It doesn’t happen very often, but why do people ask if I can come down on my price? If it was a little old lady who was barely making it financially and she had a hole in her roof, I would help her out. BUT, it is never the little old ladies, it’s the people who are well to do who ask me to come down on the price. It just irks the hell out of me for some reason. Thanks for letting me rant.
Coming to you from beautiful Richmond, Va.
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Replies
Usually by the time they say that, they have already decided they want you to do the job.
The question is more a test or a feeler to see how you react than a serious one.
If you bite and offer less, they gotcha. Then you have set an ugly precident and you can expect to be screwed. The same people dont ask the checkout operator at the supermarket if the price can lowered on a cart full of groceries do they?
They know that if they try that crap then they can expect to be arrested, therefore they play by the rules.
Also, the ones who try this stuff on are the ones MOST likely to beat you up with it. Dont let it bug you. NEVER back up on price, not a cent. After all, you are the pro. If it was easy then they would do it themselves.
I have noticed that mostly the old lady who looks like she is living on very little, will pay without complaint and compliment you on the nice work. Those ones I can see they are good folks who are finding things tough so will often give them a break.
They then usually insist on paying. I tell them with a smile that its my business and if I want to do someone a favour then I will.
I just landed a big job. They told me that I was more expensive than the other bloke, but they wanted me. He also said they would like to find some way to get the cost down. I had a think about that, and short of redesigning the thing......cant be done.
I delivered a contract yesterday for reading and signing. I didnt mention the previous phone call and neither did he. The cost issue seems to have gone away on its own. If it comes back later then something will have to get left out for the numbers to drop.
Professional. They want, they pay. Want cheap......call someone else. DONT call me when your cheap job bites you in the rear. :-)
Everything, 100% of it, depends on how you look at it.
DW
"it's the people who are well to do who ask me to come down on the price."
a) why do you think they have money?
b) what does it hurt to ask? you say yes, they save money, you say no, they lost 60 seconds.
there are people who will try to negotiate price with everyone.
bobl Volo, non valeo
Baloney detecter
"a) why do you think they have money?"
Exactamento!
I think price negotiation is just built into the psyche of some folks. I don't understand them, but have learned to live with it.
A friend of mine is like that. I once saw him pick up a tool at a flea market and look it over. The tool was marked $3. So he asked the vendor if he would take $2 for it. The vendor said no.
So the guy asks if he'd take $2.50 for it. Again, the vendor said no.
The guy says: "If you would have asked $4 for it, I would have paid you $3 for it." He put the tool down and walked away.
If you get testy with them, you're likely to just piss them off. But I wouldn't back down on price, as someone has already said.
Remember the line from someone here at BT:
"Don't be afraid of the money"
JoeyB
Never ever ever say no to a customer.. Say instead, yes I can if you will allow me to substitute a cheaper lumber grade or if you'll allow me to.... That opens a door for you to retreat into should you want to for some reason..
I know there are times when you want/ need a job for cash flow reasons.. Or to fill a hole in your work schedule etc.. If you say no then you run the risk of not getting the job, somebody getting it for $100 less than your bid or them deciding not to do it all all at this time..
By offering them a cheaper option you establish that your time is worth what you are asking for, and gives them reasons to accept your bid while saving face..
This clearly is a win -win answer. You can justify your price and make them feel that in their mind they got the best deal possible. Few will ever accept getting less for paying less. They want getting more for paying less and they are in a polite way asking you if that is possible..
So offer to leave a room unfinished so they can save that labor or use an inferior product to save them,... They may at first and sign the deal at those numbers but come to you later and offer to pay the differance rather than have something they know in their own minds to be inferior..
This is the real art of selling.
Remember, yes I can if you,....
When they start the well your more expensive and the can you do it cheaper...
along the lines of frenchy by saying yes, I say yes, but it will effect the warranty because of useing inferior mat'ls and I add but I wont do that so this is the price.
Oh yes when they ask you that be sure you have a air tight contract with them and be sure to charge alot for change orders.
There are some people I wont work for and that is one of the warning signs.
Since I do side work mostly woodworking, I tell people like that to go find someone else. Its not my FT job.
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Good advice, It shows you are pricing them a fair and reasonable level that you can clearly articulate down to the itemized item. People are suspicious if you are just giving a number, or discount, off the top of your head.
Rebuilding my home in Cypress, CA
Also a CRX fanatic!
>>So offer to leave a room unfinished so they can save that labor or use an inferior product to save them,...
>>This is the real art of selling.
I dunno frenchy, sounds more like you've mastered the art of selling a sub-standard product.
I get all my work by referral. If someone asks me to lower my price I offer them the phone number of a couple of other guys. Then wait for them to say "no, we want you" or I move on to a paying customer.
I dont compromise quality with cheaper techniques, half finished projects or crappy materials. I'm sure my reputation keeps my calendar full.
Maverick,
Selling is a skill learned thru hard experiance. The actual number of salesmen who get a selling job and are still selling 5 years later is one in a hundred. (actual numbers are much much higher but that is the common number used)
You can take my advice or not I certainly gain nothing.
I only sell sub standard products when that is exactly what the customer wants..
Can I come down in price? Yes, if you will take a used machine..
Can I come down in price on a new machine? Yes if you don't need that option.
Can I come down in price on a new machine with all the options? Yes, if you,.....
Eventually the customer convinces himself that the price is fair and now he needs to decide to buy or not..
It's a wonderful closing tool used properly. Misuse it and you'll fail the same as if you attempt to do your own brain surgery..
frenchy,
I am sorry my friend, but you are the one who is wrong---for 2 reasons.
follow closely
1) the whole basis of my approach----read virtually ANYTHING I have written here for about 8 years----the whole basis is simplicity.
I don't have clients---I have customers. I want as little interaction with them as possible, in general. My customers have a problem---it is my business to solve that problem.
my approach is---this is what I "diagnose" as the cause of your problem, this is what I "prescribe" to solve your problem, this is what it will cost for me to implement this "prescription". Period.
It is not subject to negotiation----the scope of work, the materials used, the time frame, the techniques---NONE of it is SUBJECT TO DEBATE!!!!!!!
In short---If I am gonna do it, I am gonna do it MY WAY---or I am not gonna do it at all. period......
" Ya mean I am gonna risk my life to solve your problem---and you want me to cut my price for the privilege of doing so??????? ( in my head I think --- EFFF YOU! LOL)---If you find some else willing to attempt it for less---well that is certainly your perogative and I wish you the best of luck with that---I am sure they will do a fine job."
I am in the problem solving business. ( I have used that phrase here before) My approach won't work for everyone( I have mentioned that before) If I was in the kitchen remodeling business---my approach wouldn't work---because kitchen remodelers aren't really in the "PROBLEM SOLVING BUSINESS"---they are really in the " making dreams come true" business.
Please note:--- I do not assume that my approach will work for everyone, nor do I assume it is appropriate for everyone---nor do I assume that everyone has the attitude to pull it off. I mention this because of item #2
2) your second mistake. you are a salesman first ,last, and always. You are assuming that what YOU do will work for everyone---when in fact what you do is scarcely related to what WE do.
You are comparing apples with oranges.
You sell a machine---and earn a commission I assume. that is only vaguely and very distantly related to what WE do.
Now----- If you sold that machine,
and then had to design the machine,
and then had to build the machine,
and then had to install the machine
and if building and installing the machine involved the very real risk of permanent physical mutilation, disfigurement, possible death or worse ----quadraplegia,
If your personal money was at stake, if you were finacing the deals out of pocket, if a portion of your net worth was at risk, if you were in fact playing with your own money----instead of earning a commision off of OTHERS transactions------
If you in fact did ALL of these things,and others I haven't even mentioned----then you might be closer to comparing apples to apples.
I love your political posts---but in business matters you consistently confuse your very distant professional occupation AND your hobby( building your own timberframe home) as being relevant to what WE do to earn a living
For instance---your suggestion to lower the price in exchange for lowering the grade of materials----
do you have even the slightest inkling that that would result in total HIGHER COST to me---on top of the lower sales price recieved----???????? do you have the slightest concept that using --say #3 1x8's will actually cost me more than using#2 1x8's for instance.
Keep in mind frenchy---I have thrived by my commitment to working less than 1000 hours a year. I am a limmited commodidty( sic?) there is ZERO benefit to me in cutting my rate---because I then have just cut my yearly income. I am NOT intersted in working more hours---and in fact I am not terribly interested in more money. I AM interested in the "economics of enough"-- meeting my predetermined obligations in my predetermined amount of time( 1000 hours) so that I can devote the rest of my time and energies to MY interests.
I love ya frenchy---I really do---but sometimes you really don't grasp that you don't know what you are talking about in OUR world.
Despite that---very best wishes---and Impeach Bush!!!!!!!! LOL,
Stephen
Edited 6/27/2005 5:53 pm ET by Stephen_Haz
Stephen Haz,
My friend, If I had a nickle for every person who tells me their problem is differant, they are a special case, etc.. You and I could both retire..
Which is exactly why my appraoch does work!~
Mind you I am not for one second suggesting that you make less profit on a deal. (I certainly don't and won't)
When someone hands you a question like that it is simply a signal for you to close.. It's called handling an objection. They are using a trial ballon to see if your prices are too high.
You can do as you advocate, "it's my way or the highway." Or you can in a polite way tell them that your price is firm and you are offering them a face saving way to still accept your offer..
If you did a good job of selling they want what you suggested.. but they don't like to be dictated to. By offering them less for less money you have the in effect told them that your prices are firm~
Now close the deal.. Here's what that conversation will sound like,
Well I'm certainly convinced that you do a great job and I guess that when I see everything involed I'll take the better shingle.. (in other words you win) now sign the deal and get the deposit and leave..
Frenchy-----
you are still so convinced that you are right----that you aren't paying attention to the information I give you.
If I do the job----I am going to do it my way.
I am not terribly interested in interacting with the customer beyond a minimal level.
I am NOT terribly interested in MORE money. or More sales, or more hours worked.
