How to Price Window Restoration

If you are looking to hang out your shingle and start restoring windows for pay then this post is for you. Whether you plan to operate as a solo-preneur, build a small team of dedicated restorers, or have plans to build a major window restoration outfit with dozens of employees tackling the largest restoration projects in the country knowing how to price window restoration is the most important part of the job, save actually knowing how to do the restoration work.

When I started my window restoration company, Austin Historical, in 2010 my pricing was akin to throwing darts at a board and hoping I got it right. Early mentors would tell me “increase your prices” (which was good advice), but there was never an answer when I asked, “How?”

• “How do I know what is the right price
• ”How can I tell if I’m actually covering my costs?”
• “How can I be sure I’ll make a profit?”
• “How much is enough?”

No answers, just more questions.

Recently, I had the privilege to speak at the Window Preservation Alliance annual conference about this topic and I felt like it would be of benefit to more people out there. My vision is to democratize window restoration so the more people doing this work the better in my mind. That means more windows are getting saved from the landfill.

My friend Ty McBride says, “We save the future by preserving the past.” I’m a believer that restoring rather replacing historic windows makes good sense in almost every aspect. If you’re wanting more of the numbers around restoring versus replacement read my earlier post The Replacement Window Myth.

How to Price Window Restoration

So how do we price our restoration without using a dart board? It’s actually quite simple. I’ll outline four things you need to know before you can come up with an accurate price for the restoration of historic windows.

1. Know Your Labor

Labor is by far the largest expense of any window restoration. It takes a lot of physical labor to restore these windows back to their original state. I’ve written about how long it takes to restore a window in this previous post if you’re needing a starting point.

Stripping, repairing, glazing, painting, cleaning, it all takes time and you have to charge for that time. That’s how business works. If you’re not comfortable charging for your time then this is a hobby and not a business. That’s fine, but they are not the same thing.

How long does it take you to complete the scope of work for the client? Start timing yourself or your team and document those times because without them you really have no idea how much to charge.

Don’t just calculate how long the actual work takes but all the extra things you have to do like;

• Driving to and from the job site
• Setup and breakdown each day
• Lead containment
• Going to the paint store to get the client’s special color match
• Scheduling the work
• Procuring any materials
• Managing the project
• Punch lists

There are a ton of extras that most folks forget about and then wonder why they are not making any money. The devil is in the details and if you don’t account for all these little labor expenses they add up quickly and can easily destroy a budget.

Once you have your labor hours accounted for you need to know how much that labor costs you. It’s not as simple as paying someone $20 an hour or $30 an hour. There is a labor burden that comes with each and every employee.

What is Labor Burden?

Labor burden is the premium you pay on top of an employees’s hourly wage that covers the extra costs of taxes and benefits your company offers. For example, every employee knows they pay FICA taxes on each paycheck, but did you know that their employer also pays the other half of those same FICA taxes?

Employers are also required to carry worker’s compensation insurance on employees which can be anywhere from 2-16% for construction related fields. It’s a real expense of doing business.

Then you also have the cost of benefits offered to the employee.

• Paid Time Off
• Holidays
• Medical, Dental, Vision Insurance
• 401k

All of these benefits represent a cost to the employer and that all adds to the labor burden. It will vary from employee to employee and from company to company. At my company the labor burden adds an additional 35% to the hourly wage. So a person making $20 an hour actually costs the company $27 an hour. The math looks like this: (20 x 1.35 = 27)

Now you can actually calculate the real hourly cost of the labor to do the restoration work. That’s part one. Now onto the next part of the formula.

2. Know Your Materials

Every job requires some materials. Glazing putty, glass (if it breaks), sandpaper, epoxy, primer, paint, screws, hardware, etc. You absolutely have to account for these costs or you’re just buying your client free products out of the kindness of your heart.

How much do you charge for little things like sandpaper, or a pint of primer and a pinch of wood filler? You really need to find an average across a bunch of jobs to know for sure, but you can make an educated guess and throw in a few dollars here and there based on how many windows your are restoring.

I can tell you that at Austin Historical we typically include about $35 per jamb and $30 per sash to cover the assorted materials we’ll use for each window. We buy a lot in bulk so your pricing may vary, but that usually covers us pretty accurately so feel free to modify that number as you need.

