HomeTech Systems

HomeTech Systems has been the leading resource in the home improvement and home inspection industries, serving as a direct source for cost estimating books, estimating software, inspection reports and other business materials. Thousands of successful remodelers across the U.S. and Canada use HomeTech ADVANTAGE estimating software and books to help their businesses stay competitive in the ever-changing home improvement landscape. In addition, more than 100,000 reports are written each year using HomeTech Publishing’s Building Analysis Report (BAR). The BAR is a vital tool for professional home inspectors and one of the most widely-used and respected reports in the market today.

 

History of HomeTech

In 1965, Walt Stoeppelwerth decided to start a company to provide much needed unit cost estimating and business management information to construction professionals. He first published The HomeTech Remodeling & Renovation Cost Estimator Manual, as a pocket sized, 122 page publication. Walt soon determined that construction professionals were also in need of training on how to determine pricing using the unit cost estimating methodology and, construction professionals also needed business management training to help them run their businesses. Walt began traveling the country giving seminars to thousands of construction professionals educating them on unit cost estimating and business management. And, for years, Walt wrote a monthly column for Remodeling Magazine,and continued to perfect the cost estimator manuals and build a solid foundation for the successful company HomeTech would grow into.

HomeTech Today

HomeTech continues to publish the HomeTech Remodeling & Rennovation Cost Estimator manual which now encompasses over 3,000 items listed at local costs for over 250 areas across the U.S and Canada. HomeTech also publishes the HomeTech Kitchen & Bath Cost Estimator and HomeTech House Builders Cost Estimator manuals. HomeTech has expanded its estimating tools and now also offers estimating software to help construction professionals accurately price their jobs. Using the same pricing methodology at the Cost Estimator manuals, CostEstimator.com is an online tool available to construction professionals to help them create accurate, professional estimates. The HomeTech ADVANTAGE Estimating System is also now available from HomeTech. HomeTech ADVANTAGE provides construction professionals access to over 15,000 locally priced items,and labor costs for each line item.

Cost Data & Markups

Where do the costs come from?

HomeTech Information Systems, Inc. researches material and labor costs for remodeling in more than 200 areas of the U.S. and Canada. For more than 50 years HomeTech has provided contractors with the most reliable pricing data available.

 

What is included in the costs?

The materials costs include everything that goes into the job. For example, drywall materials would include the board, drywall nails, corner beads, tape, joint compound, even sandpaper. Labor costs include hourly wages, worker’s compensation insurance, social security taxes, and state unemployment tax. If you pay other fringe benefits like vacation, health insurance or vehicle allowance, you should determine your total fringe benefit costs as a percentage of your labor costs and increase the labor cost accordingly.

What is not included in the costs?

Unit cost systems allow you to estimate standard work very quickly and accurately. But that is only about 90% of a good detailed bid. You need to apply a judgment analysis to any estimate to reflect special conditions. You should adjust your bid based on the following:

Project Analysis: If there are unusual characteristics to the job such as a tricky roof tie-in or difficult materials matching, increase the job costs.

Job conditions: Difficult conditions such as poor access, little or no storage, high risk of theft, etc., should be reflected in increased job costs.

Customer Analysis: Approximately one out of five customers will be unusually demanding, and can cost you all the profit on a job unless you recognize them for what they are and increase your estimate to allow you to satisfy them and still make a profit.

Company Capability: Certain kinds of work may be easier or harder than usual for your workers; your estimate should be adjusted to reflect that. If you will need to hire more people or pay overtime in order to do a particular job, your increased costs should be reflected in your estimate.

 

What about sub-contractors?

The prices listed for items relating to plumbing, heating, electrical, roofing, masonry, painting, machine excavation, asphalt paving, marble and ceramic tile and blown-in insulation reflect the prices that subcontractors would be expected to charge general contractors for the work, including the sub contractors’ overhead and profit.

 

The prices seem high to me. How do I know the prices are right for my area?

The numbers are based on our research of what it actually costs contractors to complete the tasks involved. We include factors for waste and inefficiencies that are a part of any remodeling job—like set-up and layout time, time spent at the lumberyard and breaks. Our prices are designed to ensure that a contractor can make a profit in the real world, but there is no substitute for verifying an estimate against actual job costs.

We recommend that you complete an estimate using our system for a job that you have already completed and then compare your actual job costs overall with the estimate produced. You can always create a custom item or adjust prices if you need to.

 

I can’t sell jobs at a 50% markup. The competition in my area won’t allow it.

