Hello. Hello, everyone. Welcome. Howdy to everyone joining. We are so glad that you guys are here with us, today. I’m gonna be hosting today. My name is Anna. I’m the customer education manager here at Encircle, and I’m gonna, you know, toss it over to Chris if you wanna take it away. Yeah. Absolutely. Good morning, guys. We’re gonna do estimating. This there was a lot of questions that came in. And so of those questions, a lot of it was focused on Xactimate, and that wasn’t how I had planned this boot camp. This was sort of give you an idea. There’s, like, the buttonology of Xactimate, how to make the individual buttons go. Before you do that, you have to have a foundation of understanding everything that surrounds the estimate from a mechanical, function. So we’re gonna get into that today. I tried to open up exact. I’m getting a frame error on my on my sketch and on my estimating items. Keeps closing the program. So I can’t do a live demo with you on some things I was gonna share. So what we’ll do is I’ll go through and and we’ll talk about it in your q and a. If you ask the questions, I can discuss it. I just can’t show it to you today. So there’s a bunch of stuff that I was gonna go and show you that I can’t, but we’re gonna be able to discuss it anyway. And then what we have is we’ll we’ll talk about the actual unit pricing and some of the factors that you need to consider when you’re doing estimating in Xactimate. Now there was a lot of questions we had. How do you work with adjusters? How do you work with reviewers? And part of it is is the estimate itself is is part of the process. The other part is selling it, so that’s documentation. So we’re gonna cover off a lot of this, but there were so many questions we got. It was like a wide range from from line items to how do we deal with problem adjusters to insurance companies changing protocols. So I’ll try to answer as much as I can. And then in the q and a, if your question is still pressing and I didn’t get to it, every time we stop for questions, fire away, and I’ll try to do my best to, keep up with them. Today, what we’re gonna do is we’re gonna be going through we’re gonna go through this. We’re gonna go through the estimating struggle today, the problems that you guys are facing. And in there, we’re gonna discuss some of the challenges. We’re we do have some surveys. Every time you guys participate in a survey, if you’ve never been to one of these, every time you participate in a survey, none of your names appear. It’s just shown as a as a group, result. So, feel free to share what what you’re being asked, freely. Your now your information will be shared. Then we’re gonna look at the five estimating systems. And so this is the five different ways that we estimate in the industry. Most people, when they start off, they learn Xactimate because that’s what you do in residential. But if you wanna grow past that, you need to learn the other estimating systems. Most of the people that are doing large loss or the complex stuff aren’t doing Xactimate. You use time and material or a different system. So we’re gonna talk about that. Then we’re gonna talk about buttonology versus estimating, which you have to understand the buttonology is making a computer system work versus the actual process of estimating. And most of the time, it’s convoluted on how we do that. Then Then we’re looking at estimating traps, the factors that are gonna hold you or your estimators back from being able to become really profitable, and that’s some of the outside factors that influence us as restorers, the pressures we have from insurance companies and reviewers. We go and look at program versus non program work. So the different mindset. If you started in the business under programs, then you’re gonna have a different mindset than if you started coming in and selling your own business. We’re gonna take two breaks today. So there’ll be two ten minute breaks, not fifteen. And then what we’ll do is we’ll do a five minute q and a and then a ten minute break, and and we’ll move from there. The next part of it after we’re done the break, we go into unit price risks, which is talking about Xactimate. Although we’re not gonna talk about the exact buttons, but we will talk about what the risks are of of unit pricing. The argument of tools of the trades. So when someone says it’s just a tool of the trade that you don’t charge for, we’re gonna discuss that in-depth. Then we’re gonna look at the parts of an estimating system that come together so they make a profitable estimate, how you document it so that you you can win the estimate, win your profits, and then what it takes to be a profitable restorer. Then we close out with a q and a there. We’re gonna do a a bone hour long q and a. I’ll stick around and answer as many questions as I can. We’re gonna start with the estimating struggle today. And if you’re in the game of restoration, it is a different business than if we were in, say, any other business that we’re looking at. Right? If you’re a drywaller, it’s a different business. You’re you’re in that commodity based, push the the revenues in, simple estimating, simple executional work. But when you look at what we’re dealing with as a restore, you’ve got multiple clients that you need to deal with. You’re you’re selling sometimes a value to the customer, but then you’re selling the number to an adjuster who has no value on the quality of the work. They’re just trying to get the lowest number. And so you have all these different pressures which comes in and puts a lot of of external strain on your business. You might not recognize it at that time that all that external strain is coming in, and it does things to your staff. Right? You learn different rules. You become conditioned to what is and isn’t allowed based on certain programs. And the other side that we look at is that the people that are in this industry are generally helpers. You you find a lot of volunteer firefighters, people that lobby police, paramedics. They end up in this industry because you still get to help the community, and you get to help them at their time and need. Well, that drive to help people sometimes sacrifices our business profitability because you’re like, I wanna help people who had a disaster. That starts to struggle, and and and that struggle will impact your estimating because you’re you’re morally torn between helping people and going out and making a profit. And then sometimes you’re told things along the way that makes it even harder to adjust. Like, your estimate’s too high. You guys are doing the wrong thing. You’re you’re, you know, ripping us off. And he’s like, no. I’m just trying to help people, and they need to make money to do it. And so we’re focus on all of that. Because in order for you to do this, you need to to get into your business, you need to ex deliver exceptional service. You have to be profitable. If you don’t have profits, you’re out of the game. Right? Profits are the blood and the lifeline to playing this game, and you need to have those profits there. So it’s not a dirty word. We’re gonna focus on profits today. We’re gonna talk about profitability. We’re gonna talk about cash reserves. All the things that you need to do as an estimator as you’re writing your numbers and trying to move those numbers into, an invoice. And then when that invoice gets paid, the difference between your costs and what’s left over is the profit. That’s what we’re trying to maximize. Now when we look at it, we look at our business. And and the way I look at it is a normal business, you would look at your business and you say, hey. There’s you know, I’m trying to get someone to make an investment in my business. And the problem is that you have this insured that fits in the middle. And so the insurance company goes, oh, we have investments too. We have this cash that you wanna take from us, but we look at your business as an expense. And so all of a sudden, you’re in this this tightrope that you have to walk with the insured. You have a customer who paid money for an insurance policy, and they wanna get a a protection back, and you have to, as a contractor, deliver on that. Now the insurance company puts in all of the stopgaps to protect their investment, and you are looked at as an expense, an unnecessarily expense or a necessary expense, but they don’t wanna pay more for your services when they can get it from someone else cheaper because they don’t see the value inside their business. They don’t see the result. They’re just looking at you as a balance sheet or a profit loss and said, we have a claim. Claim came in, pay the least amount you can. Let’s get that service back, and let’s get the homeowner back, but don’t overpay. And so they put all these safeguards in place to protect their investment, and your job is to fight against it. And if you wanna think about it this way, think of it as like a financial fortress. Right? Everyone who holds the the revenue on the other side of the wall gets to determine when they’re gonna pay and how they’re gonna make you come through the hoops to get through the door so you can get paid. Now when we look at it in the struggles of getting paid, part of it is how do we communicate? Who are we doing our contracts with? And then what are we actually trying to get agreement on? Normally, trying to get agreement on scope. If we can knock down some of those big dominoes where we knock down some of the big objections that someone would have, we can move ourselves closer to getting paid. And so we make it so it’s easier to get paid, but it’s an emotionally draining. So your estimators get trained by the reviewer or by the consultants or or by a TPA of what they can and can’t do. And those rules that you apply to one job may not apply to another, but we may inherently go to be less resistance if I just do what I was told to do. And at the detriment of your business, you’re making bad financial choices. We also look at what is the emotional toll that this puts on on your your business. You’re in you’re dealing with customers that have the they have the contract with the insurance company. And what the insurance company is sold is a peace of mind contract. Basically says that if you have one of these losses or if you have anything other than these exclusions, you’re covered. And when we look at an insurance contract, they’re not all the same. But when we look at them as restorers, we look at them and say, well, if it says that you’re covered, then you’re you’re covered, and we should just do the work the same way. But all policies have different frameworks around them. They have different coverage degrees. Right? Like, if you bought a Chubb policy and you paid five grand, it’s probably gonna be different than if you bought another brand for a thousand dollars. Like, they’re not the same insurance policy on the same house. So you wouldn’t expect the same type of coverage. You pay for a premium insurance carrier so you get premium coverage. As a restorer, we don’t normally look at things like that. But at the end of the day, it doesn’t matter who you’re dealing with. You have reviewers, TPAs, consultants. All of them are there to protect the financial interest of the insurance company, but you’re the only one that’s actually delivering on that promise to get someone whole again. So out of all the people that they put in place, you’re the one that’s effectively doing the service, delivering that service, and making sure that it hits the customer. And so that’s why it’s important that we document everything that we’re doing to get our jobs to the end where we get paid. And your justification is I’m doing what the contract says to do in order to get to the end result. So that’s when we write an estimate or a scope, that’s the first thing we’re looking at is what does it take to get the customer back. Take out all the considerations from the insurance company, all the rules, take out all the insurance upgrades that they wanna do, and all we do is what is the scope to get the insured back to where they wanna be. That’s where we’re starting point. That’s our starting point. When I I’ll do that. When I looked at this, I I came into the industry back in two thousand five or six, and I started as an adjuster. And then after a little bit of time, I I I worked in the industry for a bit. I went in from an adjuster side. I went to become a, an adjuster. Sorry. Went from adjuster to work for a contractor on a national company, and then I worked for an individual office, and then I worked for a large corporation, and I ran one of the largest branches. I learned a lot about how to get offices profitable and all the the downward pressure. And what was interesting is while I was doing that, I was learning how to make money and how to be profitable in this industry. I was when I when I took this picture, it’s like fake it till you make it. I was at that time, I was Canada’s only independent Xactimate trainer, meaning I didn’t work for anybody else. I only worked for myself and then anyone that would hire. So, like, the hired gun that would come in and train companies. And so I got to work with insurance carriers and contractors and teach them Xactimate. And then it wasn’t the buttonology I was teaching. I was teaching the how to make money with it, so how to actually take the system and make money with it. And I did that, and I opened my consulting firm. And then I got to do some work with the the RCOC, which was the restoration contractors organization in Canada. The top banners like Belfor, First On-site, ServiceMaster, DKI, Paul Davis, Winmar. I’ll forget a couple here on-site. All of these big brands, First On-site, all these brands, all the CEOs are saying, hey. We have a lot of downward pricing pressure on us. Can you work with Deloitte? And between Deloitte and myself, can we come in and fix or understand where our our margins are are evaporating? And so for a while there, I was just focused on how do we generate profitability inside the systems that we’re using. And what most of it was Xactimate. And when I was brought in and we started working on that, we started to look at how does that change the way you write an estimate. And what we know is that the digital systems put confines around you that aren’t necessarily supposed to be locked in place. So when we talk about Xactimate, they start with a price list. And that price list, we know can be you could be higher or lower, but they just pick a median price. And that price, the insurance carrier look at that and go, that’s the price. Meanwhile, it’s actually picked from a higher and lower pool. And we need to understand that because when we started to look at profitability for for the entire, book of business in Canada, what we found is that those pricing numbers weren’t being adjusted fast enough or quick enough. Now they made changes, so the prices have got better, but it doesn’t mean that they actually are improved across the entire book of business or in every price list is right or that they’re getting accurate feedback. And so what we understand through that study is that when we did time and material invoicing, we made more money. When we were moving into unit pricing, there was financial pressures coming in that were were impacting price, and all of that became a major challenge. Now I did that from two thousand eleven. We did the study in two thousand thirteen. And then for the next two or three years, we were following that along and the prices came up and got adjusted. At the same time, we saw events happen like Fort McMurray where the Xactimate price list was basically thrown out, and then contractors came in and set their own prices when they were doing great material, and it was typically higher than Xactimate. And so there’s market conditions that will impact how you’re coming up with your price. I got to meet this gentleman, Ken Tucker, and he told me that if I wanted to understand an owner’s frustration, I should probably run a business. And I I come back to Ken because it was the best advice I ever got. So at the time, I was I was a consultant. Ken helped me get to the RCOC. He was the one that brought me in, but he’s like, hey. If you screw up, eighty percent of your customer base or potential customer base is gone. You’ll you’ll never do business with them again. And so don’t screw up this pricing study. But in two thousand eleven, he had given me some advice saying, hey. If you wanna understand how a restorer functions, it’s great you manage businesses, but you won’t know until you’re an owner. And so I had to go take the owner’s journey of becoming an owner, understanding what the ownership meant, understanding the sleeveless nights, laying in bed in bed at at wake at night looking and hoping that you got a check-in the morning because you can’t make payroll that afternoon. And so all of those pressures were impacting how you operate a business. And if I didn’t go through that, I wouldn’t have understood what it takes to run a restoration company. Even though I got to run some of the largest companies that that have ever existed, I got to run a forty million dollar branch in in a region, which is a unique experience because there’s not many businesses out there that are in that size. Having the understanding of what it took to be an owner totally changed my perspective on how we look at profit. And what was interesting is as we went through and looked at that profitability on a microscale, like, was only a three million dollar business, it provided me a lot of insight into what Ken was talking about, which is small changes in your business. You have to have factors that allow you to run the business like a proper organization. You have to put your house and your family’s future on the line. There’s a lot of pressure that comes with that. So I could took on a a partner, and I went into a business, and we had some pretty, interesting numbers. When we ran the business, the first year, they didn’t make any money. And then I came in, and we grew the business to about a fourteen percent net. The next year, we’d put an eighteen percent net in. And so my second year in the business, I had grown the business fairly well. Now based on the projection, we had sales that were coming in, and our sales should have gone up. Right? Our sales went up. Our profit should have been about twenty two percent. That’s what we were predicting. At the exact same time, I was doing that RCOC study, and I took my eye off the business. So I was helping my friend here get his business up and profitable. And instead of turning a profit, he got sick. I ended up having a loss, and that loss was incredibly devastating because I had been working with the entire Canadian restoration industry to how to make more money, and all of a sudden, we have a loss that took a place in our business. So you have that impostor syndrome that kicks in. The next year, we we turned a small profit, not very much, a couple percent. But I had retooled the entire business. I looked at how we did estimating across the board. Everything from the contract all the way to the invoice got redone. And what we did is in the following year, we end up turning more sales and more profit. And what happened is when you crank that profit around and you look at the business that way, everything revolved around estimating and systems and tech the technicals. Like, those are the three areas you can really make a difference in your profitability. So if you look at it, yeah, you can write a great number. If you don’t do the work properly, you’re not gonna be able to charge for it, and you’re not gonna be able to sustain it if you don’t know how you’re doing your work. So when we look at the business, we’re like, hey. What do we need to do? We got rid of one customer that didn’t make any sense for us to do business with. We they were forty percent of our revenue. We fired them and when replaced it with new revenue. So we put all these systems in place so we could drive profitability. So today, what we’re gonna do is we’re gonna talk about how are those systems, the technicals, and the estimating all connect together so that you can drive more profit into your business. And that’s the foundation for building a solid estimate. Now what was interesting is I got to come over to Encircle, and Paul Donald and I met back in two thousand fifteen through Ken Tucker. And Ken said, hey. You gotta meet these guys. And I got to come to Encircle and build some technology with them, and we’re still in a really good relationship. I left them last year to do this, to become the profitable restore group and and to put that in play. But what’s awesome is that the technology that Encircle brought in to the industry was focusing on the field where we make and lose our money. And so now we’re combining that technical technology into the field with technicals from the industry and putting it together with the estimating. All of a sudden, you can tell a really compelling story that justifies your invoices. If you went through your business and you’re like, man, I’ve taken training and I still **** or I struggle, it’s not your fault. Most of the training you got was buttonology training. How to hit one button to one section to make something work in a computer program. The foundation for estimating comes from not from, like, which button do I choose or which price is right on the on the price list. Those are that’s the minutiae you need to understand to make an an estimate roll out. That’s not what makes it your profit. You need to know your cost before you ever put a number out. If you just grab line items and let’s say you put twenty line items in and equals ten grand, what’s your cost? If you don’t know your cost, you can’t figure out your profitability. So when I took the training originally, I had all my estimators go to Calgary, and we went on a ten hour journey, ten hours from home, took our estimating, and I was like, hey. When did we learn how to make profit? And they’re like, oh, you don’t. You learn how to make the program work today. You’re not gonna learn how to make profit. And I’m like, well, I called, and I need to know how to make profitability. I’m in charge of getting more profits into our business. So, like, no. You have to figure that out on your own. So that led me down this long journey of understanding how the systems were built, how they’re designed, and what you need to know in order to make profit. What’s interesting is that what you’re taught in the industry isn’t what you’re you need to know. They just teach it to you the way that you need to understand it to make the buttons work. That’s not how you properly estimate. So what we’re gonna do today is I’m gonna ask you guys some questions just get an understanding of who’s on the call so I can make sure this conversation’s relevant. We’re gonna talk about what we’re gonna be doing for the rest of the call on estimating. But for the first one, we have a poll that’s gonna pop up, and it’s what is your role? So who’s on the call? We may have some adjusters. You might be a part of a management team, a technician, project manager, estimator. You might be an adjuster or an insurance professional. And if you’re in a watch party, like, there’s ten or fifteen in the sometimes that happens as well. It looks good. We got some adjusters on, which is great because this is a good conversation for for them to be a part of. Alright. So most of the people that I’m seeing are in are part of the management team, a few technicians. Awesome. We got some technicians in. Lots of project managers, estimators, a few adjusters, and then a few people doing watch parties, which I always find is cool. So we’ve got I’m gonna say ninety percent. I guess it’s ninety six percent is restoration companies or restoration professionals, and we got four percent that are adjusters and insurance. So I was in insurance, but never long enough to say I was a professional. I did about a year and a half of adjusting, and I did some fraud investigation. And then later on in my career, I did another close to a year of independent adjusting and got to work with some cool companies that were going through some mergers and acquisitions. That information helped me build the basis for what we did on the restoration side. The goal is, if you do it right, is to increase the profits of a restoration company while decreasing the cost to the insurance company. So what can we do on the cleaning and restoration side that can lower our our cost to the insurance partner while increasing the amount of money we make? It’s a win win if you can do it. So that’s what we’re looking at today. Now the next question we have is in here, it’s what is the most profitable estimating method? And what do you think is the most most profitable estimating method that’s there? It’s unit pricing, bid pricing, cost plus t and m, select all. I don’t know. Right? What’s the most profitable one? Lots of inputs coming in. By the way, I love that you guys are participating. Like, there’s already two hundred and forty answers, two fifty, two sixty, Only because he told us it was T and M. I love it. So we’ve got a ton of answers coming in. Now here’s what’s interesting. You’ve got some differences on on the, the pricing that’s coming in. Let’s see. We’re still got some answers coming in. Give it another second or two. Alright. So so we’re sitting on there we go. We’re sitting on twenty two percent. So the unit pricing is the most profitable, ten percent said bid, eleven says cost plus, and forty percent said t and m, and a bunch of I don’t know or select all. Now here’s the interesting part about that is if we look at our price, the only one that should they should all be the same. It’s shocking, but if you were to think about it, they should all be the same. And we’ll go into the details of how we get to that same price. The reason that we changed the different systems is because we don’t know what we don’t know when we’re writing the estimate. Right? If I don’t know what I’m if I don’t know my efficiencies, then I can’t predict it. And so we’re gonna get into that, but this is great that we see a big smattering of of which one’s more profitable. The reason t and m pops up as more profitable is that you can lock your margin in. And if you’re more efficient, the insurance carrier wins. If you’re less efficient, the insurance carrier loses, but only because the job was less efficient. It means the contractor wins along the line. There’s no there’s no penalty for the job being slow because it’s a bad job. That’s why you would see T and M as being more profitable even though it might have a lower margin. You’re you you lock your margins in. So we’re gonna get into that today, which will explain how all that works because the misnomer is unit pricing is really good for contractors or is really good for insurance companies, and it really depends. But this is a great conversation. Alright. Next poll. The next poll we have is how profitable is your restoration business. Now if you’re an owner or manager, you can answer this. If you’re PM or an adjuster, don’t. I just want owners on this one. And what the misnomer is is that we got a bunch of response coming in. Now this is net profit. So this is how profitable were you last year. And what the industry if you’re not an owner, what the industries respond to is normally, oh, these guys are, like, making so much money. And that’s the misnomer of the industry. What we typically found is in the last, eight years that I’ve been doing this is we found that somewhere between five and seven percent is about where most people were sitting as an average. In this one, it looks like if we wanna share those results, we got about a hundred and seventy in, hundred and eighty in. So in this one, it looks like we’re somewhere about fifty percent of the industry on this call are doing actually pretty good. We’ve got fifty percent that are over ten percent. So over ten percent in this industry because we’re a mitigation response is considered making money. Everyone below that, which is the other fifty percent, is is technically losing money. Now what’s interesting is we’ve got I feel like it *****. So I hey. Appreciate the honesty. We lost money last year. That’s that happens. Then we got we broke even. So that’s sixteen percent that are on the verge of, like, being on the wrong side of the business. And then another thirty four percent are less than ten, which is considered not making money. So what’s interesting is we got fifty percent that are on the low end, and we got fifty percent that had a good year. Now it depends on your product mix, whether you’re doing reconstruction or mitigation. It depends on how like, size of the jobs you’re doing, and it depends on your customer. There’s a whole bunch of factors that come in to impacting this, but I appreciate those that shared the truth. It took me a lot of years to find out that I wasn’t the only one that sucked. Honestly, it was two thousand fifteen. I was at an event, and I said I actually had a bad year. Everyone else told me how many trucks they bought, how big they were. I never ever up until that point heard someone say, oh, yeah. We lost money last year. So that’s why I pushed the the information around there. So let’s get into the types of estimating systems that are there. Now there’s five systems that we can run through. Right? We got rate material, and that’s the foundation for everything that you do. It’s sort of how you would plan your day. If you were to look at rate material and say, I’m gonna go to to the store, and I wanna figure out my time it takes to get to the store. Well, it’s like, okay. Well, normally, takes fifteen minutes to get to the store. I’m gonna spend a hundred dollars on groceries when I’m there, and then it’ll take me fifteen minutes to come home. I’m gonna be in the store for thirty minutes. That’s one hour, a hundred dollars. That’s the time and material. If you were to break it down on unit pricing, you would say, well, per mile that I drive, it’s gonna be this much time. I’m gonna spend this much per item, right, per loaf of bread, per, block of cheese. I’m gonna spend this much, and it’s gonna come up to a hundred. So you have the the rate material as your basis for your unit pricing. Now if you find a unit that you’re more efficient on, you get a sale on it, your price comes down. And so you’re like, oh, we saved money here. But if the price went up on something because they didn’t have the brand you want, the brand you wanted, it was all sold out, you have to buy the premium brand, price goes up. Your budget still has to be the same, or you have to increase your budget. So that’s how time and materials work is rate material says, hey. We’re gonna spend whatever we need to spend, and we have a budget on what we think it’d be for time. Everyone does rate materials when you do a calculation. That’s the basis for everything. Now when we get into unit pricing, unit pricing has written or known foundations on it. So when we look at unit pricing like exact, if we were to say that we were gonna do one square foot of carpet cleaning, it makes a bunch of assumptions. It says to do one square foot of carpet cleaning, we need the portable extractor. We need some chemical. We need some labor, and we assume this much time for this square foot. And if we extrapolate that to a hundred, it says that for you to do a hundred square feet, it takes all of this calculation to do it, and it takes one hour to do a hundred square feet. Now if we understood that, then it’s like, well, how much time should it take to do a thousand square feet? And they’ll say, hey. To do a thousand square feet is ten hours. And so it just becomes a different way of estimating. When we bid it, bid pricing, we’re doing the same thing. We’re coming up with a rate material and a bid pry and a unit price. We’re like, okay. We got all these units to do. Now we have to come up to this big number. And we gotta come up with this big number, and it has to be all the inefficiencies, all the things we forgot to include, our profit and a fudge factor. And then when you come up with a bid, normally, it’s like, I think it’s eighty. And then we wanna make ten, so that’s, like, eight grand. And then there’s probably some stuff we forgot, so let’s put a hundred thousand dollar bid in. And if you know you’re in a competitive market, then you’re gonna be like, hey. I gotta get closer to ninety. Right? I’ll try to get that eighty eight thousand is is where we need to be. I’m gonna go ninety and hope I win. So bid pricing starts to allow you that fudge factor for all the things you accounted for, and then it’s either you you drive the efficiency in or you add a fudge factor on top. And that’s how we do bids. And and based on your experience, you figure out whether you’re good at bidding or not. Then we look at cost plus. Cost plus is where we start to to value items and say, we’ll work on a fixed margin on top of the cost of the materials. Normally, it’s on longer term projects, so we’ll get into that. But cost plus and rate material are very similar. Value pricing is where we put a value on. It’s perceived or real. And value pricing could be where you sell your warranty. You sell your brand, and and you attach your brand and your warranty to the value of your service. So if you were to do carpet cleaning and you guaranteed and let’s say you scotch guarded the carpet, and you guaranteed it for three months or six months that no stains would would arrive on that carpet. All of a sudden, you have a stain free warranty for six months as long as they clean the carpets in six months and reapply it. That’s how you increase your price. You’re like, hey. I give you a higher price per square foot, but I also guarantee that you won’t need to call us back for stains because I put a special, you know, stain guard on there. And so I scotch guarded your carpet. You don’t have any stains on there. Therefore, if there is a stain, we’ll come back and do it for free. But you’re gonna pay us for the carpet cleaning a premium every time we come in and do your carpets. So we wanna raise that price. That’s value pricing. Now if we look at it from degree of difficulty, the degree of difficulty that we’re looking at is where things are are switched around. When we look at the degree of difficulty, cost plus is actually the easiest way for us to do things. Cost plus is where we say to the insurance company, we’re gonna do the work. And as long as our costs are covered, we’ll make fixed margins on top. Then we look at rate material. Rate material is is we set our prices. As long as we review our price list, we should make our margins. Value pricing is is easy to do, but you have to sell it, so it’s a little bit harder in that regard. Bid pricing, you’re pulling numbers out of the air if you haven’t had a good foundation on creating a bid. And the hardest pricing that you can do is unit pricing. There’s three reasons why it’s really hard. Unit pricing, you’re playing with somebody else’s systems that limit the amount of factors you can factor in. So if you were an adjuster, if you for the adjusters on here, if you go out and you write a scope of work, but you don’t know how the scope of work is gonna get done, you can’t effectively come up with a good price if you don’t know the orders of operation. So how the job is gonna get executed? And the way we could look at that is if we were looking at an empty house versus a a home with an occupant, what is the difference? We could say, well, we’re gonna paint the walls, and we’re gonna put new drywall in, paint the walls, but it’s the steps that go into it that makes the price