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Lets say you (a GC) just went to look at a bathroom remodel. Complete gut, new everything and no fixture relocation.
How do you write up a proposal with a fixed price if the owner does not know exactly what type of fixtures or finishes they want. I know that some people put in allowances per item (toilet, sink fixture etc..) but then how do you cover your markups on material and how do you prevent all the problems when the owner starts to quote you material prices from her local big box. Do you include your labor and overhead charges as a separate item for all items that are given an allowance.
How do you guys handle a situation like this?
Sean
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I do these all the time. They make up the bulk of my agreements.
I let the Owner supply the fixtures with the understanding that fixture related callbacks are not covered by my typical warranty. In other words, if the flapper in the toilet leaks 2 days after we install it, it's a charged work order.
Most customers are willing to take that risk. (how often do you see a fixure or faucet fail in less than 3 years?)
I let them go to my supplier, pick out what they want, and rather than to bill it on my account, I have it delivered C.O.D. The Owner pays for right there. My cost.
The agreement will have further language which requires the Owner to acknowedge that they must insure that their selection does not interfer with production. Don't order a toilet that is coming in from France in 8 weeks. They must provide an order sheet with a ETA on the goods. Or it's going to cost an additional x amount of money.
Hasn't happened yet.
This also gives the client a sense of control over a tangable, visible part of the job.
It also keeps them outta the big box.
*.. i take them by the hand to our plumbing supply house.. i set up an appointment with the salesman..we look at all of the fixtures and get a wish list..the salesman gives me an itemized list , including model numbers.......i give a copy to the customer, along with all the colored brochures.. i send the list to my plumber ( who has already received a copy from the salesman).. for HIS pricing..his pricing is what my customer will pay...if he/she wants to buy their fixtures at a different location.. from a different supplier.. they become responsible for them.. if my plumber supplies them at his price.. he is responsible for them..most customers will have my plumber supply them...my markup is based on my plumber's prices...and his labor and incidental materials are all included..the only items on the ALLOWANCE are the fixtures.. and the amount is whatever b Ipay, including tax...if the customer eliminates an item.. they get a credit.. they add, they get an addition to the Allowance....about how i've done it for 26 years....they can shop 'til they drop...but if they want it warranteed.. we supply it at our prices...
*Mike, would I be correct in assuming that by the time you take the customer by the hand to your supplier----you have already closed the deal. That is, tou have a deposit or a signed contract already in hand?I can't imagine you are taking every prospective customer window shopping?Maybe it is just me but it looked to me like Sean is at an earlier stage of the game---still kind of qualifying the customer and defining the scope of the project.
*Mark-You are giving your customers a bargain. They get to purchase there fixtures at your cost with no markup at all. Sounds like a T&M job.Mike-When the customer is at the supply house and asking the salesman the price of different items what price does he list. When the customer sees the price for the plumbing (do you even break down the proposal this way?) don't they wonder why the price is different between the plumber and the supply house?Thanks for the info. I am just trying to figure out a way to write a proposal that includes all my markups for material/subs/overhead/profit and at the same time try to accomodate the client who is not sure what type of fixtures they want while making the proposal not look suspicous to the client.
*steve... yes.. at that stage i already have a contract... but my allowance is based on conversations with the customer from the bidding stage...sean.. at the supply house.. he can give either list price or my price.. i don't care.. i have a conversation with the customer..to the efffect that we will not know the price UNTIL my plumber gives it to us.. and it will be marked up by the plumber as part of his cost of doing business...my plumber gets better prices than i do.. and he puts most of his markup on the labor.. he does mark up the fixtures and the customer can compare those prices to anywhere else.. but then they have to deal with the other supplier... and my warranty and the plumbers warranty will not cover the Owner supplied fixtures...if they raise an eyebrow..i tell them to go ahead..... after i tell a few war stories about Owner supplied fixtures.. most do not have a problem with this... those that do will probably not hire me...we sell service ..not fixtures..