You can change the markup on the cost sheet if you want to but we strongly recommend against it. Most contractors go out of business because they don’t charge enough. A 50% markup works out to a 33% gross profit and if you include the true costs of managing a remodeling business, you will be lucky to end up with a 7-10% net profit.

I’m only closing 1 out of every 4 jobs I bid. What’s wrong?

There will always be contractors offering to do work at a lower price. The odds are that most of them will not be in business very long. You need to provide value to your potential clients beyond just a low price. The quality of your work and your professionalism justify a higher price than the low bid. The key is to complete estimates quickly and accurately and with a high enough margin that you make a profit. If you are charging enough you should only expect to close 1 of every 3 or 4 bids.

A Fair Markup:

Remembering Walt Stoeppelwerth

In 1965, before most remodelers even identified themselves by that profession, Walt Stoeppelwerth gave them a gift: He started a company to provide construction professionals with much-needed information about cost estimating and business management. He first published The HomeTech Remodeling & Renovation Cost Estimator Manual, as a pocket-sized, 122-page publication.

In the years that followed, Walt developed a number of other guides and software programs that revolutionized how remodelers work. At the same time, he traveled the country giving seminars, writing articles and sharing information and guidelines with an industry that sorely needed both.

“A champion of the industry and a true visionary, Walt was an influential pioneer who laid the groundwork for remodeling companies to realize their full potential,” according to Duane Hunton, who is now HomeTech’s president. “He helped them transition their skills from a trade to a profitable business model within a multi-billion dollar industry.”

Walt Stoeppelwerth died February 18. Below are tributes from a few of the tens of thousands of remodelers he helped, whether they realized it or not.

 

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A revelation to remodelers

by Sal Alfano

I had the pleasure of working as Walt’s editor at Remodeling magazine, where he was a columnist from volume 1 issue 1. Walt was one of the most generous people I have ever known. He gave freely of his time and expertise, and it earned him the respect of an entire industry. A lot what we take for granted today about the remodeling business began with something Walt said or wrote or thought about our industry. Three things stand out in my mind:

Estimating and business management In the early days of Hometech, Walt realized that the CSI classification system for construction phases wasn’t appropriate for small remodeling businesses, so he created 27 cost categories for his estimating and management system. They quickly became an industry standard. In fact, Walt was largely responsible for the wide adoption of the very idea of keeping track of costs in categories, in addition to the categories themselves.

Lead carpenter system Walt may not have invented the lead carpenter system, but he more than anyone in the industry is responsible for its widespread adoption. The idea of a job foreman who had one foot in the field and the other in the office was a revelation to remodelers who were looking for ways to keep overhead low and keep quality high.

Markup and margin When Walt first proposed a 1.67 markup multiplier, contractors laughed at him. They were convinced that margins that high would price them right out of the market. And they believed that markup was too high right up to the moment they tried it and it worked. All of sudden, the tire-kickers were gone and they were working for customers who were willing to pay for their services. For the first time, many of them were actually earning a profit over wages. For literally thousands of sole proprietors and small S-Corp remodeling companies, it was an epiphany.

Sal Alfano is the editorial director at the Remodeling Group of Hanley Wood Business Media, and the former chief editor of Remodeling magazine.

A fair markup

by Fred Case

Walt and I entered the remodeling business about the same time and became good friends. His energy and intensity were motivational. His wisdom of a ‘fair markup’ was a keystone for many as they moved from their craft to develop their businesses. Walt was dedicated to more professionalism in the remodeling industry and he certainly gave us that. He will be missed by many.

Fred Case is the founder and CEO of Case Design / Remodeling, one of the country’s largest full-service remodeling companies and now marking its 52nd year in business. The company is based in Bethesda, Md.

The business math of professional remodeling

by Neil Parsons

I was introduced to Walt Stoeppelworth’s work by one of my vendors in the late 1980s. His teachings opened my eyes to the business math of a professional remodeling company. Before then, the only math I was aware of in the remodeling industry was on a tape measure. If there was a remodeling Mount Rushmore, Walt’s image should certainly be there.

The information received from Walt and others, while understood, was not applied instantaneously like flipping a switch. There was a personal and business maturation in place at that time. Today, of all the hats I’ve worn, I consider myself a sales guy with a firm grasp on the money and math — a rare combination. I still use a phrase that I adopted in the early 90s: “When you double you’re never in trouble, but when you triple you make money!” A truly idealistic mantra, but it simply illustrates the needed path of thinking when addressing markup and profit.