Now----if I do as you suggest
I won't get to do it MY way
I will HAVE to interact with the customer in order to "negotiate"
and those negotiations will result in lower price and more hours worked.
now Frenchy------I don't insist that you sell lifts "MY" way----why would you insist that I sell my services your way??????
BTW----the money in roofing ( at least in my system) is not made by selling more expensive materials----and it's not really made by "labor"
It's made by the "intangible"
Selling your way would destroy my carefully constructed" intangible"---and convert my little operation into just another commodidty----hustling, dickering, offering "one time only deals" to scrounge up another sale.
remember----I don't WANT another sale-----I have ENOUGH sales, I make ENOUGH money, I work ENOUGH hours----I have pre-determined all these things before the year even starts-------
selling your way would destroy all that for me----with zero benefit.
but---very best wishes to you, stephen
I will HAVE to interact with the customer in order to "negotiate"
and those negotiations will result in lower price and more hours worked.
Not necessarily true Stephen!
For the sake of discussion, let's agree that you have the right to do the job, exacty to your specifications, simply because you have to warrant your work and a leak can be a terrible thing. Now, lets try to incorporate Frenchy's response to a person seeking a better price.
You indicated that you immediately respond and feel that this client is a negative situation. French sees the request as a positive response. I agree with frenchy.
Instead of seeing the negative, Frenchy (and I) are trying to get you (and others) to understand that this is simply a last ditch objection, that is actually a strong closing opportunity. You can quickly make lemonade out of lemons, if you have the right closing skills. Frenchy obviuosly has them.
So, how might you respond? My instincts tell me that you don't have any lower priced solutions because you're quoting exactly what needs to be done, nothing less, nothing more. Your only response might be something that might be slightly irreverant; use some levity: "Mr Jones, I've priced out my materials and services to a very exacting degree, the only way I might be able to reduce the price might be to use one nail per shingle. That will save you about 45 cents. Is that something you might be interested in, or should I write up the contract the way I originally quoted it?"
Levity might not be your bag, but the point it that it's okay to reaffirm your quoting process without being offended. It's okay to simply see the request for savings as just an automatic thing that many people do and quite often these people don't really need, nor want a discount, but they do need to be told that they are getting your best price. If you haven't explicitly explained that you are quoting a firm price that is non-negotiable, it is quite normal to expect an inquiry regarding your quoting process.
Basically, all I'm trying to say is that everyone that asks about a discount isn't a schmuck. Around here, when I'm dealing with a certain subset of builders, not asking for a discount is a warning signal. They don't ask for a discount because they don't intend to pay you anything close to what they agree to in the first place!
blue
Well Said blue eyed devil.
Objections are just a signal for you to close the deal. Handle the objections in a positive fashion, have the guy sign your quite, tell him to press hard because the last copy is his, get a deposit (if that's tradional) and leave to spend more time with your family.
I don't know guys..... tough to argue with Stephen.
I mean.... the guy makes a very comfortable living doing what can be very uncomfortable work... and averages less than 20 hours a week. And it's not just a lucky year... this is his business plan and it's working
He's doing something right, don't ya think? You can at least admit that, no?
Exactly my thoughts. Not only that, but he's doing what he wants, & running his business the way he sees fit. He's apparantly decided what he wants out of his business, & has attained it. In my book, that's success.
Diesel, I think we all could agree that Haz is doing something right. That is indisputable. But that doesn't mean that he's doing everything right.
My only beef is that he said that he felt negative feelings if someone asked for a better price. I'm just trying to clarify (to other readers, not him) that if someone asks for a better price, it is a strong closing opportunity. Stephen chooses to ignore and see this as a negative; that's his prerogative, but the fact remains, he'll lose a lot of great clients simply because he wants to take such a hard line.
I don't care if he takes a hard line, I'm simply making the case because there will be readers who will fall victim to the negative thinking and then use that line of thinking to run out of a house simply because a client throws out the money objection. At least now, because both sides have been strongly debated, they (the newbie salespersons with weak sales skills) will be forced to understand that there was a strong buy signal and they chose to ignore it.
Someone in here recommended reading Jeffrey Gittomer for sales skills. I second the notion.
blue
I've learned a lot from this thread. Just recently I bid a small project for 2900. The homeowner said "I'd like the price a lot better if it was closer to 2500." In the past I would have gotten frustrated, and then given my argument for why my price is fair. But after following this thread, I didn't miss a beat, and just said, "Well, lets see what I can eliminate." I omitted a few things, and said without them I could do it for 2600. She accepted, and the contract is signed. Later I found out that I was the only bidder, so she wasn't playing me against anyone else, just probably trying to stay within her budget. She didn't balk at eliminating a few things to get the price she liked, and I was glad to drop a couple of tedious items from the bid. Win-win.
A hearty congratulations Huck!
As a professional salesperson, you accomplished a lot! You were able to find the level of service and products that she could afford and met her needs! Congrats!
Now, take off that saleperson's hat and deliver MORE than you promised!
blue
blue,
Ithink you have made some very fair points.
However----if the truth be told-------- we really aren't professional salesman---are we?---------------
Sales------are just one of the long laundry list of things we do. We aren't professional accountants, or lawyers, or insurance men etc. We DO need to have some limmited knowledge of those things as directly applicable to OUR unique situations--------------- but we really are carpenters or roofers or electricians.
a remodeler might do some basic wiring----but he also knows he is not an electrician.
A professional salesman---has an advantage in remaining detached---- HE doesn't have to make the product he sells-----If I was selling a car----I wouldn't mind negotiating---I don't have to then BUILD the car after the sale,LOL
On the other hand----- I wouldn't want to buy a wedding cake, or a hand tailored suit from someone who wasn't passionate about the product of THEIR hands-----I WANT Someone with a bit of an attitude.
Also---as you very well know----adding an element of real risk to the work---adds in a different attitude towards negotiation. If I am selling shlock at Pier One Imports----I am happy to negotiate---I don't take it personally--------but If I am one of the Flying Walendas------contracting to tightrope walk across Niagra Falls-------you can bet I am gonna take it personally if someone tries to dicker.
the more seperated you are from the production of the product you sell, I think----the more accomodating you might be.
But most of US aren't very seperated from what we sell---in some ways we ARE what we sell. In my case---I take a real physical risk in what I do( not to be melo dramatic)-----I AM insulted if a prospect wants me to do it on the cheap.---It might just be business to the customer------but it's MY spinal column at risk--- HOW can that possibly NOT be personal?
The personality and character traits valuable to a professional wall paper hanger---are different than those of a roofer----and mine are different than those of a electrician. I suspect a professional salesmans personality is JUST as different.
Best wishes,
Stephen
Jazzdog----
I take no offense---in fact I am laughing right along with you. In a lot of ways you have nailed the situation!!! LOL
In actuality----
I live in a city of 200,000 or so
but I prefer working in this one neighborhood where I live----and try not to leave it for work.
When I DO work outside the neighborhood----more often than not the customer has been referred to me by someone back in the neighborhood.
I have been paying attention in the years since I started participating here on "breaktime"-----and I have often wondered about some of the other participants. I have seen several guys talk about the various places they have worked------------------------- It seems fairly common for a guy to mention somthing like------" well I used to live in Colorado---then I worked for a while in california, I worked in Texas for a number of years, then Florida---and finally I landed here"
I imagine that would be a valuable education of sorts----but that it would also cost you quite a bit in lost opportunities. Imagine all the satisfied customers you leave behind, all the" contacts" and potential referalls!!!!!!!!
I accept the fact that I have been EXTREMELY lucky.I have spent my 42 years living and working in a neighborhood that just happened to have the right balance of people, diversity, adequate incomes for my specialties, old enough houses to keep me interested and a surprising population of folks that are passionate about the quality of life in THIS neighborhood. Some pretty affluent---some not very well off----but a LOT of folks commited to living in this neighborhood and who simply will not leave. In a lot of ways we have created our own "small town"-----we put on our own 4th of july fireworks display, our own parade etc.( the CITY doesn't even put on a 4th parade)------parade route passes my front door----.
I just moved into a bigger house( too big actually 3700 sq. ft.)---on the day of the parade my house was PACKED from 12:00 noon untill about 11:30 pm---first for parade---then for fireworks. folks started dropping off pop and beer at 8:00 am to get " iced down"---blah, blah, blah---lol
It isn't perfect------we could really use a good coffee house within walking distance--------and I don't have an ocean nearby----but If I didn't live in this neighborhood already----I would have to find one like it somewhere.
Best wishes to you, Stephen
Stephen Haz,
Go ahead, it's obvious that you don't intend to learn but that's OK, it is a free society and you always are free to do as you see fit..
As for me there is a level you must interact with people. You can do so at a profit or at a cost, it's your choice..
The sad truth is most people aren't as expert at your job as you are and that's why you are there. Now the question is do you intend to maximise your profit (reward) for that interaction or do you think that it's simply a numbers game, that is if you interact with enough people you will get what you want when you want it?
The really sad part is that you're probably working harder for less than you should.. The reason for that is your failure to learn another trade (mine) You need to wear several hats, not only as the manager of your business but also as the salesman who sells it, the accountant who gets the numbers together enough so the accountant can make heads or tails of it, the personnel director and benefits manager plus another dozen or so hats.. How well you handle all of those tasks determines how well you live..
I've got my career down to the point where I seldom work more than 15 hours a week to make a really great income.. The balance of my time is spent on my hobby which is my timberframe.. There I work way too hard but I do so because I want to, not to earn money.. (I find the physical stuff keeps me young (although my aching bones right now would dispute that ;-)
Edited 7/3/2005 11:04 pm ET by frenchy
Frenchy,
1)I think I have mentioned at LEAST 2 times previously in this thread that I don't insist YOU sell lifts my way----why do you insist that I must sell your way?
