How to Price Your Modular Project correctly

As a consultant with a specialization in the Modular Building Industry, my approach is both unique and innovative with a touch of my rebel side. I embrace my role with a forward-thinking mindset, advocating the importance of offering complimentary guidance on occasion. I encourage interested parties to peruse my previous posts and articles, which are rich sources of insightful advice. My primary goal is to assist companies in avoiding significant pitfalls and failures, thereby contributing to the overall health and success of the modular building sector.

A fundamental question often arises in our industry: why do some modular companies, despite being well-capitalized, operating from efficiently designed factories, and having implemented proper processes and procedures, still face failure? Recognizing the myriad of factors involved, many of which are outside the manufacturer's control, I focus on the critical aspect of accurate module and project pricing. Mispricing is a prevalent but rarely discussed issue in our industry, as evidenced by the diverse pricing strategies I have observed numerous times. For example, I have seen a client add a 20% markup on material costs—10% for overhead and 10% for profit—while another used a flat 40% markup of materials. Both approaches are unsustainable. It is imperative to understand that there is no universal estimating program for modular building project pricing in our industry, as each company has its unique construction methods and variables.

In my consultancy services, I guide clients in mastering the crucial skill of accurate estimation and pricing. Recently, I have been collaborating with a remarkable new client, conducting a series of 8-9 classroom sessions focused on business startup education. This collaboration has been particularly fulfilling, featuring weekly assignments and discussions that stimulate engagement and learning.

Attached to this post is a simple spreadsheet I have developed, demonstrating an effective and accurate approach to project pricing. When factory setup and project estimating are managed correctly, profitability follows. The figures of 55% and 20% used in the example are both hypothetical, yet it is generally observed that 70-75% of every dollar in our industry is allocated to materials and labor, leaving 25-30% for overhead.

It is essential for startups to master product pricing, a skill that is surprisingly straightforward yet frequently neglected. Planning for overhead, profit, and loss in advance lays the groundwork for successful estimation and business prosperity. Why would one neglect to closely monitor 70-75 cents of every sales dollar?

Furthermore, I offer comprehensive and precise estimating programs tailored to individual needs. My system works for not only Modular residential and commercial, but also for: Pods, Prefabricated Structures, SIPS, Kits, Components, made of wood and or steel . Let me know if you need assistance or development.

I am readily available to provide additional assistance and insights. Together, as a team of one, we ?propel our industry forward.

“Advancing our Industry One Post at a Time”

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