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Material costs


Resene Professional development programme


The paint manufacturing industry shares data regarding market share, material trends and overall yields among other bits and bobs – some for their own interests and for others such as Government Trade and Commerce data.

From this database the painting trade pays approximately $14 per litre for materials, and this amount includes all products i.e. 'top shelf', trade lines, strong colours, textures etc etc that painters use within their trade.

Painting the same wall using the trade ‘average’ the maths are (on a 10 litre basis)

140 ÷ 120 = $1.16 per metre for sealer 120 and

(140 x 2) ÷ 110 = $2.54 per metre for topcoats

totalling $3.70, the difference less than the retail cost of paint at $5.76 per square metre.

Painters need to decide whether this difference belongs to them or their customers – we suspect many painters pass on their discounts to make their prices ‘more competitive’.

Much is made by painters about the cost of paint – paint is the essential material costing but the profits in painting are with labour management. The prime cost of painting in this exercise is at average trade pricing 76% labour and 24% materials.

There is an opinion that some bigger painting contractors receive buying terms for material that provides a competitive advantage when quoting for work packages. These people already are included in the average price for trade anyway but would need enormous percentage margins to appreciably alter the balances – a 10% price reduction, equivalent to another 30% discount on paint prices reduces the cost on the wall from $3.70 to $3.15 per square metre but even with this massive reduction 78% remains labour and 22% materials.

Paints that increase labour productivity have the potential to make huge gains as opposed to price reductions per litre. Any materials that are easier to apply or cover better/go further when applied will, within the average grouping of architectural coatings painters mostly use, make you more money.

That painters should continue to hassle their suppliers for better buying terms remains a decent pastime, because price is an important consideration for painters and their customers but, once a reasonable commercial agreement is made, better material performance is more critical to your bottom line.

On flat wall surfaces painters mostly average 120m2 per coat per day – this is each day and includes all the mucking about contingent with the process – masking, talking, texting, dit dit and ditto! and this results in $14.75 per m2 for painting paperfaced plasterboard in three coats. This returns around $45 for each hour painting and therefore covers the overheads and leaves a little profit.

 

  1. Occasionally painters are engaged on a ‘time and material’ basis and can apply these unit rates for their work. The costs per hour are inclusive of full daily rates but contractors should be careful when working through public holidays or for lengthy periods of working times outside normal working conditions.

    ’Time and a half’ or ‘Double time’ entitlements to waged staff does not have the same effect when translated to charge out rates because many elements of overheads are fixed, and in fact, as a percentage of your costs actually decrease as the optimum hours increase beyond the average times worked.

  2. Being a successful painting contractor is all about managing the productivity of the process to at least equal the ‘charge’ rate for each hour worked. The built up rates in the tables are on this basis and good painters will earn more than the average.

  1. Back costing is an essential part of properly running your business. Analytical systems are simple to setup for the painting trade except that many ‘off the shelf’ programmes tend to capture labour costs as nett actual by time sheet analysis. Remember that the rule of thumb method of simply doubling the nett hourly rate (NZ average $22 per hour) pretty well covers the overheads, holidays, accident and sickness requirements and leaves a little bit of profit).

  2. Labour only subcontractors, are on an hourly basis, not the full cost to the contractor, and an allowance must be added to allow for your overheads and profit margins.

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Resene Paints Ltd

Resene Paints Ltd   – www.resene.com

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