2) As far as mastering another trade( sales)--- I certainly haven't mastered that "trade"----but I don't need to. I just need to master a couple of techniques that apply to MY situation. Some of Those techniques, I guess, either haven't occured to you----or more likely -----won't work for you.( geographic exclusivity, percieved value, looong verified reliability, old house specialist, commitment to serving a specific "clientelle, etc.)
3) as far as hours worked-----if you do the math it appears we work comparable hours---so whats the problem?----In addition, my claims to hours worked per year----are not estimates----I track it every day and have for years. this years total, as of today( roofing305.5, carpentry 149, overhead 170.5----total 625 for the year) At this rate I may stop working in September---I have done that in previous years. In actuality---I have already made more than last year although last year it took me 905.75 hours to earn it. I haven't yet reached 2003 totals yet, but barring an unforseen disaster I should eclipse that total as well.
4) job satisfaction------- I am quite content----I reasonably expect to be " retired" by your age.
I am an old man, in a youg mans trade---and I have found that distinction is pretty easy to capitalize upon. About 2 years ago I decided it was time to start moving out of roofing and into more carpentry oriented projects---windows, doors, that sort of thing. As a result I track 3 job classifications now, roofing, carpentry, overhead. a lot of my "roofing" hours should perhaps be tracked as overhead since a lot of them are spent supervising subs. so far this year about 1/3 of my production hours have come from carpentry, 2/3 roofing----within a couple years I expect to see those numbers reversed( in 2 years I have grown the carpentry from about 5% to about 1/3 of my work.
I am slowly moving out of roofing because of age and physical condition----but mainly because I have achieved almost everything within roofing I ever wanted to do. Anything further would necessitate running multiple crews and shooting for irrelevant finacial goals. I am not interested in that.
5) " numbers game"------I only want to go on 2-3 sales calls a week. Period.
I think I mentioned that previousl-----------------------------------------------------------------
Now---2 last points, Frenchy
A)---- back in the late 70's -early 80's I spent about 5 years working in a public library when I was a student in high school and college. I came across a book,written by a canadian I think---his name was something like Charles Long, and the book was something like " How to survive without a salary" or "how to survive without a job" I stumbled across it a year or so ago and re-read it. Reading it the second time---I found it a little trite----but that was because I had largely put everthing he had talked about in to practice---and it WORKED! Most important concept----you don't need a job---what you need is money----and there are lots of ways to earn money besides a " job"
B)---somewhere in the 80's or early 90"s I encountered the concept of the " economics of enough"----in short---how much is enough----what will you be happy with. If a specific dollar amount is your motivation----you will never be happy because when you reach that amount you will always revise it upward.
On the other hand if you sit down and organize your goals---WHAT will make you happy---and then and ONLY then put a price tag on those goals----you have a much better chance of being happy. the financial numbers just become tools to accomplish what you have determined is important. the finances are tools---not the goals themselves.
these are some of the things that have worked for me. I don't insist everyone follow them , because we all have different skills, goals, psychologies etc. I would certainly fail as a lift salesman---and in fact might fail as a roofing contractor anywhere other than HERE----but you would almost as certainly flop in my world as well. and that's ok also.
Best wishes, Stephen
StephenHaz,
I read that book too and it influeanced me as well. The auther made some good points but If you read The Simple Life that dates from the 30's you note the same theme.
The jest of that book was to do all things well or as well as you are capable of, to constantly improve in whatever fashion you can and to work for yourself.. We both seem to fundamentally understand that.
I have I skill, that I'm willing to share with others.. Others have shared their skills with me here and I've learned from them. I've always felt that I should give back and this is what I'm best at.. Use or not, it's a free country..
" I've got my career down to the point where I seldom work more than 15 hours a week to make a really great income.."
Frenchy ... U have never been more full of s h i t and more full of yourself than U were when U typed this load of s h i t!
Get over yourself. Let me remind U for one little second here ... I'm reading this ... and you aren't typing crap that some dumb carpenter will eat with a spoon .... I'm not doubting you haven't carved out a little nitch for yourself in the salesworld where you can make such claims ... what I am stating .... in fact ... is that this did not happen overnight ... and this did not happen without working many ... many ... many ....
many ... many ... many ...
80 and 90 hours.
IF .... it is true. Or u are a 16 year old girl playing on the internet ....
Or .... you have worked far too many hours in your lifetime and are just now reaping the benefits ... and are too full of yourself to admit it.
Why do U insist that sales is an easy game?
It's damn hard work ... no matter how you slice and dice it.
There is no easy way out ... you've been listening to one too many sales seminar and reading one too many "instant millionaire" book while busting yer #### and actually working your little sales fingers to the bone.
I got a question for ya ... Just how old are U ... and just how long have U been selling?
I'll bet dollars to donuts that Stephan is ahead of you in the game when U add up the time spent and bennies reaped! I can read it from here ...
You've finally moved from "sales" ... to "account manager" ... not in the title sense ... but in the real world application ... and you fail to see the transition and fail to take credit ...
It's like those actors that finally have a hollywood hit after 50 years ...
after 50 years ... "overnight success"!
it's easy ... U and they say.
which is fine ... just stop posting yer crap on internet websites, huh?
or at least admit the truth to the unsuspecting readers ....
and to think ... I'm usually the one saying ... "sales is easy" ....
it IS easy ... it's just a bit more time consuming than "15 hrs a weeks" and ya build yer own log cabin.
btw .... if U didn't work your book to this point and have always had such sales luck ... U simple inherited someone elses farmed territory! Take your pick ...
it's one or the other.
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
My inclination is to refuse to lower my price but your post has given me something to think about. We often do lower our price with a change in the scope of the work. Most of our jobs are non-competitive and how else can a customer figure out how much they can afford to have? We estimate on everything they want and then start cutting til we reach the budget requirement.
Maybe we should be a little more creative in our negotiating strategy, but there is a downside in closing the sale. That is that your may end up working with an unpleasant person for an extended period of time. While a jeweler or any retailer does care who the customer is, our work involves close interaction with the customer for a period lasting from weeks to years. If there is any personal friction, this will eventually become intolerable for both parties. I have learned to listen very carefully to that little voice which tells me to get out. Someone asking me to lower the price is going to make that little voice very nervous.
Shellingm,
I think we are thinking along the same lines.
Frenchies perspective is that of a salesman------once he closes the sale he is pretty much done----so of course he is willing to cut the price, close the sale and move on to the next opportunity.
but you and me------once we close the sale----the real work begins-----days , weeks, months of dirty, or dangerous or painstaking effort--------
Now--- think of all the little extras you throw in----things that weren't part of the contract but that you do anyhow----the little efforts you make to do things even better than contracted for-----------------
will you make ALL of those efforts if you are soured on the customer who initially beat you down on price????? Human nature says NO I think. the customer may have gotten a lower price----but they will also recieve a lesser job----the contract will be fullfilled perfectly---to the letter----but none of the freebies will be thrown in.
Best wishes, Stephen
I've found that my clients who are that focused on price...who plead poverty or special circumstance...tend to be high maintenance. In almost every such case, whether they were screwed by another designer, or some other sad story, I've at least partially regretted taking the contract. Some exceptions, but my best clients have been straightforward, negotiated the scope rather than the price, and then paid on time.
Stephen Haz,
I'm sorry you are wrong!
You need to understand why..
Pay close attention because you obviously missed it the first read..
Yes I can ( Come down in price) If you,.......
That is key! I can sell for less if you accept less. Go back and reread my statement
Once I close the sale I need that guy to give me a referal..
I live and die by referals. You little scoundrels talk amongst yourself far worse than any gossping old woman ever does.. If I come down on price I'm immediately going to have hundreds of my former customers pizzed off at me. That would end any future referals.
Just like you I need to make a living..
I give the same price to the same machine to everyone! Buy one or a hundred and they each cost me the same.
By saying yes, first you have the customer listening carefully in expectation.. By saying no you'd have the customer angery and not in a good mood to listen to reason. People want what they want and there is a great deal of art/ skill to selling.
Great salesmen know how to make the differance.. Poor salesmen discount untill they reach a price the customer is willing to pay..
Edited 6/27/2005 11:01 am ET by frenchy
Stephen isn't "wrong" ... nor does he have to be.
It can be done one way ... or both ways.
The guy that let me live that lesson that sometimes .... a higher price gets more work ... was also the same guy that taught me everything's negotiable.
Like I've said ... I don't give discounts ... I never come down on price ... I charge the highest rates around ...
and on that very same hand ... I give discounts and I will lower my price.
I will "give" to get what I "want" ...
not what I "need" ... but what I "want".
If and when I "work the price" ... it's always to my advantage.
my sales genius/mentor Ron would say ....
never give them nothing for free ...
and even if that cupboard is bare and rent is over due ... and ya gotta cut your prices in half to avoid starving on the street ....
still .... never "make a deal" ... without getting something in return.
It's all a mental chess game ... who's got "hand" ...
taking control ... belt loops ... that sorta thing.
Never let them see U sweat.
as Ron would say .... never look desperate. If the schedule is wide open ... still play hard to get. We can be there on Wed for the full rate ... but ... just this once ... we'll drop the price by 20% if we can do your job Mon afternoon, as we'll be in the area already on another job Mon morning .... if U agree to meet our schedule, we'll agree to a price break ... just this once ...
You just gave a discount ... but you still are controlling the situation ... makes a big difference when any extra's and add on's pop up.
btw ... I wouldn't tell anyone who has their lifestyle comfortably supported by less than 1000 hrs of work ... field and office ... that they are wrong about anything sales oriented!
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Here is a homeowner perspective for what it is worth..
By your own statement you imply that you have some flexability in your pricing based on your customer or the market. You should, and I am sure you do, base your pricing on what the market will bare. When the market or the customer dictates you can get a big markup, then you should get it. I feel confident you wont be cutting Michael Dell any brakes on a home build. This is the same for any business.
