Wondering how much money you can make by selling and installing security screens? Read our latest article to find out how much the average installer makes!
Most security screen dealers in Australia make anywhere between $50,000 and $200,000 a year. Security screen dealers who work really hard and smart have potential to earn more than the average dealer – up to $200k is possible. But if you are just getting started, you will likely be looking at around $50k in your first year. In this article, we’re going to look at what it takes to be a successful dealer, and what you need to do to avoid going broke in your first year.
How Can I Be More Profitable as a Dealer?
There are a number of ways to be more profitable as a dealer. Two ways are:
1. Increase your repair and maintenance jobs profit.
2. Compliment or replace your repair jobs with higher value screen sales.
A lot of tradespeople use websites like Hi-Pages in Australia to source their leads and customers, however these sites are dominated by clients who are seeking smaller repair and maintenance jobs to be completed. If you are relying on these trades directory type sites as your main marketing channel / access to customers and you want to increase your profit, you will have to increase your hourly rate and work fast. It is not uncommon for handymen to charge $300 for an insect screen replacement job that might take them 2hrs. Compare this with a competitor who might take 4hrs for the same job and they are effectively doubling their hourly rate.
Another way to make your smaller jobs more profitable is to have a fixed price site fee per job. This will often be around the $100 mark, and it ensures that even if a repair job only takes you 15-20 minutes to complete, you are still getting paid enough to make it worth your time. This fixed fee price will also help cover the costs that sites like Hi-Pages charge for the lead (usually around $25 per lead).
Selling screens instead of doing repairs is another way to increase your profit. A typical sale for security screens and doors is around $2000. A dealer’s cost on those screens might be around $1200. $800 profit. If it took a dealer 6 hours to install this job, including travel, that’s $150/hr profit right? Not really. There are expenses and other things that need to be factored in.
Factoring for Mistakes:
Successful dealers will factor in mistakes – because everybody makes mistakes, even experienced installers. Our rule of thumb is that one in every hundred screen specification points that you do or write down one is going to be an error. This error rate compounds resulting in 2 to 3 mistakes for every 100 screens that you do. As a starting point, a successful dealer should be factoring in a 2-3% error margin. For a typical installation job for security screens that totals $2,000, we would recommend slicing out 2.5% of that – about $50 – for mistakes as an absolute minimum.
Factoring for Overheads:
Successful dealers also understand how to calculate their overheads and factor them into their overall pricing and quotes as well. We’ve already factored in $50 for our mistakes, but what about your Tools? Vehicle? Fuel? All that sort of stuff. You might be working out of a small premesis somewhere so you’ve got rent, electricity etc. By the time we add all of the overhead costs up, it can easily come to $40,000 a year. If your business is turning over something like $400,000 a year, that’s 10%.
So, returning to our $2000 installation job, we’ve got $200 coming out of it for overheads (in addition to our $50 for mistakes).
So, what is our dealers actual profit on this $2,000 job?
$800 less $250. $550? Nope. We’ve forgotten administration, marketing and sales costs. For a dealer selling $400,000 in screens per year these expenses can easily be $40,000. Again 10%. Or on our $2000 sales it’s $200. Profit is now down to $350. For 6hrs work we are approaching $50/hr. We’ve not yet considered GST or taxes. As you can see, there are many factors that can quickly add up and eat into your profit.
How does a dealer make more than $100k a year?
A successful dealer will factor in mistakes, overheads, marketing and admin costs into their pricing but to make the biggest difference they will have to work fast. 4hrs instead of 6 increases hourly rate from $50 to over $80. You have to work hard. You have to work smart with your pricing too but if you do all these things you can be successful.
Guys who think they can sell $1,200 of product for $1,400 because they can get it installed in 2hrs get themselves into hot water; they think they are paying themselves $100/hr to install two doors in 2hrs but they aren’t being smart because they have completely forgotten about all of the other costs. All that they have looked at is the profit on that sale and then divided it by the amount of time that they were onsite doing the install without thinking about all the other stuff on top.
Their business will struggle, and they will go broke. Remember, just because there is someone selling that $2000 job for $1400 does not mean you should follow them over the cliff.
If you’d like to learn more about becoming a Starline Security dealer, head to our online portal and fill in an application form today.