◆ Case · Pricing
Painting & Drywall
+31% net profit · Year 1 · On flat revenue
A sole-shareholder painting and drywall contractor operating in the GTA, with annual revenue of approximately $920,000. In business for six years. Two full-time employees and a rotating pool of subcontractors. The owner was working 60+ hours per week and felt like the business was running him.
"Why am I not making more money? Revenue is good, we're always busy, and I don't have enough left at the end of the year."
The 78% bid win rate told the real story. In a competitive trades market, winning 78% of bids means one of two things: either you are dramatically better than your competition, or you are cheaper than your competition. The diagnostic ruled out the first explanation within the first session.
The owner was estimating jobs by walking the site, applying a rough labour formula, adding materials, and shaving 5–10% off what he thought the market would bear. He had no job costing system, so he had no idea which jobs he was making money on and which he wasn't. He assumed the problem was his employees working slowly. The problem was that he had priced 40% of his jobs below his actual cost of delivery.
When we built the actual labour burden — wage plus CPP, EI, WSIB, vehicle allocation, and tool amortization — his true hourly cost per person in the field was $68. He had been estimating it at $52. Every estimate was wrong before the first brush touched the wall.
We rebuilt the estimating model from the ground up: actual labour burden, material margin of 18%, overhead allocation by job size, and a target net margin of 14%. The new model produced estimates that were 12–18% higher than his previous quotes. The win rate dropped to 61%. Revenue dropped slightly in year one. Net take-home income increased by 31%.
The owner worked fewer hours. He stopped taking work he would have previously fought for. He raised his subcontractor rates because he could now afford to. The business became, in his words, something he actually liked running.
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