Do you pay sticker for a car? The nerve, asking them to come down on their price!. Point is, the car dealer has flexability or perhaps not if the model is selling like hot cakes. I would have no problem asking a contractor to revisit his bid if his price was significantly higher than other bids. He is human after all and perhaps he made a mistake or is thinking about something in the project that is not my intention. I would have no problems asking for ways to cut cost or ideas to do things differently. In almost all cases, I would qualify my request with the expectation that a bid should not be submitted for less than you would produce quality professional work.
Like I said, this is just a homeowners perspective. I hope you get that such requests are viewed more as an attempt to validate the market and get some assurance that you are getting the best possible price in the marketplace (considering quality of course). It is in no way meant to imply that your services are less than valuable or that you are in some way "not worth that much". Heck, I would love to pay you $500 per hour but like everyone, I have limits on what my employer pays me which I assure you is not what I am worth. :-)
FYI, a contractor that came back to me after being asked to review his initial bid for any flexability to see why it is out of line with the market with a decisive "NO" would likely not be my contractor or would be held to extremely high standards and would probably not enjoy the nit-picking that would accompany the premium price. The expectation of premium performance is the only reason I would pay a premium price.
>but why do people ask if I can come down on my price?
Why's that a problem? What's wrong with asking?
Do you always charge the same price a service? Actually, you've already said you don't. So what's wrong with asking that I don't pay more than someone else? Why should I be expected to pay more? Am I getting more?
when you go to a dr do you ask if he can come down on his price for a office visit????
when you go tto a lawyer and he says 5K retainer do you ask him to come down on his price?
When you take your car to a mechanic do you ask him to come down on his price?
why is this diffent?
just curious
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Anytime there is a custom or semi-custom service or product for sale, and comparison among alternatives is difficult, bargaining will be prevalent. An average homeowner doesn't know what is reasonable and customary for remodeling work, and has a difficult time comparing competing bids. A request to lower your price is an excellent opportunity to explain why your bid is actually superior to others and/or a great value. It's the perfect opportunity to close the sale! But, you need to be prepared to articulate why your price is fair, and why the customer will be thrilled with the quality of your work. Frenchy's advice is right on the money.
I guess I got irked cause after giving the lady the price, her first reaction was to try to get it cheaper. Nothing else but can it be cheaper. Uh...no, it can't ma'am. Maybe she will shop around and find that I am in the middle as far as pricing. Maybe my gut is telling me that this is not the project for me. Oh well, I am no longer irked, and it has been very interesting to see the many different responses.
Coming to you from beautiful Richmond, Va.
Edited 6/21/2005 4:28 pm ET by Joey B
About a month ago a lady asked if I could do better on the price for replacing her decking. I itemized my costs and ended up revealing to her the amount of a very small profit. On second thought, I said, maybe I charged too little. She quickly told me it was ok and asked when could I do the job.
I have to admit that not all jobs are priced the same. When I feel there is financial strain on the clients, I usually cut back on the mark-up, or even the base per hour cost, keeping in mind the bottom line must always be black. Rarely do I have anyone ask to knock it down. If they don't like the price, they usually don't sign on the line.
I never met a tool I didn't like!
I am one of those who choose to negotiate. Often I find that there are ways to reduce the total cost to me by offering something of value in return-- I generally do not expect that a price will be reduced absent such exchange.
A few examples:
I had the panels in my basement replaced recently. The electrician reduced his bid by 10% because I agreed to have the inspection the following day (rather than that day), and because I agreed to pay the day the inspector passed the work.
A fence company agreed to reduce the price of cedar pickets I was purchasing because I offered cash and did not require a receipt.
A jeweler reduced the price of a second set of earings for my wife by 50% because I asked if she would give me a discount if I bought another pair that transaction.
These examples do not mean that I don't value the service/product, I am just aware that different parties place different value on other components of a negotiation. I personally wouldn't sacrifice quality, but timing of payment, cash versus check, scope of purchase, and flexibility are common points of trade. Price is only one of the many aspects of a transaction.
By the way- lawyers' retainers are often negotiated, as are the final bills (after the work has been provided).
I offered cash and did not require a receipt.
Big red flag. Only reason someone would take cash and not offer a receipt is so they can do the job off the books. Congratulations ... you just aided an illegal transaction.
I'm sorry, I thought you wanted it done the right way.
Ed, I routinely offer cash discounts. Most people are happy to oblige. What the hell's illegal about it? ..Oh, you mean the guv'mint might not get their "rightful" cut? The transaction's not illegal. What people choose to do with their cash may be, but that's certainly not anyone's business. Now is it?
You have provided a service and accepted money for that as part of your business. That's business income, and it's taxable. You can argue the politics of taxation, but for now it is the law.
I'm sorry, I thought you wanted it done the right way.
1.) I wouldn't bother arguing the "politics of taxation", because that phrase is redundant.2.) You implied that accepting cash was somehow "illegal". I'm waiting for you to demonstrate this to me....Legally.3.) You implied by your tone that something decribed as "illegal" was also, by definition, immoral or unethical. There's really no connection at all.Do you work for the guv'mint, Ed?
. You implied by your tone that something decribed as "illegal" was also, by definition, immoral or unethical. There's really no connection at all.
So not paying taxes which is illeagal is not immoral ? not following ethical business practices is not Unethical???
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Ed, I routinely offer cash discounts. Most people are happy to oblige. What the hell's illegal about it?
Not paying taxes for one, you also open your self up to a number of things....get hurt working off the books how can you claim workers comp..
tell the ins company..I was working for free and I got hurt.... and....yea goes over big..
then comes the law suit if the HO is not satisfied with your work or doesnt pay you..no record no proof...
In court ..Well your honor the agreement was he was going to pay me XXXX for doing this..
HO I dont even know this guy and If I did have him do any work I wouodnt pay that much..He said/she said...
on and on and on the let your imagination go wild.....
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Sancho...yer a bit off topic. Anyway, I was pointing out that CASH is still LEGAL TENDER in this formerly free country..At least for now.When did I advocate not paying taxes? When did I submit that accepting cash payments is "working off the books"? I use written contracts with all my customers, including my written guarantee. Whatever method of payment, my contract is binding. On both of us."So not paying taxes which is illeagal is not immoral ?"No. A group of men who control the masses by means of economics and the threat of violence--calling themselves a "government" or whatever; forcing said masses to pay them tribute on their LABOR are otherwise known as thieves. Whether some of my neighbors may or may not have 'elected' said thieves makes no difference. Not handing the fruit of my labor over to a thief who demands my wallet is not immoral. The thief is immoral. So if one were to avoid taxes, one would be acting morally. (Not that I advocate it, rather I certainly don't condemn it). And it's none of your business who pays what to whom, frankly. Whatever evil deeds you or Ed imagine another man does with the LEGAL cash he accepts as payment for his labor will not change anything about the FACT that their receiving the cash is neither illegal nor immoral. And that.. was my point, Sanch.
And it's none of your business who pays what to whom, frankly. Whatever evil deeds you or Ed imagine another man does with the LEGAL cash he accepts as payment for his labor will not change anything about the FACT that their receiving the cash is neither illegal nor immoral. And that.. was my point, Sanch
Excuse me I guess my moral ccompass was askewed. because I thought doing something illegal such as not paying taxes shows something about peoples morals and ethics
No. A group of men who control the masses by means of economics and the threat of violence--calling themselves a "government" or whatever; forcing said masses to pay them tribute on their LABOR are otherwise known as thieves. Whether some of my neighbors may or may not have 'elected' said thieves makes no difference. Not handing the fruit of my labor over to a thief who demands my wallet is not immoral. The thief is immoral. So if one were to avoid taxes, one would be acting morally. (Not that I advocate it, rather I certainly don't condemn it).
So then its ok for you drive on the nations highways which was built by those thieves in govt and paid for by all the suckers who give them tribute....So then you are in essence taking advantage of people who do pay taxes and the govt.and ineffect stealing from them and the govt. Because you are using something you didnt pay for.
again my moral compass was askewed....
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Ron,
I agree with you that it is wrong to try and illegally avoid paying taxes. But accepting cash at a discount does not immediately imply that such activity is going on. They may simply want to avoid the credit card fees. The no receipt thing would make me leary of foul play though, if in conjuction with the cash discount.
I agree with you that it is wrong to try and illegally avoid paying taxes. But accepting cash at a discount does not immediately imply that such activity is going on. They may simply want to avoid the credit card fees. The no receipt thing would make me leary of foul play though, if in conjuction with the cash discount.
I pay cash for most things I buy anymore. But I do get a receipt. That way I am sure I have recourse in case anything goes wrong. I cant guaranty that the guy is going to pay his taxes though. But the jist of Sungods post was that he didnt and dont pay taxes.
I could be wrong but just by the verbage he wrong I made that assumption
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Sanchy: It's SunTOAD, not GOD. Whatever gave you the impression that I'm some sorta god?Anywho, the gist of my post was NOT that I do not pay taxes, for that's nigh impossible. I limit my donations to the IRS as much as feasible, and so do YOU, I'd bet. I probably try a little harder than you, however, as you seem to have some religious belief that you owe a tithe to the god of State. That's the major difference, methinks.But again, a thing declared ILLEGAL does not make it IMMORAL. Think US of A during slave times... It was ILLEGAL to harbor a fugitive slave. As a good citizen, you had a duty to RETURN the slave to his master. Did that make it moral? Were citizens in Hitler's Germany acting MORALLY by turning in their fellow neighbors--who were JEWS--to be murdered, because it was THE LAW? Then, is using a public highway immoral because I disagree with the theft that was used to build it? Give me a choice, Sanch..I'll gladly use a PRIVATE highway--and pay the toll to the owner. You know of any 'round here? Oh, the Guv'mint owns ALL the Highways, you say? Dang. What's an honest guy to do?