*Mike, I like your style. I also like Mark's. I wonder who's bottom line is better....Mike, you mentioned that you use the owner's number for your allowance. How does the owner know how much the fixture is going to be. Do they just throw out a $350 figure and you just use that?That sounds reasonable to me.blue
*blue.. we have a conversation about fixtures .. i tell them typical prices based on their input...they then make up a shopping list...like one one piece toilet...one sink and vanity, one faucet, one shower, one shower valve, one shower head..that gives us an allowance..the plumber will give us his final prices......i also give them an acessory allowance for medicine cabinets, mirrors, toilet paper holders and towel racksif an addition has a kitchen and bath.. there will be a fixture allowance, a kit. cabinet allowance, a flooring allowance, a lighting fixture allowance, and maybe an appliance allowance .. or maybe i'll tell them to supply their own appliances.... i recommend places to look at all of theses things based on service and price.. bad service and cheap prices will never get a recommendation from me...i don't need the headaches and neither do they...
*Mike your system is as good as it gets. You obviously build in your SCA costs into your labor. How long is your typical sales call till the moment you get the verbal nod? Can you price a kitchen job and close it in one sitting? In an hour? Just curious.I still like closing the deals with builders on frames. I'm not out of the business yet. I just contracted another rough frame at 16,300. I spent a total of ten seconds figuring the job. Here's how it went:i RING (that's my cell phone ringing on my desk). "Hi GReg" (I'm reading his name on my caller ID, "How 'ya doing?". "HI JIm, I'm doing fine. I got one to frame, are you interested?". "Sure, is it one that I've done before?". "Yes, it's just like the last one". "Okay, when can I start it?". "Monday". "Okay, That's perfect, see you then, I'll send Frank by to pick up the plans" "Okay, by". "By".Awright, maybe it was 20 seconds.This one will be a little better than the last one. I'll make 2k without pounding a nail. More if I acutally do something. No shopping, no fixtures, no suprises, no problem!blue
*yup, that's the great thing about specializing..you know your product..me ..everything is one -of -a -kind.. the only thing that makes it faster is that i don't agonize over it as much as i used to.. especailly since it didn't make me any money ....in this one off business.. everything costs .. once you recognize that, it does make it easier to say.. yup, that's the best i can do .. and it's better than anyone else is going to do it for ..if they know what they're doing ....
*Mike, I had an awful time doing "estimates" and proposals. That's one area of the business that I hate. Still do.blue
*From the very begining I tell my customer They are better off to get the fixtures from a suppply house. I tell them who to call & set an appoiuntment with. I have 3 different sales people I deal with (1 gets 90% of my buisiness) & they all quote list. If pressed they explain this is part of my profit & i do a lot of buisness with them & they will not jepordize the relationship by revealing my prices. The only ceramic tile rep I use is a master at this.i explain to customers that they are free to supply their own fixtures but I won't warrant them & I am still going to make the same profit. The conversation usually stops there. If they keep pressing then I probobaly don't want the job.
*In defense of my give away method, one the the motivations of bidding a job w/o fixtures, ie; Fixtures supplied by the owner; is simplicity. It keeps me from trying to be a mind reader.Also, most folks have a set budget. I know the cost of getting the job done. That's what I bid on, that's what my profit comes from. Service. I couldn't give a rat's ass about the mark-up on a lav, a toilet, a couple of faucets and a tub.What's it worth? Compared to the job costs of $20,000.00 to $75,000.00. That's were the money is.If I want to spend time holding someone's hand all afternoon, I'll send my client to my supplier and I'LL spend the afternoon at home holding my wife's hand. hehehe.I send the plans and specs, plus my own paramiters over to my saleswoman.Let my saleswoman earn her money, while listening to them argue. Sometimes profit is defined by what you spend your time chasing.
*Problem with the customer going to the salesman is when the sales person thinks they are a designer and try to change a design you have already nailed down...."This tub would be soooooooooooo much nicer for you"
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Lets say you (a GC) just went to look at a bathroom remodel. Complete gut, new everything and no fixture relocation.
How do you write up a proposal with a fixed price if the owner does not know exactly what type of fixtures or finishes they want. I know that some people put in allowances per item (toilet, sink fixture etc..) but then how do you cover your markups on material and how do you prevent all the problems when the owner starts to quote you material prices from her local big box. Do you include your labor and overhead charges as a separate item for all items that are given an allowance.
How do you guys handle a situation like this?
Sean