different. And if you’re not familiar with it and you haven’t considered it, you’re gonna end up with two different prices. So we’ll talk about that in a little bit when we get into unit pricing. Now in here when we get to cost plus, cost plus is usually on larger projects. So if a project’s gonna last more than three to four months and you’ve got a lot of volatility in the market, you’re gonna then come in and look at cost plus. Now, typically, those are your large multifamily residential jobs. So if you have a large fire, then you would look at cost plus where the price of of, plywood, framing materials, electrical will go up and down in big levels between those times. In larger projects, you would say, hey. Maybe we should do cost plus on materials because then everyone knows that whatever the price is at the time that we go to install it, eight, nine, ten months later, that’s the price you pay. So the insurance company benefits from the price going down or the, insurance company loses with the price going up, but that’s just the real cost of doing business. And so those prices are effectively put in and agreed to that based on a a markup scale or a margin scale. And so what happens is if you’re doing that, you’ve got index inflation, you got cost of goods sold. So let’s say with the tariffs that just came in place on the fifty first state, we have a tariff war. Prices all of a sudden escalate on some items over others. If I did a job and I needed materials from Canada, and all of a sudden those materials go up in price, a cost plus job would account for that, and then you put your markup on top, and your profits are protected. If the price drops all of a sudden, tariffs come off and the price, like, drops from when you bid it, then you still get the margin, but the insurance company would then not pay the the tariff price. They pay the actual price. And so cost plus makes a lot of sense in those cases where you have that fluctuation of pricing and everyone knows that that’s just being accounted for. Typically, it’s large projects or projects where you’ve got a long timeline on it where between the time you start and time you finish. Could also be where you have really complex systems. Maybe it’s computer systems or you’re getting into, like, military institutional. You might do a cost plus contract in those situations because it just makes more sense that I’m just gonna get my margins figured out, and then we’ll you’ll just pay whatever the invoice is plus my my cost and my markup. If we look at rate material, rate material is where we provide a price list. So I’ve come back and said, okay. Everything on the job from equipment to labor, I’m gonna have as a price that we’re gonna negotiate at the front, but I don’t negotiate time. I I I don’t know how long it’s gonna take. So if we were to look at a fire job, let’s say a fire job on we have two different fires, and this is good for the adjusters on here. What is the time difference that it takes to to clean a dry fire versus a wet fire? So a smoldering fire or a fire with synthetics versus a natural fire or a hot fire, what’s the time difference does it take to clean? And you guys put that in the comments. We’ll we’ll take a look at it. How much more time does it take to clean a synthetic fire over a dry fire? Anyone have an idea? Because, yeah, four times, thirty five percent. No. It’s it’s closer to four hundred percent. Minimum, four four four hundred percent. So if I was to look at my my price and if I was to walk into a fire and I looked at a fire and I said, I’ve got a dry fire and the unit price I don’t know what the unit price and exact to me is based on. Is it based on a dry fire or or synthetic fire? What type of soot am I dealing with? Well, I don’t know because the system doesn’t say it because they didn’t build it that way because they didn’t account for it. They just were like, well, it’s heavy cleaning. Heavy cleaning of what? Dry or heavy cleaning of of what? So I don’t know what the unit price is gonna come out with. So if I don’t know how that’s been built, and I don’t know the confidence on the person building it, right, I don’t know their skill level. I don’t know what they know. Well, I don’t even know if the line item is right. So if I don’t know the line item is right, I would go to a material a rate and material budget and say, hey. Here’s the price. You’re gonna pay me seventy five dollars an hour for us to do the work, and it’s gonna take whatever time it takes to clean. And you can get that difference of four times the price because it’s it’s a wet fire. That and it what it is is is that soot or that char takes so much longer to clean. Right? It’s a deeper clean, whereas a dry ash, you could just vacuum it up and then give it a light wipe. A a sticky or synthetic fire will have a a wet soot. You could vacuum it up, but you’re gonna have to do a lot more cleaning on it, and you’re gonna get a lot more of that penetrating the surface. So when we look at this, we say, hey. If we’re gonna use rate material, then I’m gonna use it when I don’t know my efficiencies, but we agree the work needs to get done. And so we’re gonna do it, but we just don’t know how long it takes. That’s when I would switch over to rate and material. Because if I’m using unit pricing, it says, I know how long it’s gonna take, and I know what every factor that’s considered in a unit to make up the price. If you don’t know, you don’t use unit pricing. So that’s where unit pricing is better, not perfect, but better on reconstruction and not very good on mitigation. If we were to look at it this way, this is the other way I would look at it, is rate material on the bottom is your foundation. Once I know how much something costs, like, if we were looking at carpet repair so if I looked at carpet repair and, let’s say I have a carpet stain. Stains this big. It’s on a five thousand square foot carpet. Carpet’s immaculate, but it’s got a bleach stain like this. But that carpet would cost ten or or fifteen thousand dollars to to to replace. How much would a would the customer be willing to spend on a bleach stain? A thousand dollars? Now if I was going to an insurance company, they say, well, that’s just one stain. We’ll pay a minimum three hundred dollars. Okay. That’s one way of pricing it. A value price is, hey, missus Jones, if you don’t have to spend fifteen grand on the carpet and I can fix it for a thousand and give you a warranty that it’ll never fade, will will you pay that? And you have to sell that up. But if I did that, I could sell that carpet stain that the insurance company says is worth three hundred dollars. I could sell it for a thousand or two thousand dollars based on value pricing. What I need to know on both of them is how long does it take? So what is my time and my material? Time is an hour. Material is, let’s say, four dollars for the material, and then twenty five dollars for the equipment rental. Let’s say, all in, hundred bucks. If I charge the insurance company three fifty, I make good margin there. But if I can value price it to fit thousand dollars, fifteen hundred dollars, I make all that additional profit because I can sell extra value to it. I still need to understand the time and material to understand if I can do it. And so that’s what the basis is. Now when you get to bid pricing, you’re like, well, who am I bidding against? Because who you bid against will determine your price. If you’re bidding against the the budget, you know your costs, and then you’re like, okay. I I got an adjuster who is really administratively tedious. They don’t make things easy. I’m gonna add in time for that. The customer’s a pain. I’m gonna add in time for dealing with them, and I come up to this budget. If I get a green project manager, their number might be way low. It’d be like, that’s not a job I wanna win if the adjuster is looking for the lowest price. If the adjuster is looking for the job to be done right with the right quality, then I’m gonna put my price here. And if I got two other quality companies, we should all come in around the same price. And you’ll see that price discrepancy in bids. Right? You’ll see that up and down in the bid price. The last one is unit pricing, and that’s the one that’s most difficult because you have to understand everything. It’s crazy as an industry that we go in and we ask the newest people to use the most complicated estimating system that’s out there, but that’s the industry it is right now. And so a lot of your questions are on Xactimate. We’re based on how do I make this Xactimate work. It’s the hardest system to work. You need to understand the rest of it in order to make that work, and that’s why I focus on this boot camp to be about that. When we look at material, labor, and accommodations and meals, when you go rate material and you’re you’re negotiating these contracts, your negotiation of those contracts are effectively you’re setting your prices. You know what your material costs are, and you put a markup or margin in there of what you need to make in order to make it profitable. And you do that on every piece of this. So you actually create a a price list that comes in and says, here’s what we’re gonna do. And whenever we deal with sub trades or vendors, here’s the margin we’re gonna put on top of that. And what’s interesting about this is we know the type of labor. So if it’s my like, when we do rate material, my contents and cleaning technicians are the same price as my water technicians, which are the same price as my fire technicians. It’s a technician rate. If you look at Xactimate, there’s, like, five different rates for different people. But when we do rate material and commercial, they’re all the same rate. Like, a cleaner and restore and it has they’re all the same. And then if we’re doing this best, it’s it’s a different price. But all of our labor pools are the same, but in exact to me, it’s different. So what we do is we look at what is the type of labor and how much are we gonna charge for it. What is the type of material and how much are we gonna charge for it? That rate is your price. It’s not your cost. It’s your price. So then you figure out, like, a sheet of plywood or a sheet of drywall. Let’s say a sheet of drywall, you pay seven dollars or eight dollars for one sheet. What is the charge that you’re putting on there? Is it twelve dollars a sheet? And that includes your handling from the store to the to the site. Is it sixteen dollars a sheet? And that includes everything, or is it is it twelve dollars and all the labor to go pick it up is is now part of the the labor component of it? When you do rate and material, typically, it’s that sheet is this, and then the labor to go pick it up is billed as time. So you factor in your your your pricing scheme of how you did you come up with your price? How did you come up with your price? What is the mechanics of it? And how much strategy do you have behind that? Because then you’re gonna have to negotiate this. When we look at that, we go, well, what type of material are we doing, and what’s the quality of it? Because quality was gonna dictate price. Where are sizes? How like, is it a four inch baseboard, six inch baseboard? Is it a large air scrubber, small air scrubber? Right? How many do we have on-site? And then what do we do with the downtime? So if I have to bring equipment into a job site, it can’t all be deployed at the same time, but it has to sit on-site. Is there is there a a half rate for equipment sitting on-site that’s not used? Is it full rate? Is it because once we bring it here, it’s losing revenue somewhere else, but you’re gonna need it. We just need to do work to get it there, but we need to secure the equipment or it’s gone. You have to have all these considerations. Are you in a cat or you’re just in a regular business as usual? All of these are what you’re gonna negotiate in your rate material. Now why we use rate material? It’d be usually because there’s high project complexity. So things that you don’t know, multistory family, multifamily residential, commercial, industrial, almost all the time, I’m gonna use rate material. You have unpredictable project costs. So you haven’t gone in and done all your testing. Like, I wonder how long it takes to clean a square foot of wall because I wanna compare it to my unit price. So once you figure out, hey. What what does one square foot take to clean? You could then multiply that by the number of square feet in the building and figure it out. That’s part of a good project manager job if you’re estimating, whether you’re doing rate material, unit pricing, you should know what your production rate is on your cleaning. Like, hey. This this actually takes a lot longer for us to clean because you have to set budgets for the adjuster. And it doesn’t mean that because you’re doing rate material, the adjuster doesn’t get a budget. It just means it’s a it’s a flexible budget. It’s a rough order of magnitude. Does that make sense? So when we look at that, the client normally lacks trust as well. They’re like, I don’t trust your numbers. So you’re like, well, this is the way we build our number out is we did a sample clean. We wipe the walls the way we’re gonna clean it. We realize it’s a four or five wipe sample. That’s the process to clean the walls. It might change in the lighter areas. This is the amount of time we think it’s gonna take. And then whatever time it takes or whatever materials we burn up, we’re gonna just charge you what you have. And you could put a clerk in the works on, and they can watch us charge as we go. It’s it’s a fair way of doing business. On long projects, on complex projects, this is the best way to to do your project. Then you got mitigation emergencies where you lack decision making information. So I don’t know what’s behind the wall. I don’t know how to price it because I don’t know if we have metal crack with water in the bottom that we have to, you know, the bottoms and then vacuum it out. Can we just dry it with like, taking baseboard off and drying it? All of a sudden, you have all this unknown information. Great material makes sense for that, especially if you can’t control the site. And then if you got poorly defined scope where you see on projects where they say, hey. Remove and replace drywall as necessary. For an adjuster, it’s it’s pretty hard. If I see that scope, I don’t know, like, what is remove and replace as necessary, and you come in and the entire room has been gutted. And you’re like, well, shouldn’t have been the two foot or four foot cut, and all of sudden, everything from ceiling to floor is gone. That’s the information that you have to have is great materials good for that, but you should still have a better defined scope with asterisk. Like, hey. We’re we’re scoping that we’re gonna take the drywall and insulation out, but we don’t think there’s insulation on the inside walls. If there is, it’s gonna increase our time. Like, that’s how you would communicate that for rate material if you’re doing a project like that. When we look at value pricing, value pricing is hard to do in the insurance market. It it because it requires the consumer or the client to make a decision to pay more for a service, and insurance companies generally pay a very unit price minded mindset. But a value price, if you were to look at it, if I wanna get coffee and I go to a a high end coffee store, Starbucks, what am I getting there? Well, I’m getting peace of mind. I get the same coffee every time. I know what I’m getting. So right there, you got that chain consistency. I get an environment that I can sit at. Is it status? Maybe it was status in the past. Maybe it’s not now. But you had status that, hey. I have a Starbucks coffee. It’s not McDonald’s, but it’s still coffee. Now what’s the atmosphere that you get in there? Well, if you go into the shop and you sit there and you’re working from there, you get the environment, which is no kids running around or or used to have no kids running around in a Starbucks, but it was a a business like environment that you could meet, talk, relax, enjoy a coffee, and you pay a premium for that experience. But if you want a coffee and you’re looking at, well, who’s who’s the cheapest, you could go McDonald’s. So if you were to take this back to an insurance mindset, when you get the same coffee, it’s still a dark roast coffee versus another dark roast coffee, we’re just gonna pay less at McDonald’s. Why? You get rid of that personal service at Starbucks. Take all that value. I don’t want the value. I just need a coffee for a coffee. And even then, they’d be like, why are we even paying McDonald’s coffee? Why don’t you just, like, make it yourself? So there’s less cost in there, and there’s a quality. Value pricing is always with perceived or real value that you have to add to it. Problem is when someone else is paying, they’re just looking at the end result. And the end result is you get dark roast coffee, whether it’s Starbucks or McDonald’s. Is it coffee? Is it similar? Does it taste the same? That’s where you start to look at it, and you go value pricing is hard to sell to an insurance company because they’re looking at it as a commodity. And so when you are a restorer and you’re selling an upgrade to a customer, you can put more value and more margin into your upgrades because you’re selling the value of an upgraded kitchen. So you can make more margin on that upsell value when you do value pricing. Hey. We’ll sell you the the the solid surface counters. You got an insurance credit for the laminate, but we’re gonna sell you the solid surface counter, and we’re gonna charge more for it. And we’ll warranty that for five years, and you’re gonna pay x. And that’s how you can increase your sale using value. When we look at this, guys, we have perceived and real value. So perceived values is things like warranty, your brand. Real value is, did you go from a laminate to a solid surface? That’s the real value. The perceived value is where you get a lot of extra value that you can charge for that you don’t actually have to incur cost on. So that’s things like warranty, putting your brand on it. I’m a big proponent of, like, I if I’m part of a franchise, I’m gonna put my brand on. If I’m an independent, I’m gonna create that brand image around my brand that this is a prestige brand. And the value perceived value is we’ve been in business thirty years. We’re independently owned. We’re Canadian owned or we’re American owned. I’m gonna put whatever value that is gonna help increase my my salability of my sale. And what it is is, does the customer feel good about spending this money with you? So when we’re talking about doing the carpet repair, literally, I said it a hundred times. I took carpet color repair and carpet repair moment, last two courses on my iCRC journey. And I was like, oh my god. I I missed so much money inside these jobs that I could’ve been selling because there were so many carpets that had rolls, and there was just a stretch stretch the carpet out. And people were replacing the carpets because they were installed incorrectly. I’ll charge you a thousand dollars to put a power stretcher down and and stretch it out, and it maybe cost me a couple hours. That’s high ROI for the time we invest in our business. Why? I can put a warranty on that. Be like, yeah. Your carpet’s good for five years, so we’ll never roll. If it does, we’ll come back, and we’ll do it again. Why? I charged you a thousand dollars for something that cost me a hundred dollars. If I have to come back, it’ll cost me another hundred dollars. I still made eight. And so I love value pricing with the customer. It’s really hard to do in restoration. We do it in restoration. We will look at restoration. The reason why it’s hard to do is, let’s say, P and M, you lock your margin. Right? So you’ve got a a cost in here. We got our overheads. We got our cost of goods sold, and then we’ve got our profit. And for us to do a T and M job, we can say, hey. We can make thirty percent profit on something if we do it in in T and M. We lock it in. On unit price, we have to put more in there because why? Well, that unit might not materialize to be as efficient, and we could lose money. So you have to make your unit price include for the inefficiencies. Every job is different. The unit price has to account for the difficult jobs. If I go into bid pricing, I would say, hey. You know what? I still have my overheads. I still have my cost of goods. I’m gonna be able to put a little fudge factor in there because if I’m wrong, I need the if my cost of goods cost of goods sold goes up, I need to account for that increase in that cost. So bid pricing, put a fudge factor in probably because we don’t scope as well, so you have to put that in. Value pricing value pricing is what I can sell it to you for. And so where do you sold value pricing every day? Well, do you buy Apple phone or Samsung or Nokia or what other brands are out there? Your your technology is mostly value pricing. It doesn’t cost them more to do it. Shoes is another one. Like Nike shoes. Could you get a fifteen dollar pair of import shoes? Yeah. Why do you pay a hundred? Because of the brand. The value that you perceive is that they’re gonna back it with a good quality shoe that they’re engineered for sports. Okay. Is that true? Maybe. Is there a lot of marketing to it? Yeah. There is. And so value pricing is the shoe. They sold you the value. You identify with a brand, and any brand that you identify with has value pricing built into it. Really hard to do it in restoration because the insurance company is paying for it, And so they’re not the end consumer. Hannah, don’t know if we got any questions that we can jump to here before we get to a break here. We do have some questions. I think what maybe, first come, first survey, probably the best way to do it because we’ve had a few sitting in there for a while. I’ll start with this anonymous one. It’s kinda long. This person says, one question I’ve had recently is, as the person to take care of the homeowner and make them whole, where am I fitting in with the adjuster? I need to tear out the floor, should I tell the adjuster that? Wait for them to look at the property, do the work, and hope that they agree that it was needed, and I’ll get paid, leave drying equipment on the floor for fifteen days until the adjuster arrives, and then remove the floor, then deal with the pushback that I, that I should have pulled equipment sooner if I knew the floor wasn’t going to dry. So so so there’s a couple questions there. Is if if I’m if it’s a category two or three, I could stabilize as long as I need to knowing that there’ll be mold. And so it comes down to communication. And I’m sympathetic to the adjusters, but I I’m I’m hard on them at the same time. So so we have a few on here, but their job is to identify coverage. And the faster they identify coverage, the faster we can we can get moving. If they get inundated with a lot of work and they can’t get to the job, but you wanna move ahead with it, your job is to go and document it and then put a plan in place saying, here’s what we need to do and fired off to the adjuster as soon as possible. They give them two options. The option is we stabilize till you come and inspect it, or I move forward with it with the information I’ve given you. I move forward with it, and you approve that this is the game plan going forward. And your your whole focus should be, did you help save them money? Do you help reduce liability? And did you help them identify if the cause of loss? Like, if I’m an adjuster and I can’t get to the job site right away, make it easy for me. Right? Give me the information so I can make a a educated decision other than, hey. You know, you were here for fifteen days and you didn’t do anything, and I didn’t get here for a few days. And all of a sudden, we’re in now a conflict where I’ve got a ten thousand dollar bill that I can’t justify. Give them the chance to justify it first. Now if they don’t communicate with you, that’s on them. But if you’ve given them the information that says, here was the loss. It was a broken clean water pipe. It sat for a day before it was called in. We can go in and and attempt to dry it right now. We can stabilize it till you come. How do you wanna proceed? Let them be part of the conversation. That’s their job is to spend the money of the insurance companies appropriately. Give them the best avenue and be like, hey. I recommend we go ahead with this, this, this, and this so that at the end of ten days, like, if you dried for fifteen days and you didn’t actually dry anything and you had to pull the floor out anyway okay. If your equipment is on the shelf, then you have a negotiation piece. But if your equipment’s flat out, you’re in a cat, you’re busy, why are you putting yourself at that risk? You know what I mean? So it would become one of those things. And if there’s adjusters on here, if you if you wanna if you disagree or agree. But I always wanna give the adjuster, like, if I’m the professional that they’re coming to, here’s the solutions that I’m putting in play. Here’s what you need to do in order to react to it. Like, you have option a, option b. Option a is cheaper, but we gotta get moving. Option b, if you don’t respond, I’m gonna go with option b. And then I’m gonna follow-up as, like, two, three times because if I ever end up in court, I wanna be able to say, I did everything I was supposed to do to move this job along. I stopped at this point. I told them, if you don’t respond, I’m gonna go on b. If you respond, I’m gonna go with a. And so let them adjust. And if they don’t adjust, that’s on them. But at the end of the day, be a solution provider. Don’t don’t be there and be like, hey. What do you want me to do? May not be trained in your craft. Like, don’t assume that they know water damage like you do. You’re the professional. That’s why you’re in the business. Provide recommendations and then provide your options and let them make a call and give them a rough order of magnitude. Hey. If I get started today, it’s five, seven days of drying. You’re gonna be somewhere, like, fifteen grand. If you don’t do that, you’re gonna be, like, twenty eight thousand dollars and and a lot more demo. How do you wanna proceed? Like, that is a compelling argument for an adjuster who has, you know, thirty files hit their desk in the same time you hit you had thirty files at your desk. To help them make decisions. That’s a good word. Seeing lots of in the comments. Here’s a good question from Patrick. He says, what did you do to increase the sales, marketing, etcetera? We didn’t increase the so you know what? We did we went hard, and it was probably back when I was talking about we fired our client. We went in and and increased it. We lost forty percent of our revenue, and we replaced it with higher margins. We went to better insurance companies, and we went to property managers, customers that we owned, and we had the relationship with. So we went to property managers that had more doors, and we got a little bit know in Canada, like, eighty, ninety percent of our work was was we call it program work, but it was, like, insurance company direct. No TPAs. But we had one insurance carrier that changed their philosophy on us. So they changed from being a a good company to work with to a a bad company to work within our area. And so we fired them, and we strictly focused on building our business on new, higher quality insurance company work. But we did fire department work. We were working directly with fire department. So we went and just said, hey. Let’s get rid of something that bogged us down and brought our business down, and then let’s focus on revenue that we could estimate the way we wanted so we could use more T and M. And we just we just went in and went hard on who did we wanna do business with. Instead of trying to do business with everybody, we went and did business just with those that we really wanted to. Awesome. Thanks, Chris. We have a question here from Brett. He says, do you charge for tech hours? I’ve been told that we can’t do that and lost a decent amount of money on jobs because of this. So it depends. So that’s a depends question. Are you in a program where you’ve signed a contract or not? Tech hours have to be charged for equipment inspections and other things. If you’re it it’d be hard to charge for tech hours if you’re doing extraction and using the line item, and then you charge tech hours for extraction or setting up extraction equipment. It’s it’s built into the line item. So it depends on what system you use. If you just treat time and material, then you would charge for the the tech hours and the equipment rental. If you’re using unit pricing, you have to charge for tech hours because it’s not included in your equipment monitoring. So it it kinda depends on your system. But yeah. Tell you what, let’s keep going forward, and then we’ll we’ll come back. We’ve got q and a coming up here. I just needed a quick break for for being able to rest the voice. Let’s keep going. And then what we’ll do is we’ll get through this, and we’ll get to the, the first break, and then we’ll keep moving. So when we look at it, the other side is when is value pricing gouging? Because I told you that we could charge more for the work we’re doing. So if I you have to ask, like, what is a price gouge? So if I’m an adjuster and I’m used to paying a hundred dollars for an item, let’s just say say, hundred and fifty dollars for a dehumidifier, and this is actually a real case that I had, is price gouging is is is price sensitivity. That’s what we’re talking about. So when someone’s used to paying a dollar for a Coke or a dollar for a Pepsi, are you price gouging when you go to the gas station, they charge you three dollars for the same can? Or you go to the sporting event, they charge you seven dollars for the for the exact same thing. What’s price gouging? Price gouging is is you’re you’re allowed to set your price inside a market however you want. There’s essential services where essential goods and services that are required by law to not have price gouging. But what is price gouging? So I had an interesting case that I had to work on years ago, which was a church. And this church had where they brought in a restoration company. Now this isn’t the actual church, but they brought in a restoration company. And I was working for an independent adjusting firm, and the manager came in and said, hey, Chris. You gotta be able to look at this. These guys are charging crazy rates. And I’m like, okay. So they were charging twenty five percent more for their air air movers. So if an air mover was thirty dollars, they were charging forty. But they were charging, like, a hundred percent more on their labor. So if it was fifty dollars at the time, they were charging a hundred dollars for their labor. And they’re like, this is, you know, absolutely crazy. This is out of the line. And I went through and I looked at it, I looked at their contract, and their contract has said all these these are our normal rates. This is our rate schedule. And the price was twenty five to fifty percent higher than the market. And so when you look at it, a job that was ten grand was coming in around seventeen five for for the same work, if you’re just putting them in perspective. And so when we looked at it and hit the desk, I looked at it and said, well, this is their normal rate schedule. And they’re like, yeah. But has this number, and these guys are way above that. So this is price gouging. It’s like, well, no. They set a premium price. They literally catered to the church market. And so what they understood is they understood that they need to get in there, save as much material as they could, get the church up and running for Easter. And then if they could get the church up and running for Easter, the church did really well financially. It’s a business transaction that at religious holidays, there’s more money to come in. So they got the building up and running, and then they did the rest of the restoration after after Easter. They charge a premium for that because they understood how the church works. Whereas a normal restorer comes and just treats it like, well, we’re gonna put our equipment in. We’re not gonna work overtime. Here, they were like, hey. We’ll get you back up and open for for Thursday. Perfect. And that push is why they charge more. Is that price gouging? The value. The the the priest at the church or the church organization saw value in it. They signed the contract. They agreed to the value. When we got down the insurance company side, the justification for that was it allowed them to have less business interruption. Problem is that wasn’t the insurance company’s concern because there was no business interruption insurance, but it was a factor into why the price was higher. So when you look at it, you’re like, okay. That’s is that price gouging? I could’ve got it for less. But would you have got the same service? Would you have got the twenty four hour response to get the building open as fast if you weren’t getting paid that premium? And it’s a fair argument. In that case, I went back and recommended payment because they did what they were supposed to do. They executed it. They followed the standard. They did a really good job. But was it price gouging? And the answer is no. When you value price, your price could be is is detached from your cost. So there is no way to go back and say, well, I should have got it for this. No. Because you gave them a price. And the way that they did this at the church is they did a rate material, but they had a value price built into it. As they said, this is our rate. It’s a higher rate than others, but the value we’re selling is we’ll have you open. We’ll warranty it, and we’ll come back, and we’ll make you guys an extra good. So they put rate material and tie value pricing into their sheet because of what they offered, and they guaranteed them that they would have them open for the holiday. That’s perfectly normal, and that’s that’s normal business. In insurance, though, when you have an insurance adjuster who’s looking at it like a commodity, they would say, well, that that that price was too high. And that was the problem we had within the organization is adjusters were looking at what they normally could get the rates for versus what we had to pay on this job. Exactimate covers that by saying in their unit prices, the median rate, sometimes it’ll be higher rates and sometimes it’ll be lower. In this case, it was just justified. They just added value. And so when we look at it, the other side is is is perception. Adjusters will have a perception of price gouging. Right? Price gouging is when the price is higher than what they expect. What is the right or wrong answer around it? And and it’s really not there. It’s if I’m gonna restore, I’m negotiating up front. These are my prices. Where we get ourselves in trouble is if you don’t negotiate up front in your contract and you don’t have the discussion with the adjuster up front, then what they’re normally used to seeing or how they wanna do business is how the business is gonna roll in the future. So when we look at the value price versus price gouge or any price, maybe your unit price is just higher price than that. You what you’re doing is you have to come in and sell it before you get the agreement. So you sell this is the reason our prices are higher. This is what we’re gonna provide you. We’re gonna provide you warranty. We’re gonna finish the work. All of us are trained. We’re trained at this level. This is why you’re paying a premium. You