The Dulles Toll Road is privately owned (and was privately built. Will be given to Virgina in a few years)Another reason to take cash, and give a discount, minus any goverment distrust.A year ago took a 10 grand deposit for a job. Started job. Six months after deposit, bank says "Opps, we sorry, checked bounced" I have already bought materiels, now bank account in the red for 6 grand. H.O. knows nothing about it. My checks are bouncing left and right. Took two days siting in bank offices to get it straightened out. Almots made me lose the will to work for myself.So, yeah, I'll take cash, and give you a discount! (And a receipt)
Well, I don't live in Virginia. But why would this private company who owns a private (probably profitable) road "give it" to the State? Strange, eh?Your point about cash is well taken.. And when I started my first business, my VERY FIRST deposit in my business account was "lost" by the bank. Our first business checks, subsequently, bounced. That looked real good.
I can't believe that so many contractors get so huffy when some one asks for a better price.
Frenchy's (and a few others) are right. Anyone with any sales skills would immediately recognize the opportunity. Look at it from the buyer's perspective: if they weren't interested in you, or your service, they wouldn't bother to ask for a better price. In essence, they are sending you a signal to close; what you do with it is up to you.
Skilled negotiators strive to get their price, in essence win the negotiation, but they also have a most important secondary goal: make the other party feel like they won.
Frenchy's suggestion accomplish's both goals and make the other party feel like they got something.
This thread clearly demonstrates why most contractors need to hire professional salespeople.
blue
Ps It's not illegal to accept cash and give no receipt. It is illegal to not report the cash. I've been offered cash many times and always tell them that cash is fine, but I'll still be booking it. I don't want anyone having the drop on me.
"Ps It's not illegal to accept cash and give no receipt. It is illegal to not report the cash. I've been offered cash many times and always tell them that cash is fine, but I'll still be booking it. I don't want anyone having the drop on me."Right on. Especially on not allowing anyone to have the drop on you.(But I still might not book it ;)
(But I still might not book it ;)
You have just confirmed what I suspected of you.I'm sorry, I thought you wanted it done the right way.
that he has a sense of humor?
jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Actually Blue,
I think you are deluding yourself.
When a prospective customer asks you to cut your price----they aren't showing interest in YOU or your SERVICE
but rather they are revealing what is most important to them---PRICE.
That's perfectly fair---but they will go for the best price---no matter who provides it----as long as the product is percieved as being comparable.
they really have no interest in you, or me----they will buy it from the guy down the street if he has it " at a better price"
As a framing contractor----you are kind of a wholesaler ( the GC being the retailer)
So you may be comfortable with the above arrangement.
But as a roofing contractor, selling my services direct to the homeowner---I am directly a retailer----and I am MUCH better off servicing customers who want ME and who think my price is a secondary issue.
That is----- instead of trying to accomodate folks who aren't interested in me and who want me to cut my price----I prefer to devote my energy to OVERSERVING and OVERSATISFYING people who pay full price. Less work and MORE money
Verybest wishes, Stephen
>>I prefer to devote my energy to OVERSERVING and OVERSATISFYING people who pay full price. Less work and MORE money
I agree 100% with you. there are two kinds of customers. I prefer to court the ones who appreciate quality work and have no trouble compensating me for the extra effort.
My own brother is the cheapskate type. He's always trying to negotiate with the lowest bidder and never happy in the end. Would I do any work for him? Never!
There is also the transition type, people who have had dealings with a Frenchy and would pay anything to get some satisfaction. I see that often enough. They usually want me to finish something the first guy bumbled up
Maverick,
several years ago I went to a seminar on selling roofing( Certainteed put it on, I think)
( I kept one of the handouts---right up untill I moved 6 weeks ago----damn---I wish I still had that hand out)
I am working from memory here---but some of the folks who are good at math will be able to extrapolate the figures I guestimate at------------------
At the seminar ,the moderator offered the following scenario
------- " Let's say you are selling roofs at a certain pricing structure. At your current price you net a 15% profit on each job. Your salesman suggests to you that you are at about the going rate----but that if you cut your prices---say 10%----a flood of new business will probably come in----and you will be more than able to make up the difference.
what's the problem with this plan-------the problem is that to make it work you will have to sell ( and actually complete) about 33&1/3 % MORE jobs just to NET the same money you are currently making
In round numbers I suppose this means if you are currently selling a roof at $10,000 -------15% net will be about $1500----but if you cut your price 10%----that price cut comes straight out of your $1500. If all your other costs remain the same----your "new" price of $9000 means you will only net $500 on that exact same roof
But---the bad thing is-----your COSTS to produce that roof likely will NOT remain the same. Remember------now you HAVE to sell at least 33&1/3 % more projects just to net the same cash at the end of the year-------You now have to make WAY more sales calls----maybe 60% more sales calls----can you handle that---or do you need to hire a salesman-----------can your current crew handle 33&1/3% more work----or will you need additional employees, additional trucks, additional wear and tear on existing equipment-------------
and MOST important in the roofing business----you are taking on 33 &1/3% MORE future liabilities---warranty work----maybe more than that if your new employees screw up---or your present employees start to rush or cut corners to keep the pace up"
Now---I imagine most of you folks are little guys like me----not only do you do a lot of the production work---but you do ALL of the sales work.
I don't know about you----but I am reeeeeeeeally NOT interested in making WAY more sales call just to break even with my current NET.
So----what worked for me was to RAISE prices. I make fewer sales calls-----but I am better prepared and better rested when I make them. I do fewer projects( less work)---but I make more money on each project.
Parallel story-------each year at the end of the season I sit down in November/December and project what my financial goals and obligations will be in the upcoming year. Since I KNOW historically I will work less than 1000 hours a year( last year 577.5 hours production/328.25 hours overhead)----simple math tells me what my " RATE" will be for the upcoming year.
It's crystal clear that cutting my rate will not help me meet my goals----but will only increase the hours I have to work.
Having MORE business is not an incentive to me-----I concentrate on finding less work---but selling it at my pre-determined target " RATE"
Once I do sell a project----I usually spend a bit of time thinking it through for ways to produce the same results in less time and with lower risks----thereby increasing my effective "RATE"----sometimes a job I originally intended to do myself gets subbed out more profitably----some times a job I originally intended to sub out----gets done by myself.
Very best wishes to you all,
Stephen
In my mind, You may have just hit upon the difference between all of us being in business and doing what what we do as a hobby.
I used to conduct sales training classes for the computer industry. It was amazing how many people would sit there and tell me that what I was teaching may be ok for others but it didn't apply to their business. I guess they must have been dazzled by the bright light at the end of the [business] tunnel.
Generally speaking if you had a handle on 4 topics you were in good shape
QUALIFY: In sales you qualify the customer for the product you sell. Are they already lined up with someone else and just double checking their other vendor? Is the job already done and now they think they got had?
NEEDS: Uncover the needs [and wants] through a systematic and thoughtful series of questions to prepare a solution. The needs will have to be there, the wants are negotiable [maybe]. By the way, the wants are things that can be removed to help them meet the budget. Most will find a way to come up with more money if in their mind they turn the want into a need.
BUDGET: Identify their budget, or lack of it and help them work through the financial aspect of the project. Many people have NO idea what things cost. Give them examples [pictures] of previous jobs and their costs.
TIMING: Are you pricing the job this month for delivery this month or 6 months down the road or maybe sometime in the future. If they have a hole in the ground, then they MAY serious about building that garage your quoting or the in-ground pool the other guy is quoting. Which one does the customer NEED NOW?
Now, as a hobbiest, all that goes out the window.
Needs and timing seem to determine how interested I am to make a project.
The customer ends up qualifying me: "You mother said you were good with tools and could make me this shelf for my medications".
Budget? Most of the time I find ways to reclaim lumber from my favorite lumber yard because all my projects can be built on a work bench. Even when I buy lumber I buy really nice stuff and build really nice pieces and then give them away. If they want to give me a few bucks I take it because I would expect to pay for anything I got like that. It would feel right.
So who pays for the overhead? I do. I'm a tool junkie and I buy the best. I have a garage full of Delta Stationary Power tools [all on wheels]. I have one of almost everything type of tool you can buy from Woodcraft. If I was in business and wearing this stuff out I would need to amortize this and get jobs to pay for it. I would make sure my pricing is well thought out and applied.
What the customer would get is quality for the price. I'd have a ring binder with pictures of my shop, me in it, smiling customers picking up their work [or standing in front of their addition, or on the lawn in front of their home with the new roof in full view . . .you get the idea]. I would have the estimate [sanitized] to show what work was done and what the bottom line was.
Don't have to think that way when its hobby.
Judging from the other posts, if someone is in business. one of the costs that will get the greatest return is a cost of a sales training class either given commercially through the local colleges or from a vendor.
I thought this post was going great until I started seeing attacks of personal nature and people getting defensive. It would be better if 1) everyone would just state their case about how they sell and overcome the price objection and 2) each evaluated the ideas against the way they do business and quietly agree to use the good techniques and forget about the ones that they personally don't see useful.
Jerry
Sancho Ron.
I try to pay for most things with cash, not to cheat anybody out of anything but because cash is king.. I have sub contractors willing to work for me because they know that I will hand them green folding stuff with pictures of dead presidents. No check to bounce, no debt to collect.
My wife works across the hall from the credit union and brings me home whatever is called for..
Thats great. I pay cash also for what I can. But I always get a reciept and the work is not done "under the table".
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I certainly don't get work done under the table either, Not that much would fit under there ;-) I don't need reciepts for the same reason I seldom get reciepts when I buy gas, One less bookkeeping function for me to mishandle..
When I have subcontractors work for me I usually know them and feel comfortable enough or I won't hire them.. The idea of needing a slip of paper to enforce what I should have coming leaves me cold..
Is it possible for someone I contract with to cheat on their income taxes? I suppose.. However I would be willing to wager a significant amount of money that they don't. Guys I feel comfortable with are too much straight shooters to do stuff like that.. the penalties if caught would far exceed any potential savings.
I had a receipt once and brought a defective vacumm back to Sears. They informed me that I shouldn't have used it to vacumm up sheetrock dust. I couldn't read that mentioned anyplace in the owners handbook so I felt cheated..
