yeah, working off a template is is all
fine and dandy if if you have cookie cutter projects. Uh, I get it. But
that's also people are always going to hold you to the lowest number possible when you offer a template.
And even if it's not on a template and your your numbers are just everywhere,
you have to be able to explain to the client where you're pulling these numbers out of, right? And I've been on
projects where it's like, "All right, we want to use you, but we need you to explain this."
And then it's it's like, "All right, well, one of the the the previous ones was,
"All right, well, it's behind a meat counter, so you don't want to use this material here because eventually it's
going to end up shrinking and then you're going to have all this bacteria in all this stuff. So, I priced it out with
this one." Well, what if what if we don't want to use that one? I said, "But then we can come up with an alternative,
right? But at the end of the day, it's like you're you're the one that's going to have to deal with the health
department. So, do you want to you want to have that conversation now or later on when you got to replace stuff because
it's not to code
and that's where the the knowledge and the value come into play there. Um you know it and let's just use that
scenario. Say they you they go with the product that they wanted they want installed. It shrinks, it fails, starts
harboring bacteria. Uh they have a surprise inspection. They fail their
health inspection and the inspector says, "Hey, your guys's flooring uh is
harboring bacteria. You need need to remove it or change it." Now, they have to pay for that again.
So, long-term savings does happen when you when you find the the right value in
the right company. And that's across the board, not just in our industry.
So the question the question I guess another question is does are the people who are are doing lower value or lower
bids, cheaper bids, right? More more affordable bids. Are they affecting the
people who are creating better service? Like and the people who are doing these lower
bids, is their work, you know,
is is it worth it versus getting that other person who has
a better reputation, gives better service? That's when it starts affecting, you know, does it affect you
or does it not? Because do you want that kind of client that's always going to pay less and always going to be haggling
you or do you want the clients that are never going to just depending on what
you're doing, right? In in your case in commercial, they're always going to ask you for a bid. In my case, sometimes
they don't even ask. They're like, "Yeah, man. Just come and do it." So that's what some people industry that
I talk to, it's like, well, hey, we're getting the clients that are paying this much per square foot because my work is going to last 50
to 100 years, you know, so I'm charging, you know, x amount of dollars. I'm not
charging 5 to 10 bucks a foot. I'm charging way more than that, especially to do a shower and stuff. You know,
they're not they're not going to go in there and do it for cheap for for four 500 bucks. And that's what some people
are paying, you know, four 500 bucks for a shower. So then you as a consumer, you're buying a
200 $300,000 house. And then in 5 years, 10 years or less, that shower is falling
apart already, you know? So there's a big difference on who's doing it, how much they're
charging to, and the level of experience. So if not, was that client ever? sucks too
for manufacturers on our end because when stuff like that happens like these
um these maintenance people will start blaming the product like this is a crap
product I need to get this out of here and it's like slow down man it's like it's I don't like throwing installers
under the bus but sometimes it's not a product issue
yeah there's a lot of times it's it's not a product issue rather than the maintenance [clears throat] or
installation issue. But um to add to what to to to build off of
what you were asking there the beginning of that is
the installer who doesn't
the guy who's the cheapest on the block is probably that way because he they just don't know the value that they
offer. because there are some pretty good installers that are still accepting
extremely low dollars per square foot, right? Um, and some of that is because they they they don't know any better. Um, and
they don't know any better because we have an industry of
secrets, right? We have an industry of these are my guys. I want to keep them
under my wing and and we don't share openly share um business information. I
mean we share it but like as an industry as a whole nobody likes to create their
own competition by giving them the information that they don't feel they're
at that level of privilege I guess. Um however
by by them taking uh the low number all the time they are able to stay busy
right and they are able to to fulfill a need in the market. Um, but when it
comes to the slow time, that's when workmanship, not just cost,
that's when workmanship stands out the most, right? When someone's in the slow time now, instead of only
instead of having five people coming asking you for work and what type of installs do you have, now you have a
hundred people and out of those hundred people, they're all fighting for that
work and their pricing seems to dwindle. Um, so now you have a a big influx of
installers who are very capable of doing work. Some to the standards required,
some not, but they're all pretty low on
dollar amounts. Now, now that's an exaggeration. I'm not saying everybody's low. I'm just using all that as an example. Um, and to some extent, you
should compete a little bit depending on what time of year and how how flooded the market is with work. um and who has
the work. Um
the numbers are just so far spread from one installer to the next
that it's hard to maintain a consistent um average in dollar amounts for labor
for what we do. Right. And something else he was talking about was about these clients and
when you go with the and you listen to podcasts and they say this on all these business podcast too, right? You go with
the client that's looking for the lowest price and then you're constantly being nagged by them. And it's the ones that
you give them a price, they're like, "All right, when can you do it? Get in here." Are the ones that at the end of the job they're like so happy, so
thankful. How do I get you paid?