won’t get any calls of complaints from us. Whatever your value pitch is, that’s why they’re paying a premium. And so a few years ago, I had a claims manager in Manitoba come up and say, hey, Chris. We pay twenty to thirty percent more if you stop the phone calls coming to our phone. We’ll give you twenty or thirty percent more money. Just stop the customer complaints coming in, make our lives easier. We can afford to pay a little bit more. And what they’re doing is they’re basically adding value as, hey. Complaints go down. You spend a little bit more money so you can make the the small problems go away, which means maybe you paint a wall occasionally here and there that isn’t in the scope. Make the complaints go down, our customer loyalty goes up, and you make more money. It’s a win win, and they’ll pay for it. But if you’re expecting a premium pay and you get customer complaints, you’re gonna be not on their list very long. So that was an old school way of doing business. Still works really well. Right? Because they’re sitting there going looking at customer retention, and they value customer retention and customer experience as a big part of their insurance business. So when you start to look at it that way, that’s when value pricing or adding value to your price comes into play. When we look back at that church in that specific example, the customer was the one that was dictating the value. Hey. We need to be open because if we aren’t open, we lose all that revenue from Easter. And then the church is like Christmas, Easter, and then probably like weddings. Right? Like, those are revenue grounds. But for holidays, Easter and Christmas are the two major ones that you you have to be open for. That’s all they did. Hey. Open it up. We get our revenues, and you just look at it like a business. Now if you don’t like looking at religion that way, it is it is what it is. But that company specialized in will get you up and running. And so they made the place smell really nice. They they took care of the equipment. They wrapped it up on on Thursday night, put it back in on Monday. Everything goes smooth. When we start to look at bid and lump sum pricing, though, this is where you start to come in. And, you you can get multiple bids in. What are you doing with the bids? Well, if we have three bids that got submitted to an insurance company and the three bids were were submitted, how do you come up with your price? How come the bids can be really close and then you get that one that’s, like, really high or really low? Right? So what happens is that an insurance company typically should remove the top bid. If it’s if it’s outlier on the top, they should consider removing that one. If it’s an outlier on the bottom, that’s not good either. That means somebody completely missed something because your bids, if you do it, the way you get to a bid number is it’s time and materials. How much time do I think it’s gonna take to get there? So when we look at a bid, it’s how much time. You can use unit pricing or you factor in. You’re like, okay. If you wanna use here here’s something for bids. If you wanna use an Xactimate for your bid, you have to understand if your costs are there. So anytime you submit a bid, you have to know your costs before you submit the bid. Don’t submit a number and then come back in. We had a company that did that, and they went belly up. They were doing two million in revenue, and they bid on a large project, a million dollar project. They didn’t know their costs, and they end up losing the business. But if you look at doing a bid, your bid, you should know all the cost on your bid before you submit it. So if if I have my cost figured out and the next company has their cost figured out, we should be able to come up with relatively the same number. We might be a little bit different depending on our margins and our profit mark profit budgets. Right? So if I come in and we say the job should take a thousand hours of drywall, My cost is sixty five. There’s a sixty three. Like, we should not be too far off on there. There should be sixty three thousand dollars in drywall labor either way. Sixty three, sixty five. We’re not far off. If that number is thirty, that means somebody said that they could do it in five hundred hours. There’s a problem there if we’re really low. So when we look at bids, you’re basically accounting for all the time and materials that go into it. You could use your unit pricing system to get you a bid number, but you have to then go back and verify that your costs make sense of it, your scope is good, and that there’s nothing missing. Bids are incredibly interesting when you watch two skilled project managers bid a a job. Usually, they’re within ten percent. Ten percent up or down from the number is not unusual. Ten percent high, ten percent low, which means you have a twenty percent band between the the potentially, the the legit bottom price and the legit top price. It’s probably about twenty percent. If you’re below that and you’re, like, thirty percent low, that bid should be eliminated from the from the process. There’s almost no chance in a multi bid that you’re gonna get someone that low that can do the job. So when you look at your bids, you’re looking for something of like kind and quality. You should be looking for the numbers that are very similar. Occasionally, you’ll have two companies overbid it, but most of the time, what what you find is that if there’s a really low number or really high number, those ones should be considered or or at least looked at with a high degree of scrutiny because I’m gonna be looking for where my my basis is. If I’m doing a larger bid process, I’d probably want five bids in there, and then you can pull the top and bottom out and then select the lowest out of the the three. But, yeah, bid process is a great process as I don’t expect to win them all either. I’m trying to lose sixty to seventy percent of my bids. That means that my price is high enough that I lose most of them. And the ones I’m winning, I’m winning it, and I know I’m making my margins. If I get tight, I can maybe move that number up to fifty percent. If I’m winning eighty or ninety percent of my jobs, I’m leaving money all over the table because I’m not I’m not competitive. Someone else should be winning some of these bids. And so it’s a mindset when you look at pricing on lump sum and bids. But lump sum and bids is like gambling. So you get to you get to be the house, though. You control the odds. Right? So if you were to look out if you were to look at the scope of work, you get to understand what everyone else is looking at. And so what’s interesting is if you were looking at, like, playing the casino, you can choose to place a bid. You could choose to pull your bid back. Right? You can walk away from a job if you don’t think that you can make money on that bid. Now if you’re looking at the at the game, you look at who you’re playing against. And this is where experience comes in, and this is the soft part of the estimate. If you’re sitting there just playing the unit pricing game and you’re just running it through unit pricing, like, hey. It’s a four hundred thousand dollar bid. That’s our number because that’s what the units told me. You probably missed a bunch of stuff that isn’t in there. Like, how long does it take to get the job done? Where are the site conditions? Where are the where are the delays you run into with, like, the building or the HOA? What are you running into? All the other soft factors you have to factor in on a larger job. That’s the thing that separates a lot of the residential contractors from the commercial contractors is all of a sudden, you’re not used to playing with all those delays and and the things you have to factor on top of the unit price. And so those challenges is what holds you back. If you don’t understand the delays of a bigger project and you try to play it with, like, a small residential system, you’re in two different worlds. You haven’t factored in that fudge factor that’s gonna come into play. Tell you, we had this I had this project manager. So I I love this story. He took me out. We went out to a a job, and he he asked me to walk this site with him. It was two thousand ten, but we ended up having this project where he’s like, hey. Whatever you do, don’t say anything. Just, like, nod with me if it’s a yes and just shake your head if it’s if it’s a negative. And I’m like, okay. So we walked the site with the project manager. We had these two junior project managers that were competing for the bid. And all of a sudden, Rob’s out there. He’s telling the story, oh, you gotta consider all this. Hey. You also have to consider this. You agree, Chris? Like, this is pretty complex, isn’t it? I’m like, And then he’s like, oh, you know what? This is gonna be in there, and I’m not sure if you know, I don’t know if we can do it in your time frame. And I’m like, god. God. It looks like a a head shake this way. And so we’re going in there, and and we walked through this job site, and he’s just, man, he’s just showing experience all over the place. And I’m sitting there popping my eyes. He’s like, I think we can do it. You know, it’d be a push. We might get it done. We could hit your numbers. We could hit your time frames. Chris, we’re gonna have to throw some resources on him. Like, yep. The other two project managers were silent. And what he had done is he had noticed that they were in out of their their element. They didn’t know what he was talking about. So he just hammed it up with experience and just made it look good. We got in his car, and as we’re driving back, he’s like, hey. He’s like, you know all that. He’s like, you know we’re winning this job. Right? And I’m like, I don’t know. It’s a big job. He’s like, no. No. It’s a pretty simple job. Goes, the problem is the other two guys are really green, so I just made it look so complex for them that we set the expectation that their price is gonna come in high. We we got the job. Sure enough. We won the job by about ten percent, and he hit his margins because what he did is he had put all of that soft all that soft cost into the job. He put into the heads of the project managers. And because they didn’t have the experience, their mind went the price is way higher than it should be. He came in just below where they they repositioned them. And so that bid becomes a a strategy where you’re playing against the other people you’re bidding against. I watched it unfold, and I was like, man, that was that was just a master class in negotiating large loss when you have everybody on-site. You’re trying to dictate how complicated it is, and then you’re trying to come up with your own scope in your head. And everyone agreed what the scope was. It was just what was the price. And he hit his numbers, and he knew what he was doing. But that was where you watch semi experienced project managers take on the pro and and come up with a number. So that’s interesting. And then we had project managers that could execute that job, and you hit your margins all day long. So when we look at this, we look at the at our lump sum bid pricing. It’s a combination. And so the things that you have to factor in is that risk. That’s not factored in in your unit pricing system. You don’t have unit pricing where you change the risk profile in your unit price. You do that in your bid and lump sum pricing. So increased margin risk means that you get to increase your margins if there’s more risk that you’re gonna lose money. If there’s a bigger chance you’re gonna make lose money, then you’re gonna charge more for it. So that’s why on on rate material, I would take it as I’ll get less money on it, but I guarantee my profits. I will I will make less on on rate material in exchange for guaranteed profitability. The the other side is it’s the reverse auction. Right? Low price wins. And so in a competitive landscape, when you’re bidding against people, there’s not both auction that happens. And this is what you have to be aware of. Consultants and making up their vapor numbers, it doesn’t count. Like, a vapor number if I’m a contractor and I’m going against the consultant’s number, I have to know mine are real. So I have to know my cost and my profit and my charge out. On a consultant’s number and where adjusters get themselves in trouble, they’re writing a an Xactimate scope with a number. That number means nothing if you can’t attach it to work being done. A consultant that comes in and says, that job was worth five hundred grand, and you charged a million. If you were never prepared to do the work, that number doesn’t count. That number is a fake number until you tie it to real job cost and real risk. So the only numbers that should be considered are real contractors who are ready to do the work because they have to take on that inherent risk of the job. And I can give you a number of a dollar. Doesn’t mean it’s right. If it’s ten thousand dollars and I say it’s three thousand dollars, they’re just opinions. Until somebody is willing to do the work and put their business online, those numbers are vapor numbers. They’re not real. And so when we look at it, it’s a it’s a reverse auction. It’s basically they’re looking for the lowest price. Just make sure you’re you’re competing against somebody who actually has real numbers. Sometimes you’re gonna walk away. If it’s a consultant who comes up with a number, but they don’t know how they came up with the number, they didn’t attach it to real cost, you walk away from that number. And I’ve watched a lot of court cases go in where they attach a vapor number and say that’s the that’s the settlement. The settlement is three hundred grand. You haven’t attached it to any real numbers of anyone that’s actually doing the work. And if you don’t do that, it’s pretty flimsy. I would watch that you don’t get into those reverse auctions. Then we look at why would you use bid pricing. So there’s no review process after you submit a number. It’s, like, limited. My number is this, and this is the number I’m submitting. I’m submitting it for this scope of work. If we open up the walls or we get into the business and there’s there’s different changes in scope, I’ll put a change order in. Be very careful not to be the company that puts, like, massive change orders in, but you’re effectively going in and and writing a number for what you know and what you can see, and you battle the contractors. Like, that’s when I’m in competing against another contractor. I’m like, I like an experienced contractor to bid against because I can learn from them. I can learn how how they won the bid, how we lost. And, again, you’re getting paid for those soft things, which both experienced project managers or estimators should know. When you watch your business, you can get yourself into trouble. And I told you about this contractor where they overbid. So greed and ego get into the play when you play with large contracts, especially when you get into larger bid items. Now for you, it might be a hundred grand or a million dollars or ten million dollars. Whatever is large for you, watch your bids. You have to know your cost before. We had a contractor that was doing a mitigation on a building. Everybody else was in the two to three million dollar mark. His bid was a million dollars, and it was one point eight million in real work that needed to be done. So he was stuck on his bid. They bled him out because he couldn’t get paid. And while he was doing his bestest job, his company went upside down. His company could not go into the business and and effectively execute because he bid a hard bid on known scope of work too low because he didn’t do his job costing prior to submitting his number. And the insurance company should not have given him the the the job because he was so far low from everybody else’s bid. So effectively, his mistake, their mistake resulted in a contractor going out, and then the job ends up costing more because it still has to get done. So it costs more in the end for everybody. When we look at the unit pricing, when you see this picture, what do you see? Right? I see unit pricing everywhere. And this is how you gotta start looking. I always look at, like, callouts. They like like, they pop out of your oh, here. What do I see? I see eye protection, Seven dollars. Right? Respirator cartridges. Gotta change those out. You got the respirator. You got the Tyvek suit. You got the nitrile gloves. Although, those look like latex, but they you got the nitrile gloves. You’ve got, you know, knee pads, rubber boots. You got booties on the bottom. Like, you got all this stuff that you could charge out here, then you got pump sprayer. That’s piece of equipment, and then you got consumable that’s inside of it. And there’s so much application that we figure we’ll get from that pump sprayer. So how much will a gallon cover on the ground? And if you do unit pricing, you have to think this way. So before you get into Xactimate and you get good at Xactimate, you really need to start thinking about unit pricing as every single thing has a a number attached to it. And that’s how you have to wrap your head around this. Everything that you miss in a job is dollars going out. So I don’t care if you’re using Symbility, Xactimate, or something else. You have to be thinking that every specific item that’s that you see on a job has to be charged for. So a ton of questions came in prior to the when you guys registered. Bunch of questions like, hey. How do I charge more? So I could show you buttonology and say, well, there’s this line item and this line item, and it may or may not apply. Here’s what you need to think about. The complexity of pricing is how you’re gonna have to look at this. So you’re gonna look at this as, okay. How do I build this person out? So if I look at a technician as, like, a an avatar, like, a gaming avatar, it’s like, how do I kid them up? Well, I don’t put a respirator on. There’s a full face. There’s a PAPR. There’s a supplied air. Well, I’m gonna put a PAPR on. Okay. We’ll rent that over a hundred dollars a day. And then those cartridges, we’re gonna change those up. How often do we change them? Let’s say once a day. So I can’t charge for cartridges. Your unit pricing mindset has to be, what is my cost on those cartridges? What is my margin need to be? And then what’s my expected change out? You have to know all that because you’re submitting a bid. What if your cartridges change out every four hours? Now they’re not gonna change out every four hours, but let’s say that they did. You need two a day or they get contaminated, so you have to change them up. Well, that’s now eroding your profit because you didn’t charge for it. So unit pricing has to consider everything in there when you’re pricing it out. So when we look at this and we say, well, how are we gonna look at it? The complexity of the unit price is really simple. A simple one is a piece of equipment. It’s a piece of equipment. It’s a single consumable like a zipper, or it’s an hour of labor. That is the simple unit price. We use that in rate material. So we use that for rate material. We can go in and we can say that one piece of equipment or that one hour of labor, that is the most simple unit price we can come up with. What happens is you get into difficult ones, like extracting the floor or cleaning the wall. Now all of a sudden, you’re combining four or five different units together. So we say, well, there’s a labor component for for the labor. So if we’re if we’re wiping a wall, we’ve got the labor component. Yeah. Hold on. Let’s just talk about a wall perspective. If we’re gonna do a wall and we’re gonna clean the wall here, to do one square foot of wall, what do we have to do? We have to clean the wall. So I have to apply detergent, let it sit. Well, that’s time. Then I gotta wipe it. Oh, that kinda worked. Then I pull my cloth off, and I wipe it again, and then I rinse it. Okay. That’s cleaning a wall. So if I clean a wall and it’s three steps to do one square feet of cleaning, And I’m like, okay. But there’s material, there’s consumables, there’s time, there’s inefficiency, my lunch, my breaks, my travel, all has to be factored into that. All of a sudden, you get into it, and you’re like, man, that’s a lot of things that have to go in. What if something changes? What if I’m now cleaning longer? Well, those those unit prices have to be factored in. You have to change the way the unit price works. So all of a sudden, you’ve got now more to consider. Then you get into the extremely difficult ones where it’s like a price per foot or price per square meter, and all of a sudden you get five or twenty line items put in. So, you know, Australia, they used to have a price per room for drying. It’s like, how do you even come up with that? Because if you were to try to break it down, you’d have to factor in all these different factors. And then if one thing was wrong, your whole price is off. And so unit pricing becomes really, really difficult. And from an adjuster standpoint, if you were to look at it, like that, two coats of paint in one visit versus two coats of paint in two visits, just changing your orders of operation can, like, holy screw you up. When we look at paint labor getting organized, we say, we’re gonna go and get paint. We got labor. We gotta get organized. Then we have to travel. Then we have to set up and prep our space. Then we paint. We got paint material. How much how much do we pay for paint? What do we pay for the painting supplies? And then what’s our labor cost? Right? Then there’s a time that we gotta sit there while it dries, then we paint again, second coat, then we clean up, then we travel back, and we get the truck cleaned up. And on the other side, you have all of that, and then you have to add in another set of trips. Well, you’re painting on that second coat. It’s it’s more, so much more if you have to do two coats and two visits. So if you’re pricing your unit price and assumes that you’re there for the day versus it assumes that you’re coming back another day, that’s gonna be almost a two hundred percent difference in your price. Man, maybe not quite two hundred percent because you’re not sitting there for the dry time, but you’re gonna have a like, a maybe one’s a dollar and the other is, a dollar eighty seven. Right? So it’s not quite two dollars, but it’s a dollar eighty seven because you’re just shy, but you have to do two cleanups. You gotta reorganize the vehicle twice. You gotta travel. All of a sudden, you just blow through the cost of doing your business. The unit pricing, and this is exact to meet Symbility or anything you’re using, is the most difficult method of pricing your services. You have to understand every control and influence that goes into that price, and then you’ve got control the variables. So we call that factoring unit price, which is if you were to produce forty two cars an hour at a unit cost of ten thousand dollars per car, you would know what you’re doing. Right? Like, you know, hey. We’re gonna we’re gonna have a cost of four hundred twenty thousand dollars every hour that we produce these cars because we can make forty two of them per hour. What would you do if you’re in that factory? You’re like, okay. Well, what’s our our overheads? We have an office. Okay. What else do we have? We have a plant and equipment and labor, all the things that you have in your business, but we have to produce cars fast. What if all of sudden the process change that we can only do half that number? Well, all of sudden, we’d be upside down. We have bigger overheads proportionate to the amount of cars we make. And that’s what happens with your unit price if we don’t think about it that way, but you’re trained to lose money in unit pricing. Right? If you were trained that one system is better than another, you were trained to lose money on unit pricing. That is literally the the hardest system to run is unit pricing if you don’t know the basis for creating a price. And you can quote me on that because that’s I’ve heard so many people say, oh, that, you unit pricing is the best system in the world. It’s I used to say that too. It’s not. It’s a great system if you understand how to use it. The best system is rate and material. If you don’t know your efficiencies, if you know everything and you wanna get into, like, detailed fine tuning, unit pricing is great. If you don’t know the pricing and the costing, unit pricing is so hard, it’ll bankrupt you so fast. So you have to understand that unit pricing will drive your price down or your margins down, and it can get you into trouble really quickly unless the people that are doing your pricing or or setting the price understand how you make money. And right now, that’s not the case. It’s really tough process in the industry. Alright, guys. Let’s take another q and a break, and then we’re gonna take ten minutes. And then we’ll come back, and we’ll we’ll keep at her. K. Let’s check-in on the q and a here. Bear with me. So I’ll start with some of older ones we didn’t get to earlier. So we hear have here from Patrick. Xactimate line items is an old process and a waste of time. What are your thoughts for all in one price per square foot? Example, ten to thirty per square foot for mold remediation with a scope that follows IICRC standard. I I like that in the sense that if you build it so Xactimate is a great system. Don’t get me wrong. I’m gonna I’m gonna poo poo on one part of it. Their price list research, I don’t like that because they don’t do a very good job of it, and they don’t have a good methodology in my opinion. Unit pricing, you could come up with the same price if you factored in like, let’s say we’re doing that smoke this discussion, and you said, well, it’s a wet smoke versus a dry smoke. Well, if I knew that their time was based on a dry smoke, I could times that by four and come up with a wet smoke calculation. If I did a test, then I was like, oh, it’s not four. It’s six. I could times their cleaning rate by six to come up with the right cleaning rate. Right? So I like that. If I’m building my own, I’m doing it based on the fact that I know my time and material budgets in my head. I’m like, well, I know that when I do a mold damage or a mold remediation, it’s based on these factors, and there’s ten things in there, and that’s between ten and thirty dollars depending on the factors. But you built your list yourself because you built you built it on your experience based on your rate material knowledge, and then you said, I can turn that into a unit price. That’s when you get to that level, you’re at a high sophistication of estimating because you understood how you got to your price. When you take a price out of Xactimate and you just apply it and you hope you make money, you’re at the lowest sophistication. You’re allowing someone else to set your price for you, and then you hope to make money with it. So there’s two different parts on the spectrum. I like I like that system. I also like the system if you just build your own price list, and and I teach you that how to do that, then you make your own price list. Get it up to the top number. That works too. But both of those methodologies, Xactimate is a good method. It’s the wrong price list, and it’s become a pricing system instead of an estimating system. But I also like if you can build your own on square foot, we did that in Fort McMurray. We had a, like, a ten to twelve dollar light cleaning for smoke damage, and it was, like, fourteen to twenty and then twenty and thirty. And then if it was passed out, it was custom. Yeah. It it it makes perfect sense to to have your own unit price in your head, but you’ve factored in all the factors. And so that’s why it makes sense. Got it. Thanks, Chris. Let’s see. I’m trying to find one that we could maybe answer, you know, before we take a break. Well, this one’s been in in there for a while. This is from Jacob. He says, what do you do when, efflorescence is found on concrete and the moisture is permeating from a unit we do not have access to, but the homeowner has no mold coverage through their insurance carrier. That’s a tough one. So efflorescence is kinda like that fuzz you see come out of concrete, and and so that’s signifying it’s just minerals are are are coming through. It signifies that there’s a a long term moisture problem. So our you know, what is the resulting damage? Like, is it a private job or an insurance job? I I guess the question is is if the insurance doesn’t have mold coverage, would they pay for somebody’s preexisting problem or something that’s the defect in the building or normal for the building? And so is there coverage? Typically, in most policies now there’s some policies that have a little different wording on there. But for most policies, it’s sudden and accidental. It doesn’t include seepage or leakage like that. So there’s it’s almost always a private job, and it’s always private mold job with a different underlying underlying problem. That’s a tough one to like, you don’t like, there’s a lot of unknowns in that question. Like, what what’s in the other unit? But if you see efflorescence coming in through the concrete, it’s normally part of like, it’s it’s long term issue with the building. Not necessarily it’s it’s wrong or bad. It’s just part of part of the building makeup. You see it in a lot of, like, really old homes. Like, if they’re, you know, turn of the century homes, hundred year old, hundred and fifty year old homes, it’s not uncommon to see that. Right. Alright. Let’s see. We got time for one or two more before you wanna have a break, Chris? Sure. Okay. Here’s a bit longer one. I’m getting a bit in the weeds on pricing here. It’s an anonymous question. It says on a fire claim, heavy smoke, soot, cruise in full PPE, no power or heat. What are some recommendations on how to bill out the content, packing hours, and boxes in Xactimate? Yeah. So so it’s a good question. Again, you’re in an environment. So so you hit the the harder the environment is, the more I lean to rate material. So no power, no heat. Cut teams are in PPE. So it means I’m putting in temporary power, temporary heat, and I have people on full gear. Their efficiency of packing a box, if you were to use, like, the the pack line item box or pack box line item, that’s for one environment. It doesn’t tell you that it’s for a normal environment, a clean environment. So I assume that they didn’t do it in a a hazardous environment. So if you’re now working in that that with that material in those conditions and you’re trying to pack a box in PPE, you’re gonna be slower. So that’s where I would shift over to rate material. Or you do some packing and you find out that, hey. I can only pack a box. It’s fifty percent slower. That means your price per box doubles. Really hard to justify that. Like, it’s hard to explain it if you don’t understand the system in detail. You could, but it’s just easier to switch over and be like, hey. We’re working in these conditions where we use rate and material because the line item pricing doesn’t work. If it does, you document how many boxes per hour you can pack, and then you go back and change the production rate in exact so it matches what your production rate was in the field, and you get to the same thing. Again, that’s why I said if it’s rate and material, a rate material using the exact same price retail price should be the exact same unit price because it’s just an extrapolation. If it if your unit price says it’s, let’s say, sixty five dollars to pack a box, well, they made a bunch of assumptions into there. And then if your rate and material is a hundred, well, that just means that your unit price is wrong. You have to go in and and modify your rate material sorry, your unit price to to make it an hour. You have to change the efficiencies to get to that hour. That’s all it is. So, like, literally, the the the exact same price should be there whether you bid it out, it’s unit pricing, or it’s t and m. It should all be the same. Problem is is if the insurance company says you can’t modify unit prices, well, then you have to go to a rate material because the unit price will be wrong. That’s the short answer to that long question. There’s a lot there to unpack. Yeah. For sure. What’s interesting is I did this private equity back in two thousand ten. It was one of Canada’s first private equity acquisition. But I’ll tell you the interesting part about going through private equity is and I was talk just talking about this last week with with a bunch of restores. When you’re in private equity, if you if you look at an independent restoration company or you work for a franchise, it’s usually a different mentality of, you know, we’re there to serve the community. We’re there to help people at their time of need. When you work for private equity is you gotta do that, and then you gotta turn a profit. And what’s wild about private equity is they focus on financials twenty four seven. It’s not a fun environment when you’re losing, and it’s it’s it’s tough environment when you’re winning, but it’s it’s a discipline that is important for people to understand. Because of the volatility in our in our market, being able to generate that profit on a consistent basis is a really unique skill. And in two thousand ten, when I was with First On-site, under the Torquest, financial private equity firm, we were looking for profitability. Now the year before, I had actually helped the company turn profits, and then I went over to to them, and I was recruited to increase profitability. And what was wildly interesting is as we got in there, we started to see all the different levers that you can pull. Right? All the levers you can pull to make things change, and and you’re looking for how do you drive more profit in so so you could do cost reduction. But what happened for us is we looked at estimating, and we had broken out our estimating from unit pricing and rate material. And what we found is whenever we did unit pricing, we were about fifteen percent lower profitability wise than when we did rate time and material. And so when we started to look at our business, we were like, man, that really comes in as a as a red flag is I was always told rate material, time materials, would be lower margins than Exact. Everyone says, oh, you get better margins, but that’s not what we experienced. We experienced lower margins in Exact. And so when we went back and I broke it through, I had to go through the training process of identifying and dissecting why was unit pricing coming in lower when we had rate material that was higher. How come that was happening? What we found is it’s a double edged sword. And the difference that was happening there is the way we were being taught in the industry, and the same thing that’s happening today, is we were teaching buttonology versus estimating. And my top project managers were real estimators. They knew their costs, and the system of Xactimate was a method to get to a price. What others are doing is using the buttonology and hoping it comes to a price that makes money. And I’m gonna just talk about that in this section because estimating and buttonology are completely two different things. And so when we look at that, when you’re under the pressure of private equity and they’re focused extremely high on on that on how much money you’re gonna turn, it’s okay to ask yourself, what is the difference? Buttonology, the way I describe it, is effectively learning how to use a computer system. Honestly, I would never have figured this out into the same clarity if I didn’t work at Encircle. So in Encircle, when we built the systems, you build