Three decades later I almost never buy from Sears and now Sears is no longer the largest retailer in the country. I'd like to think I had a tiny bit to do with that..
well believe it or not we actually agree on something. b/c my whole discussion has been with people who want cash but dont pay their taxes or under the table sort of thing. I wont do business with those type. But I do insist on a reciept. For warranty issues
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I think Canada is still open.How many countries can you name that have no taxation and are not third world?
Jon Blakemore RappahannockINC.com Fredericksburg, VA
I tell you what...
When all the business out there get rid of their illegal immigrant help, or when all the big corporations are forced to close up shop on that tax haven island, or when communities shift the property tax burdens back to the businesses instead of the residents to lure business to the community by offering those tax incentives, or when developers are forced to pay a fair share for all the new residents and required infrastructure improvements..... I will feel much better about the "cash and taxes" issue (not that it is an issue for me).
I hate to offend you but that this has to be the most misinformed post i've ever seen...you have to be a democrat... not one point you make is valid and all are short sighted... not even worth explain'n....
pony
I tell you what...
When all the business out there get rid of their illegal immigrant help, or when all the big corporations are forced to close up shop on that tax haven island, or when communities shift the property tax burdens back to the businesses instead of the residents to lure business to the community by offering those tax incentives, or when developers are forced to pay a fair share for all the new residents and required infrastructure improvements..... I will feel much better about the "cash and taxes" issue (not that it is an issue for me).
Go ahead and explain to me the error of my ways....
ok I'll bite... against my better judgement and knowing you don't want to be informed vs "just mad and wanting to blame someone else"
When all the business out there get rid of their illegal immigrant help
around here illegal help makes $12-$15 an hour so it's not a willingness to pay but a lack of people wanting to work... big difference between wanting a job and wanting to work,
or when all the big corporations are forced to close up shop on that tax haven island, "those big corporations" are publicly owned you either own their stock or purchase their product either way they have to make a profit for the stockholders and if they are save'n money somewhere (taxes) it comes back to you in value or in lower prices... do you think for one second that if they paid more in taxes that they'd hold the prices at the same level that you buy?... what about all the companies they compete against that have offshore ownership with your plan you might just close em down and lose the jobs they create...
or when communities shift the property tax burdens back to the businesses instead of the residents to lure business to the community by offering those tax incentives, who do these "residents" work for? would you rather have the jobs in another town or state so residents don't have jobs... give'n local tax breaks to industry is the cheapest most wise thing a local gov can do usually it's in the form of a "tax freeze" so the local gov still gets what it always got...people with jobs buy houses build houses pay taxes on these new houses employ others and spend the money they make usually pretty close to home...
or when developers are forced to pay a fair share for all the new residents and required infrastructure improvements..... OK developer takes farmland that pay'n about zip in taxes builds 200 houses that create a forever revenue stream to the local taxing gov... each house... say 200k around here thats about 5k in prop tax each... they can float alot of bonds for that... but with your idea each new homeowner would pay his part for all the infrastructure on the front end... that shouldn't add more than 100k to the price of each new house... but with your thinking I'm sure you assume the builder is make'n enough to pay it out of pocket without pass'n it on to the new homeowners... which there would be none... and the supply house wouldn't sell the materials and the local building trades wouldn't build and there you solved the not hire'n the illegal help cause there'd be no jobs...
I will feel much better about the "cash and taxes" issue (not that it is an issue for me).
must be a democrat
pony
$12 to $15 an hour cash is pretty good money. Probably equals out to around $20 to $25 an hour if the payroll went through Uncle Sam. I wonder if some of the Social Security issues are due in part to a large number of workers working under the table.
I, too have met younger people that lack a desire to work, and that is different than wanting a job. Who gets the blame there? The ever present instant gratification media exposure- or poor parenting? Is the poor parenting due to the fact that wages have stagnated and both parents need to work to make ends meet?
I am quite sure that any money that a corporation "saves" by avoiding taxes comes right back to me in the form of "lower prices" or "value".... Yeah, right. So then there is no need for all of the merchandise to be made overseas, right?
If a company avoids paying taxes, then where does that "missing money" come from? Obviously, the Govenment at almost all levels has spending issues, and that is a whole other set of problems.
If tax breaks were given to businesses that created "good" jobs... you know, the kind that are full time with benefits, or jobs that paid a wage that would allow the employee to live in the town that they were employed in, my position would be different.
Those of us that have "good jobs" are ulitimately subsidizing those that do not get paid enough and must rely on government programs to make ends meet. Where does that government money come from? If low paying jobs are created, the pool of money available to the government in the form of taxes is smaller (the pool of money available from illegal workers is non-existent). If that business is "tax exempt" or subject to a "tax freeze", the pool of money available is smaller still.
Just because the pool of available money is smaller doesn't mean that the government will adjust their spending accordingly. However, when Uncle takes a bigger bite out of my wallet, I MUST adjust my spending cuz the boss isn't giving me a raise.
That farmland generating nearly zip in taxes costs the town nearly zip in services. Where does it state that every available square foot of land must be developed?
Add a couple hundred homes where none existed, and now infrastructure and services are needed to support those families. Now, the town needs more money, money that wasn't needed before.
Why can't the funding (or at least a meaningful part of the money) for that come from those that want to develop the land and make money doing so? I understand that the developer isn't going to absorb the cost, I am not that stupid. Maybe some growth planning and meaningful impact fees would help the problem. If the people want to live there, and the jobs pay a living wage, the extra money shouldn't be a problem, right?
The issue is bigger than "Democrat" or "Republican".
You know, I have been biting my tongue with regard to your posts and your attitude, but now you've gone too far.
in this formerly free country It's still free, moron. Leave if you don't like it here.
who control the masses by means of economics and the threat of violence-- How does the government threaten you with violence?
forcing said masses to pay them tribute on their LABOR We are not paying tribute to the government, we are funding the military that keeps you free, along with other services.
Don't like our government? Then try somewhere in the middle east or western asia.
I'm sorry, I thought you wanted it done the right way.
Wow, Ed...I made you bite your tongue? dang. I'm--sorta flattered, I guess."It's still free, moron. Leave if you don't like it here."I'm a moron because I don't like the fact that criminals have laid claim to a perfectly good country and made us, the working class, their subjects?? How so? And why should I leave? I was born here; unlike the criminally wealthy socio-political class who parasitise the rest of us, I DO work for a living. And F-ing hard, bro. I've carved out a piece of God's vacant earth, built a home and a business--I've raised a stellar family and I do my best to love my neighbor, AND my 'enemy'. I just don't like robbers and murderers bullying us all around. If that makes me a moron in your eyes, then you, sir, are a serious mental defective. So, I'll stay--THEY (and you) may leave if you can't handle my presence. Deal?Oh, re: "how does the guv'mint threaten me with violence? " Well, since that's any State's ultimate sanction against it's subjects who don't comply...uh, think about it.For the record, I don't like this government..I don't like any government.. in "the middle east or western asia" or anywhere else on this rock. So What planet do you, a man who believes he has some innate power or authority over other men, recommend I re-locate to? And will you and your ruling kind then promise to leave us alone who choose to sojourn there? In other words, can I really opt out?I think Lincoln already definitively answered that one, no?
Ed, though I'm just a spectator here I see both sides. Your right, we do have to pay for the military and other services which make this country great, but taxes do very much suck!
I think the root of the problem is well known. The big wigs get all the breaks, and the small timers, especially contractors have a tuff row to hoe with the I.R.S. For me,,, I'm too smart to post on a computer what I do with all of my dealings and moneys earned. Be mighty nice if the system were resolved so that all contributed an equal share ( though this idea has been around for a while), and the burden would not be so great on entrepreneurs. Incidently, when I was in the military, I made at my highest paygrade almost $18.00 per day (20 years ago). Really not adequate earnings for the risks taken. I respect your allegiance to our great nation,,,, but after serving honorably in our nations military,,,,, the government and ethics,,,, hmmmm,,,,,
Respectfully.
Jon Jordan
J. Jordan Builders, Inc.
One possible option. Other is that cash has no risk, while a check can bounce and credit cards charge fees. Also no recepit meant to me that I would not try to return any of it later so that it was garaunted sale. Given what you say, I will be wary in the future, but that is not how I saw that situation.
What value did you give back to the electrician? You agreed to pay him the money you owed him when he passed the inspection? What were you planning to do, hold it for 30 days unless he gave you a discount?
And the jewler, 50 percent off the second piece of jewlery. Out of curiosity, do you walk in to many restaurants and ask for a second meal half price? What about clothing stores? Home Depot? What if your boss asked you to work 20 days, and ten of those would be at discounted pay, and in return he would buy lunch for you for a week. Correct me if I am wrong, but you aren't giving any value back to anyone, you are just saving yourself money.Coming to you from beautiful Richmond, Va.
What value did you give back to the electrician? You agreed to pay him the money you owed him when he passed the inspection? What were you planning to do, hold it for 30 days unless he gave you a discount?
For the electrician, he told me that it made his life easier no to have to wait around for the inspector that day and I handled it the next morning. So it saved him time. The contract specified payment within 30 or 60 days (I forget which) so I agreed to no lag which has some (albeit slight given interest rates today) value.
And the jeweler, 50 percent off the second piece of jewlery. Out of curiosity, do you walk in to many restaurants and ask for a second meal half price? What about clothing stores? Home Depot?
In regards to your second point with the jeweler, I did not propose the magnitude of discount. I simply asked if I bought something else too could she do anything on the price. Clearly this provided some value to her, or she would not have made the 50% off proposal. I would not have purchased the second item without the discount. In theory (as long as she did not price below her marginal cost, which I expect that she didn't) she was better off too.
Restaurants generally will not offer a second meal half off, but if you have a group of 20 for example, they may agree to provide a small discount/free appetizers etc. Big chain clothing stores can't give discounts generally, but smaller shops are often willing to work with you because the individual you are dealing with is often a decision maker.
At Home Depot the power to offer such discounts generally does not reside with the managers there, but in one instance I rented the pickup truck from them to take a large order home, and because it took over an hour for the truck to return, I was able to get it free.