Yep. Yeah. So, Rollin does ask this question here.
What do you do to make it worth your higher price? And then Jose kind of chimed in right here with
kind of what I think Rollin is getting at too, right? And we all know this. It's he started to open his eyes on how
to charge after his first training because you look at some of these things
that maybe you were doing wrong or you weren't doing
quite to where they needed to be um as far as to standard and then you're
like man if I would just charge a little bit more I could do all this and it
makes up for that time and then I know everything is done 100% correct.
So, and well, well, let me you know how or what is Ran's question
here? What do you do to make your worth you worth a higher price?
You get out there, you network, you stop being fearful of competition and you
start talking to the fellow installers in your area, in your region, in your country. You put your heads together and
you learn, right? Put yourself in a position to learn
skill set, business uh uh business skills, and then you'll start
understanding on where you're falling short. And that's the other thing, too, is being
being honest with the the guys, right? And it's it's not um
and you see it over and over and over again on the pages where someone asks a simple
question. Hey, what do you guys charge for this? Or how how should I be pricing this out? And everyone just
loves to go in there and just be like, well, if you price, you shouldn't be doing it,
you know? But everybody starts somewhere, right? You don't you don't just you don't pick up. We were there at one point. That's why I
don't do this because it's like, man, I just started. I have no I worked for someone hourly. The last time I did
anything like this was years ago. I don't even know where the market is right now.
Yep. And you know, when we started, it's like, okay, I think that I'm worth this
much money an hour. If I divide this square foot and do by the hour, this is how many hours I think I can get the job
done. And yeah, I think that's a good price. And and that's how most everybody starts, right? Like
but what happens if you have to, you know, that that 20our project turns into
a 40hour project and you were basing it off of a dollar amount um divided by the square footage and a
couple things went bad and now you're in a position to where you just doubled your labor and diluted your hourly rate,
right? Like and it it's could be it's doesn't even have to do with the job, right? We've done it before when, you know, we've
been doing something and then the van breaks down on the way there and it's like, well, now I got an entire skid of
VCT in the back of this van that has to get towed. Now we got to figure out how we're going to get this from this
vehicle to another vehicle and then still get down there and it's fun.
Yeah. Yeah. That that really happened too, guys. By the way,
it always happens at least three times in your lifetime of flooring [laughter]
at least. Danny says, "How on you YouTube says, "How's labor? How's the labor situation
in our area? We have a big shortage of qualified installers, so our prices are
way up." And I
I don't know that it's necessarily the installers that's the issue over here because we do mostly commercial. I think
it's the estimators that are doing it cuz then what they'll end up doing over
here is they'll price out the job and then find someone to do it for lower
than they price it out at. Yeah. Mhm. So, I mean, and I think in our area, we
have some pretty good installers over here. So, it's it's not necessarily
an installer thing. Sometimes it's just an estimating thing where it's like, oh
man, I I had put it it for this much
money and now how am I going to find someone to to cover this?
Right? Or let's look at it look at it another way. And I've seen this happen too is where um an estimator they team up and they
are low bid, right? They're low. They're winning everything. Now they don't have enough people to install. So those the
solution that I've seen is they start u
uh backpicking smaller subcontractor crews and saying, "Hey man, look, I got this work right here. if you go get your
DBA and some insurance, I can just give you this jobs right here and you and you can work for yourself. You can own your
own business instead of working for so and so. And that's what gets, you know, really efficient to split up and gets
them in trouble. And guess what? As soon as that heavy workload that they under bid disappears, so does the work that
they were promised. And right, that is that's a really legit scenario
on on how the market gets flooded. Um, so on on Twitch, this this guy here says
he's a barber and he loves this show because he can see all the stages of beard growth in one place. [laughter]
And he he did say that, you know, that uh referrals, recommendation referrals
are king and that uh he doesn't get customers cuz he's cheap. He knows his trade, right? And 100%
like as a barber, you you it's the same thing. It's you got to be priced so you
know you're making money because if you're not all it takes is someone coming in there
with something like this and then you're like man it's going to take some work
and uh says that the first con at the first CFI convention he went to someone
told him you do less work and make more money but doing the work right and that
that changed his mind about it's not always about more more.
Sometimes it's about how can I slow down and make myself more efficient.
Mhm. Been there. We have Yeah.
Trying to take on too much at one point at one time put us in a bad spot. I'll tell you what.
I guess I don't know if that's actually up north, but it's in Canada, so you automatically think it's north. But he
says his phone won't stop ringing. He's strictly commercial and that's awesome. Um, Rin says,
"What decides what is high and what is low?"
That's a great question there, Rin. I guess you individually, right? Maybe
it's it's based on your personal expenses and stuff like that, right?
Everybody's business is run differently, which is why we had to charge a different price than
our competitors in in the market. But at the end of the day,
everything should still be pretty close based on that project, I think.