systems that fit an industry, like the industry processes. And at times, you have to make some considerations or some you have to you have to trade user interface for for technical capability, right, or technical correctness. And it wasn’t until I I got through that process of working with Encircle to see, hey. There’s times when things are really complex in the field that you have to modify how you do things. Then then I looked at the estimating systems and went, we’re being told to do a lot of things different because their system is not robust and it’s archaic, and there’s a lot of things that it doesn’t do well. And so you’re taught buttonology how to make their system fit the industry, not how the industry fits. Like, their system doesn’t fit what we do. We have to fit into their box. And that creates some con some some, I’d say, conflicts or some compounding impacts to your business. When you’re changing the way that you would naturally do something in order to put it into a computer system so you can get a result, and that’s the weird world we’re in right now, Is in order for us to work with an adjuster in the system, we actually have to look at how are these systems come together and how do they function from the insurance company side, from the contractor side, and then from getting the actual job done. And I was furious because I went on this three day training in two thousand ten, and I took all my staff with me. We went to Calgary, and we went to do estimating training. I said, hey. I need to learn profitability. And I need to just tell me when we’re gonna learn the profitability piece. And the instructor said, no. No. You’re just here to learn how the program runs. You figure out how to make it profitable. And I was furious because I had talked to sales, and they said, hey, Chris. You know what? When you come to this training, you’re gonna learn how to be profitable. Just, yeah, sign up. We got ten registrations. I paid a lot of money for our teams to go, and then I had to call our CEO and be like, hey. I screwed up. I don’t think we’re gonna learn any of that here. He’s like, well, you make the call. You figure it out on your own. You’re a big boy, but you’re gonna have to figure out how to get your branch profitable. And that was the focus that I I took then, and it became really clear now, is that buttonology of how to make a program work doesn’t necessarily result in how to drive a good profitable estimate. They’re two different things. And if you don’t realize that, you think that you’re getting training on estimating because you’re learning the computer system. And really what you’re getting is you’re getting buttonology so that it kind of fits into the industry we’re in. So change your mindset right now and be like, instead of being like, what does Xact do for this and what does Xact do for that? Change that and go, that’s the system of how we get our number presented to an insurance carrier. The backside is you have to know how to do it yourself. You have to have the skill set to figure it out. If you don’t have that, you’ll almost always be running up against margin compression. Alright. What we do is when we look at it, another problem that we have is we have some of the most skilled people are not on the computer system. So we put in our our least skilled people. We’re like, hey. They’re really good with computers. They can become an estimator. Well, that’s good at data entry, but that doesn’t solve for getting to the right number. If you if you actually look at estimating, estimating is simply a process of what is the scope, then there’s the digital side. How do we actually have to enter it? What is the cost? So is the scope right? Does our time budget time material budgets allow for this scope to be this amount? And then what’s the actual execution? Before you submit a number, you should know your budget’s profitability. If you don’t know if you’re gonna be profitable when you submit that number, then you’ve already done something wrong. And so if you don’t know if that number that’s going out the door is gonna be profitable until after the job, you’ve made a mistake. Now when we look at this, we go, well, how come this happens in this industry? And there’s a problem that hits the industry, and it affects everybody. It’s called the Dunning Kruger effect. And your estimators will have this, and you’ll get this. And it’s a really interesting phenomenon. When we look at the Dunning Kruger effect, it explains a lot of things about why restoration is really hard, and it gets why it gets harder over time. So if you get into the restoration, you’re like, oh, man. I thought it was easy before, and all of a sudden, I feel dumber, or I feel like an impostor. Impostor syndrome kicks in because when we look at the the Dunning Kruger effect, it’s the confidence versus the knowledge scale. And so as we look at it, we say, hey. When we get started on something, our confidence goes way high. You become the ignorant FNG. Right? Everyone’s got them. It’s the ******* new guy. And those people that are in your business are so cocky and arrogant because they learned a little bit. Maybe they learned a little bit about Xactimate. They got their level one certification. Maybe they took the WRT, and they learned a little bit about drying buildings, and now they think they can dry, you know, the cathedral. You get a little bit of information, you get cocky, and then what happens is you start to learn what you don’t know. You start to see the things you don’t know, and you get into this fear and into the minors. And this is where you’re not good enough to be the pros, but you have more knowledge than the new guy, and you know there’s a lot you don’t know when you get scared. When you get over there, become a knowledgeable professional. When you get to that point, you’re starting up on the incline until you become a superstar. Now what’s interesting about the effect is it could be on everything. Like, if you’re new at water damage, it will impact you on water damage. If you’re new at estimating, it’ll impact you at estimating. The second you get through the ignorant phase, you get scared. And you’re like, oh, I don’t know if I can do this. There’s other people that are smarter. And you get all that negative talk in your head about why you can’t do something, that’s where this this comes into effect. And what you’ll find is, even when you’re like an old pro, you’re never as confident as you were when you first started. And so there’s that that confidence gap you’ll never get back. You’re always more confident in the beginning. Now here’s the beautiful part about it. If you can get through the curve, if you can come from the ignorant out through the minors and into the professional, what’s awesome is once you get to the end of it, you make money consistently on that ends. Once you get to a knowledge professional or your guru, you start to make money on a consistent basis. When you’re in the minors, you hit and miss your profitability. So fifty percent of our survey today said, hey. We’re making money. Well, fifty percent of you have got through that that miner’s curve. When you’re in the miners, you hit and miss on profitability. When you’re new and ignorant, you lose a lot more than you win. You might just get lucky. Like, the system might work. You you have the overheads. You’re chucking the truck it, and you’ve got the pricing systems of just sort of work. You’re in the high margin work. So even if you make mistakes, you can still make the business run. But what you find is that when you’re in that, you get that false sense of knowledge when you’re in that that new area. What happened to my business is when we had our down year, I gave a bunch of people that false sense of knowledge. I had a bunch of new people that I brought in, and I didn’t give them the training. I didn’t have the time to, but I didn’t give them the training and focus to get them really set on their business. Right? So if I’m teaching them how to be a good estimator, I taught them buttonology. And that was a false sense of knowledge for them, and and that was my mistake is I knew better than at that time than to give them a false sense of knowledge because what I did is I was like, hey. I’m gonna teach you Xactomy. You’ll be the best at Xactomy. You’re gonna know how to enter every line out. What they didn’t understand is they didn’t understand the business around it. And so I’ve had people that had this great sense of they were, like, really good at buttons, but they couldn’t explain it. Or they were really good at buttonology, but they didn’t know how we made money. And what we realized is that I gave them that false sense of knowledge and the profitability dropped. And then what happens as an owner is you rely on those people to come in and and help you. And what happens is if you get that false sense of knowledge, you surround yourself with peers who have that false sense of knowledge. It actually makes you dumber, and it makes things go dumber with time. And what’s interesting is it’s our fault as leaders in the business is you bring someone in, you give them a three day water course, you give them an Xactimate level one, and they feel like they’re on top of the world. And then they go out feeling empowered. You have to quickly get them through that next training curve. If you don’t get them through the process, then they become to the point where they get into the minors. They feel the impostor syndrome. I don’t know what I’m doing, and they make bad decisions. That is why we see businesses fold up when their new new restoration company starts is they don’t get through that curve fast enough. And that’s why we see estimators fail is they literally think that they’re doing a good job. They think that they should be on fire, but they don’t have enough knowledge about what they’re doing. And that’s where we can divine technology, the technicals, and and the knowledge base and combine all that together. And then all of a sudden, you can start generating a profitable estimate or a profitable business. When we look at estimating, estimating is the process of forecasting the cost and resources required to complete a project. So you need to know what you need to do, that’s resources, and you need to know the cost. This may include calculating quantities, cost, materials, labor equipment, and other expenses based on mutually agreed scope of work. The purpose of SMA is to provide an accurate and comprehensive budget that reflects the expected cost, covers overheads, and delivers the anticipated profit margin. You’ll hear me on a regular basis say, I’m not a huge fan of third partying you’re estimating. I don’t think it makes sense in any business. I like it if you’re if you have surge events happen, but for your, you know, nine to five work, your regular work, you should be estimating and and doing that in house because that’s how you figure out whether your pricing and your costs and your labor budgets are all there. If you don’t know how they’re put together, you can’t go out and make money. So if you can’t budget if you don’t know how you built the price, how are you able to go and price a job if you don’t know how you built the price? If you didn’t build the price, you can’t charge for the job. All of those systems that we’ve been given were built to be changed, and you were built to make them your own, the fact that we don’t do that anymore means that we’re disconnected from how we make our money. And so an adjuster who’s using a stock price list, who doesn’t have a sub trade attached to it and says, well, this is the what the real world cost is. It’s just a vapor number. And if we’re writing vapor numbers, your margins get compressed every time you write a vapor number that you don’t know what your costs are when the numbers go out the door. Now we have a poll question here. The processes you have put in place because you were punished by one client, you’ve applied to all clients. So, yes, we were punished for charges, so we removed them. Sort of. We’re more cautious for what we charge. We charge for everything we can and let the reviewer figure it out. Or no, we haven’t had to do that. So if you’re if you don’t play program work, you don’t do that. Now here here’s the thing. If you were punished like, let’s say that someone said, hey. No after hours charge offs during the day. So if you if you said, hey. We don’t charge after hour charge offs during the day, do you apply that to all of your customers? Right? Or is it just to that one customer that you that told you you can’t charge that? Is that the only one you do? And so we’re starting to get some numbers back. And what’s interesting is is just keep the numbers coming in. We got good feedback coming in. Hundred and fifty of you have responded. Keep it going. Let’s see if we can get to two hundred. And what’s great is is as we’re starting to see the feedback, this is gonna be really good for this discussion that we have. Alright. So here’s the results is is some of you apply it. And this is in past sessions, these numbers were actually higher where we had more people that were punished with charges. They removed it across. So, like, hey. You know what? We’re gonna take our most stringent conditions that everyone puts on us, and we’re gonna just modify all of our estimating so that we take all those conditions. So whatever we write, it doesn’t matter who we write for. We’ll just always be perfect. And the problem is if on eight companies, I can charge after hours call out during the day, right, like a service charge during the day, but one company I can’t. What we were finding is my estimators were charging that taking that off of all their estimates. Like, oh, no. We’re not allowed to charge. It’s like, one on one client doesn’t allow us to charge. Don’t self punish us. One of us doesn’t charge because we signed a contract. And when we signed the contract, we said we would not charge them for that. Doesn’t mean we do that for everybody else because we signed other contracts with other contingencies. So one comp company, that’s what they wanted to do. And I saw some questions that said, like, you know, every insurance company has their own rules. Even every adjuster has their own rules, and that’s part of playing the game of the price is I need to know what the rules are so we can adjust our price. Now for the for forty percent of you, you said, hey. We’re more cautious. We’re more cautious for what we charge for. So now what you’re doing is is there’s that negative push that comes back to you. That’s a negative pressure that’s starting to to creep into your business. Then you got a bunch of we charge for everything we can to let the reviewer figure it out knowing that there’s gonna be pushback, knowing that there’s gonna be confrontation. And then for a bunch of you said, no. We haven’t had to. Those are the ones probably playing the private game, or you have a really good relationship with your adjusters. Now here’s what’s interesting is when we look at this, it’s called the estimating trap, and it’s a psychological thing that happens. When we look at it, and I started to discover this in two thousand seven, is the estimating trap was something that started to to pick up on my on my radar is I started to focus on more franchises that we had that were being told, hey. If they did a lot of business with this company, then they weren’t allowed to do a lot of this stuff. And I started to review estimates. And what I noticed is is that on accounts where I knew the SLAs really well, I’m like, why aren’t you doing this? And they’re like, well, that’s because we we’re always told that that’s wrong. It’s already built into the price, so we didn’t charge it here either. I’m like, well, this is a major problem. Like, now what we’re seeing is a rule from one company filters into another company. The rule from this company filters back, so it’s a double hit. Then you multiply that by five companies, and all of a sudden, you’ve got all this negative margin erosion without anyone ever doing it. It’s it’s it’s self induced. And so what we started to realize is that or or what I started to realize is that we started to see these margin compressions that as sales go up and you start to work with companies, your profitability goes down. What what’s happening is you’re applying these rules and programs. So it’s really, really dependent on the companies that do a lot of program work. If you do a lot of program work, you get a lot of this downward angle pressure. So the more program work you do, the more rules you you you get involved in, the more pressure that comes from the insurance company on your estimators or your review team, what you’re gonna see is that they’re being told on a regular basis, that’s wrong. If you’re not allowed to charge for this, you can’t do that. And it’s just every day. You can’t do this. You can’t do that. You can’t do this. You can’t do that. And if you look at an independent company that’s using Xactimate, but they just change the price, they do what they wanna do, they never hear that. So for that small percentage, think it was, like, fourteen percent of you, they’ve said, hey. We haven’t done that because you’re just playing your own price list. When you’re in programs, you’re gonna get conditioned. And it’s to make sure you understand, it’s an agreement. I signed an agreement to get a volume of work, and I agreed to these conditions. It’s nothing more than a a business transaction. But when it psychologically affects your estimators where they then apply that to everything else because they believe it’s wrong, that’s when it impacts your business in a really negative way. You sign a contract saying, hey. I agree to this term for this amount of business, and it’s interesting because it’s like fleas in a jar. And the fleas in a jar scenario is that if you took a bunch of fleas and you put them in a jar, they would be jumping out of the jar. So if you put fleas in there, free range fleas, those free range fleas can jump up. They can jump higher than the jar. If you cap the jar and you put that artificial constraint on them, what’s interesting is the fleas learn their bad behavior. They they learn that they they’re limited. It only takes three days, and then they permanently learn the behavior. They can’t jump higher than the jar. So if you take the lid off, they never jump out of the jar. And then when you remove them from the jar, they never jump higher than the jar. And what’s crazy is those bad behaviors are passed on or those learned behaviors are passed on to their children. So if you look at that in our business, if you’re in program work and your business is heavily dependent on program work and you bring new staff in, New staff are gonna learn the behaviors of your existing estimators. So they’re gonna say, hey. We never charge for after hours work. And you get all this dissent that you see on Facebook. Oh, you should charge this way. You should charge that way. The problem is is that there’s some people that are programmed because of the work you’re doing that you’re like, hey. I’m gonna be more cautious on how I charge. Whereas others are like, they look free and they’re pretty wild because they charge for how they wanna charge for their business. The difference is one has come into a program and you’re constrained, and and we just saw a comment that says, hey. In Canada, I can’t change prices anywhere. Not when you’re on a program. You sign program rules. If you’re not on a program, you can change your price all you want. You’re just gonna have more resistance, so you’re gonna have that constraint put on you. And that’s the interesting thing. And if you get out of Xactimate, you go to a rate material, you can change the game because you change the system. Does that make sense? So estimating is as much about psychology and amount as much about playing the game as it is coming up to a right price. You have to sell somebody on it. You’re being pushed into it. It’s just constant battle about trying to determine the value you can sell for the price that you’re trying to get. The problem is if you’re in a program and you’re being told those rules, you take some of those bad habits and move them into your business. The other side is, though, it picks up some efficiency and some leanness that comes from those programs that you can move to the other side of your business. So there’s a give and take there. There’s some there’s some really good things that come from programs for driving efficiency into your business, and then there’s the negatives. Just you gotta be very cautious on the negatives when you’re told you can’t do something. There’s no rules that say you can’t do something in Xactimate. You can’t charge me for a line item that doesn’t exist there. There’s no rules in the real world. It’s just artificial rules of a jar, and that’s what you’re being told. Okay? That’s what that’s what I’m trying to get to here. You know, it’s kinda the same as, like, if you have a kid, you put them in time out. If you put them in time out enough, right, and we put our kids in time out enough, what happens? Well, we can change their behavior by putting them in time out. And so think about a reviewer if they tell you, hey. You’re gonna not get more work from us. That’s you being put in time out. If you’re doing the right thing, but you’re being put in time out for doing the right thing because someone else thinks it is wrong, you have to make a business decision if that’s right for you. So when we gave up our forty percent of our revenue, we did that because we were being told we were doing the wrong thing. And we made a decision that we were doing the right thing. They weren’t a good client for us, and so we moved on to a different book of business. And we did that because we were being punished for something that was right, and we just didn’t wanna play the game that way. So that’s all you have to do is in estimating, a lot of problems come from you don’t understand the foundation of the estimate, and then we don’t have the systems built properly, and then your client potentially isn’t the right client for the way you need to make money. Now when I started to look at things through the IICRC and and Encircle, I was on the s seven hundred. And we were starting to look at the discussions that were interesting discussions inside the s seven hundred because as we’re writing it, we were I was brought in to discuss the documentation and and and the processes around that. And what was interesting is you’d hear different people with their different perspectives. So these are trained professionals. They’re talking about how we have to work within the industry. And what’s was wild is for eight and a half years, I was a restorer, but I didn’t actually have to do restoration. I got to work with restorers, so I got to think about restoration more than actually doing it. And what was interesting is as we’re sitting in these discussions with the s five or s seven hundred, you’re hearing people say, well, you have to do this. So if they came from a program perspective, they’re like, well, you have to do this way when you’re in a program. And yet when writing a standard, it’s not for programs. It’s for what is expected of a normal restore. And what was interesting is you started to see people’s learned behaviors being conditioned where they believed that the business had to be done a certain way. When you’re watching it from the outside, you’re like, man, that’s just totally wrong because you have these other ways of doing business. And so that’s where I really picked up on this conditioning within the industry is that once you’re conditioned, it’s really hard to break free of those rules because those are the rules of of making money. This is how you decide to play the game. So I’m not anti TPA. I’m not anti program work. I’m just if you do it, you’re gonna have to understand that you’re gonna have certain terms and conditions that you agree to. Reason I make a big point about this is that that becomes a really big trap for eroding your margins, and you start to apply it on multiple projects. You even apply it to line items. Like, we can’t change line items. Well, if you can’t change them in the system, then you better hope the price list works most of the time for you. If it doesn’t, then you have to go to sub trade because there’s not enough money to do the work, so you have to move it to sub trade. All of a sudden, you add all this administrative burden into your estimating process that doesn’t necessarily need to be there. Does that make sense? Like, the outside constraints will make you more inefficient if all the outside outside business that you do or outside customers that you do put all these artificial constraints on your business, your business becomes more confusing, it becomes harder to run a good number, and then it becomes really hard to predict profitability. And that’s because you have other people telling you how to do your work. So when we avoid these traps, it’s just understanding that you get repeated learned behaviors, and that usually results in in margin compression. The conformity feels safe. It doesn’t feel good to step outside your normal range and say, you know what? I’m gonna, you know, change my price. I’m gonna submit a number based on what it should be because I know what my costs are. Conforming to the system where you get a good scorecard makes you feel safe, but it usually leads to profits eroding, and and it puts your business in a worse position. Even when no pressure’s applied, your rules are applied to estimates. So your estimators, you have to watch to make sure your estimators aren’t reapplying those rules. If you just always wanna come back to that example, the fleas in a jar is like, are we fleas in the jar our estimates, or are we actually writing them the right way? That is a a perfect example of conditioning. When we look at programs versus nonprograms, you’re making changes. Right? So when we get back to looking at struggles in a business, when I got to work with a company in two thousand seven, two thousand eight, we were trying to figure out why businesses were struggling. So as their revenues were coming up, we saw independent independent contractors that would go through this spike where they would have really good profitability, and then all of a sudden, it would tail off and then it would drop. And what was interesting is that as companies got older with time and they got so when they came in and they they’re they’re the NFG, right, and they’re ignorant, they don’t know anything, they’re actually cranking up, like, just living wild. Just I’m gonna estimate the way I need to. I’m doing this, and this is how I do it. Then they their profitability drops. They start to get conditioned in the program. So they go from being independent to being in programs to finding a steady balance. And then what happens is the rules change, but they didn’t get more aggressive. And what we almost continually saw is that margins get eroded. So if this is true in your business, you would have seen high margins early in the business life cycle. The margins drop and plateau, and then all of a sudden you get into this declining scale. That’s usually a sign that you need to overhaul your estimating processes, and you have to go back and rebuild the foundation. Because what happens is you’re now conditioned and then the game changed and your margins erode. What’s interesting is if if you look at an established company in the seven or eight years in the business today versus a start up business, the start up businesses are almost always more profitable than an established player. And the established player has those constraints put on them, and then the rules change and it becomes more constraining and they get less profitability. A new company comes and starts up, normally, their margins go up, and then they get into, like, comfort. If you just rebuild your systems around here, like, if you rebuild back in the in in the where the x is here, then you can get your profits back up. As your as your revenue goes up, your profits go up. But what we saw is that as companies go on, they start bleeding profitability. It’s really wild phenomenon, but it comes in usually around the conditioning around program work is the best I can figure it out. Because companies that come in that don’t get access to program work normally do really good for the first few years. And then they start adding programs, and all of a sudden their margins drop across the board. Programs are inefficient. That’s one of the one of the downsides of programs is that you are gonna be in where you’re getting a lot of pressure on your estimates. So you’re gonna create an estimate, get it in really fast. Normally, if you get an estimate in really fast, you’ve you’ve missed stuff. New technology today with three d, three sixty cameras, little all that technology is helping you get your your estimates in quicker with more accuracy. So with time constraints, like three days, five days, you’re now getting your estimates in. If you’re missing items and then you’re penalized for missing items and asking for change orders, which is silly, because, like, I’m trying to give you a fast estimate. I need to know everything that’s happening before the job’s even started. That program rule is effectively set up to drive consistency on their end, not on your end. So we’re looking for those program rules, and it’s like, well, if you didn’t do the job right, you’re punished. Those rules are set by others who aren’t necessarily focused on you making money. They need to lower costs, and they’re like, hey. If I can get them to lock in a low price, I penalize them for changing the the numbers when they do, then we can condition them to to to substantially reduce their invoices on a regular basis. But the goal is that you wanna put your programs in and use that program efficiency, the inefficiency of program to drive efficiency. So they want fast KPI. You figure out how to increase your efficiency. But what do you get? You get more overhead. You gotta do more file reviews. If you were to deal with, let’s say, that church where you just say, hey. I I get my invoice to the church. They pay me, and I move on to the next job. That process is is an easy process. I charge for fair work. I get paid based on my estimate, whether it’s unit pricing, rate material, whatever it is, and I move on. If you go into a program, then you got all the reviews that go with it, right, all the inefficiency. All of that has to be factored in. Normally, when you get more inefficiency, your price goes up. In our industry, when you add more inefficiency, they want the price lower. That doesn’t normally equate to a good business practice. So that’s where you start to start focusing on how can I use a program if I’m on one to find what’s good for my business, and then what can I get rid of that is bad for my business? And that’s just my caution on program work. It’s it’s how I built my company in Canada. It’s all programs, but you have to figure out whether you wanna play inside that scope of work and who do you wanna play with. Just because you’re on a program with one company doesn’t mean you have to be on a program with another company or follow their rules. If you don’t sign with them, you don’t have to follow it. And the only caveat or or exclamation mark or what you call asterisk would be if you’re on a franchise group or a national group, and there’s penalties for your friends or your colleagues if you don’t play by the rules. Alright, guys. Let’s do another question period, and then we’ll take ten minutes, and we’ll come back and finish this up. Alright. Questions have been kinda popping off a little bit. We also do have some as well from before the webinar. Sure. It’s preregistered. Maybe we should go back and do a couple of those because I wanna make sure those I don’t want those to get lost. So let me just pull up my list here for for my preregistration questions because there are some good ones in there. Here’s one from Mike. He says, what are some ways we can improve communication between our estimating department and our project managers? I’m a I’m not a huge fan of having them split. But if you have them split, they both own the number. So if I so where we had problems in the past or where I’ve seen problem no. I’ve had I’ve had this happen. So an estimator writes a number and doesn’t understand the cost it takes to get the job done. So they they write the top line, and they don’t know what the cost is. And then all of a sudden, the project manager goes to execute the job. And and if the estimator says, hey. We’re gonna make forty percent on a job, but they don’t actually know what the cost is, how do you expect whose fault is it when it’s out? Is it the top line’s wrong, or do they they waste money on the bottom? And I remember I had this chargeback happen to me. We had an estimator that estimated the price using Xactimate, missed a bunch of items, and didn’t account for custom items. So it was I think it was, like, a solid wood door for, like, a front of a very high end home. And we had the door was bid out at twenty three hundred dollars, and we had a thirty four hundred dollar charge on us. And when I went back and looked at the numbers, the estimator made the mistake. The project manager executed or the crews executed properly, but the project number was wrong. The top was wrong. So when you look at that, if you disconnect the two of them, somebody’s always gonna blame somebody for being wrong. So it’s either the top is wrong or the or the cost is wrong, and, hopefully, your your your profitability doesn’t get squeezed. Those have to be, like, lockstep. If you don’t know what your cost is, how did you set your top line price? Like, if you literally just put line items in, we’re like, oh, it’s a hundred grand. Send it in and you haven’t talked to sub trades, you’re behind. Like, you lose every time. So you have to know your cost even if you’re doing unit pricing. Like, if your unit pricing is way off in your area, you can’t do that. So I I don’t like having estimators and project managers disconnected. They should be saddled together on whatever compensation plan you have them on. They should be saddled together. They they win together, they lose together, and they better find margin. Alright. Thanks, Chris. Let’s see. Here’s a question from Brian. He says, what is the best method to save time on-site sketching large properties, and what are some more efficient tactics for estimating? Yeah. So so if you’re not using here’s here’s the plug for Encircle. If you’re not using Floorplan, you should. That is a big saver. So you should still know how to sketch. Like, there’s complex ceilings that you’re gonna have to add into your estimates. But the technology that’s in the marketplace today, Encircle’s got it, DocuSketch got it, Matterport’s got it. Like, you’ve got a lot of technology that you could deploy into the business. We didn’t have that ten years ago. So, like, if you look at, like, Encircle, you use floor plan. You walk around and using your camera in, like, three minutes, five minutes, you can get three thousand square feet sketched out. That used to take us hours on-site. And so you now have that technology for, like, let’s say, twenty five dollars. I don’t know what the price is today. But let’s say twenty five dollars, you can do your sketch and you do it in five minutes. You don’t even have to do it. You can have a technician do it. And if it’s if it’s there on the technician, you’re billing for the time. You wait five or six hours, and you get a a three d sketch that’s