Neil Parsons and his staff at Design Build Profit provide business coaching, sales and marketing training, and offer direct design and project development services through Design Build Pros for several established remodeling companies.

From hoping to knowing how to make money

by Paul Lesieur

When I was starting out, little accurate information existed to help a new young contractor understand how to price work to ensure profitability. With the help of Walt Stoeppelwerth I went from hoping to knowing my jobs would make money.

The first construction software I bought was a floppy disc set of Walt’s HomeTech Estimating System. I was writing a check as soon as the discs came out — and I still remember how long it took to get them up and running! Walt was a proponent of accurate estimating, charging the right price, the lead carpenter system and design build. A true visionary and friend to small contractors, he predicted the future of remodeling better than anyone. Our industry has lost a giant.

Paul Lesieur is a longtime contractor in Minneapolis (Silvertree Remodeling) and pundit (through RemodelCrazy, among other forums) who never misses a chance to be an instigator on remodeling topics.

Sharing the wealth

by Tim Faller

I had the privilege of working in the Washington, D.C., area, where Walt was active in NARI and the industry as a whole. As a consequence, I not only heard of him but talked with him on many occasions. People have asked me if I invented the lead carpenter system, and the answer is no. It goes back to Walt. It was his pushing that gave the idea traction in the remodeling market — and that traction allowed me to pick it up and run with it.

Walt often “shared the wealth” with me by referring companies and organizations to me as a consultant on the lead carpenter concept. Most importantly, I hear remodelers in every city speak of him as someone who helped so many understand the real cost of remodeling and making a real profit. Walt, your influence on my life and the industry will endure. Many thanks!

Tim Faller is a hands-on carpenter, author of The Lead Carpenter Handbook, and a consultant to the remodeling industry through Field Training Services. He also operates FalCon Remodeling and Handyman in Westerly, R.I.

Walt to the rescue

by Joan Stephens

It would be difficult to find a remodeling company that hasn’t been influenced in some way, either directly or indirectly, by Walt Stoeppelwerth. In the early 80s when we were trying to figure out how to estimate remodeling projects, Walt came to our rescue. Through his program we were able to transition from eking out a living to actually making money in the remodeling business.

We will miss seeing Walt at trade shows, but the legacy he left will live on in many remodelers who benefited from his great training.

Joan Stephens is co-owner of Stronghold Remodeling, in Boise, Idaho. She served as NARI national president from 2004 to 2005.

Permission to raise prices and be successful

by Shawn McCadden

I first attended one of Walt’s seminars when I worked at my dad’s remodeling business. It was the 1980s, and the seminar was at Somerville Lumber in Massachusetts. Walt’s approach and presentation style immediately captured my attention. I became a fan right away. It was like he gave me and the other attendees permission to raise our prices and be successful. My dad’s business and what I did within it was never the same!

Over the years and as I was developing my own business, I attended dozens of Walt’s presentations and several of the multiday workshops he put on at HomeTech, in Bethesda, Md. What made me keep attending, in addition to his valuable wisdom, was his friendly and down-to-earth personality. He always and graciously gave me an ear and advice about the things I was working on in my business. We also bantered many times about industry topics like sales, markup, the lead carpenter system and project packaging. I owe a lot of my success to what I learned from Walt and HomeTech. So does our industry.

Shawn McCadden is a former remodeling business owner and a nationally known columnist, speaker and consultant to the remodeling industry. He writes more about Walt in this post on his blog.

This strange thing called “overhead”
by Rob Baugher

I was first introduced to Walt in the early 1980s, when he and Linda Case were coming to town with several others. At that time, there were no conventions or seminars or even many books or publications on remodeling.

What Walt brought to the industry were sound business basics. I remember that he very confidently explained what the cost of business was: materials + labor + this strange thing he called “overhead.” Included in overhead was a line for owner’s income and profit (separate from labor?!!!!). It was the first time anyone had shared such valuable information with me.

Among other things, Walt told us that the cost of operating a remodeling business was at least 50 percent more than material and labor. He also told us we really needed a professional markup of 67 percent in order to pay all the expenses that we would incur from our operations in this industry because it was so different from new home building. He said that he knew many other remodelers that had used this formula and had found success with it.

Walt wanted to help the carpenter to understand his or her own business and charge a fair price so he or she could do great work.

Really, Walt and a few others like him paved the way for the entire industry to grow and mature. Within a year we began to hear of conventions and more educational seminars and then books.

Through the years I heard other remodelers call him “Uncle Walt.” I think that speaks for itself. When I heard of Walt’s death, I thanked God for what he meant to my business. Walt did what most of us try to do every day. He found his purpose and went after it with his whole heart. We are better from having known him.