Don’t forget about other random costs you need to do the job. Gas for the truck, tolls, parking fees, permits, Certificate of Appropriateness (COA), etc. There can be a lot of hidden costs and you need to make them un-hidden.

Once you know how much the materials will cost for the job you can add that to the cost of your labor. Now you have your total direct costs otherwise known as your Cost of Goods Sold (COGS). That’s great, but we’re not done yet.

3. Know Your Overhead

Every business has some overhead even if it is just you. Maybe you don’t pay rent on a shop, or the utilities, but maybe you pay a CPA to do your business taxes, or have a local occupational license to keep in good standing with the city.

You have a phone bill, internet bill, software subscriptions and a mess of other things that are costs of doing business, but aren’t directly related to a specific project.

All these things are called overhead and you have to keep your overhead as low as possible for as long as possible because overhead is what eats through your profit. Even if you produce each job profitably you can still end up in the red if your overhead is too high.

Look for creative ways to keep overhead low and you’ll keep more of what you make.

So how do you cover the costs of your overhead when pricing window restoration? You have to markup the direct costs we gathered above by a certain percentage so you are charging enough to cover all these non-job related costs.

We’ll keep it real simple. Let’s say your company does $100,000 a year in gross revenues. You’ll want to calculate how much your overhead will cost you for the full year. Let’s say $25,000 will cover all the overhead bills like rent, licensing, quickbooks fees, etc. That’s great. That means your overhead runs 25% of your gross revenues.

Now, you have to look at the direct costs (COGS) of all the jobs you’ll do in that year. If you are charging enough then after you cover the direct costs of labor and materials you should have $25,000 (or more) leftover to cover the overhead.

If you don’t have enough to cover your overhead then the business is losing money and you need to raise your prices enough to cover the shortfall. How much do you need to raise your prices? Well, how much were you short of covering your overhead? That’s how much your need to raise your prices (or cut your direct costs, but that’s a separate issue)

You’re almost there. There is still one more thing we need to cover. Profit.

4. Know Your Profit

Unless you have founded a non-profit a business it is supposed to make a profit. That profit is usually a reflection of how healthy your business is, how well you serve your clients, and how well you manage your costs.

Don’t feel like you are being greedy for making a profit. That is the only way the business grows. You can invest profits in your people (higher wages, more benefits, etc.). You can buy better tools to do the jobs more efficiently. Profit is like the lubrication that makes the business run.

Profit enables growth and also provides a buffer for slow times so you don’t run out of operating capital. Profit is an indispensable and important part of any business.

What should you aim for as a net profit? After you deduct all the Costs of Goods Sold (Direct Costs) and Overhead you should be left with a net profit of between 8% and 15% if you are operating a healthy restoration business. The traditional formula looks like this:

Revenue – Costs of Good Sold (Labor + Materials) – Overhead = Net Profit

Recently, I have been a fan of the book Profit First which really focuses on the necessity of profit. It turns the formula on its head like below:

Revenue – Net Profit – Costs of Good Sold (Labor + Materials) = Overhead

This a is great way to stress the importance of turning a profit on purpose instead of it being a lucky leftover and I wish more business owners thought this way.

Putting it All Together

Ultimately, there is no “right price” for window restoration. It depends on how efficiently you can restore a window, how much your overhead costs, and how much profit you endeavor to make for your troubles.

Knowing that a larger window takes longer or multiple panes takes longer is important, but what’s more important is if you know how much longer it takes and even better if you know why it takes longer.

I know I have given you more questions in this post than I have answers, but these are questions that only you can answer. I don’t know how long it takes you to restore a window, nor do I know how much your shop costs, or how much salary you need to take home to support your family, but I do know that if you take the time to calculate all these items realistically then you will be able to price window restoration in a way that works for your business.

One last thought. Regardless of what your costs are there is a limit to what the market will bear. Property values and median incomes vary throughout this country and even if your pricing is accurate your market may not be willing pay $2,000 or $3,000 a window whereas another city may think $3,000 is a huge discount.

Know your market and what value people put on window restoration to see if it’s even worth it to build a window restoration business. If you live in a town with no historic buildings it’s probably not a great idea. Or if you live in an area that is very preservation averse you may want to think twice.

I hope this has given you some good questions to help you refine your pricing for window restoration. Let me know how it goes in the comments below.