Home November/December 2016 Deck Math Revisited: Part Three of a Three-Part Series

Deck Math Revisited: Part Three of a Three-Part Series



Over the past two months, I’ve written about what I call “Deck Math,” which encompasses teaching your contractors to properly estimate deck costs, and helping them find more efficient, less expensive ways to buy and use lumber for decks.

At my company, we are both deck builders ourselves, and also run a lumberyard for deck contractors so I have a unique vantage point. The lumber side of our business is doing very well, despite the market, because by teaching our contractors the skills we use, we’re making them so much more efficient that they’re doing well, too.

Our typical deck contractor customer has been in business for five or six years and typically does everything: decks, basement remodels, windows, and so on. He does all kinds of things, but typically, he doesn’t know where he makes his best money. We teach him how to make his best money doing decks. The guys who are good and efficient and who know how to factor in all of the costs of the deck building business into their estimating will make money, and in turn, they’ll become better customers for us.

One final and very important aspect to what I call Deck Math is creating a good system for how the deck builder will get paid.

A deck builder needs to very clearly establish the terms for getting his money when the deck is done. What we’ve found works very, very well when we’re building decks is to break up the job into four payments.

Let’s say a person buys a $10,000 deck. The first day, when we sign the contract with them, we ask for a 25% down payment, or $2,500. We charge them another 25% when we physically show up to build their job.

If you stop to think about it, we’ve now got half of our money upfront.

We then charge another 25% when we physically finish the job. And the final 25% is due two weeks after we’ve finished the job. (We started that because, once we’ve finished a job, it’s probably evening, and the homeowner is just coming home from work. They want to look at and enjoy their deck, but you’re waiting to get paid. And we found that you’re setting yourself up for calls on Saturday or Sunday, when the homeowner says, “we just saw this we want fixed…” A customer may even be likely to stop payment on that last check to make sure you’ll come back out to fix whatever they’re concerned about.

On the other hand, if the homeowner knows that you’ll be back two weeks after you’ve finished the job to get that final payment, they’re more relaxed. They feel you’re a deck builder who’s confident in your work, and they feel better about working with you.

And here’s one final note: We also give our customers a 1% discount if they pay us by credit card. A credit card payment makes it very efficient for us to collect our money. (You do need to disclose all this on your contract at that first meeting.)

We all know that it costs money to process credit cards, but we’ve found that the benefits to cash flow outweigh that cost.

We may increase our costs by 4%, knowing that we’ll give 2% or 3% to the credit card company and 1% back to the customer, but we’ll get all our money when we need it. We also set ourselves apart from other companies that don’t accept credit cards.

When we began accepting credit cards for payment, our deck building sales went up tremendously, with spikes of 25% to 30% in sales.

This practice could provide your deck customers with a boost, as well. You might want to suggest it.