Right. Well, as as long as if if it's apples to apples, yes. Right.
for the apples to apples means that that the installers have very similar uh education backgrounds. Their their
styles are are very similar. Um right, as far as skill set, but then where are
they coming from? Who's working out of the garage? Who's working out of uh their own brick and mortar? Right now
you have that to to factor in. Well, and not only that, I'll say like last last
week I went to um a procurement meeting over at one of the construction companies, right? And that's what he was
talking about was buying power and how these larger companies have that buying power to where they can call someone and
be like, "Hey, I need this at this price or else we're
not going to get it." And or or you know, that's just one aspect of it. But
or I heard that so and so's been on the job. If you don't give them a way higher
price, I'm going to stop selling your product. That's probably happens, too.
You know who you are. So, Kendall says, "Uh, how about just do
a higher bid and then go to a lower rate after negotiating?" That's normally what he does. And I
don't know if I'm reading this correctly, but that sounds to me like you get
a an okay to do the job at a higher rate and then you offer them a lower rate,
which unless I'm wrong, unless I'm reading. So, well, I I don't know. So, let's look at this. The the project that I I gave
numbers on a project and we were there was some unknown variables in
there, right? So, I gave, you know, my my base numbers and then I did alternate number one, alternate number two, and
then I got a phone call saying, "Hey, we do you have time to go take a look at the project?" Because, you know,
alternate alternate number one is obvious is not going to work because the substrate is not wood. But I we want to
find out why you put alternate number two in there and see what we could do to try to help mitigate costs. It's like,
you know what? Yeah, no problem. I haven't looked at the project. what I submitted was a budget and that's why
the alternate was in there. So yeah, 100% I would love to come visit the project, take a look at it and we can,
you know, chitchat. So I did. I went out there, took a look at it, said,
"Yeah, I don't think the full thing for alternate number two is even going to be needed, but I can tell you that this is
going to be needed. This is going to be needed. This is was included in the base. This was not. So yeah, we can make
some adjustments and save you some money." Um, so so maybe that's what he meant then.
Okay, sweet. You guys got the job done, right? Like we didn't even come to a final number,
but he just he just like you said earlier, it's it's throwing it out there, right? Like, hey,
like we technically don't know what's going to be needed, but I need you to be pre prepared that it could be
up to this amount, right? like I don't want to charge this amount, but if we
need to, it's there, right? And um I use that old that old
line, you know, that uh I learned years ago is I'm not trying to take your money. I'm trying to make you money. You
know what I mean? That was a he was a builder. Um and it it's it's a balance. It's a it's a team effort.
Uh and and I want to approach it like that all the time. So, we're gonna do Rollins's comment here and then we are
at time guys say that uh he feels like it comes down
to knowing your cost of doing business and that is 100% correct and that's
just having Rollin on here. The cost of our doing business is going to be different than
the cost of his. Our cost is going to be different than Horgees. Horge is going to be different than everybody's. So,
it's making sure that you know your cost and stop undercutting yourself when you're doing when you're when you're
throwing these numbers out there. And um we talk about it all the time. It's
like having a you say that you're you own a business, but you're just owning a job. And
let's I mean, Kyle said it best when when he
was doing his podcast, too, right? It's pro profit's not a dirty word. like it everyone has to make a profit all the
way down the line. There there's a book out there that's is called profit first. Um and right do
they have two couple variations of it like a contract version? Yep. Yeah. Um I I advise people to to read
it, listen to it, whatever. Float your boat on that one. And uh it it does
if you're willing to learn and open up your eyes and listen to this book, it it will give you some great information.
Well, that's the time for today, guys. We want to again thank the NFCT,
Divergent Adhesives, Trade Tap. Make sure you guys are going to get your VTI.
Um, sorry,
my hat. And, uh, Pro Installer Magazine. Make sure you're reading up, man. just like
if anything just reading that will put you miles ahead of a lot of other people.
All right. Thanks for joining us today, brother. We can get a tutorial of what you got going on, bro. I'm sitting here watching you do all that.
Man, you know what? It's it's a lot of fun. It's um it entails a lot of little
detail, very tedious work, but uh overall, we should be done hopefully by tomorrow.
And it's just this one step I need to sew and bada bing. Nice. Well, we appreciate you hopping on
today, bro. Yeah, thanks for having me. Even though I was kind of just in the background.
Yeah, you you were still there. At least you at least you hopped. I know last week you you were like, I'm in a really
loudy or really loud spot right now. So, but sometimes that because Jorge will,
you know, text or call me at 2:00 and he's already like, I'm already at the bar, bro. I'm at I'm a drinking a brew
most days except for today. Maybe later. I don't know. But yeah, everybody jump
on Trade Tap, go get your education and uh your trainings. And I hope to see you
guys later on in the year if you go to the any conventions or or next year
during ties coverings. And I hope to see you there. Thanks for watching us. All right, we'll see you guys later.
Peace.