imported into exact, and now you tune it up. You do all your measurements. So now you can use technology to to drive some of that efficiency. I like technology for that standpoint. Now I still like to be on-site to write my estimates, but I’ll tell you that three d technology out there where you can see the site. Like, I do a lot of file reviews to, like, verify is the job running, like, normally in a court setting. So I’m looking at a a Matterport, and I look at the three d’s and go, okay. How many lights do they have? You can learn a lot from those. I like them. I like that technology a lot. Things that drive your efficiency, be very good on your knowing your scope. Right? So you have to learn line items. That’s the thing about Xactimate. If you try writing in Xactimate or Symbility let’s say you’re in Xactimate, You you have knowledge in Xact. And then you’re told to write in Symbility. Symbility is a completely different buttonology. Completely different system. Like, you have to think. They’re it’s not estimating. Like, they’re estimating as core root, learn how to estimate. Then you gotta learn buttonology for exacting. You need to learn buttonology for stability because they’re two different programs, two different methods of estimating even though they’re both unit price. So people that come in and think that, oh, I’m I’m learning the exact way and it’s no. It’s it’s exact way is unique to exact. It’s it’s it’s a a computer system. It’s like learning if it’s like learning Microsoft Word and then Corel when when that was around, where it’s like Sheets and and learning Google Sheets versus Excel. Two different programs. They’re kind of similar. They they function completely different. And so you have to understand that that’s those those nuances on those two programs are are very different, and they will get you We actually the the same person who sent that question sent another one along that said, you know, how do you combat an ex an adjuster who’s using Symbility when you’re using Xactimate? Yeah. You they’re apples and oranges for the most part. In two thousand thirteen, when we did the r c it’s a this is a good question, so it’s a deeper answer on this one. In two thousand and thirteen, when we did the RCOC study, when I was working with Deloitte on it, what we found is we were looking for, like, is one pricing system cheaper than the other just like out of the box? And Symbility was the cheaper pricing system. And so insurance companies are like, oh, well, if it’s a lower price out of the box, it means we get a lower cost. Again, these are paper numbers. They don’t they’re not real. Like, if I don’t make any money on on one system versus another, it doesn’t matter. Like, you can’t compare apples and oranges. If you wrote, like, a a ten thousand dollar estimate in exact, and then you wrote a nine thousand dollar in in stability, but it’s actually a fourteen thousand dollar real number, it doesn’t matter what digital system says. What’s the real cost in the real world to have real people do it? And you have to keep coming back to that. If you don’t and you’re just taking the top line of the digital systems, you have no idea if you’re making money or losing money. And and that’s why we see a lot of contractors lose money because they’re relying on the system to be the right price. It’s not a pricing system. Like, I can’t over explain that enough is Xactimate and Symbility are starting points, not a price program. And so the insurance carriers think it’s price program. We capitulate to them and and act like it’s price program. But on a job by job basis, you could lose your shirt on one job if you use it like a pricing system if you don’t know your cost. So if someone wants to bring in stability and say, hey. I can get for less or or or exactly, there’s times when it’s reversed. The number doesn’t mean anything. You need to say, hey. What’s my margin? And does this number make sense? And if someone comes in, like, normally, on stability, you need more line items to get to the same number as an exact. Like, it’s a little bit more detailed breakdown, which means there’s more room for error or more room for data entry. An adjuster with limited knowledge in a system that requires a higher comprehension of learning is normally a bad disaster or a low number. Good question, but it’s there there’s a lot to unpack there. For sure. Sorry. Threw kinda threw threw a bit of an open ended one at you there. So how are we doing for time? We got about, I don’t know, looks like, about sixteen or eighteen minutes, depending on my clock, until two. Maybe we have time for one more question, before our break? Yeah. Or or you know what? If we’re or or yeah. Let’s do one more. Okay. Let’s see. This one’s been sitting in there for a while. It says, if you’re familiar with contractor connection as an estimator, how do you suggest working through this program and getting estimates to be profitable? Most items are rejected. Bid and labor hour items can’t be used in most cases. I’ve been seeing a lot of talk you know, I’ve seeing contractor connection in the chat a lot as well. There’s probably few people wondering about this. So I I I don’t I don’t really have a problem with their like, they set a set of rules up, and you signed the agreement that said, I can play with those rules. Then what happens is and then maybe it wasn’t you. Maybe it was your company. But if you didn’t do the, hey. Can we make money on this program with these sets of rules or the constrictions on us? And they put those rules in place. And if it’s not profitable, don’t do it. Like, you’re a time when you’re gonna trade volume for for margin. But if if you’ve eroded your margins to a point where you can’t make money and their rules don’t allow you to make money, then you maybe can’t do the work. There’s a lot of people that go off the program. However, there’s a lot of people that say that they can make a lot of money in it. So I’m gonna say is it it re like, it requires you to be really efficient. You have to be really knowledgeable of how you make your money and and align your field operations up with your estimating. If you’re just sort of like, hey. It’s another insurance company that we’re gonna do work with, you’re probably in the wrong place because that’s it’s driven by efficiency and systems and streamlining to make money, and they’re they’re not there on like, again, you’re a commodity. So you’re gonna be treated like one. I I don’t disagree with their their their model. It just puts a lot of pressure on your business. Is there a good way to play with it? If the rules say you can’t do it and you sign the deal, where you’d have some leverage is if you didn’t sign a contractor connection deal, and then you’re being reviewed by the system. But the how do you get it? Document. Document. Document. And then have the conversation before you do the work. The hardest position for you to negotiate is after the fact. After you’re done the work, you can’t take it back. So call them and say, hey. I I gotta do this. You know, it takes longer to dry. So are we getting paid? Usually, the adjuster can override any of the contract connection decisions. So if you get an adjuster to agree to it normally, then then it it overrides any of the program rules. But you’re you’re gonna have to play the game extra tight. It’s a it’s a tough program to work in. Alright, guys. Let’s get going. I’m I’m gonna jump into unit pricing, and what’s interesting is this is where we start to to break down sort of what is a unit price. So it doesn’t matter what system, and it was great that we had the question come in before about is it stability or exact to make. And what’s interesting is that when we look at unit pricing as a whole, it doesn’t matter. So it was actually wild in Australia a few years back. They used to have per room unit pricing. And so if you could imagine going into a room and being like, well, that you’re gonna get x number of dollars to dry a wet room, Includes everything. You’re like, well, there there could be a thirty to forty individual tasks in that room versus you go to a different room and and maybe there’s sixty tasks to get it done. Right? Like like, line items that you would need to do. How do you come up with, like, a blind price per room if you’ve never seen it? And and the people that came up with that didn’t have a knowledge of how unit prices are built because you can build a unit price for multiple things being compiled. The and we talked about the simple unit prices that, like, I got a labor hour or a piece of equipment. If you were to grab a an extraction unit and apply it to a job and you were saying, hey. I’m gonna rent it out per square foot. Well, all of a sudden, you have to know how many square feet does that work versus a per day rate or per hour rate. Everything has to be broken down. So we’re gonna break that down here, and it this is the foundation. If you understand this, all of a sudden, Symbility and Xactimate make way more sense to you if you understand this this next lesson. So when we look at unit pricing, a unit price could either be one of these individual items as a stand alone, like a a labor, an equipment, a consumable, or material, or it can be combined together. The more combining you do, the harder it is to adjust that that number. So if I go and look at it and we say, let’s let’s simplify this down to just a material. Materials are crazy because this now this isn’t this isn’t today’s pricing. So I don’t this is from the last time I did this, so I don’t know where today’s price sits at. But if we were to look at a two by four by eight, and you said, hey. We’re gonna buy it for three dollars and thirty five cents, a eight foot board. If you’re gonna do unit pricing, you have to figure it out based on the board foot. And so it’s point four one, Basically, point four two cents. So forty two cents per foot is what that board is worth buying it off the shelf and putting it into the into the job. So here’s the question. Based on your knowledge of unit pricing, if it’s forty one cents or forty two cents a a a board foot, how much does a a two by four cost if you’re only buying four of it? Right? Is it thirty three percent because there’s waste? Is it easier to ship so it’s forty percent off? Is it fifty percent because it’s just fifty percent less? I’m cutting the board in half. How much would the store charge me for that reduced board price? And it’s interesting. We’re we’re getting lots of feedback. So keep the feedback coming, guys. What do you think it’s gonna be? How much of a price do you think if I told you that a a eight foot three eight foot board is three dollars and thirty five cents, how much do you think the store is gonna cost to charge us for a four foot section? So if I had a tree and I had a twelve foot length and I cut an eight foot, I got a four foot leftover. It’s waste material. Right? So is it gonna be thirty three percent waste? Is it is it forty percent? They’re gonna mark it up a little bit. Is it fifty percent? You’re like, hey. You’re just paying per board foot. This is awesome. We go, well, over a hundred people participating here. Is it special order, or is it why not? Let’s just charge more money. And this is wild because when we start to look at how we price versus how the industry prices, We start looking at different things that come in and can impact your price. Can you can you end up poll and show show the answers? If you didn’t participate, you gotta be faster. So in here, it says the majority of you said, hey. Special orders. Two dollars and eighteen cents. Somebody says, like, hey. Seventy four percent more money. Why not? The fifty fifty would make sense. If we were only charging it on a unit price, you only buy the boards for what you have or the board feet that you have. And then some of us, seventy percent said, hey. Wait a minute. Twenty percent said this it should be less. So here’s what’s wild. When we look at that and we look at the price, the materials that they charge is two dollars and forty eight cents for a four foot length. So even if it’s their waste material, they’re not giving you a discounted price. They’re charging you a premium for a short board. It’s seventy four percent of the price to buy fifty percent of the material. So when we look at insurance companies that come in and say, well, you’re doing less work, so we actually it it should be a discount. It’s opposite of what we would see. So smaller jobs, when we look at our smaller estimates, things that you could factor into a fifty thousand dollar job have to be priced in. So when we look at a small job, let’s say it’s a fifteen hundred or two thousand dollar water damage, project management fees, Well, you have to include them because they’re not enough margin in that small job to account for all the project management scheduling and admin that goes into it. So in our industry, it’s a little bit of a a little bit of dilemma in pricing where all the big pricing pressure is on the low volume or the low margin, high volume work. That’s where everyone puts the reviews on. They don’t have reviewers typically on on the not the same type of reviewer. On the large loss large loss, you provide your your bid chart or your your pay schedule, and then you go do the work, and then maybe they’ll bring a consultant in at the end. You have a clerk in the works that validates the paperwork is good, and the number should be paid off of that. But the business is, like, business as usual, TPA work, where the price should be higher on a per unit basis because it’s smaller, is actually getting compressed. It’s different than the market. But the reason you need to understand this is because when you go to write your estimate, you have to understand that there’s a lot of charges that have to be rounded up. So when we look at this, we say when we look at our pricing and we we factor in our cost, our cost difference changes. If we buy a hundred two by fours, our variance from our forty eight two dollars and forty eight goes up. It goes up to seventy eight percent of the price. So if we buy in bulk, the difference gets further away from our price on the material. Now if I’m gonna go come in here and make a budget, right, and I wanna budget off of here, what do I need to budget to be profitable on both boards? I’d have to say, like, I’m doing five dollars per board to make it worth my my while. So in one case, I’ll have thirty three percent margin. Right? And then if I buy in bulk, I get thirty seven point six percent margin. On the other side, I got point eight percent margin if I’m doing that on there. Now that’s not actually the correct margin. I think it was supposed to be where are we looking at? It’s, like, point five eight or four eight. Sorry. It’s a forty eight margin, not not a not a not a not a point eight. But what you have is you have a variable margin that happens here. So if I’m charging my five dollars, I gotta charge it out. If we look at paint, paint’s the big one here. Your unit price on paint doesn’t account for small jobs. So if you’re sitting here and you look at how am I gonna make money, If you need a small amount of paint, you have to change your paint price per unit. It doesn’t have enough per ounce. If we look at the breakdown per ounce, it’s if you’re buying five gallons, how many jobs are you buying five gallons of paint versus buying one gallon or a couple gallons? So if we’re sitting there buying paint, our price margins normally come in on the unit price that make it worthwhile for buying five gallons. But if you have small jobs, you have to dramatically change the price because the price of material for small jobs goes up, not down. So when we did this, the estimated unit was forty eight ninety nine per unit per gallon, and so thirty eight eight cents an ounce was what we were being paid. So at a gallon here, you’re almost in the profitability range. You do hit it on five gallons. Now that’s only assuming the baseline paint. What if you have a premium paint? Well, now all of a sudden, you’re in trouble. You kinda make money here. You really don’t make any money there. And over here, you’re losing money. So if you’re gonna go into unit pricing and they’ve got paint two coats, and all you’re given is paint two coats as your option, not paint two coats high grade, paint two coats Benjamin Moore, you now have to change the paint product price. Now if that’s my cost, I have to add in margin on top of that. And it’s not ten and ten. It’s another twenty percent plus ten and ten. So all of a sudden, you’re getting this really convoluted complex pricing method that you have to account for your different costs. So if I’m coming in and creating an estimate on a rebuild and they need a Benjamin Moore spec paint, well, now I have to come in and add that into my cost because it’s not calculating. It calculated at thirty eight a gallon. Well, just when I looked at the Home Depot rates at the time that we did this presentation the first time, I could get in where I’d be upside down on my paint if I need to put in the premium brand. And that’s not even going to a premium paint store. That’s just grabbing Home Depot’s premium brand. So what we have to understand is you have to understand your cost on your materials before you ever say yes to the job. If you don’t know that scope, you can’t make money on unit pricing. Unit pricing is so constrained on the inputs that go into it. It’s it’s kinda like if you were to look at driving a thousand miles. Let’s say we’re gonna drive a thousand miles. I I just did this drive so I can talk about it. New York to South Carolina. I’m gonna drive a thousand miles, New York to South Carolina. The GPS says it’s eleven hours. So you’re like, okay. Now do the time and material. That’s fuel. That’s two tanks of gas. That’s eleven man hours down. There’s two of us. Okay? That’s twenty two man hours. And then we’ve got wear and tear on the vehicle, and we’ve got our time and meals. If you were to do a take time and material, you’d be like, okay. Put a budget for lunch, budget for supper, budget for fuel, wear and tear on the vehicle, and our time to get there. If you have a a a if you speed, you can you can get that time down so you can get there faster, but you probably still get the other cost. But you can shorten, like, the the time. If you shorten the time up, you might still have increased cost because, like, you’re burning more fuel. So you saved on time, but you cost you more fuel. If you’re creating a unit price, you also have to factor in accidents that are gonna slow you down. Or maybe you get a speeding ticket that’s gonna slow you down. So all of a sudden, have to factor that in to be able say, hey. How many units of distance can I travel for the expense that I’m expecting? And if anything changes in the in that equation, there’s a car accident and you’re delayed for two hours, all of a sudden, things go later than you anticipate, and it costs you more time, burns more fuel, and maybe you get into another meal. All of that is your unit price assumptions. And so you have to factor in downtime. Be like, well, we’re not gonna be making we’re gonna hit constructions. Those are gonna be accidents. It’s gonna be fourteen hours. And so then you would base your time off of your fourteen hours, not off the ten, the GPS. So ten is optimal. You have to price based on fourteen hours. That’s very basic time and material to unit pricing. And then you would say, well, to do a thousand miles, we’re gonna have to come up with a a time budget to get there. Or to do eight hundred miles, we’re gonna to come up with time budget to do that. You’re gonna factor that in. Same thing happens with estimating. I factor in that we’re not gonna have a lot of waste. But what if my paint color, it for part of the wall is a darker color and I need more of it. And then for my lighter color, I need less of it, but I have to buy two different quantities. Well, I gotta factor in the cost of buying two different quantities. One’s a five gallon pail. One’s a two one gallon pails that could throw your estimate off on your cost. So that’s when you come into unit pricing. You have to be thinking about this on, like, a different plane of what’s gonna cover. So we look at any material. We look at consumption rate. How much consumption does that assume you’re gonna roll onto the wall? So if we’re looking at paint, how much coverage will one gallon give you? That’s the yield. And in Xactimate, they call it yield. In the real world, we call them a production value. K? It’s production rate. How many production units do you get out of that one gallon of paint? So if we were to come in and say, well, one gallon will then give us a consumption waste. Out of every gallon, we lose ten percent. What if it priced for you one point one gallons and you have to buy two gallons or you gotta buy a quart and a gallon, but you’re only being paid for one point one gallon. You’re being paid on the on the lower cost. So now you have to go buy a higher cost item. Your paint price is completely off now. You’re not making any money on your material. When we look at, you also got project waste. So that project waste is where you factor in your roll on your your your over or under. So if you were to buy three point one gallons and you have to buy four gallons or three gallons in a quart, your price per paint has to be averaged out. It works per per gallon. You have to change it so you can hit your margins. And that’s what the estimating system that’s what Xactimate was designed to do is you would go in there and go, oh, well, wait a second. I gotta raise my price of paint to offset it not rounding up to four gallons. So you make those adjustments and you come up with the margins you want. In our system today, in the insurance world, it’s the price is the price. You’re trading some volume for making the system easier. So I’m not against the insurance company saying, hey. The price is the price. When it comes to paint, you’re like, okay. I take it sometimes. I win sometimes. Does it make a lot of sense? No. Not necessarily. But on a volume play, there’s some give and take to to drive efficiency into the system. You trade some downside for more work. So it’s not it’s not a bad thing. It’s not a good thing. It just is what it is. When we look at labor, though, labor, you got the other side. You got direct wage, which is your hourly worker rate. You have all the burdens that are factored in there. So, like, your cost of your labor, all the burdens, your overheads, your cost to operate your phones, uniform, badges, overheads, trade profit. So in trade profit, in the states, you guys don’t get overhead and profit on mitigation. In Canada, we get overhead and profit on mitigation. So, you know, when someone says, oh, OMP doesn’t apply to mitigation, it depends where you are. In Canada, we get it. In the states, you don’t. And when you look at trade profit, it’s built in. So if it’s not on top, you then have to build it into the price. You have to make that trade profit or the overhead profit on there. So if we were to look at how we build our system, if you’re building your your rate, your production rate, you would say, well, if it’s not factored into the price, if I didn’t factor profit into there, then I’m effectively saying I don’t earn it. If it’s factored in there, you can do it a couple ways. So I can look at how do I build my my my rate. So I can build it with my starting rate, my hourly rate, my production time, and all of it’s gonna fluctuate. If you think about it as a moving example, let’s say it takes the time it takes to hang a door. So let’s say it takes in here. Let’s say it takes some time to hang a door. And it actually, I’m gonna go back and then show you the slide. So if I’m in here where I’m looking at the production rate now did you guys hold on. Sorry. Was I sharing my screen when I showed you guys the cans? Kristen or Anna, can you Yes. You were. I was? Okay. Yeah. Alright. So when we get into here and we look at our labor rate, when we look at this triangle, the triangle is is sort of where you start. So you look at if everything’s equal, you have a starting time, a production time, and you got your hourly rate. You look at it as like a triangle that that doesn’t move. I can modify my rate. I can increase my rate, and I can shorten my production time to get the same unit price. I can extend it out. So if we were to look at an extreme example, let’s say that I it it takes time to hang a door. It takes time to paint two hundred dollar two hundred square feet, and I wanna change the toilet. There’s a whole bunch of stuff I do. But the customer says, Chris, you can’t charge me more than twenty five dollars an hour to do this. Okay. So I have a constraint. Maybe it’s a government entity says you can only charge twenty five dollars an hour. And I say to them, well, I charge a hundred dollars, and if I don’t get paid a hundred dollars, I walk away. And I say, okay. Perfect. I get invoice on a hundred dollars and hope that they pay me even though they said they can’t pay anything over twenty five. Or I can tell them, yes. I can charge you twenty five dollars an hour as long as I use unit pricing. And what we do is we can come in and we can modify. This is the basis of all unit pricing. I can modify my production rate to be twenty five dollars an hour if I just extend the time out. And this is why it’s really hard in Xactimate to figure out what your hourly rate is. Because if you’re doing it in a unit price and they screw up the hourly rate, so, like, you’re like, oh, I can’t do it for that many hours. What they can do is they can extend the job time per unit so that you make more because it doesn’t take an hour to do a door. It takes a half hour to do a door. So all of a sudden, if I wanna come up with a two hundred dollar an hour for the task, if I come in and I make the tasks really tight, it’s like, hey. I’m making two hundred dollars in fifteen minutes. Your unit price, it doesn’t matter how you got to two hundred dollars. That’s the price. Whether I showed it as a six hour install or I showed it as a or an eight hour install or I show it as one hour install, it doesn’t matter. It’s how I how do I build the the unit price. So the unit for that door is two hundred dollars. It’s either I’ve accounted for eight hours to do it or one hour to do it at two hundred dollars an hour. If you’re using unit pricing, you’re not fabricating anything. You just said, I assume that it takes us eight hours to do the door door at twenty five dollars an hour. That you said twenty five dollars an hour, I need to get to two hundred. I’m charging eight hours as my unit price is based on twenty five dollars an hour. It takes eight hours. Now when we make those modifications, that’s on an extreme. But when you make those modifications, you’re adjusting the production rate. That’s all you’re doing. And once you understand how you adjust the production rate, then you factor in that into any of your units. When you do smoke damage, if you had light forest fire damage, so light soot in a house, how long does that take to clean versus a heavy soot? Could be, like, double, triple. So if I have light smoke, I would say that’s my base unit is light. It takes me one unit of cleaning for every square foot. If it’s heavy smoke damage, it might take me three times the units, three units for every square foot to clean. I just triple my price. If I’ve got a inexperienced staff doing the work, it might take me four times because they’re not as fast as an efficient team. So I would make that adjustment in my unit price. And what I’m doing is I’m I’m effectively changing my my production rate. So production rate, if you think about it, is your guesstimate of how much time. It’s not right. It’s not wrong. It’s just guesstimating how much time on an extreme basis. This is all you’re doing. You’re figuring out how much time does a task take. So if you in unit pricing, if you understand that, then you can figure out how to build it. When we look at it and it’s like the you know, look at a storybook about Goldilocks and the three bears. What’s too high? Well, too high is you’re out of the market. That’s it’s a ridiculous price. Too low, you’re out of business. You can’t do the work. So just right is always the bare minimum margin you need to survive. So some of you said, hey. We’re not profitable. Too low. You’re already on the wrong side of the pricing path. The other side is too high, and then it’s too high is too much. Like, how high is too much? So then you start looking at your profitability. If ten percent is your target, fifteen percent is not too high. Is twenty percent too high? Twenty five percent too high? What’s too high? You gotta kinda look at what the market will bear. But anything less than ten percent profit is too low. Right? Maybe you can get a little bit below ten percent net profit, but not many companies will survive the ebbs and flows of this industry if you’re making less than ten percent. If you’re less than ten percent and you get stuck in a drought, you’re losing money. When we look at unit pricing, it’s a powerful estimating tool. It’s a horrendous pricing tool. You cannot use it for out of the box pricing because that’s not how it was built. It was built for you to modify everything. So if you were doing spraying an antimicrobial on a solid surface, This is a perfect example. If I’m spraying it on a hard surface that is not porous, what’s my spray rate per gallon? Let’s say it’s a thousand feet or five hundred feet per gallon. If I go to concrete, which is now porous, it’s got grooves and more surface area, and some of it gets absorbed into it. If I’m spraying concrete and it goes down in half or maybe it’s it’s a it’s a quarter reduction in the amount of spray it takes. So I have to I have to add twenty five percent more for concrete. Well, I have to change my my production rate because I’m gonna need more product to spray it on concrete than I do on surface. That’s where you have to understand your yields inside of Xactimate. You have to understand your pricing because you change your surface. Like anyone that sprays it on concrete, you’re gonna have more product going out per square foot than if you were to spray it on steel or on a solid surface or tile. So all of a sudden, you have to increase your product consumption, which then increases your time, so your price per square foot goes up. And if you don’t know that, you’re you’re already working against yourself. But you don’t know what the assumptions are. How did they build the unit price? Was it built on concrete? Doesn’t say. Was it built on stud walls? Doesn’t say. So you don’t know how they built the price, so you have to look into it and figure that part out. And that’s where you can get in trouble without knowing it. The one of the main complaints we get or one of the main things is this tools of the trade or it’s the cost of doing business. And a lot of people say, hey. There’s things that are included in your hourly rate. Now here’s what’s wild is in any other business, tools of the trade that are included as part of your hourly rate would be built into your hourly rate. So if I have my my moisture meters and the infrared camera and I invest in new trucks, if I built my own price, I would include those items into my my policy. Right? I would include them into my my price. So tools of the trade are nothing more than what am I including in there? So what would be tools of the trade for for a carpenter? Table saw, you know, pencils that you lose them every job, tape measure, hammers, nails. If I’m a carpenter that says, hey. I’m coming in just to do carpentry work, and I and you provide the tools, I have a rate of x. If you want me to provide all the tools, my rate is y. So somebody has to come up with a rate of supplying tools versus not supplying tools. Who comes up with that? You do. Why is it when we deal with the software companies that there’s a a understanding that certain things are included and certain things aren’t included? K? There’s no price for your moisture meter. There’s no price in the program for a twenty thousand dollar IR camera. So where is that built into? It’s supposed to be built into the hourly rate. If you don’t build it into the hourly rate, then where does it become? It becomes part of your overhead. But you haven’t built it in as part of your overhead because if I have a a twenty thousand dollar IR camera that my team uses and you don’t, you’re making more per dollar without having that tool. You have to adjust your hourly rates to account for your product, or you have to build that IR camera out separately if all the rates are staying the same. And that’s really one of the big challenges that you have in this industry is when people are putting they’re telling you how you price, you don’t have the ability to change your price based on adding value to your hourly rate. Now it’s not fair or it’s it’s different. The people that play the private game, they can charge twice as much for their equipment because they’re like, hey. I don’t charge for my infrared camera. I built it into my pricing scheme of my rental equipment. So that is included with that. What you have to watch out is when other people dictate what your tools of trade are, you could come up with any price. If you said let’s say, a large TPA says this is how tools of the trade work. They didn’t write Xactimate and say, hey, Xactimate. Is this how tools of the trade work? And then you are supposed to modify your rate. And if you said, well, if you want me to include tools of the trade into my hourly rate, it’s this much per hour. If you want me to break it out and show it individually, it’s this much per hour with this much equipment rental or tool trade rental that I’m billing into there. The one you get is, like, ladders for for roofers. All the ladders included. Okay. We’ll go debris removal. You could build it into the price. It’s just did the people that built the price include it, or there’s just other people making assumptions. And that’s the problem you run into with exact and stability is you don’t necessarily have people that are from our field building the price, and they’re not necessarily thinking about how are all prices built. So you have to be very careful when you’re working with people on that. I always turn this one back. So I I I’m I’m hard on insurance in that respect, but what is an insurance policies tool of the trade? So if you were to look at their policies, and I I use this as an example, is one insurance company might cover all jewelry from zero to ten thousand dollars. And another will say, no. You have no coverage. Or another one will say, yeah. We cover jewelry to a hundred thousand dollars. Well, isn’t that a tool of the trade? Like, isn’t covering jewelry part of your trade of insuring? And it’s kinda the same thing as what we do. If you were to look at different policies, I I I read this one, a hole in one policy. If the and this is from a lie the natural insurance policy. If the policy covers contents at your principal residence, we will pay up to five hundred dollars for expenses for you and a family member you or a family member incur to purchase food or drink at a golf club to celebrate a hole in one achieved by you or a family member during an official round. The scorecard and certification of the club or match secretary must be submitted. No excess applies to or no excess applies to this cover. So is that tools of the trade for an insurance company? Do do they all offer whole in one coverage that if you score one, they give you five hundred bucks? Pretty wild. That’s a cause. Why? That’s a marketing