Are You Selling at the Right Margin? The Technology That Helps You Know for Sure

QFloors Co-founders, Chad and Trent Ogden.

When customers come into your flooring store, and they are comparison shopping, how do you know whether you can “meet or beat” competitors’ pricing, without losing money, or leaving money on the table? What level of margin is too low?

Years ago, my father owned a successful, multi-location flooring business. His decades of experience in flooring gave him a good general sense for costs and margins. But occasionally, his intuitive “guesstimates” would end up costing him. He would sometimes forget that sales don’t always equate to profits, if you’re selling at too low of a margin.

This is why you should be aware of the profitability of the job every time you create a proposal. It will help save you from the majority of those unhappy surprises.

Job costing is the method where you gather your costs of doing a job (materials, installation, freight, commissions, taxes, etc.) as well as your shared overhead costs of just doing business, and you track how much you are selling the job for, and how much of a profit you will be making. Job costing can be done before, during, and after the completion of a job.

While flooring dealers usually recognize the importance of job costing, relatively few do it consistently. Why? Because they don’t have the technology that makes it simple and quick. It takes too much time to manually calculate, so it’s just not practical. Or, perhaps their system has not been accurate, or forces them to do it afterthe-fact and way down the road, when it’s too late to make much of a difference.

With QFloors software, job costing is easy, accurate, and pops up right on the sales order screen, as you are building your proposal. As you enter the line orders for materials and labor, you can open a box to the side that lists all of the related costs of a job, including the material, labor, estimated freight, commission, estimated taxes, indirect overhead costs, your profit and margins before and after commissions, etc. It’s convenient to have it on the same screen as your proposal, so you don’t have to guess, enter it into a calculator or spreadsheet, or toggle back and forth between windows.

So if you want to see what the difference will be between selling the job at a 40% margin or a 45% margin, just enter the desired margin on the whole job, and see the comparison. QFloors will change each line item’s contribution to the subtotal in order to hit the desired margin. Or if you have a customer who is negotiating price, who is telling you something like, “Do everything for $6000 and it’s a deal,” you can see what type of margin you’ll make with a total of $6000. Being able to see those numbers and play around with them before you close the sale is very valuable.

While it may seem like figuring out the formula for job costing is complicated and confusing, with a software tool like QFloors, it is simple. How is QFloors able to accurately job cost? How is it able to bring up recommended prices when you enter a product into the sales order? It starts when a dealer sets up their software.

You set up your product catalog, by importing B2B price lists electronically from your vendors. You also can import CSV files from non-B2B vendors, or enter manually one at a time. Once products are in the system, you enter standard labor rates for all of the different types of labor you might offer. A feature in QFloors’ product catalog allows you to quickly apply freight to different manufacturers by product type. So you can populate the freight fields on each product based upon the vendors’ or common carriers’ rates.

Once costs are in the system, QFloors has a retail price formula setup screen, to recommend retail MSRP based upon the cost inputs. If a particular product is not in your catalog when entering a proposal a salesperson can just type it in the sales order and manually enter in a unit cost on the fly without taking the time or waiting for someone else to add it to the catalog. If you have a special promotional price from a rep that is not reflected in your computer yet, this same feature allows you to change it immediately. You can set different gross profit margins, based upon costs. You also can set an unlimited number of retail price formulas in the system.

So when your customer is standing before you, waiting to hear a total price, you can pull that up quickly, easily and accurately. As you fill out the sales order, you enter the product and immediately see the cost and suggested retail price. And you don’t have to worry that you forgot to factor something into your price.

The job costing is right there on the same screen, so you can adjust as needed before finalizing. No more leaving money on the table.

QFloors also makes it simple to see an accurate picture of how much you made, after a sale is completed. You can go in and see the bills applied to the job, what the real costs were, and evaluate if you made what you thought you would make.

QFloors factors in indirect costs of doing business, such as warehouse, truck or installation costs. Credit card fees can be costed into jobs automatically after a credit card payment is made. With a new bill feature in QFloors, you can apply miscellaneous costs to a specific job by assigning bill line items directly to a sales order job cost.

Job costing is powerful both before a sale (so that you can get an idea of your margins) and after a sale (so you can see how close you were and make needed adjustments in the future).

In this time where comparison shopping seems to be on the rise, it’s more important than ever to know what your margins are and where they should stay. QFloors software helps make that easy and practical. ■