What if your boss asked you to work 20 days, and ten of those would be at discounted pay, and in return he would buy lunch for you for a week.
If my boss offered me the deal you propose, I would consider the following:
What is my opportunity cost of the 20 days (e.g. what is my next best alternative)?What is the magnitude of the discount? Where is the lunch? Does this help position me for a promotion/raise in the future? What would the work be (e.g. will this teach me new skills, improve my resume, introduce me to potentially valuable contacts, etc.)? I am sure there are others, but these come to mind sitting here.
In the end, I may take him up on the offer, I just would need to consider all of the components of the hypothetical.
Correct me if I am wrong, but you aren't giving any value back to anyone, you are just saving yourself money.
I respectfully disagree. The value is different in each situation, incremental work/revenue, flexibility, saved time, lower transaction costs. It is true that I too save money in the process, but I believe that the other party also is benefiting or they would not agree to the deal.
I understand your point of view JMAC, just don't agree with it.Coming to you from beautiful Richmond, Va.
Neither does my wife. She does like those earings though:)
Anyone who pays retail for jewelry is throwing away money. I offered an instant cash sale on my wife's engagement ring at nearly 50% off, and he took it right away. I had expected to land somewhere in the middle. Receipt and taxes paid too.Some people do try to bargain on everyday goods at the store. Try the milk close to the expiration date, or the damaged ceral box. You can get them cheaper often.
does this all mean I have to stop keeping track of and reporting my cash earnings at the end of each year?
appearanty I can't do both ....
take cash ... and still claim it?
I never knew it was so hard.
Guess ever cash transaction is illegal ... sounds like it's illegal to give different prices to different people too ... also sounds illegal to work a better deal for both me and the customer ...
wow ... I really gotta change things ... or get ready for life behind bars!
What's my mechanic gonna do? He's really screwed. Been running a "cash only" business for over 20 years .... he's gonna take a long ride up the river, huh?
the biggest confustion for me though ... is if I'm constantly breaking the law ... why do I keep writting specs and prices down in the contracts?
I think I'm being set up ... by myself.
never did trust that guy ....
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
why do I keep writting specs and prices down in the contracts?
Therein lies the difference Jeff. You at least offer a written contract with all pertinent informastion. I inferred from the origianl post that it was a verbal agreement and cash transaction, with the intent of no paper trail.
I'm sorry, I thought you wanted it done the right way.
Guess the libs are right..you are a money grubbing republican after all..:>)
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"And the jewler, 50 percent off the second piece of jewlery. "
What this says to me is that the margin on the jewlery is well over 100%. Which is usually the case for jewelery. Some stuff doesn't sell until it is 75% off (i.e. at cost), but much of what they do sell is at a high margin. Yeah, they have commissions to pay and rent to pay, etc. But most other retail stores get by on 30% margins.David Thomas Overlooking Cook Inlet in Kenai, Alaska
I was in the truck last week, and heard an ad for the bon maceys in Seattle.Major sale. Meaning lots of stuff. Not just a few items...80 percent off.I was flabbergasted !Can you imagine what kind of markup they have, if they can sell stuff for 80 percent off ?
Are we there yet ?
Have you updated your forum profile lately? Please Do!
A couple of the main reasons I am in business is to give me some control over my time and some control over who I work for. Sounds like Stephen has done that. How Blue and Frenchy can brand someone as a "lesser than" or "not capitalizing on the situation" when he is attaining the goals that he set for his business and doing it in a manner that is comfortable for him is beyond me.
It is a free country. We aren't all the same. We don't all chose to handle our lives or business the same. Stephen is handling his business the way he wants, making what he wants and working at it at the pace he wants. I don't get where you can argue with that. He has attained the American dream and now you say he is working too hard at it or not making what he could?! I would be interested to hear your version of where Bill Gates and Warren Buffet went wrong. DanT
DanT
I don't insist that everybody do it my way, as I've repeatedly said to Stephen , it's a free country.. But if he would learn a few basic rules of sales he could maximise his profit while offending fewer people.. to me that is a win-win situation.
There are a lot of things we as pros do that make our life simpler. I've watched guys who make a living doing sheet rock totally miss oppertunities to close a sale and as a result they spend too much of their day looking for more work and too little doing that which they are really good at..
To be fair, I'm lousey at book keeping and it's a real struggle for me to do the most basic task. Frankly I hate it.. That to me sounds like the way Stephen feels about sales. He does a lousey job because he feels like he's not good at it..
You said: "To be fair, I'm lousey at book keeping and it's a real struggle for me to do the most basic task. Frankly I hate it.. That to me sounds like the way Stephen feels about sales. He does a lousey job because he feels like he's not good at it.. "You're kidding, right? "Lousy at sales"?! Why? Because he doesn't do things exactly the way you do them? So, you've got it all figured out, huh? Must be nice to be perfect. Too bad Stephen's doing so poorly. Maybe if you could give him a few pointers, he could turn it all around, & not be a drain on society.
gregb,
Part of a good job of selling includes making everything a win-win situation..
You want a job done and he wants reasonable compensation for the work..
The method advocated by Stephen dosn't provide that same feeling..
To review, His approach was a firm, that's my price take it or leave it.. (or as he said, NO!) While his approach may work in his neighborhood where he's a known commodity and people are prewarned of his bruskness, in modern society that rarely is ever the case..
The method I advocate allows the same compensation without the confrontation.. (my way or the highway) You listen to their request for a lower price and explain that you will have to give something less..for a lower price. I will- if you will- approach. You have politely explained your prices without the need to elaborate.
What that leads to is a closing oppertunity rather than the, "Well, I'll think about it that almost always results from a firm no to the potential client.. Sure, he may come around or he may seek other contractors and give them their price rather than be dictated to..
With the approach that I advocate, you've said yes which allows the customer to say yes.. or at least hand you another objection with it's attending closing oppertunity.. You seem to feel that an objection (such as can you come down in price) is a bad thing.. It's not! It's just the way some customers ask for more information or provide you with a way of saying yes..
I've sold to Amish and they are extremely tough neogotiators. Yet I made a fair profit and they refered me to others in their sect. I took pride in every blank check they'd hand me with their signature laborously scrawled in. (they never took financing and had I offered I have no doubt they'd have refused to do business with me) When I turned the check over a few days later, I made very sure that the amount on the check was the amount we'd agreed upon to the penny.
There are the same rules in selling that there are in building .. you keep everything square, plumb, and level and you do well.. What makes you differant from the hacks is the ability to find a solution to complex objections and to ensure that the solution is fair to everyone involved..
Just like you would no sooner want to cover poor framework up with sheetrock, you shouldn't fail to give your customers every oppertunity to say yes to you rather than your competition..
Frenchy, you keep missing the point. Instead of interpreting what Stephen & I have said, you continue on with the same rhetoric about how we're missing out on potential sales.Let me break this out a bit more, since it appears Stephen & I have very similar methods, & thoughts about how we run our businesses. I'll tell you how I do things, since I don't mean to speak for Stephen.1) I don't negotiate price, unless the scope of work is changed. The customer has called me because I'm the professional. I have the knowledge, equipment, experience & resources to do the job, & that includes attaching a price to it. We're neither the cheapest, nor the most expensive contractor in our area. We're fair in our pricing. It goes a long way, but typically isn't the determining factor in whether or not we get a job.2) We offer very good customer service. This service is something our customers are happy to pay for.3) We don't "advertise" in the sense of the word. We operate primarily off referrals, & repeat business. Word of mouth is a powerful form of marketing for us. Our customers "know us" before they call us - it's WHY they're calling us. It's also why we can charge what we do. The customers see value in what we're offering.4) We don't do competitive bidding. There's ALWAYS someone who can do it cheaper than us, or at least claim they can. We provide a real scope of work, & a real budget on our jobs. This is a service that we're compensated for. 5) We screen our customers. Contrary to what you may think, there are jobs I don't want, & customers I don't want to deal with. Unless we think that the customer & project will be a good fit with our company, & our way of doing business, we pass on the job. I can only guess how much money I've made by NOT dealing with certain types of people!6) Our customers call us because we do nice work, & because they like the way we do business. We're easy to deal with, & they appreciate the fact that we take the time to hold their hand through all the steps in a complicated remodeling project. It's about service to them, & they're willing to pay for it.So tell you what, Frenchy. You do what works for you, but don't bother to keep pounding on how it's the "best way", to paraphrase what you've claimed. I wouldn't trade my way for your way for $10 million in annual sales, because then I might have to deal with the type of people I try to avoid, & I like our philosophy too much.
This is begining to sound like the ciber pimp RC on his method of sales...remember him.. He was the one who said something to the effect of if you dont do things his way then you were a "small toolbelt" type contractor...
Ah Steve your way works fine for you as does mine for me... I guess we're just a couple of small tool belt guys who can sleep well at night.... :>)
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Greg------that's a very well written post.
I would have to agree with almost of it.
one small thing I would like to add to your 1) category
In general I won't negotiate on the scope of the work either. " THIS is what I am going to do, THIS is what it will cost".
Other than that----you have written very well.
thank you,
steohen,dumb roofer---lousy salesman.
Yep, I know you don't negotiate, Stephen. Seems silly that you would. Sounds like the scope of work is defined by you after figuring out the best way to solve the problem the customer is asking you to fix. If this is this case, the customer has no business trying to alter the scope of work. That would amount to them trying to tell you how to do your job, which is also silly, since you're the pro that they called to solve their problem in the first place.It's a little different with us, however. Since we're a G.C., our customers are picking out products & features they want in their new space. We do design-build work, & try to tailor the design to suit the budget. And, no matter how hard we try to avoid it, the scope always changes during a remodel. (Never seen it drive the price down overall, though!) ;) Greg
greg----as you might guess
I am tempermentally unsuited to do all the handholding builders and large scale remodelers must do.
better you than me, eh?
lol,
stephen ,dumb roofer, lousy salesman.