piece. They built a premium off of this customer base likes golf. This will be something we can use to put in there just to sell it, and we know that we’re gonna have a low payout on it. Cool. That’s the Chubb Home policy, I believe, from the UK or from Australia. We look at another one. What’s tools of the trade? Well, they they ensure coverage loss. So in this one, we have coverage for guns up to five thousand dollars. K. Is that a tool of the trade? It’s coverage. It’s insurance coverage. It’s it’s the same as every other coverage. But if I had a different policy, it says, hey. Classic. We only pay five hundred dollars for for an incident on certain covered items. If you have a different coverage, we pay this amount. Well, it doesn’t say five grand. The two policies are insurance policies. They’re both the same. You’re assuring people. Why aren’t you assuring them the same? The the the tools of the trade are built into their price. So a tool of a trade for us is how we bill. It’s how did you build your price. Now when you look at your estimating system, your estimating system sorry, guys. When you when you look at your estimating system, your estimating system comes in and we look at the the policy. I I about that. I didn’t I’m losing my mind here. It was starting to fade out. That hole in one policy was actually a chub policy. And then in here, you’ve got these other policies that are showing up. And so these policies have these limits. This is what I was trying to show you. And so you’ve got these limits here that are are totally two different things. Let’s be very careful when someone tells you that your price is part of the tools of the trade. They’re not. Right? We have these estimating systems that we build. It all starts with a contract. No different than the insurance customer contract. We do a contract with our service that says, these are the rules that we will engage this business from. If you don’t pay us, then this is what’s gonna happen. If you pay us, then this is what’s gonna happen. I’m gonna estimate the job this way, time and materials, value price. If you agree to this, then this is how you’re gonna be billed. No different than when a plumber comes to your house or a carpet cleaner comes to your house. You basically sit down and you you you put a program in place, and you say, this is how we’re gonna do business. Do you wanna do business with us? Then from there, we go in and we do floor plan. We go get our our our map of the house so we can under understand where the loss is and what we need to consider in our estimate. One of the big spots that people miss is they don’t get a good floor plan of the unaffected areas that you have to walk through. So you miss all that revenue from the front door all the way to the source of loss. Like, if it’s in a basement, you lose the stairs going up to the main floor, the main floor hallway, the main floor bathroom that you’re using. All of that needs to have site protection. You’re not necessarily getting paid for that because you forget to sketch it. So what we do is we build really good sketch, and it comes from this. This is an example of Encircle’s floor plan. It comes from here and then moves into an Xactimate, and then you just do some modifications and and build it in. Then you take that and you create a scope of work. Right? So we go through our contract. We get a floor plan. We then do a scope. What’s the scope? Scope says, this is the detailed work we’re gonna do. In unit pricing, it’s the line items. It says the line item says, this is the type of work we’re doing, and then you modify the line item so that it comes in and says, here’s how long it’s gonna take. If you were to look at the the wall behind you so if I was to cut boards and put them on a on a wall like this, would that take longer than doing one in a in a different facility where you gotta stain them? You gotta mount them to a backer board, and you gotta put them on the wall. Or if it was battened, could you just throw up whole sheets? And here, you gotta cut these, which would take longer. Do the whole wall or cut these custom boards. A lot of the cutting, the custom boards takes longer. And then you gotta stain them all, finish the ends. So what we do is we look at the scope of this, apply wood, and then it’s like, was it harder than normal or easier than normal? What’s normal? Normal would be like an eight foot length or a ten foot length. Is it longer than that or or shorter than that? And then you figure it out based on that. That’s your scope of work. Anytime your scope goes harder, the price should go up. Anytime it’s harder than normal, price should go up. Then what we do is we look at our documentation. And so we factor in our documentation as we schedule a plan. Well, how do we schedule our plan? Well, we document it. We move it into a schedule. We create a budget. And all of a sudden, what we’ve done is we’ve now said, we’ve got the contract. We’ve got a sketch. We’ve got a scope. We’ve documented all the inconsistencies. So the questions that come in, how do you get insurance companies to pay? You justify it by documenting it. Right? We then get it onto a schedule, and then we create a budget. That phase is there. Most people fail to do that. They fail to put it on a schedule. They fail to explain the orders of operation that led to a higher price, and that’s where most people have orders of operation. The way we do the work is out of alignment with how the work’s getting done. And then you come back and you say, well, how do I win? So this is a big part of the setup, and we don’t do a great job as an industry. When we when we work in this business, we don’t do a great job as an industry of getting documentation done. If you’re looking at like, hey. How do I get more money out of a job? I saw on the chat, bunch of you said, hey. You gotta document it and submit it to the insurance company. If you’re playing the insurance game and you’re in a partner program, one hundred percent you need to do this. I still would do this if I was playing just the homeowner game. I would still document everything and send it to the insurance company as a courtesy because I wanna try to get it paid as easy as possible, but it’s documentation that you wanna do. So here’s the type of documentation that you’d be looking at. If you were looking at it and say, hey, Jerry. I’m concerned about the foul odor in the basement in the flooring in the basement not being suitable for my family to live around. What is the plan to deal with it, And is it safe? All of sudden, looking like the homeowner sends the project manager this message. They’re super concerned, and the project manager and the homeowner are on the same page. They can go down and say, hey. Like, let’s see if we can deal with it. If the homeowner and the project manager are on different pages or the project manager isn’t documenting that, at the end of the day, how are you gonna deal with this if if you didn’t document their concern? If they document it and you fail to, you come back and, hey, Jerry. I see the repairs are are starting, and the contractor mentioned that the floors are concerned, and he’s worried about our health. Can you address this issue? That’s the area that I’m gonna go back to them and and start talking to them on. If the project turns out it was a floor was impacted by category one, and all of a sudden you get this nasty odor, well, maybe a preexisting condition we have to discuss. So, like, why is there an odor coming out rather than just say, hey. Don’t worry about it. Alright? How many times do we go to jobs where preexisting condition has led us to now have to think about, like, maybe this isn’t a sanitary floor because of the odor. It smells like cat urine. We had a preexisting problem. We can’t treat it like a category one. It’s gonna have to come up because it got wet. That documentation from the homeowner to the project manager and then from the project manager to the adjuster or back to the homeowner is the difference between you getting paid for a floor that you removed and you not getting paid. So how are you documenting it? Well, doc conversations are number one. When we look at court cases, conversations are number one way. What happened? When did you know it happened? How did you respond? So if if there’s information that you didn’t know until later on and that you could not have known until later on, those are easy cases the defendant restores. Like, yeah, it turned out it was bad situation. There was no indications until here that it happened. However, if you communicated or failed to communicate or you only communicate with the insurance company and the homeowner was asking questions and you never communicate, it will fall back on you if you’re not documenting loss and saying, hey. Let’s have those open and transparent conversations. So when we start to look at our invoice and estimating, does an order appearing increase or decrease our scope of work? Does it make it harder or easier? If our scope gets harder because of that preexisting condition, then I need to address it with the parties involved is explained because of this order, we suspect there’s a contaminant. Because of the contaminant, we suspect it’s gonna be more time. If it’s more time, it’s usually more cost. Right? So that’s why I look at anything different than normal, we wanna communicate. If it’s more difficult, it’s it’s a higher price. And so every time you do that communication, it’s like, I’m communicating when things are more difficult. So you do your general documentation, and then you go in and you ramp it up when there’s a problem. So what would be your normal documentation to, like, get paid? I like that comment, by way. I just thought that somebody’s saying depending on what we find into the job. Absolutely, Jared. In my initial walk through, I’m gonna do the walk through. And after the site safety is done, this is what how I found the location. So to that statement, based on my initial observations, this is what I believe the scope is subject to change. And then they do three sixty photos left to right. So I would come into the doorway, and with my my phone, I’m gonna go like this around. I’m gonna take a step back, and I’m gonna finish the room three hundred and sixty degrees just to capture the overviews. Right? That’s my initial inspection. The next thing are notes and observations. Who, what, where, when, why. Then I would add a video. If I can add video at no cost, add video. Video is great. You know, like, hey. It smells like a wet sock in here. It smells like a dog in here. It’s category one, but it smells like a wet sock. Probably category two or a category three. Justifies pulling stuff out. If I saw that in a video and you said, yeah. Smells like a wet dog in here. The homeowner’s like, yeah. Like like the worst wet dog you’ve ever smelled. You’re pulling out the floors. So all of a sudden, your documentation justifies your scope, and you can then justify that increased cleaning, that increased budget, and that increased equipment rental. Then you’ve got your cause of loss and schedule loss. So or source of loss. So I’m gonna document the cause loss for the insurance adjuster. If they’re not on-site like a lot of them are, document it. Take nice big picture away. Zoom in. Zoom in. And what I wanna do is make sure I identify what happened. Hey. The pipe broke. It was a ruptured pipe. The dog ate through the the wall water supply line. The carpenter punched a nail into the supply line. A joint came undone, sudden accidentally. Cool. Document it. And then I wanna document all the preexisting damage. Why? We get blamed for people after the fact. They’re super happy you’re there, but then they don’t notice all the nicks, dings, dents, and scratches from the work you did. So three sixty photos. If I see dents and scratches like on here, if I have dents and marks and scratches, I’m gonna document. Take picture away, zoom up, picture. Picture away, zoom in. Why? Every time you take a picture, I’m doing two things. I’m telling the customer I know it’s there, and two, I’m gonna have proof it’s there for when we’re done. The other thing is is if you get a a low end insurance company that only pays for one wall, The other three walls look like trash. Right? When you compare twenty year old paint to, like, brand new paint, it’s gonna look like you did a bunch of damage to it when they notice all the nicks and scratches on there. They’re all normal wear and tear. Just document it. You do that left to right and then video for those odors or the non visible. Sometimes there’s things like you’re trying to show video of like, hey. This is distorted. Describe it. If it doesn’t show up in the video, it’s better than nothing. The other areas I would wanna do is site protection. So if I’m doing site protection in the unaffected area and I charge for it and I have to fold it up every day, show your pre and post photos from it. Protect everything from cross contamination. Your justification is is a sanitary reason, and then you’re putting it in. If you’re building a negative pressure, show your negative pressure readings. Like an adjuster is gonna say, why do you need negative pressure? Oh, it’s contaminated environment. Well, then show them the manometer readings. Like, it’s okay to present our data to them. Show them the data. I had it under negative pressure. Help the the adjuster justify their payment for these products. You’re putting a service in. You’re saying, hey. I need negative air. It needs to be under negative pressure, and this is the goal I had at five point five kilopascals or five kilopascals. This is the the the the pressure I need at. I maintained it, took a picture, and I showed it. Well, the unaffected areas, I’m gonna go through and inspect this. Now this doesn’t sound like a big deal for estimating, but it’s massive. This is how we’re gonna document things. And if we come in after we do our initial inspection area of the affected areas, I’m gonna make sure I get that cause loss, schedule loss, preexisting conditions in my site containment. The next thing I do is resulting damage. Why? That’s where the money’s at. All the resulting damage is where we’re starting to document this. It’s like, this is the things that need to get torn out. And now I’m another big fan of grabbing a black marker and axing if you’re pulling a wall out, ax it when it’s wet. Because the number one dispute that happens after is it looks dry, and a consultant will come back and say, oh, I think it’s dry. No. The scope was initially set as it’s a category three. It’s coming out. You x it with a marker. That was the discussion at the time. It’s now permanently marked, and it’s it’s ready to come out. I love when I see that because it doesn’t allow for Monday morning quarterbacking when it’s dry to say, I think that’s clean wall. If it was wet, you you mark it. You mark the structure. You do the contents. Contents is a big one. That will impact your estimate. If I’ve got a room full of contents, I’m gonna have to justify it. Then we’ve got our equipment, and we have to make sure our placement is good. And you wanna come in and go, what’s our equipment placement and what’s our justification? Do we need more equipment or less equipment? Do we meet the standards requirement for equipment or do we not? Justification in the standard is really tight for putting your equipment in and then making your adjustments. That makes sense? So far, if you follow that, if I were to review your estimate, your estimate should look like your documentation. Right? If we were looking back, I should have an estimate that looks like your contract. Your estimate should look like your documentation, and your documentation should basically justify what we’re doing inside the job. If you’re doing that, you’re more than eighty percent of of the way through, and you’re doing more than most contractors. When we look at the report, what you’re trying to do is come up and show the damages, the condition of the building, and the and explain the story to the adjuster so that the estimate makes sense. You have to imagine your estimate or your Xactimate or your time materials, whatever you’re doing, has to look good. It has to come into play so that the insurance company looks at the paperwork and goes, yeah. That’s what thirty five thousand dollars looks like. Because if you have, like, three sheets of paper and no sub substantiation behind it, how do I pay you the price of a car when you have no paperwork to to support it? And you’re like, well, they know it’s a wire damage. They know that’s what it should be. The vice president doesn’t know. The claims manager doesn’t know. They haven’t looked at your file. Give them the justification in in your paperwork. It’s called front loading your claim. If you front load the front loading pack. Basically, answer all those questions before you get the job to a dispute position. Front load it with all those questions, answer all those questions in advance, and you’ll have a much easier time in the end not having to fight an adjuster. So when we talk about being profitable, why do you wanna be a profitable restorer? Like, there there’s a mentality out there that restorers should, you know, be happy to be doing work and saving their community, and that’s what we do. But why do you need to be profitable? If you really believe in your mission that you wanna help more people recover after a loss, you wanna help more people in your community, you have to be profitable because you’re you’re a for profit business. You run on profits. You grow on profits. You have to be profitable, and there’s nothing wrong with it. Just understand you can do the right thing and be profitable. The insurance company doesn’t necessarily want you to not be profitable, but it hurts their bottom line every time you take a dollar from them. It hurts their bottom line. So you have to do it ethically and do the right thing. And what’s wild is and maybe I was naive, is that I was taught that if you were technically trained, you have all the technical experience. The more technical you get, the better you are. The problem is is the more technical you get, the more you fall in that Dunning Kruger effect. Right? You so you get in that curve, and then all of a sudden down here, you get scared. Well, to get profitable, you have to get through the technicals, but you also have to realize that your business comes first. Your profitability comes first before the homeowner. You you could turn the job away. If it’s not profitable, don’t help. It’s a hard thing to say. Private equity totally changes the game when it’s that way. It’s like, it’s not profitable work. We don’t need to help them. Let someone else help. So you have to change your mindset on why are you in this business. Are you gonna be profitable? And so when we start to look at how profitable are you, it’s okay to be profitable. You just have to understand the industry. So in the last five years, I’ve had this really interesting high level conversations and and looked at it from a much higher view. Right? So you got lawyers, adjusters, claims managers, property managers, and everyone assumes you have these credentials that you can go and do this business. And what’s interesting is that whether you’re on your second course or your twentieth course, no one really cares whether you’re credentialed up to the to the top or not, but you should. Because you really need to be able to go into a job technically savvy and be able to make that technical argument. And if you look at plumbers and HVAC companies, they spend a lot of time in that training. Right? They spend a lot of time focusing on how do you get someone trained, how do you get someone good. And even then, there’s, like, really good plumbers and really bad plumbers because they run their business poorly. But when we started to look at it, restores have a distorted reality. Plumbers come to your house and like, if you can’t afford it, we can’t help you. But as a restorer, we go to people’s homes and we’re like, man, we really like to help you. I just need to know who’s paying, and then we’ll figure out how we help them. Like, there’s nothing wrong with renting equipment to somebody who can’t afford the insurance thing and just say, hey. I got equipment on my shelf. It’s not making me any money. I’ll give you it for fifteen hundred dollars. You pay me fifteen hundred dollars. I’ll give you a wet check. You do your own when the stop’s beeping, that’s when you’re dry, and then we’ll come back and we’ll check your building for you before we pour equipment out. Cool. Make less money, provide less service, fits the market. There’s nothing wrong with that, but you have to understand this business is is tough, and they assume everybody’s doing the same thing. Your price the reason why prices are, like, in in are all the same is they assume everyone’s offering the same service, and so you have to break through that mold. When we look at it, I got to be a professor at Humber and instruct a bunch of restoration professionals. So Anna, who’s on the call, she’s she’s my instructor there as well. And what’s interesting here is that we had students that were getting the top training from at least in Canada, that’s one of the the higher programs that are there. And it’s amazing is that even as a professor there, no one cares. Right? Like, if you come back and you’re like, oh, why? I taught at Humber. In the real world, no one cares. It doesn’t matter. Your credentials don’t matter. It’s how you explain it. They don’t care what your your background is. Your credentials don’t matter. It doesn’t matter if you’re a professor and you taught this thing. You still have to come in and logically explain it. So don’t be like, oh, I’m a master restorer, so therefore, you should listen. You still have to do your justification of saying, here’s why it is. So it’s kind of like humble education. When you write an estimate in unit pricing and there’s something that you need to change or disagree with, you’re educating. I had to put this extra line item in because this happened. Here’s where the standard says this is happening. This is how I approach the job, and here’s why I add more time. Normally, you wanna have that conversation before you submit your numbers, and then just say, hey. As per our conversation, this is what happened. But in the case that you don’t have that conversation because you can’t get ahold of someone, justify it with the standards. And you should know the standards, the IICRC, and everything that goes with it. Most of the estimates that get kicked back in review have no justification. So there’s some adjusters on this call that would probably say, yeah. Like, if you see things that are getting kicked back, it’s, like, super thin, no support. You didn’t help them do their job. They don’t trust your number because you got bad line items all over the place. You’re just trying to get to the number, but it has to be that you’re you’re putting in the numbers in the right spots. Now the I I c r c is interesting. I had a file reviewed by a fellow instructor, and we were in a head to head battle of opinions on this. And what was interesting is that the file I’m not gonna get into the details of the file, but the file was where how would you put it? There was things that were being said that restorers were expected to do that was was wrong and incorrect. And I I watched this happen, and I was on the other side. And I went, there’s no way that this person is making these claims that they’re saying the restorer should do all this stuff is wrong. And what was interesting is they made a statement that every restorer is taught to restore the property as fast as possible. And I remember, like, having a flashback to, like, two thousand five or six, and I remember the instructor saying, yeah. You number one priority in restoration is get there as fast as possible. What they were saying in there is, technically, that’s the right thing to do. The IICRC teaches technicals. But from a business standpoint and from an estimating standpoint and from a logistical standpoint, it’s not to be there fast and first. It’s there to get the job signed up and file the contract and get the paperwork done. And it was interesting. I was in this court case two years ago, and we won against another instructor. And it led me to believe this question that I’ve been asking myself for so long is what if everything that we were taught in restoration was wrong? And I kept coming back to this. It’s like, what if we were taught everything wrong? And the reason why I asked that is we’re effectively looking at our business from a perspective of technically what’s right, and we have to match it to what’s right for the insurance company, and then we have to match it to what’s right for our business. And the conflict that kept running into is what if everything we were taught was wrong because you’re you’re you’re taught in silos. You’re taught in a silo of, technically, this is correct, but business wise, it’s not. Technically, this is what the insurance companies want, program rules, but that’s not technically good for our business either. And all of a sudden, what if everything that we were taught was wrong? Like, the buttonology is wrong. And you’re like, man, that’s totally a mind shift for me. What was interesting is that the more I explored it, the more it made sense. We don’t drive buildings or restore fires from an academic theory anymore. We do this to to restore buildings because financially, it makes more sense for them to pay us to do the work than it is for us to just replace stuff. So we can clean it or save it. There’s a financial benefit for us getting paid versus someone else getting paid. And that’s when I started to look at things a lot different. I I started to put this in the perspective that the way we estimate, the way we price, the way we build out our our our revenue models, all of it is just a balance against what’s the other option. And so when you start to look at unit pricing, unit pricing is just commoditization. You have to come up with value offer. Like, what’s your value offer? And every decision and every investment in your business is about increasing profitability. So if you’re gonna invest in equipment, it has to have an ROI. You can’t just buy a fancy truck to have a fancy truck. If you want to invest in in new restoration gear, are you gonna actually use it? You know how to use it properly. Can can you take that gear and maximize your profit potential? And this is where he comes back to understanding your price. The price of equipment rental in the industry hasn’t gone up in a ton of years, although our prices have just spiked. I’m looking at at some dehumidifiers a couple weeks ago when I was in a Ramsco and John Don’s offices. Expensive. Totally spiked on price. Our rental rates have stayed about the same. So what’s offsetting those those rental prices? Right? All of a sudden, do we have a longer return on investment? Someone else controls our price because the the cost of purchasing new equipment has gone so much up. It’s making the heart the game harder to play. So if I’m going to invest in equipment in my business, I have to get a return on investment. I have to know what my costs are in order to come up with that return. When we start to look at it, we we can look at the other side of it and say, well, we move quickly to get the business needs met before we can restore the property property. So if we go in and if you change your your your mentality you know when I showed you that we had a really profitable year? All we did is we said we put the business first. We didn’t put the SLAs first. We didn’t put anything else first. We put the business first. We made better business decisions for our business, and we’re like, we’re gonna only restore jobs that we can make money at. Or if we are restoring jobs where we’re losing money, the overall payday for that account has to be worth it. So we yeah. We do a few jobs where we lose some money, but overall, we have to make money. That’s why we fired one flight because overall, we didn’t make money. So we were like, well, you’re done. You’re not good for us. You need to be here as a profitable restorer. You need to be looking at how do you generate more profits in a faster time frame. Alright. Excuse me here. Any let’s jump into one more example here. I’m gonna pop this up. If we were to look at car assembly, I wanna I wanna tie this all together, all all these ends together. I want you to understand if we were looking at car assembly and we said we’re gonna do great material, so that would be your your basis for doing anything. Now the reason I use car assembly is we can imagine a car coming down assembly line and says, hey. It takes a hundred hours to build. Five thousand dollars in material, five thousand dollars in labor. We combine it together. We know what our costs are. You look at your production line, and you’re like, hey. Can we drive efficiencies in there? If you took that production line, said, oh, no. We figured it all out. It always takes five thousand dollars in labor, five thousand dollars in that in materials to get there. It’s a hundred hours to build it. That would be your rate and material experience. What could you do from there? Well, you could break it down. You could say, you know what? There’s three hundred and ninety five individual processes that makes up one hundred hours, that makes up five thousand dollars of labor, five thousand dollars of material. If you’re a car guru or an engineer and you already knew that, you have enough experience, you could just say, hey. You know what? It’s just ten grand. That’s your bid. You have enough knowledge. You’re like, yeah. It’s ten grand. Because, obviously, it’s a hundred dollar a hundred hours, and it’s five grand material, five five grand of material. All of those should be the same price. Right? If you were to do the same model and follow it through. The problem with our industry is nobody looks at all three estimating systems as the same, but they should be. Like, literally, you can’t you should have a different price. So if I have a rate material, it means for me to get rate material different than unit pricing, one of them is wrong. Usually, it’s the unit price. Unit price is a bunch of false assumptions. Rate material is based on actual experience. The bid price is based on you knowing and remembering that experience and be able to put it into a bid. If we were to take that same example and said, hey. Our rate material price on a car is ten grand, And then we have unit pricing, and and we got different car companies. They’re like, oh, it’s fourteen grand. It’s four grand. It’s ten grand. Seven grand. You’re like, sorry. What? And then on bid pricing, you get somebody at twenty one grand, someone at five grand, eleven grand. You’re like, how did you come up with all these prices? That’s insane. What happens if we turn it into restoration and you ask the adjuster the same question? They’re like, hey. On rate materials, it’s a hundred grand. How come when they look at it, all of a sudden they see two hundred fifty thousand dollars, sixty five thousand, a hundred? Which one’s the right number? If you don’t have this basis of how much you think it should be, how can you factor in which is the right price on the company? So when I look at insurance companies, look at them with sympathy because I’m like, hey. I’m getting a ton of numbers that aren’t the same. In a unit price, my rate material and my unit price should be the same. If I’m bidding, I put the fudge factor in. It might be a little bit more because I’m factoring it in. Technically, it should all be the same. The only reason that this is a hundred thousand is because that’s the experience we actually have from doing the job. If I’m bidding it or I’m coming up with units, I have to make assumptions and factor in. So my price could be a little bit higher. It shouldn’t be lower than the time and material cost. Right? Because that’s real experience. It should always be higher. How much higher depends on how much risk you want me to assign. So is two ten too much risk on a bid? Not necessarily. It depends how much risk I have. Depends on the the protocols. If we were to change these numbers and we were saying, hey, in our in our estimating strategy, we tightened it up. Instead of getting this wide range of pricing, we now have a narrower band of pricing because we have a better scope. I could easily see that, hey. The cost on here is ten grand. I could pay ten, eleven, or ten five. At nine, I probably don’t get the product I need on a on a on a volumes play. On bid pricing, maybe you could do it for ninety five, but ten and eleven are the right price. If we come into restoring homes, a hundred is the right time and material price if you know what the price is. One twenty could be the right price because you factored in the fudge factor. Ninety is too low. It’s just you’re gonna lose money on it every time. One twenty five might be too high. Hundred and five might be right if you do quality control and you have a really good estimate in place. If you’re doing a bid, it’s not unusual to see your bids come in at about one twenty, one twenty five, one thirty. In here, I would expect that I’m gonna lose some revenue. I’m gonna lose stuff right here. But I’m okay losing because it means that if I win the job, I I get a higher margin. And that’s why you want your bids to be a lot less. Does that make sense? When you when you get into pricing and you get into the pricing strategies, you have to think about what is the customer seeing, what is the actual value of the product you’re providing. For you to get more value here, maybe I have to do payment terms, or I need to give a better warranty, or I need to communicate better with the adjuster or something to incur me getting paid a higher amount compared to my competitor. Estimating is really tough, guys. It’s I know you guys came here for some some of you came for buttonology. We’ve got a course for that where we go cradle to grave on it. But in here, I wanna give you the mechanics, the foundation of it. Because once you understand this, the the buttonology actually gets easier to figure out. We do have, a decent number of questions. Now you talked about you kind of mentioned a little bit about insurance companies who have different, I don’t know, different guidelines on pricing and things along those lines. This question came in from Daniel, who I know is on today. He says each insurance company has a different set of guidelines. How can we be more consistent? We’re arguing with adjusters about line items because Xactimate lacks on proper line items. One adjuster wants it this way while another adjuster wants it that way. So he’s just kind of asking how we can deal with, you know, the lack of consistency, you know, across the carriers. Yeah. So what I realized is it’s hard. So the answer is it depends. Right? Do you make the concession for someone so first thing you have to say is one adjuster’s giving you work. You just take a step back just and look at the business. How much business do they give you, and is it worth customizing your entire business to that one adjuster or that one group? If they if the the answer is yes, then you go on to the next decision as, yes, it’s worth it. Do you have to change your process so much that it makes it unbearable for you, or is it an inconvenience, but it’s like, hey. You know what? I like the work I get from this person. I had an adjuster that just would beat me up on stuff all the time. Like, he just hated seeing the the the petty stuff. And I’m like, what if I change