ABCs of job costing

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Effective tips to pricing the project vs. just selling the product

By Leah Gross

 

Johnston Paint & Decorating in Columbia, Mo., employs an all-designer staff proficient in helping the customer with an entire remodel project. Pictured is one of its recent renovations.

In an industry where price shopping is rampant, specialty dealers are challenged to maintain their profit margins while still being competitive with not only home centers but also other flooring retailers in their respective markets. A big part of that objective, experts say, lies in mastering the art of job costing. That is, factoring in all facets of the project—from estimating all the way through installation—and making it transparent to the customer so she can make an informed decision.

FCNews rounded up several retailers to get their insights on how they continue to thrive and compete when it comes to job costing. Following are some tips:

Know thy market
Dawn Iversen, president of Jerry’s Floor Store in Spring Lake Park, Minn., makes it a point to train his sales reps to be aware of strategies employed by competitors so they can respond accordingly. “We get a trickle of customers in our store to price shop, and many have already received quotes from the local home centers. So it’s critical to know where you stand on the key factors that are driving your customer, including pricing.

“If they don’t know already, when your customer understands what goes into the mix beyond just product cost, they can appreciate what a specialty retailer brings to the table—most importantly, quality and integrity and a commitment that we are going to stand behind whatever job we do for them. Time and time again, it comes down to trust, whether it’s a first-time customer or a repeat. It’s about building a rapport and a trust and tailoring the presentation to the customer’s specific needs. Consistency throughout all levels of your management is key.”

Leave no stone unturned
Jason Fromm, president of Carpet Spectrum, Lomita, Calif., stresses the importance of anticipating costs in order to avoid surprises for the customer down the road. “There are many factors to consider when providing an estimate for flooring installation, and our associates must consider the individual items that are unique to the project,” he said. “This level of detail requires that our associates spend time with clientsat their residence or business, walking a job site in order to explain the process from beginning to end. Our estimates factor in the basics of existing flooring removal, floor preparation, furniture, appliance removal and reset, transition and wall moldings and, in some cases, floor leveling. As part of our effort to ensure the best job possible, we employ CFI-certified installers and install to a tolerance that meets or exceeds the manufacturer’s guidelines. Our clients are assured we are using the best underlayments, compounds and adhesives to validate the performance and warranties of the flooring products selected.

“In the end, our clients appreciate the level of service and caliber and integrity materials to complete the project. If the process is properly explained to the client, cost becomes less of a factor and the peace of mind of knowing the project is completed correctly the first time overshadows the marketing efforts of our big-box competitors.”

Leverage your expertise
Kevin Raasch, owner of Vic’s Carpet & Flooringin Oconomowoc, Wis., believes the advantage lies in the “hands-on experience” his team has in the field—something that helps the estimator better understand what products make the most sense for the job. “Having a solid footing in the industry provides the confidence to stand behind your products and your price proposals,” he explained. “Your knowledge serves to instill a level of comfort in yourcustomer that cannot be achieved any other way.”

Johnston Paint & Decorating in Columbia, Mo., also plays up its expertise in the market. In fact, the company employs anall-designer staff, which conveys to its customers that it is an authority on project management and design. At the end of the day—according to Melissa Murphy, co-owner—price is still a factor, but customers recognize that they are getting a unique benefit vs. the competition. “Our level of knowledge, background and eye for esthetics contribute to instilling the confidence our customers are looking for when making a purchase decision,” Murphy said. “Shortcuts are just not part of our culture at Johnston; we are hands on with our customers every step of the way.We strive to ensure that our customers feel like we are a team—all in it together.”

Raasch and Murphy are not alone. Bo Perkins, sales manager with Knoxville, Tenn.-based Broadway Carpets, prides himself on the company’s stellar reputation for delivering optimal customer service for more than 40 years. A big part of that longevity, he says, is differentiating his store from the experience some customers encounter at big boxes. That means coming up with ways to counter home centers’ aggressive pricing strategies. “There is no such thing as free installation and we don’t waste our time worrying about that because we do not need to prove ourselves,” he explained. “We cannot compete with 24/7 hours offered by big box stores, but where we cannot compete we are heads and tails beyond them when it comes to taking care of and knowing our customers. We train our staff to hold their hand through the whole process to ensure a good experience. Also, we don’t operate under the ‘one-and-done motto.’ We love the second- and third-generation customers who come back into our store. That is what we take pride in.”

Carpet Spectrum, based in Lomita, Calif., prides itself on the wide array of soft and hard surfaces offerings available to satisfy a range of end-user demands.

Overcome your fears
Mike Cherico, former vice president of Floors & More and a 38-year industry sales veteran, cites one of the biggest impediments to adequately selling the project vs. the product: fear. “Fear on the side of the sales professional who does not anticipate the costs involved correctly and has left the customer in the dark about hidden fees. It’s key to remember that your customer knows there will be expenses beyond product and installation, and you must not overlook those added costs at the early stages as part of an effort to pique their interest. Transparency from beginning to end will earn their trust and build their confidence. The best formula is to keep it simple.”

Be transparent
Greg Miller, president of Henry’s Floor Covering, Inc., in Greencastle, Pa., encourages his reps to employ standard operating procedures when job costing. That means no exceptions—every customer who’s quoted on a job receives a pre-printed work sheet that lists all materials and associated costs, including labor. Everything is priced by the unit, i.e., square foot or square yard per piece. This method, according to Miller, provides a more professional, transparent presentation compared to advertisements and quotes provided by many of the major home centers, which heavily advertise “free labor” with a product purchase. “Box stores may advertise free labor, but there is no such thing,” he said. “Last time I checked with my installers, they still needed to feed their children. We know we’ve made our margins and our estimators keep us competitive.”

Vic’s Carpet & Flooring’s Raasch agreed. “No one likes surprises, so it is imperative to keep things transparent and present everything upfront. No one is perfect, but when you do have issues you need to address them ASAP to keep the peace.”

Promote, promote, promote
Nick Cinquepalmi, chief executive officer and president of Landmark Flooring in Tinley Park, Ill,, feels the most important component in winning jobs in today’s competitive business environment is solid and consistent marketing and education. “At Landmark, we [aggressively target] a geographical radius around our store with enticing ads to bring prospects into our showroom. Once there, our main focus becomes winning their trust and confidence in our service. Our reputation and our core goal of selling the client the right product for the right home environment is central to our approach and distinguishes us from all competition.”

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