Many painting contractors are concerned about estimating, and rightly so.
You don’t want to overcharge your customers and estimate the cost of the paint job too high, but you also don’t want to underestimate the job and not make any money… or even worse, lose money.
In this article, we will focus on bidding or estimating residential paint jobs, including interior and exterior jobs.
We’ll focus on estimating on an accurate and exact price to charge a customer – not an estimated price. We are not trying to get “in the ballpark”. The goal is accurate estimating procedure to provide customers an accurate price. For more information click here on how to start a painting business.
For exact estimating formulas, estimating standards, and estimating forms, click the link below and we’ll send them to you. These estimating formulas have been used nationwide for over a decade by thousands of painters.
>>Click Here to Download Our Exact Estimating Formulas<<
The Basics of Estimating
The purpose of estimating (coming up with your price) is not to win the job. That’s the job of your sales process, your reputation, and the quality of work you deliver.
The purpose of estimating is to come up with the correct price. The correct price is a calculated move. It depends on your variable costs on the job, your overhead, and your target profit margin.
Your price should be competitive with the market, but also at a point where you can make good profit for the hard work you do and excellent work you deliver.
Winning a lot of jobs because you have the lowest price is not a great way to run a business. Working for dirt cheap is not the goal.
You need to focus on your sales process if you want to win more business. But lowering your price should not be a common practice you use to win business.
To develop a competitive and fair estimate you have to:
These are your labor costs and material costs for the job. Labor is the total hours multiplied by the labor rate. Material costs include the paint and supplies you’ll use on the job.
A smaller company will have very little fixed costs and a larger company will have more fixed costs. These are costs like marketing, office staff like estimators and project managers, warranty, website, an office, accounting, etc…
Smaller companies should aim for no less than a 30% profit margin after variable costs. Larger companies should aim for no less than 50% profit margin after variable costs.
For example, if your variable costs (labor + materials) will be $1,000, a smaller company should add in at least $450 to your bid. This $450 covers your insurance, warranty, marketing costs, accounting, and your company profit.
A larger company should bid that job for about $2,000 to cover their additional costs like marketing, estimators, project managers, office managers, software, hiring costs, and more… Plus their company profit.
Bigger business, more costs. Bigger businesses can (and need) to deliver more value to justify the higher prices.
When to Raise Prices
We recommend aiming for at least 20% net profit margins. That means after all expenses. As you add more employees and overhead, you keep improving your gross profit margins a little bit. That’s the profit after variable costs (labor and materials).
For example, if you bring on a new employee and they are going to be a cost of 7%, then you should raise your prices 8%. As your company grows, you will start to have more costs that show up that you aren’t planning for. So always keep raising prices a little more than you need.
One of the biggest mistakes people make is under-pricing their jobs and working for too little. You are a business owner, and you determine your pay.
Improving your sales can help you win more business without sacrificing your pricing and profit. For now, focus on estimating right. Then focus on improving your salesmanship.
When You Screw Up
Will you mess up a couple times? Definitely. More than a couple. I have messed up a lot of painting estimates. But every time we mess up (and we still do), we learn from those mistakes and never make the same mistakes twice. Screwing up and failing is how you learn. Be ready to make never-ending tweaks and adjustments to your estimates.
There is no way to be in business and not screw up. Learn to embrace those failures, and learn from them. If you do screw up your bid, that’s ok. You have to price yourself incredibly low to actually lose money. So don’t sweat. Just learn.
You’ll need to consider 3 things to put together your exterior painting bid.
#1 – Total Hours for Prep Work
#2 – Total Hours for Application
#3 – Total Material Cost
Determine Total Labor Cost
Once you have determined your total hours, you’ll need to multiply that by a standard labor rate to determine your total labor cost. Labor rate of $20/hour is a safe bet nationwide as a good starting point.
Determine Total Material Cost
Multiply the number of gallons and the price per gallon to get total material cost plus any sundries.
Determine Total Labor + Material Cost
Add your material and labor cost to come up with your total job cost.