Rob Baugher is CEO of Baugher, Inc., a 39-year-old design and remodeling company in Homewood, Ala.

Charging enough and knowing what you’re worth

by Reva Kussmaul

Walt Stoeppelwerth was a wonderful mentor to my remodeling practice. I first saw him some 20 years ago at a West Coast building show. He spoke about charging enough and knowing what we’re worth. This is my favorite quote, and advice that everyone in this industry should heed if they want to be successful in business:
“The number-one problem in the remodeling industry is that relatively few feel confident enough to charge customers what their work is worth.” — Walt Stoeppelwerth
Most remodelers in the room were rather baffled by how adamant Walt was about this. It wasn’t until about 12 years I really got the importance of this statement. When I wasn’t charging enough — not only in terms of my worth but also in terms of making a profit and earning a living — I continually didn’t have enough money. When I finally began to follow Walt’s advice, my company became profitable.

From there I decided to become a remodel coach: I coach contractors on the importance of charging enough to be profitable, and I coach homeowners on the importance of hiring contractors who communicate clearly about money.

“Charging enough” has been and continues to be a huge problem in our industry. It is the cause of so many of remodeling nightmare stories we hear about. Walt was a pioneer in this discussion, and it is partially because of him that I continue to have it.

Reva Kussmaul is a former contractor who began Remodel 411 10 years ago to bridge communications gaps between homeowners and remodelers. Based in Pasadena, Calif., she is working on a book for remodelers about successful business operations.

A genuine desire to help

by Paul Winans

Walt Stoeppelwerth did a remarkably good job of charting a path for success for remodeling company owners. Walt’s insistence on remodeling companies adopting a professional markup was revolutionary. His genuine desire to help people like me be more successful than we would have been otherwise is much appreciated and admired. Walt’s work with remodelers inspires me in my consulting work. He will be missed.

Paul Winans operated a successful design/build remodeling company in Berkeley, Calif., for many years. Since selling his company and moving to Oregon, he has consulted to remodeling businesses as a facilitator for Remodelers Advantage.

Taking the emotion out of numbers

by Jack Whealan

I first met Walt at a HomeTech seminar more than 20 years ago. I was a fledgling business owner with a ton of jam and not a lot of business smarts. My dad saw an ad for a remodeling business seminar at a hotel off of the N.J. Parkway, and off we went.

At the time, the concept of overhead was a mystery to me, and I was of the mind that a ‘fair price’ included only direct costs. Well, Walt opened my eyes. I still remember exactly how he laid it up, like a parent who lovingly but firmly rebukes their child. Some people argued with him (I know they didn’t last in business), and initially I felt a little guilty about his markup advice, but it played out exactly as he said it would. To this day, I see my top-line costs (COGS), revenues, and expenses with absolute clarity because of that initial prodding. Walt helped me take the emotion out of the numbers. I embraced his philosophy and never looked back.

I met Walt a second time at a seminar for home inspections, this time at a hotel near Shea Stadium in Queens. It was the same eye-opening experience and launched my company’s distressed housing arm. Walt’s advice has yielded one thousand times the investment.

Walt was an industry giant. To give you an idea of how far-reaching his effect has been on my businesses and me, I just wrapped up yet another estimate on HomeTech software (see photo). In my opinion, his ideas on organic development and management fly in the face of the garbage that’s coming out of many construction management programs. His hands-on “lead man” model and the faddish, clean-hands construction manager model are at opposite ends of the spectrum, and I proudly embrace the former.

Walt was old school in that he knew that construction is a noble profession that takes years to learn and costs $.67 on the dollar for direct costs and $.33 on the dollar for indirect costs. Walt also knew that people who are good at it deserve to get paid. I can only imagine how he felt about TV shows that glorify DIYers and bathroom remodels costing approximately $1.50. RIP Walt. Your legacy is a great one.

Jack Whealan is the managing partner and owner of SkyTop Builders, in Mills River, N.C.

The difference between margin and markup

by Darius Baker

I had been involved with NARI for about two years when, in 1991, our local chapter had Walt out for an all-day seminar on how to estimate. I picked up his program and have used it ever since. His presentation was where I finally “got” the difference between margin and markup. I never forgot that and immediately became more profitable. I count that day as the major turning point from working for a wage to making money.

I refer new and struggling remodelers to his program frequently. Walt made a lasting impression on not only me but our entire industry and should never be forgotten for that contribution.

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