Square ft. Pricing for Hardscapes - Yay or Nay?

I just got back from Phoenix Arizona 20 min ago, where I was teaching a workshop for contractors on profitably pricing their jobs.

An interesting question came up during our session.

Should you use square foot pricing for hardscapes?

Or said another way – should you use unit-based pricing for the work you do at your company?

What is square foot or unit-based pricing?

In the context of hardscapes, let’s say a patio, it means you charge a flat rate per unit, or square foot.

For example, you charge $30/sq ft for patios, and you are creating a proposal for a 400 sq ft patio.

400 x $30 = $12,000

Another example is you have an excavator and dig in water lines for $X per foot.

That’s what square foot/unit-based pricing is.

And you can kind of see why people use it, in my example above.

It’s super easy and fast to get to the price.

It’s easy and fast to tell prospects over the phone what the job they want will cost.

Why the debate?

So, why the debate on should you or shouldn’t you use square foot pricing?

Well…

I love the way I heard Phil Bahler from Pave Tool describe it.

Imagine with me for a moment you are using unit-based pricing, in this case square foot.

And you are installing pavers.

You did some math and came up with the $ per square foot you need to charge for installed pavers.

Variables…

Now, you get a lead for a new job, and you’re pricing it out at your square foot rate.

It’s a 20’ x 20’ patio, square, minimal cuts, one side up against the house, so only 3 sides need edge restraint.

How long would a job like that take you?

Let’s say it takes your crew of 2 people 2 days.

Bingo – you get it done, collect the payment, and off to the next one.

Now, this next one is also a 400 square foot job.

Except this time, it’s a…

100’ long sidewalk, 4’ wide, curved, with soldier course border.

How long will that job take your crew?

Twice as long?

Three times as long?

But wait…

You used the same square foot rate to price it?

And it took you much longer?

How is the cost of your additional labor getting covered?

What about the extra waste from cutting the pavers with the curved design?

It’s not hard to see the problem…

So, what’s the solution?

Now, if you use square/unit-based pricing you might be saying, “Yes but I calculate variables into my square foot pricing.”

And yes…. you can.

But it’s extremely difficult to stay on top of all the variables you’d have to consider to keep them accurate.

How much does your unit-based rate change when things like your overhead, insurance, marketing expenses change?

How much does it change when your materials costs change?

What about when you give your employees a raise?

What about when there is difficult access vs easy access?

All of these challenges can be solved simply by using templates and production rates instead of unit based or square foot-based rates.

Your template and production rates will allow you to adjust the independent variables on each job, and dial in your proposal’s price accordingly.

I wrote a full article explaining how production rates work more in depth.

And I also made a spreadsheet template here that you can use to calculate your own production rates.

It only takes minutes to get started.

The best part?

Once you have templates and production rates built, it’ll be just as fast as square foot pricing – just plug your measurements into your template and off you go.

You have your profitably priced rates for the job.

Happy calculating!

Don’t let your profits be robbed by one more square foot priced job!