the price on the line? I’m just like, yeah. That’s fine. So it meant I just had to learn how to work with them because they just didn’t wanna charge they he didn’t wanna personally see things the the way it was. Now that’s when we could change more prices in there. So we would just eliminate, like, all the masking and all the fluff on there and just raise the price of paint. So it was like painting walls, and it was one price. He liked it that way because it was a little bit more the old school way. You’re gonna find that the push from programs, I think there’s a pendulum that’s swinging right now. And I think the pendulum has hit about as hard as you can get on the on the reviewer side. What you’re seeing is insurance companies are starting to hire more field adjusters. So this trend of putting people back in the field, think, about we’re in about a seven year swing. And, back when I started my career, I was told about the seven year pivots. Now it’s a little longer than seven years, but every seven years, the insurance companies go from one model and switch back. So it used to be the independent adjusters would be you know, they farm everything to independent adjusters, then they seven years, they bring it all back in house. And then seven years, it goes back to independent adjusting. I think you’re gonna see that where there’s more adjusters going into the field because that’s where the insurance companies make and lose their money. And and my my belief is that all this process that they tried to enforce, it doesn’t work like auto, and they’re starting to realize it. So now what you’re gonna have is you’re gonna still have that customization on estimating because you can’t standardize residential estimating as much as you say you want to. Every house is different. Every house is unique, so you can’t standardize it. But what they should be doing is validating if the scope is right. Is the scope right? And then is the degree of difficulty right, and is the price right? And I think you’re gonna see more people back in the field, and that’s probably a change. Like, that’s where more insurance companies seem to be going is they’re reinvesting in human, human capacity. And I guess with my guess is they’re supplemented with AI so that it makes it easier to do the job, but they’re gonna need more people to make those decisions because this isn’t something like auto. What’s the steps to do that? I still think it comes down to communicate your process, your technical reasons for doing it, and justify it. I found very few adjusters push back when you provide them with all the support they need. So that’s a long answer to the short question, but but I think you’re in a I think we’re in a good spot where things are gonna start to get easier as opposed to harder. I think this is the most hardest they can get. Awesome. Thanks, Chris. This is a good question from Adrian that came in pretty early in the webinar. And I saw a lot of comments in the chat, just kind of bemoaning this issue. But, he asks, how can we effectively and professionally communicate to an insurance adjuster that they do not have the authority to determine the water damage category, especially when they didn’t inspect the loss site or evaluate the conditions in person as required by the s five hundred standards? Yeah. You’re you’re gonna get into this. So it’s who’s holding liability for it? And and I’ve won recently, won a few cases where we had the insurance company dictate how the job should be, and then the restorer didn’t follow those instructions. The insurance company and them got into a legal dispute, and the restorer won because the standard is very clear. So if you make a determination on what the category of water is, If they dispute it, they need to then scientifically challenge you. They can’t have an opinion. There’s no way that they can have an opinion that based on the source alone, that that is the resulting category. You justify it. So there’s the five characteristics. Is there what where what was the source? What was the time? What was the temperature? Is there any contaminants? Is there an odor? If you have time and temperature in an odor, then you can justify a two or three. There’s no real difference between a category two and three. So once you move past that threshold, they would have to test it back. And if they didn’t test, then it’s up to them. What what I come down to is you can you can have that dispute if you want, or you could provide the information to say, hey. You know, they came from a clean water source. They hit contaminants. I I’ve had a house. The one the worst one I ever had, but it was, like, the best example, was I had a category three basement where there was ***** matter. Like, the the the homeowner let the dogs use the basement as a toilet. Water hit the basement, and, basically, the entire basement was just cat three. The main floor, you could have argued that the dogs walk upstairs so that the main floor would be cat three two, but the main floor was treated as category one. They they cleaned the surface of the floor, and then they they extracted and dried it. Okay? So which one is it? Three or one? And in that case, I would agree. The top was one and the bottom was three. You can make that justification all day long. So the source doesn’t matter. It’s how you document it. That’s what it comes back to. The insurance company then making a pivot from that, they need to provide justification for it. Now depending on what relationship you have with the insurance company, you might have to get a consultant in to argue it. If it’s worth enough dollars, you bring a consultant in before you get to the point where you’re arguing and you get an opinion. But it’s it’s tough when you got people that are not educated making decisions on something that they don’t know anything about, and you always come across that. Then you have to make a decision if they’re right for your business or not. We hear you. Thanks, Chris. So let’s move on to Tammy’s question here. Says, is there a good formula for GP when looking at the costs, labor, and materials? I look at all that before I submit the estimate, but we end up having to pull subs in for demo due to getting busy. The subs are just sending us a bill after the fact based after the fact based on hours. Do you have any tips on how working do you have any tips on working with subs and planning? Yeah. So I like if you’re running a a the demo is interesting because you can set a budget. And so I I use the components in exact. I wish I could show it to you, but I use the component section of exact where when you get your estimate together, it tells you how many hours it estimates the demo should be. So, you know, if you’re using the water damage line items or the DMO line items, what you do there is you come up with a budget. And I I it’s a complex way, but effectively, what you’re doing is finding out how many hours does the program allow you for. And then you go back to the subtree and say, hey. On this job, I’ve got two hundred hours or a hundred hours in demo, and I’m paying it at fifty dollars an hour or thirty dollars an hour, you know what your your job’s paying. And and instead of getting them where they just, you know, hey. I’ll just throw my extra workers on there whether they’re good or not. You know, like, that’s a three thousand dollar job. Like, you’re the one that’s setting the price, take control of it, and be like, hey. This is three grand. You want it? Take it or leave it for three grand. If you run an inefficient job, you make less money. If you run efficiently and your guys are fast, you make more money. Put your a listers on it. It’s a it’s it’s a price a bid price job, but you’re telling them the number because you know what you can charge the insurance company for. So don’t give your trades the opportunity to to put their inefficiency into your job at your margin and your expense. We get into that, like, in in when when we in the course I’ve built, we get into that in a big way because managing sub trades is a big part of making money and not having in house staff is or or or taking the pressure off in house staff is a huge part of the business for sure. Excuse Alright. I’m kinda just gonna maybe do these in order then, going forward, because we keep we keep getting a few. This is a question from Jake. He says, how do we deal with someone like, State Farm who just shuts their eyes and says, nope. We won’t pay for it. Charging the customer is the only course of action since they refused to negotiate. And then he’s he kinda gives a quote relevant to the question, but I think that the question is just dealing with an obstinate carriers who Is this Jake from State Farm? Just kidding. Snake Farm. State Farm today in the comments. It it it’s it’s a yeah. This is Jake, and I’m asking about State Farm. No. State any type of carrier, and it’s a fight because it could be regional too. Right? So you could have, you could have an adjuster in one state that is completely a different experience than another state with the same company, just two different adjusters, two different regional offices, and how they’re running. Also, inside those those insurance companies, you got different types of policies that they write. So there’s different tiers of policies. So there’s like, we look at insurance companies and go, oh, well, State Farm is State Farm. Well, State Farm premium line is different than a State Farm Econo line. So you gotta know what kind of policy you’re dealing with or what type of insured you have. It’s it’s tough if you’re on programs. Like, if they’re like, this is our price, this is our price, and you’re in a program. If you’re not in a program, then you’re playing free market. You’re dealing with the homeowner, you’re not dealing with the insurance company. So I always I’m I’m light on the carriers. If you signed a preferred program, you accepted the terms and conditions and the rules that go with it. If it’s it’s free market, you’re not obligated to it, but you might want to, you know, work with them to make it easy, and maybe you’re gonna give up a few thousand dollars in your in your estimate to make it smooth to get paid. But if it’s if it’s a hard line, the homeowner is ultimately responsible for your services. It’s it’s it’s more of a negotiating thing of, like, what are you willing to trade for it? So I’d be willing to get price concessions for faster payment. If you want me to knock my bill down, then I want the check fast. So, like, let’s not nickel and dime. I’m not gonna rewrite it. If I give you a bill for five and you wanna pay me forty two, then throw the check-in the mail tomorrow and I’ll agree to your your deal, then, like, I’m not doing any paperwork to justify it. Just cut my bill, give me a check, and and we’ll call it a day. I trade that. I trade fast payment for not having to deal with the bureaucracy. That’s a good deal. Because if you look at it, if I’m playing free market and someone else signed a a vendor agreement, and so I I was looking as what’s my discount for getting vendor agreement work where I didn’t have to do the agreement. Yeah. I gave a discount away, but if they if I force them to pay me quick and I got the same as another contractor would get for similar work, I could fight tooth and nail for my five grand. But if you just don’t write me the check really quick, you know what? I’ll I’ll I’ll take that lower margin job and and get it off my books and get to the next one. That’s how I would approach it. But if it’s if it’s to the point where it’s below your cost of doing business or your it doesn’t hit your your bottom line profit margin, then you you gotta make those decisions before. If you’re dealing with a company, of who it is and you don’t like the way that they do business, turn the job down before you you get it. Right? Like, I don’t do work with we we turned one insurance company down. If I found out it was the insurance company that I didn’t wanna deal with, I won’t name the name, but if I was dealing with them and I didn’t want it, we would turn the job down and I would just walk off the job. I wouldn’t wanna deal with them because I never got paid from them. So I was like, screw it. We’re in there for a day. I’ll take my loss, and I just don’t even wanna deal with it. We’ll just, like, we’ll pull off the job, give it to someone else, and we’re up. And then we would give the insured the bill for the time we were there. Call whoever they want. I don’t care. I don’t want their work. And so that you have to make that decision. It’s hard if you need the revenue. It’s easier if you have more revenue coming in than you know what to do with. So Okay. Yeah. Tough break. We do a lot of comments, questions, just kind of along the You guys are awesome. It’s just it’s just rant central in there. Okay. So Masud has been patiently waiting for this question. I started to kind of answer it myself. And, Masud, if you’re still on, maybe you can hop on and clarify. He was asking about the best estimation systems for content processing, household goods, post mold remediation, etcetera. Seems like he was looking at Encircle. From an Encircle’s perspective, Masud, if you’re looking at, like, contents pack out an inventory, that’s something that we bake into our product for no extra cost. But if you’re looking for something more on the estimating side, I mean, let Chris take that. Yes. Contents is interesting. There there are, like, ten different ways you can play that game. Right? You can go rate material. So you you you you buy your box for a dollar fifty. You sell it for three dollars. You make fifty, like, fifty percent every time. That’s the way contents is really good at. If you get efficient in your pack out that’s a long question. Long answer. Rate material works really good for certain things. Like packing out would be rate material. If you were gonna go box pricing for cleaning, then you drive the inefficiency into that rate material so that you can drive efficiency into your box cleaning. And then you’d be like, hey. If I get the time to pack the box right, then I can give you sixty five dollars or eighty dollars a box to clean it and run it through the ultrasonics because I I I know I can drive efficiency, and I can get a unit price to work. As a general rule, you just go rate material and because contents is degrees of of cleaning required. If you were to look at Xactimate, Xactimate’s pricing is kind of just pulled from the air. Like, there’s no science behind it. There’s no methodology behind it. It’s just this is what maybe retail’s worth. This maybe what cleaning’s worth. Rate material is probably your best bet on contents. I’ve seen people try a bunch of different methods. You can make it work in boxes if you have a really, really honed system. You have to really work at it to make it work in boxes, but great material, every day of the week. Thanks, Chris. There’s a question from Billy. He says, are we required to furnish time sheets for tech hours or tech hours back? Great question. So it’s kinda weird. When we use unit pricing, if you’re an exact, some of it is rate and material. Now as a general rule, when you do rate and material jobs, you need supporting evidence. So in that program where we have rate and material pricing, what we’re basically doing is we’re saying, hey. We’re saying it took more time. We’re gonna support cards for you. Where you normally get those, like, equipment inspection, picking up material, or picking up supplies, things that aren’t included in the line item. That you should have time cards for. And so you have to know exactly where is what’s included in your unit price bid is effectively what it is. It says, I’ll do it for this price. Everything outside of that is rate material, and you should have time cards for. And so that’s where these hybrid systems fall apart is, like, when do I need a time card? When do I not? Now we used to make our guys go through and do time cards on everything. And then someone says, wanna see all the time cards. And then it’s like, well, hold on. You charged me for this and unit pricing, but you didn’t pay that much. It didn’t take that much time. It’s like, well, yeah. But that unit price, if if it was slower, I lose. If it’s faster, I win. You just get a single price for the item. But for the unit price on time cards, anytime that you’re doing things that aren’t inside of, like, a per square foot price, you should have a time card or an equipment card or consumable card for. So equipment rental is by the unit. You need a unit tracking card. Anything that’s by the hour, you should have time cards to support it. One hundred percent. Great. So thanks, Chris. Some of these some of these questions, some of the the, people who asked have dropped off. So I’m gonna kinda skip down a little bit here, and jump to this question from, Gore. He says, during cat do cat two water damage, can we use, a heap of vacuum? Yeah. I I there there’s wordings in the standards that would support a a preclean on all cat one, two, three. So you could have a clean. So the the HEPA is where are we where are we removing? We’re removing solid contaminants. So you could do a HEPA clean on a category two or three. If they’re still wet, then you’re probably gonna do a wet carpet extraction. Right? So we’re gonna extract the water off a carpet, roll the carpet, get it out, get the pad out. You want all that water removed, so we’re gonna extract it. Then you got the floor. And let’s say the floor is damp, but, you know, not you do you do a HEPA vac on there? Yeah. You could do a HEPA vac and get all the the carpet fibers and stuff off the ground because then when you turn the air movers on, you don’t wanna aerosolize that. So you a hundred percent could justify a HAPA clean on a category one, two, or three. On a category one, you might be doing, a wet carpet clean if it’s carpet, but on a ceramic, you you you extract your water, and then you could do a vacuum to get all the the solids off the ground. All that’s supported in the standard. So yeah. And it’s not uncommon to see HEPA cleaning as a preclean. Okay. Let’s see. Which one from Kevin says, how can you justify Matterport in an estimate? Well, that’s where it comes in is what are you providing? You’re providing a three sixty added service. And this is where exact this is where the problem is with with unit pricing by somebody else. Imagine you had just an Excel spreadsheet. Right? Like like, that’s how we build time and material budgets up. We have an Excel spreadsheet. We put all our time material in, and you’re like, I’m gonna charge for a broom. And in Exact, you’re like, well, there’s no brooms in Exact, so you can’t charge it for me. Well, when we do commercial jobs, we might charge you for a broom. I charge you for a hazard sign in a hallway. I charge for everything in a rate material commercial job. Xactimate or Symbility or any other company says, well, I’m not gonna put everything in anything under the sun there. I’m gonna still put the more common items in, and then you’re supposed to create your own price list and add your own items. So when you start to look at this, it’s not that there’s not a charge for it. Like, if I’m doing a commercial job, I would put Matterport three d six three sixty documentation in. And if I did two or three scans during the job, I would I would show that, and I would bill for it. It cost me money. It’s part of my overhead is the argument. So the only argument is, like, well, that’s the cost of doing business. Cool. Do you want me to add it to my hourly rate, or do you want me to charge it out individually? The reason why it’s charged out individually or the reason you should add it as an additional charge, if you’re not applying it to every job, then it’s a charge that happens as, like, a one off. So then the the the the thesis behind it is we don’t build it into every hourly rate because if we built it into our hourly rates, it would mean we would be charging for it even if we didn’t use it. That’s why it’s charged as a unit price. But if it’s part of your everyday operation, you could build it into your hourly rate. And then as part of your cost of doing business, it’s built in as an hourly rate. You could justify it by adding it in. Sometimes what you’re doing is just adding an extra half hour or forty five minutes on an hour charge, and it’s like someone’s time card gets rounded up, and that’s how it’s added in if the adjuster doesn’t wanna see it. But they’re like, yeah. I’m cool if you charge it. Just don’t show it. That’s sometimes how it’s done. I don’t like that, but that’s just the industry. Right? Like, everyone talks about fraud, but yet they’re like, hey. Don’t don’t show me this charge. Charge it to me something else. It’s like, well, you’ve indicated you want me to do something different than what I’m actually doing. So, like, what’s fraud, what’s not fraud? It’s soft manipulating of program rules to make everyone happy so that we have to lie to make it happy. It doesn’t make sense. It’s just the where the industry’s at right now. I think that’s gonna change. Like, I can’t imagine this industry getting more efficient with more fake rules and fudge numbers than what we have right now. Like, it’s it’s ridiculous. But how do you show it? You can either transparently show that you’re charging more for it, or you can build it in as additional hours. Yeah. Okay. Let’s see if this person posted anonymously, so I can’t guarantee they’re still on the call. But their question was kinda specific, actually, but maybe somebody still on the call has been in, like, a similar situation. So perhaps, you know, your advice could be useful, for everybody sitting in. But they’re kind of described a situation where they’re saying, how would you deal with an adjuster and their supervisor that are refusing to review the file themselves after a third party has reviewed it, leaving the customer with a large out of pocket cost, about fifteen k. And are you getting and you’re getting nowhere, with a third party reviewer as they’re stating that it’s up to the insurance adjuster to make a decision on what they’re paying. So when you run into situations like this, it’s usually a breakdown in process. You you somehow got to the end of the job where you now have a a substantial dispute. And, ultimately, we can easily say it’s the homeowner’s responsibility, but and and and that’s true. But I think there’s a you know, that’s the easy out. I look at a process because if you don’t get paid that fifteen grand, you have to increase your cost of of acquiring that that fifteen thousand dollar difference. So you’re gonna have what process would I put in? I can send it to a lawyer to try to get my fifteen grand. Part of what you’re doing is is looking at your entire process from the contract to the collection. And so I look at is where do we fall short of coming up with the right dollar amount? And you might have done everything right if you communicated everything right, and that’s fine. Usually, there’s a communication breakdown somewhere along the line. If you sign the contract with the customer and you say, you know what? We’re gonna do this work and it’s this is how we’re gonna charge you. And the insurance come back company comes back and you don’t have a relationship with them and they say, nope. We’re cutting all this. Your only action that you have is to lean the house and sue the homeowner. You don’t have a contract with the insurance company. And I heard this amazing it was an amazing piece of advice is is sympathy versus empathy. So a lot of times we sympathize with with people. We take their pain on. Oh, you you bought bad insurance. You grab the cheapest insurance out there, and now you’re surprised they’re not paying. Your services are worth the extra fifteen grand that the insurance company says they’re not paying. It ***** that the homeowner chose the worst insurance company they could for the price that they decided to pay. Is that your problem? You can empathize with them and be like, that’s not a very good situation to be in, but you needed to have these services provided. And because we provided it, I made your home healthy, I prevented mold. I cleaned you up. Whatever you did to to restore them, I’m entitled to be paid for my services. No different than if you go to a dentist and there’s stuff not covered by your insurance company. You have to pay the difference. The difference is our bills are bigger. Do you offer them a payment plan? Do you have access to be able to say, hey. Do you give us a payment plan, and we’ll we’ll we’ll put you on a twelve month or an eighteen month payment plan? Ultimately, cutting your bill is not the answer. If you apply legal pressure to them, which is not fun, but if you lean their building and you put them in small claims court or or sue them, their insurance company will have to take action. There’s a lengthy process. So normally, what I do is I’m like, what’s that legal process? I failed at the beginning of my legal process. How do I streamline my my business so that I get less of those? You’re not gonna eliminate them. You’re just gonna get less of them. It’s it’s a process thing. It it all has to do with, you know, do they owe you money up front? Do you get a retainer from them? Are they responsible for the difference? Did their insurance company make an like, agree egregious discounts that they’re not entitled to. If you have to apply them to the court, you have to apply them to the court. It’s just the way it is. Or you write it off and say, hey. I just that that’s a learning lesson for me. I I can’t do that again. Awesome. Thanks, Chris. While I while I kinda go back to our question list, would you mind putting the QR codes back on the screen? Somebody was asking for your estimating course and beta groups specifically. Yeah. So so this one over here, the green one, that will get you the the sign up for the conference and if you’re interested in when we got our product launched. And then I’ll tell you guys about it when we’re done q and a here. But then we have a beta group, which is for anyone that’s like, hey. I’m I’m okay coming for the ride with you while we’re building this thing out. The blue barcode is is, yeah, you wanna be on the early adopter with us. And and if you scan either one of those, I’ll let you know about the conference we got coming up in July. Awesome. Thanks, Chris. Yeah. I’ll I’ll minimize size myself up here. So we got a few questions left. I I wanna prioritize the ones that have a name attached to them just because I wanna make sure that I get to people first who I know for a fact are still on the webinar. So I’m gonna jump ahead a little bit in in the queue of questions. So hang tight. If you posted a question anonymously, I do want us to get to it. I just wanna make sure I get these specific questions first. So Gore sent in another question. Says, if we’re cleaning salvageable items, can we use an Xactimate, bid item? Oh, so here here’s here’s the thing. Could we use bid salvageable items? Okay. So is this salvage that the insurance company wants to sell after, or is this stuff that we’re actually, like, doing a cleaning on? It I’m not a big proponent. I know there’s a green initiative out there, but if you could have cleaned it properly to the insured specifications to get it back to them, then that’s money well spent. Right? So so let’s say that an item cost a hundred dollars and it cost us forty dollars to clean it, and it can go back to the home. If it’s not good enough for the homeowner, I’m not a big fan of taking items and cleaning them so that we can donate them or give them away. That’s landfill. Like, they’re they’re not normally used items. And so there’s there’s a we’ve seen in the industry a push to, like, clean things so we can sell them to re lower the insurance company’s cost of doing business, but there’s still a cost. Like, there’s like, maybe if the thing has high value, it makes sense to do it. But on, like, your normal general household items, the grass sale items, they hold the grass sale value. Why are we wasting our time on it when we’re increasing the risk of someone getting a contaminant from not their house? So if I’m reading the question right, it’s it’s salvage. If we’re taking salvage items and cleaning it so someone can sell it, no. If if I’m doing it for, like, you know, employees that want a couch and they’re like, hey. I think we can clean this. Maybe. But if I couldn’t clean it for the homeowner, I’m sure as hell not gonna spend my time trying to clean it for some random Sense. Thanks for that question, Moore. We had a question. It’s kind of very, I guess, open ended from William. I think I know there is at least one William still on the call. Said what estimating software would be your top recommendation? It’s hard. Depends on what type of work you’re doing. So I like I like Xactimate. I’m still a big fan of it. It’s just in the program, it’s it’s got limited rules. If someone puts guardrails and tells you your hands are tied behind your back, it’s really hard to operate it right. I like rate and material, like, time time and material pro. If I’m gonna do commercial jobs, I like great material just if I’m doing, like, small jobs. Your own unit pricing, like, just having a price sheet and just running a tally sheet works just as good if you’re doing a small job. Like, it depends on the type of work you’re doing If you’re gonna play in the program work if you’re not playing program work, I avoid their systems. Right? Like, I’m I’m not gonna walk into an auditing funnel. It’s kinda like like a trap. I’m not walking down the auditing trap if I’m not playing the game the way they wanna play it. So my hourly rates are different than their hourly rates. I’m not putting my estimates in the system that they can easily auto audit auto audit. I’m gonna play the rate material game. It depends how you play the game. That’s that’s really what comes down to it. And you should have a strategy on, like, hey. Some of my book of business, I’m playing by the rules. Some of it, I play by my own rules. There’s nothing wrong with that. It’s it’s it’s good for you to have a strategy on how you’re gonna price your business. You have to sit down and actually think about it, though, and be like, hey. On these types of businesses, I’m gonna have this price list with this rule set, and this is how we’re gonna do it. And then when we do program work, we’re gonna do it this way. When we do property manager work, we do it this way, and everyone knows the system you’re using. But I like Exact. I’m not a huge fan of Symbility just from or whatever they call it now. Just from the the framework that is more detailed, which means more mistakes. I like I like exact program, and I like t and m. And then if I can, I’m bidding it or going value pricing. Like, I don’t I’ll give you a number. I don’t need to break it down for you. And then before I send your question, come in, bid items, like, bid item there, like, again, there there’s no methodology behind their content cleaning line items. Like, it doesn’t say it’s this much fluid. It’s this type of equipment to clean it. Like, their bid item or their their unit items are actually, like, mini bid items. They have no idea how they built it. It’s kind of based on what’s the replacement cost of an average item, and then let’s give it twenty five or thirty percent of that. If you were coming up for a price, like, you have to make a decision. Is that where you can do business on a price? Like, does the unit price of cleaning a salt and pepper shaker make it worth doing, or is the unit price on cleaning jeans worth doing? You have to make a decision. If not, change your price. If the insurance company says don’t change the price, then if you’re, like, seven dollars per pair of jeans, not worth it, they get an. Economically nonresorable. So I think you couldn’t do it. Let’s say you couldn’t do it for the dollar that they were offering. Economically nonrestorable. Right. Let’s see. Here’s one from Garrett. What is a good way to combat an adjuster or carrier that says they can only allow for standard grade on flooring, the lowest price of the four flooring line item options without an ITIL report? We use average grade pricing on all flooring with supporting documentation to justify high or premium grade if needed, but it seems a lot of carriers are switching, or wanna go with standard grade materials and everything. Yeah. So so it’s it’s not ethical either way. Right? Standard grades without an ITIL. What they’re saying is, hey. We know we’re getting you have to look at it. They put processes in place, and the average insurance company is not really well educated on how the game’s played, how the restoration game’s played. So they put processes in to pull the outliers in. Like, hey. There’s one company who always put premium carpet in, and it could be average. Well, let’s just charge standard unless you have a validation from a third party. It makes sense on the law of big numbers. It’s not necessarily right. I wouldn’t even care though if if it was like, kinda own flooring, I’m good with it. If you wanna give me an ITEL and that’s where you want your validation come from, if it says it’s premium grade or standard grade or in between, cool. I don’t care. But to just randomly guess at what we’re dealing with, if the insured has a, you know, a receipt or they have what the like, very few do. But, otherwise, I’m I’m good with third party saying, hey. Like, it’s standard grade unless we get an ITIL. Send in the ITIL. Send in the sample and and get it inspected or do the digital ITIL. I don’t have a problem with that. Like, that’s to me, I like that better because it’s at least we’re now trying to get to a right number. And then once we get the grade, we can then figure out our cost and hit our margins off there. Flooring is actually a nice book of business where you can still make forty points on flooring if you’ve got the wholesale flooring supply. I think it’s a good good position. Even if you’re doing retail, you’re making your overhead and profit on it. Okay. Whatever they want. Again, it’s the homeowner that has to battle if they want higher grade carpet or lower grade carpet. It’s not my fight. Like, they bought junk and turns. If that’s the fight that’s there, it’s not my fight to be had. I’ll I’ll put in, you know, premium Italian custom tile if that’s what you want when you had linoleum before. If you want that vinyl sheet wrap, cool. You want custom Italian? I’ll put it in. Who’s paying? That’s all I need to know. It was like, are you paying the difference? No. Then you should fight your insurance company. Otherwise, you get a standard grade. Like, just don’t make it your problem. You you the you got too big of a career, too long of a career to to win every fight. If the homeowner is happy with standard grade, then I’m happy putting it in for them. That’s just my my old mentality used to be I would fight tooth and nail for them, but then I realized that they bought cheap insurance. And the byproduct of buying cheap insurance is they get something. They don’t get top of the grade replacement. I don’t lose sleep over it anymore. Like, if you trouble that insurance and they they jerk you around, that’s on you. That’s not on me. Don’t make it your problem. You’re a contractor. Your job is to go in and and get the scope. You just need to know who’s paying. They wanna upgrade? Cool. They’re paying. Well, they were entitled to more. Maybe. Maybe not. I’m not reading their insurance policy. I didn’t pick the insurance company. They did. They told me this is how much they’re paying, and I’m telling you this is how much to get you