Determine Final Price
Now you’ll add your company markup to cover your other costs (overhead) and add in your profit. This is based on the size of your company and your own goals with your business. See the section above for our recommendations on your markup and profit margins based on the size of your company.
Determining Prep & Application Hours
In order to provide an accurate estimate, you’ll need detailed standards for preparation and application time based on what you are painting and the condition the house is in.
We recommend breaking the job down into detail. Not all surfaces are created equal, and not all trim are created equal. 2nd story trim takes longer. Stucco takes longer. Wood windows take longer. Certain prep takes longer.
We need to take all of those things into consideration to get a consistent price that’s best for all parties involved.
>>Click Here to Download the Full Estimating Guide Including Labor Standards for Prep Hours, Application Hours, and Materials<<
Caution: It’s always important to actually do your measurements. These are only provided here as a guide and we strongly recommend using our detailed estimating formulas provided in the link above.
The examples provided in this slideshow can vary based on the type of paint used, number of coats, and the condition of the home. Consider these ballpark prices for a standard paint job.
(Note: Hover over each image for extra estimating details)
Estimating interior painting is much more difficult than estimating exterior painting. There are simply more factors that go into interior estimating. Most interior estimating formulas will work most of the time. Almost all interior estimating formulas break down in certain situations.
There are a lot more complexities and nuances to estimating interior.
So for this article, we’re going to focus on the simplest way to estimate an interior paint job.
Step #1: Break down the estimate into individual rooms. If you’re painting the main floor of a house, you might have a kitchen, living room, dining room, hallway, bathroom, and 2 bedrooms. Estimate each of those “rooms” listed separately then add them up for the total price.
The best way to do this is to draw a mini diagram/floor plan on a blank piece of paper with each room listed on it.
Step #2: Estimate each room, one at a time.
Estimate a single room by going off of a single base-price. Then you’ll adjust the estimate.
Our base price is a 10×12 bedroom with 8 foot ceilings and normal amount of trim. These prices included doing 2 coats and includes labor plus materials. This is the total price a customer would pay.
Now go back to each room on your floor plan. If the room is bigger or has more trim, add a little bit more to this base price. If it’s smaller, take a little out. This is a simple way to get pretty close to a perfect price.
Over time, keep learning from your mistakes and adjusting your pricing. Make note of mistakes you made and learn from them. Continue to hone your craft of estimating interiors.
Other Price Considerations
Remember… This article is a very simple and basic way to estimate interior to get you started.
Caution: It’s always important to actually do your measurements. These are only provided here as a guide and we strongly recommend using our detailed estimating formulas provided in the link below.
Above, we show a simple home layout including measurements for three rooms: the office, the living room, and a dining room. Based on the estimate standards for 10×12 room with 8 foot ceilings, we came up with a total price range of $2135-$2697 for painting the three rooms.
Here’s how that breaks down (note, prices are rounded):
Warning: Estimating by square foot is the most common way that most painting contractors talk about estimating paint jobs. It’s commonplace in this industry and it’s a big mistake. Here’s why…
Sometimes contractors will talk about square footage about floor space and other times it will be about wall space. In either case, there are problems with this approach.
Imagine you have 2 homes that are both 2500 square feet. One home has a lot more detail than the other home. In both cases they might use about the same amount of materials and paint. But the labor cost is based on prep work, spraying or rolling, and trim.
Prep work and trim can change the price dramatically. The two houses, based on the amount of prep work and detail work, can be significantly different prices.
But if you are bidding by square foot, you can get yourself in trouble when you don’t take into account extra detailed houses.
Or you might be pricing too high on simpler jobs with very little detail.
Pricing by square foot is over-simplifying estimating and leads to problems. This is why, at Painting Business Pro, we don’t recommend estimating by square foot.
Estimating is a science, not an art. Getting it accurate is best for the contractor and the customer.
This article is an introduction to estimating like a professional. But it’s not the whole story.
That’s why we have provided this free guide on estimating. We’ll send you all of the standards for estimating prep time, application time, coming up with material costs, adding in your profit and coming a price you can be confident in.
Click the link below and we’ll send it right over.
>>Get Painting Estimating Formulas Here<<
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