Question 8: How much will you cut your profit margins to get a job?
Tim Burch, Burch Builders Group
We will not cut profit margins to get a job. We may adjust our infrastructure to allow for a lower profit margin, but we will not cut profit at the signing table for a signature. My father always told me that it is better to sit in the office and plan for future business than work for free because you cut the margins to get a project.
Craig Durosko, Sun Design Remodeling Specialists
None. In this industry you don’t have margin to cut. We have been able work with our vendors and trades on cost savings in materials and labor and passed them on to our clients, allowing us to be more competitive without lowering our profit margin.
Peter Feinmann, Feinmann Inc.
We have cut our margins to break-even on selective projects when we were clear what the risks of the project would be. We did this in fall 2008 when there was tremendous fear in the marketplace. We were able to secure several good projects that started in January 2009 and avoid layoffs.
Dennis D. Gehman,Gehman Custom Remodeling
Alex Iosa, Iosa Construction Corp.
As of right now, we have not had to cut our profit margins. Fortunately, being in business for 20-plus years has given us a great reputation in the remodeling industry. We stress to our clients that we always give them our best cost of the project upfront. We don’t like to negotiate the cost of a project. It is our belief that once you start negotiating costs, you become the “used-car salesman” that no one likes to work with. We believe in the quality of our work and our customer service, and since we don’t compromise either of those, why should we compromise their value? We are also realists, and though this philosophy is working for us now, we do realize that in order to stay in business we may ultimately have to cut our profit margins.
Paul Irwin,Pattern Builders
It depends. I learned the hard way that if you're losing money as a whole, you can't make it up on volume. But there have been times when I’ve paid to do a job — that is, done it for a loss because I knew that it would result in more work or a much larger project. That’s an investment.
Chris Landis, Landis Construction Corp.
John Murphy, Murphy Bros. Designers & Remodelers
Our target is 40% but we will consider down to 30% — more likely to cut on larger jobs. Maybe 25% on the right project at the right time of year.
Jane Regan, HB Building and Design
We will cut our profit margin down to 15% to get a job and keep our workers working. We did one job at 10% and it nearly killed us financially.
Alex Shekhtman,Elite Remodeling
I reduced my overhead by letting go of warehouse/office space and moving to my home office. I now have no company vehicles and no employees. With low overhead, I can reduce my prices substantially without sacrificing margins too much.