back to what you need. You make choices. Make make it their choice. And it sounds cold, but that’s the business we’re in. Like, I’d love to help you. On the mitigation side, I’m actually more sympathetic than on the rebuild side. So maybe it’s just being older and crusty. But I’m like, at the end of the day, you bought cheap insurance. That’s what you get. And I just you see two hundred or five hundred jobs a year. You don’t have time to sit there and get emotional over everybody getting less quality carpet. Like, this is it’s not your business. Okay. Question from Ricky. It’s been waiting on this in a while. She says, do have a question on Xactimate. I’m always being questioned on removal of labor minimums. Even if we remove a sink or vanity and toilet, as an example, and we only do mitigation. Yeah. So He also adds, I’m not on program work, but always deal with a third party for review. So those minimums are built so that you can go in and and, you know, it’s four hundred dollars whether you do one item or another. Now if you’re bringing a plumber in, the the argument is who’s doing the work. So if you’re doing it as a water technician, you’re like, hey. We’ll take on the liability of detaching a toilet, and it’s part of your your labor hours as a water damage technician, I can see that. You you know, we charge you a plumber rate. There’s probably no minimum if you’re just doing the mitigation. If you brought a plumber in and they were just to take a sink apart for you and it’s kinda one of those things like, how do you do business? Again, the program, digital software is built one way. How would I actually charge you if it was rate and material? So if it was rate and material and I was doing the work and I said to my technicians, hey. You guys know how to turn the water caps off on the toilet? Yeah. Can you take it off? Yeah. Do I wanna make that decision? Yes. Okay. That’s our liability. We we accept it now. So now I said we will detach plumbing, but we won’t put it back in, and I think that’s what you’re saying. Then what I would do is I’d be like, well, I would just charge you the tech time to do it, and it’s just part of my service. I’m not gonna charge you a plumber rate for doing that type of work. I would I would lean more into the insurance company’s argument on that. The only reason I would I would defer from that is you’re using it as a line item. So if you detach the toilet, could you use the WTR or the HMR codes that are around that? Yeah. Maybe. And and then is there a plumbing minimum if you do it that way? No. But do does are all the line items in in exact? No. They’re not. So then you have to change the labor code in each item. It it there’s no clear answer. It’s your business, but I would probably half agree with them is that I wouldn’t charge the minimums. If they’re letting you charge the plumber rate on it, take the plumber rate. Like, it’s a pretty good deal. You didn’t have a minimum. The minimum is there. The minimum charge is to say, hey. I’m charging you a minimum to have a plumber come in because they won’t show up for twenty four dollars. So the the the the the thesis around the the the minimum is that you have to pay three hundred twenty five dollars to get someone to show up to the door, four hundred dollars, whatever the number is, to get them to show up to the door to do that twenty five dollars of labor. If that’s not true, if you’re not having that person come in, then the labor minimum gets wiped out, and then you’re getting paid for the time that you’re there. That’s the theory. So if you were, like, I’m in house, we’re doing it, then I would agree with them. I wouldn’t pay the the minimum. But that doesn’t mean that you don’t have some kind of like, your pricing scheme could say, hey. When we do plumbing, we charge a two hundred and fifty dollar minimum to touch the plumbing because it’s a liability, and then we charge our normal hourly rate after. Like, you could get into that that kind of pricing scheme, but you’re getting into complex custom pricing. Just as a general rule, would say I would probably just charge the hourly rates and get rid of the minimum if me and my team were doing it in house. Well, I hope that helps, answers your question there, Ricky. I should probably go back and respond to some of these anonymous ones. Hopefully, the, the people that posted these are are still here, and then I can jump maybe back down to some of the more recent ones. Well, let let’s do let’s do, a couple more, and then and then I’ll I’ll rip through it. I we’ll we’ll get done here in the next fifteen. How about I do this? If you posted a question anonymously, you know, a while back going back to two PM, if you’re still here, repost it for me. Otherwise, maybe I’ll just assume you’re not here anymore, which is, like, maybe a little not fair of me, but I just wanna make sure we can get to people that are definitely still here. So here’s one just came in. It’s a hot one. I’m charging time and material for a fire loss, full p p full PPE. For packing, I’m using lab CLNR. Adjuster wants me to use, CDC lab c, which is a lower rate. How do I get it through their head that there is a premium charge working in a fire smoke contaminated situation? CDC lab c is for any generic packing. Yeah. See, that that that’s the problem I have with the the program is that it was built based on, like, nineteen ninety standards. And today’s world, we have more laws around us. You’re not I don’t think you’re wrong. Like like, straight up, it’s it’s there’s a lower price in the program, so you should charge us the lower price. Again, it’s inside picking off a menu and saying this is the price for the service. It’s like, well, if I just did you time and materials, let’s say my guys are in full PPE. They’re in a hazardous environment. You’re paying the hazardous rate at rate and material. The fact that they’re now like, oh, no. We want a different rate. It’s it’s what’s the justification of that? So one, what’s your site safety assessment say? So do you did you do a site safety survey that says your guys require PPE? That site survey could be built into your contract saying when these conditions are met, we charge this rate structure out. That’s how I would build it, is that it’s the rate structure is based on a site safety assessment. And so then you have it. And then when when we get into, like if you go deep into, like, contracts and and strategies around pricing, that’s the first place I would go is, like, what’s my contract say to elevate that price to this term? If you don’t have it, then it’s an opinion. And so we wanna get away from opinion. You wanna actually have it based on what is the number, how do we base our our price on that number, and what justifies us choosing this category. Site safety assessment says if we’re in PPE and the site has been deemed hazardous, then we charge the hazardous rate. And then it’s really not a question then at that point because then they’d be like, well, this lower rate. That lower rate applies for regular work, and we’re not in regular work. We’re in this work, and that’s the rates we charge. And you could come back and say, hey. Any work we do, we switch the normal rate to the HMR labor code, And that works too. Right? Because you get a higher price even though the inefficiencies aren’t built into it. At least it’s better than it was. There’s no good answer. That’s the problem with with exact domain stability. There’s no good answer because it’s it’s a it’s a **** system built by the pricing system isn’t built for restores by restores. It’s built by a combination of people that think that, you know, we should modify our numbers to make the insurance company happy, but we modify the numbers to make a restore happy. It’s garbage system if you if you look at it from that perspective. I like it because it’s you could tune it. I love that. It’s when it gets into, like, well, this way you should charge me. No. This is how I am charging you. That’s how we price the job. The problem is there’s no there’s no best practices built in the industry to say this is how a job should be charged and this is appropriate because everyone’s worried about antitrust. Like, if you look, that’s the biggest challenge is anyone and everyone has an opinion, and none of them are basing it based on fact. So put yours more fact based, but, again, you’re still getting in these arguments, and then it’s just opinions, and then it’s a business decision. There’s no good answer. We’re not that well organized as an industry. Okay. I True. Let’s see. A lot of these questions are older from anonymous people and who I haven’t really gotten anybody back in the chat saying, hey. Me. Me. Me. There was one question from a gentleman who or a person who is still on the call, I think, R. Romney. This question, though, is, like, quite specific. I think it it might be better to take offline. I think, Chris, you may maybe share an email Sure. With the with the attendees. So to you, r Romney, we’ll we’ll get you Chris’ email. You might wanna pose the question offline. That might be a little bit better way to get that that question answered. K. Tell you what. Let let’s do this. Thanks, Kristen, for going up. Let I’ll roll you guys through. Some of you stayed on this call long. If you if you wanna see what we’re doing, I’ll share that, and then I’ll stick around for another ten minutes as long as my voice holds up here. I’ll stick around after for anyone else that has questions, and that way we keep everyone happy. And I’ll share with you with you guys with what we’re doing here. So we came up with with this, and I’ve it’s been it’s taken me longer than I expected to to get done, but it’s pretty awesome. What we’re doing is we’re putting together the everything that’s that’s based on Profitable Restore. So, like, technicals, how they time in. And what I realized when I was with Encircle is that everything that we had been taught in the industry and everything I was trying to push through on the digital side was up against the old way of doing business. And I kept coming back to this question. It’s like, what if everything I was taught was wrong? Because every time we put try to put digital technology into Restorer’s hands, it always conflicted with, like, how things actually happened in the field. And that’s where I realized the standards and the business and the technical and the technology, they didn’t they weren’t all compatible. And so when I came up with this question, it’s not that it’s technically wrong. It’s just what if it’s wrong for business? And when I looked at the business, I was the the part I was looking at is how do you increase your profitability? Well, you can do two things. You can actually make more money on the jobs you do, or you can grow your business and expand the growth of your business. Either one will make more money, but one’s easier to do than the other. It’s easier to make more money on the work you’re already doing than to go and double or triple your business. And when I started to look back at, like, when I failed as a business owner, when we had those rough years, all the things that happened and all the that impostor syndrome, all that negative talk I did to myself where you basically just shoot yourself in the foot, it all came in and and it was you know, I thought it was on one hand, I had the impostor syndrome. I I thought I was doing really well. And on the other hand, I was losing money in my business, and I felt like a loser because I’m like, I can’t figure this out. And I actually was about to quit the industry at that time because I had another job offer in agriculture space, and I was like, I don’t know anything about agriculture. I’m sure I can learn it faster than this. And what I realized is you gotta stick into this, and I told you about the Dunning Kruger effect. I was at the bottom of the Kruger effect when I when I quit is I knew enough that I knew I had no idea what I was doing. And I also knew enough that I was like, there’s a lot of things I did wrong. And you get in this helpless feeling. So I was trying to figure out how do you get someone past it. And the best way we came up with is that if you can train somebody faster through the processes of tactical, you can get them through it, and you can actually get someone to profitable and really profitable really quick. So what we did is I’m building I built out this estimating strategies. We’re just finishing up the last production on it. And so what it is is going through and explaining in detail how to build all five of those estimating systems out so they all work together. And then what we did is we basically said, hey. If you come in and you have a strategy of when you’re gonna use these systems, how you use them, how you can negotiate, which levers do you pull, you’re in control of your price and your margin. You’ll know what to do and how to do it and when you’re making money and when you’re losing money. So we put that in the course, and then we came in and said, okay. I’m gonna teach you profitable Xactimate. Not Xactimate level one, two, three, but I’m gonna go through every level so that you can level up and get your certification. I just can’t do it as an XCT. I I can’t be banned from saying things that are true about anybody’s program. So I won’t sign anything that doesn’t allow me to just talk straight facts about their program. So you can learn level one, two, or three. So you can go get certified. But the way we’re gonna do it is we’re gonna focus on anything in the program that is buttonology that’s wrong. I’m gonna teach you how to do it in the business that’s right. So we get rid of all the bad lessons right before you start. So if you got new estimators, we’re not teaching them bad habits that lead to lower margin because that’s what happened to my guys. And all of a sudden, we started teaching buttonology, and they started making bad decisions. So we’re gonna go in there and teach exactly how you do it so you can make a profitable estimate. The other thing is is when do you come up with your own price list? So I think you should have multiple price list depending on your customer. And what’s interesting is if you do a cost of doing business analysis, you figure out what your overheads are based on your projected volumes. They change. So you run some different scenarios. Like, what happens if we have a really big mitigation year versus what if we have a a drought year and we don’t get a lot of emergencies? Your pricing is gonna change. You’re gonna have more overheads if you don’t do as much mitigation. So you have to have that figured out and you review it monthly. Now the monthly review is really easy. But once you do that, you can come up with multiple price lists so that you have the way the right way to play the game. Hey. I’m doing military and and government contracts. Well, this is the price list we use. Hey. I’m doing a property manager. Then this is the price list. I have a bad insurance company that I that never pays. Well, then this is the price list they use, and here’s where I negotiate versus an insurance company that really is good to us. Well, then this is the deal I give them. And so we work through that, and we build that customer strategy out. The other thing that holds most owners back is how they understand money. So the staff and the owners don’t see money the same way. So it’s the concept of money, how we think about it, how we value our goods and services, and it’s sort of the question that came up with, like, contents. Like, how do I value what my cleaning bill should be? I don’t know. Fifty percent of replacement seems like a good deal. It’s either you pay for replacement or you give me half the value replacement. Well, I won’t pay you twenty five percent. Well, I can’t do it for twenty five percent, but I could do it for fifty. So we come up with how do you value your goods and services, which comes to to starting to put a value on the price of your business. How do I get the customer to perceive that value, and then how do I justify charging the customer the dollars that I’m gonna charge? All of that comes into not feeling guilty about generating profit. And so inside of there, we also talk about where do you pay bonuses for your staff and how do you make that work. Other part is and where we see most of the problems is estimators are are not understanding dollars, and some owners don’t understand dollars. We go in and explain exactly how profitability is built. What’s the difference between markup and margin and get the entire business speaking the same language? Contribution margin, and financials, how each silo is impacted differently, and how you have to actually make sure you’re estimating is aligned with each silo. Then we go into the margin curve, and the biggest mistake estimators make in losing money is that they they look at every percentage the same way. So we break that down and start putting band or expectations of where estimators need to crank profit. And then what we do is we go to the hidden dangers of cost compression. When you go to scale, your business hits this major frustration of you don’t have enough money to grow, but you’re also not able to get through some of the bad areas where you’re losing money. So that cost compression is what holds your business back. So we’re gonna work you through there. And it all comes down to to to being a good estimator, but it comes into running a profitable business. And then setting competitor traps, when to pass on jobs. I don’t like to take low margin jobs, but you have to make a a strategy in place. When you do take a low margin job. Someone has to approve it before it happens. So we did that. We came up with that whole business, and then we went back and looked at what are the mechanics of actually running estimates. So we would have the ROM, when and how to use the ROM, how to properly communicate your range of your estimate. When I hear that that fifteen thousand dollar loss where you’re like, hey. We’re fifteen grand out. At the beginning of the job, if we said it’s between fifteen and thirty, and then at the end, we’re like, hey. We’re, like, between twenty and twenty five. We’re we should only be a couple grand off the mark. Somehow, the communication process failed where there’s, like, a fifteen thousand dollar difference. Usually, it’s it has to do around wrong or the do not exceed mistakes that we’re seeing. Then what we have is we have selling change orders. So we’re not, as an industry, very good at selling. We’re good at order taking, but we’re not good at selling. So it’s using change orders to up this the margin of a job, not to just decrease the margin of a job. And then what we do is we wanna get rid of those scope battles. A lot of you guys were talking about where the scope is is being battled. I try to deal with it before we get into the estimate, and then we track cost in real time. And that’s where we track to make sure our margins are on there. And what we’re doing is when when you’re in this program, a lot of it’s self learning. And then what we do is every two weeks, we get together for a ninety minute session, kinda like what we’re doing right now. We teach something, and then we sit and do q and a for an hour, hour and fifteen depending on how big the lesson is. And we just work through different problems, and then that leads to next the next coaching session. And so we do these biweekly coaching sessions where we basically sit down as a group and figure out how are we gonna make more money, what challenges do we have, how do you you know, how do we break through on an estimating system? Hey. I’m trying to apply this system into my business. Why is it why is it struggling? And then finally, what I did is I came up with a system where for a lot of you, we saw about fifty percent of you weren’t making money. So for a lot of you, what we’re doing is we’re gonna put in a seven day cranking profits challenge. You don’t have a lot of margin to play with, and I’ve been there. I’ve lost money. So what it is is if you come in and you sign in to the program, for seven days, all we’re gonna do is look at low lying fruit. Forget the fundamentals of estimating. Let’s find you some money. So we’re gonna focus on for seven days, your one week, let’s go fix the the most important parts in your business just to get some profit coming in so that you can reinvest it in your business. Then we’ll spend thirty days getting your estimating systems set up. And all we’re trying to do is get away from that that horrible feeling of, like, I’m wasting all my time spending on a treadmill, and we want you to be profitable again. So that seven days is focused on profitability, and then the thirty days is getting the fundamentals built into your business. And from there, we train in and get you to be a powerhouse estimator. All of that’s gonna qualify for RIA and the ICRC credits, And so that’s the that’s where I’m at right now. And then what we’re doing is when we sign up now we haven’t come up with the full program, so that’s gonna be released in in June or July. I haven’t come up with a price point on it, but it’s gonna be an all inclusive price. So as we add water damage, fire contents all in there, and I’ve got trainers coming in, it’s gonna be just an all in one price for the online stuff. If I have a thirty day money back guarantee that we’re putting on it, so, like, there’s gonna be no risk. That’s where you come in and you’re like, hey. If I wanna be part of the beta group, when we announce it, you can say, yeah. I wanna be part of it. If you’re like, hey. When this built, give it to me. That’s what the two QR codes are for. So sorry. I’m losing my voice, but that’s the that’s the appreciation for letting me pitch you on that. I’ll put those QRs up again, but you’re gonna get all of this. And effectively, my goal is that you’re gonna get a ten, twenty, thirty time ROI on your investment because you’ll have a ton of time and money to spend not doing it right. So that’s rolling that one. And we’ll come back, and I will those are the QRs. If you’re in the beta, you’re in the blue. If you are like, hey. Wait till we’re done. We’re in the green, and then I’ll take some more questions. Really exciting, Chris. I I think there’s maybe I’d say maybe two more questions that we might wanna answer. This one is, from, Elena, I think. Says we are a mitigation and restoration contractor, not in any programs, but we get pushed back. Like, we don’t pay for that or we don’t accept that charge. And she’s wondering, you know, why are we held to program rules when we’re when we’re not a program vendor? So that is a normal problem here in Canada where so it depends. So here’s the other thing. Are you on a franchise or not? Because that that that depends too. We used to be on we used to not be on the same programs as our sister franchises. And then you you you dig heels in here, and they’re like, well, I’m gonna punish the people next to you. If you’re an independent, you can play the game more, like, harder. Their rules, their program rules don’t apply to you because their policy isn’t written. So an adjuster on on the call can tell you the policy doesn’t say that they don’t pay for this or they don’t pay for that. That’s an internal policy decision. Nobody tells you that you can’t charge, like, emergency service call during the day. You could charge it. Is it two hundred and fifty or five hundred dollars? Doesn’t matter. You could charge whatever you want. They have policy wordings of what they are and aren’t responsible for paying. It’s gray, so it’s a dispute. If it’s in between, you make a decision. If you if you take the price reductions of being on a program and they pay you quick, I’d be like, hey. Listen. What what what do you want? How much how much from the price that you had to the the price they want? Is it five percent? If it’s a five percent reduction, I’d look at it as as part of my cost of doing business. If I’m in that space, I go, hey. I deal with this one insurance company. They always wanna give us program rate revenue. I I I I need to know how much they wanna cut for me to make a decision whether it’s worth fighting for. It’s like, hey. Pay me quick, and I’ll I’ll take your deal. Because the the alternative is, what was what was the deal for a program vendor? I’m gonna give you volume for that discount. Okay. Well, I’m not getting volume from you. So I want quick payment for that discount. I’ll take that. I like that. And then I feel good about it. I got something in return. If they take four months to pay me, though, I’m not gonna be very happy. Right? But you’re in a position where it’s like, do you wanna dig heels in? Is it someone you wanna work with, or is it someone you don’t wanna work with? The customer could pay the difference. Like, that’s fine too. You you the program rules don’t apply. What does your contract say? What is your communication process during the claim? And then what is the payment process? Most of that conflict happens at the beginning, but we don’t deal with it there. So if they have program rules in place, we should know it before we start because we have to make a decision. Do we wanna do this work or not? Right? There’s one insurance company in the Midwest that every time I hear them, like, oh, that’s a that’s a absolutely horrendous deal that they do because they always fight every every invoice after after the fact. Like, why would you even do work for them? Make a decision to not do work for them. Okay. Alright. So, Chris, this came in from our a while ago. I mentioned it earlier. If you feel like you maybe wanna answer it offline, that’s fine. I’ll go ahead and pose it. Okay. The question is, I’m interested in starting a local company which solely works the content loss end of claims for inventorying and valuation purposes. It seems there are companies handling this that are not local, and they hinder the inventorying process due to blocks in the extensive communication chain. How feasible do you think this is? Not interested in restoration itself, but may accept jobs from both insurance and restoration companies. Yeah. So so there’s two things. I it’s a very feasible company. Having that third party inventory done properly is is, I think, hugely important and might even be something that you could call an emerging market in our industry. There’s two threats to that model. One, restorers could do that and charge for it if the insurance company decided that they wanna use a restorer as a partner. But right now, insurance companies look at the restorer as, like, the necessary evil, and they need third parties all over the place to do the work. I don’t think that’s gonna change anytime soon, but but some of the market would slip over to the restorer saying, hey. We’ll do the inventory for you. We’re already there. And it’s just coming up with a replacement cost pricing, which is an administrator you need to have. I think you’re gonna see some people move that way, some franchises probably move into that space because it’s just another service offering, you know, a differentiator. But is there is there a need for a third party to come in and do an inventory? It’s it’s been done for a lot of years, so it’s it’s an established market. And the reason I say it’s emerging is I I think there’s still it it’ll depend on what the insurance industry does. Now that they’re putting more field adjusters back in the field or they’re hiring more field adjusters, they’re not gonna do the inventory. So they’re they’re gonna wanna go look at the loss and have someone do the inventory for them because their goal is to be processing claims. I think that’s still a market that’s out there. The two things that will be a threat, can technology be faster at doing it? Maybe. And then the other one is can restorers go and do that service? And and they haven’t moved too fast on it. So is that a major threat? Contents is not the primary wheelhouse of a restoration contractor today. If it becomes more of a a primary service for restoration, then I would say that that’s that’s an easy place to absorb revenue for a restorer. But I I don’t I don’t know where that goes. But it’s a good it’s a good model, and and and it is getting a lot of uptake depending on the insurance company you’re dealing with. I appreciate you answering that. I don’t know. We got a couple last minute questions that came in after five. Chris, I wanna be respectful of your time. I’m putting you on a call. I’m good. My my voice is still here. Okay. So are the gentleman the person who sent us that question has a follow-up, but somebody else sent well, if we’re gonna do both, then Do both. A follow-up. So he says, how how do I figure out what to charge for this? Charge for what? This contents business you guys were just Oh, so so there’s there’s things to ask her. They’re, like, price per item. And then so you so you got kinda like the same thing. You got unit pricing, right, where we come in and say price per item. We assume it takes five minutes per item to research, and you do price per item, or rate and material. It’s a hundred and twenty dollars an hour or a hundred and fifty dollars an hour or whatever you charge to to go in and price that inventory out. And and just so you know, just it’s it’s professional service. And because you don’t have the volume, the price the hourly rate’s probably higher than what, like, a technician is. So when you look at it, rates that I’ve seen in there is not different from, like, eighty to two hundred dollars an hour for that type of service. When you look at that type of service and you’re like, well, what if I do unit price? Well, if you get something that’s really unique, like an antique or a hard to to locate item, maybe it’s like for like, you could do blended pricing. Like, items that take less than five minutes is two dollars or three dollars an item. Items that take more than five minutes is t and m. Kinda have to come up with your pricing, but those are really your only two models. It’s a per unit price or an hourly rate, and it does it all. The hourly rate to me makes more sense because your your job is to get completeness on the list. If it takes longer to research prices, it takes longer. If it’s shorter, you would win if you’re on unit pricing, but your risk to lose is much higher. So I would just do rate material. Yeah. That’s good info, Chris. Thanks for sticking around and get waiting for that that question to to that person that asked. I guess I see one more in here, which is from Cassie saying, is there a way we estimators could get a catalog or list of things that the insurance companies will pay for or not so that when kickback is given, we can push to get items paid for? Well, there’s not. We’re actually building something similar to that is I’m working I’m working with a company. We’re we’re actually working on how to create the right compliance piece for insurance. So I’m I’m working on that on an estimating side. We’re not there yet, but, effectively, what we’re looking to do is wherever there’s compliance reduction, I wanna track how many dollars are being reduced off of my estimate. So from a business decision, if I wanna do work with somebody, I wanna know and, like, anything. Right? Like, we we hire a painter and the painter gives us a discount on their invoice, but then they give us a discount on, hey. I do extra things for you. What’s the value of those extra things? So I wanna know when I base a decision on which insurance company I wanna deal with, what are in the written rules and what are in the unwritten rules. And and I need to know how much dollars I lose every year into the unwritten rules. I should also know how many dollars I lose in the written rules because one SLA might look really bad, but when we get into the program, you realize that that’s how they enforce the job. It’s just whatever is the SLA, that’s what they enforce. Everything else is free. Another company, the SLAs is what gets enforced and the unwritten SLAs get enforced, and all of a sudden, it’s a junk contract for you. So we’re working on trying to come up with a method to track the profitability on there. So the only thing I could say is click on those QRs, and then when I get that in place, then we’ll we’ll have that program in place, and and it will help dramatically reduce your the amount of dollars they’re slipping through. No. It’s it’s the other side of it is it might make sense to have those dollars slip into those those reviews. Like, you may have very low marketing costs and very low overheads to win that work. So then I would make a trade on how much money am I trading for the book of business that I’m getting. Like, it this this industry is really emotional. Like, I say it. I’m like the pot calling the kettle black. I get emotional when people cut my bills. I don’t like it. So what I do is, like, I I worry about how do I build a pricing model where if my bills are being cut, I’m making a financial decision. Mentally, I have to be in agreement with the fact that I’m getting my bills cut. If I don’t get my bills cut or I don’t want them cut, then I’ll be like, I’m not doing it. I’m not doing it for this price, pound sand, until I understand the financial situation. So what is my what is my potential upside? If I know what the upside is, like, hey. I’m gonna get a million and a half of revenue, and I gotta give up a hundred grand for it. How much did I make? Did I make forty or fifty percent on it? Okay. Well, I made five hundred grand. I can give up a hundred grand for that. Oh, that’s okay. But if I gave up four hundred grand and I only made two hundred grand and I and my overheads don’t cover it, that book of business is off my books. I’m I’m wasting time. So it’s a good question, but it kinda depends on, like, what your margins are, what your volumes are, and and then what is the individual company. And it changes. The the really wild thing is it changes region by region. I just did two weeks ago, I did a survey of, like we had three insurance companies. I won’t name them. But I put three insurance companies on the board and said, one, like, which one would you say is a high quality insurance company with the pays well? And then which one’s a low quality insurance company that pays really poorly and who’s in between? And depending on the region, people were marking it differently, and we’ve had this discussion. And it was like, hey. This top tier company is up here, but they’re also down here. Why? Well, in my region, they ****. Ah, okay. So but they’re a top tier company. Yeah. But not here. And so it depends who you’re dealing with. What’s the branch do? What’s the national protocols? There’s so many factors that go into it. Right. So I think I think that’s probably a good place to, you know, to cut for the day. Well, I’m done. Thanks for sticking around, guys. A bunch of you guys made it to the end. That’s oh, I always I love it. You guys are enduro ********. And I know it a marathon, Chris, so we thank you a million because I know we’ve got lots. You got my contact info. Find me on LinkedIn and Facebook. Love to be friends. And then if you see me floating around, just say hi. And if you need anything, reach out to us. Appreciate you guys. Well, I will echo everyone in the chat and say thank you. Thank you, Chris. It’s always, so educational to have you out, and we’ll be looking forward to the next time. And I wanna thank everyone else, as well who attended, especially you, you know, troopers who stuck out, you know, to the the very end. So we appreciate you guys giving us so much of your time and afternoon. So thanks all around to everyone. I hope that you all have a great evening. Have a great day, guys.