Well, Stephen, I gotta tell you, you're missing out on a huge profit center! All you gotta do is take my next class, & I'll show you how you, too, can reap all the benefits I do by working only 10 minutes a day! ; )
ron, that's a fair point.
I haven't been in business quite 20 years----( about 17 and 1/2 actually)
I have a call on my phone right now requesting some "warranty work" ,which I will attend to tomorrow. Involves a potentially missing piece of step flashing------will almost certainly take me longer to drive to the house than the " work" will take--------and that's IF any work is actually required.
but---it's MY name on the door---ain't it????
Stephen, dumb roofer, lousy salesman
Huck,
State of Ohio, Workers Comp.
It's a state thing---not a private insurance
Liability insurance is through Erie Insurance
I am a LLC, limmited liability Company
I would strongly suggest re-thinking your sole Prop. status and forming a LLC or a S-corp.
Best wishes to you, Stephen---dumb roofer, lousy salesman
Lousey job ?
frenchy----- to you, I may be a lousy salesman----but I am a good enough salesman to know that I am eating your lunch here. LOL
I will admidt your lousy salsesman crack made me mad----for about a second and a half----------
but then I realized that your crack was a self defense mechanism.
you see----YOU are supposed to be the master salesman---and in fact YOU are trying to sell me on something( your method)
but you can't answer my most basic questions regaurding your "product"----the method you think I should adopt. your defense is---that there is something wrong with me---I must be a lousy salesman.
As close as I can figure---the very BEST I could achieve with your "method"---is to duplicate the results I am already getting.
Keep in mind ,frenchy, that you are a salesman-----the sale is your end result. THE GOAL.
To me, however---the sale is NOT my goal, it's a minor tool to achieve my goals---------------------- HOW i use the tool and how I achieve my goals is what's important----
the difference between a hand cut dovetail and a machine cut dovetail.
because you view the sales process, as designed to produce a sale---first last and always,
you are missing my aim----the sales process is just a tool to winnow out the people ( potential customers) who would want me to do things "their way"---instead of "my way".
I think if you view what I do objectively----you will see that I have actually put into practice quite a few techniques used by some quite large companies-----I just use different terminology and adapt to the level of business I want.
Now, as far as basic salemanship goes----YOU might want to take a refresher course---because you are consistently violating your own basic rules of salesmanship. Try listening to your customer----I have told you REPEATEDLY that I am not interested in "Maximising Profit"---as you put it.---you keep missing that---it must violate your sense of salemanship. You are trying to sell me a large screen TV---when I keep telling you what I want is a 13" black and white---LOL
Try NOT insulting your customer------ If my prospect chooses not to buy what I am selling----I don't tell them they are" lousy salesman", or "not interested in learning"
they are free to accept or decline---it's their choice and I wish them the best of luck either way.
Try to actually be able to supply basic answers to your customers basic questions----instead of avoiding the question with non-quantifiable claims of " my way is better"--------HOW is it better?, in what way?, give me specifics----how do they apply to ME? How much? etc.
BTW Frenchy----my prospective customer generally already have the answers to those questions and more-----before they ever call me. I am such a lousy salesman, my prospective customers have had their questions answered ---BEFORE they are asked----by previously satisfied customers. But----"I"----am the lousy salesman?????
but hey, what do I know??? I am just a dumb roofer---and apparently a "lousy Salesman" as well.
Stephen Hazlett, lousy salesman.
Stephen,
If you have never lost a sale to the competition who did a inferior job for more money then You are the exception.. If nobody has ever been turned off by your brusk manner and got someone else to do the work then you are indeed a super salesman.. I should use your methods and learn from you..
In the real world that doesn't happen.. few people know enough about a task to determine the fair price for the work involved.. When a customer asks for a lower price it's not always a request for a lower price, rather it may be their way of asking for enough information to justify your price in their own mind.. or it may be a way of telling you that they cannot afford that much or it may be a way of asking you to close the sale..
You say a firm No and they have almost no face saving method of dealing with you except, "Well I'll think about it".. You aren't ready at this point to deal with that objection.. (it can be easily dealt with as well but trust me you need to learn a great deal more before you'd be able to turn that one around)
If you say yes, if you will,.... You haven't lowered your price one cent, all you are doing is asking them if they want an inferior job. (few will ever accept that) Those that would accept a inferior job are still yours to accept or turn over to someone else.
The sales process has rules, if you violate those rules you can't be as successful as if you don't violate those rules..
You seem to keep coming back to the idea that I'm a hit and run salesman.. I've been doing the same basic thing for 14 years.. Selling rough terrain telescopic forklifts. The vast majority of my sales are referalls or repeats.. These are tough, knowledgeable contractors who usually live and die by being the lowest bidder on a project. Falling back on second grade math (when we all learned how to add and subtract) is the natural tendancy of such men after listening to the fifth or tenth salesman today that tells them their Forklift is best.
In my market I have a 65% market share and the other 18 salesmen share the remaining 35% Nation wide Skytrack is the dominant forklift followed by Lull and then Gradeall.. Only recently has Sky track made any inroads here.. I sold Lulls untill I found out their weakness and eventually I sold Ingersol Rands.. Price wise there is really no differance in costs in an apples to apples comparison between any brand. While each brand has it's strengths and weaknesses the ability to explain why the differances matter and how they apply to the customer makes the differance..
Service after the sale is key to those referals, that and a good feeling from dealingwith me.. One prime point of pride I have in the last 14 years is the great number of people who referred me to their friends.
Frenchy,
I would like to clear up one thing---and then make one last point.
I am sure that I have "lost" plenty of sales to " competitors" who delivered a inferior product at a superior price.
I am equally as sure that I have "lost" sales to " competitors" who quite possibly delivered a SUPERIOR product at a lower price.
Neither of those possibilities bother me at all. I can't controll what other people do---only what I do. I don't know what other people need to sale their goods and services at---only what I need. but since I only have about 1000 hours of work to fill up each year-----I couldn't possibly produce roofs for all the people who theoretically might wish to buy one from me.----As a result---I don't really have any competitors----those other roofing contractors are really doing me a favor.
Now---the one last point I wanted to make. You mentioned something interesting-----" FEELING"------you say you are looking for a win/win situation with good feeling for both parties----and that my approach somehow fundementally precludes that result.--------
You see----that idea is exactly why I think you don't grasp what I have been trying to explain----time and time again! LOL
I am in the problem solving business. Imagine you have a problem that you have no idea how to solve. If you KNEW how to solve it, it would still be beyond your physical ability to solve. Any solution to this problem,obviously entails a certain amount of danger, a lot of work, and probably will be expensive. the longer this problem goes unsolved---the bigger the problem gets. your worry about this problem eats away at you---day and night. You put it off, sometimes you manage to forget about this problem----but always it comes back.
You are increasingly worried about this problem----and you ALSO know that many of the people in this "problem solving business" are pretty rough and un-trustworthy.
You mention this problem to a co-worker. Your co-worker responds----" oh, don't worry about that. Call Stephen----- he is kind of expensive---but he is worth it. don't even think about having anybody else handle this for you. He took care of the same thing for me---AND my neighbor. I have known his family for years. In fact---remember that huge church I told you my parish was building??? he took care of a similar problem for them as well------------
so--- you call me---and get my answering machine---which instructs you to leave a message with the time you would like a return call. I call you back at EXACTLY that time---and make an appointment to look at the problem. I show up for the appointment at EXACTLY the arranged time. I tell the you EXACTLY how I propose to solve the problem---and EXACTLY how much it will cost. PERIOD.I supply you with workers comp certs., liability insurance certs. and material lit.
How do you feel? Well in general you are going to "feel" relieved. you will feel like the weight of the world has been lifted from your shoulders.
unless ,of course, you don't have the required money---and you start to negotiate. but that's not MY problem---it's YOUR problem.----because
I am not going to negotiate---a lower scope of work will not solve your problem----but it WILL damage my reputation. Trying to negotiate a lower price---in reality INSULTS me---because the implication is that I did not deal truthfully or fairly with you. both attempts at negotiation will be met with---" I am sorry,but no. we are only interested in the project as outlined in my proposal"
best wishes to you frenchy,
stephen---dumb roofer,lousy salesman
I would like to clear up one thing---and then make one last point.
I am sure that I have "lost" plenty of sales to " competitors" who delivered a inferior product at a superior price.
I am equally as sure that I have "lost" sales to " competitors" who quite possibly delivered a SUPERIOR product at a lower price.
Neither of those possibilities bother me at all. I can't controll what other people do---only what I do. I don't know what other people need to sale their goods and services at---only what I need. but since I only have about 1000 hours of work to fill up each year-----I couldn't possibly produce roofs for all the people who theoretically might wish to buy one from me.----As a result---I don't really have any competitors----those other roofing contractors are really doing me a favor.
Steve, Great answer but even though I am a "small toolbelt" :>) I would like to add something more to your post. From a HO perspective (me)
I was considering getting my roof done. I was talking to my pal shadey about it. he has a friend (his god father..really) who does roofs. Dr Roof is his DBA. I told Shady that I heard Dr Roof was a little more expensive then some of his "competitors".
Shady then told me... Yes But....
He's been in business for 20 years and he will be around if you have any problems....
Thats one thing to take into consideration..sure guys go down on their price... cut corners....
Get the sale
then they go outta business or aient around when the uninformed HO who dont know any better has a problem b/c the contractor "came down on his price"....
HO then gets upset and probably not only reports your butt to the contractors board but then ruins your rep all over town.....
Me Ill pay the extra..get the job done right.....
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Stephen - you mention you supply worker's comp certs. If you are a sole-proprietorship with no employees, how did you get them to cover you? I tried, and they said they'd cover any employees, but not the owner. I'd like to know more about your policy, and esp., who is your insurer? Maybe they can help me out, as I also am a sole-proprietorship with no employees.
How Blue and Frenchy can brand someone as a "lesser than" or "not capitalizing on the situation" when he is attaining the goals that he set for his business and doing it in a manner that is comfortable for him is beyond me.
Ouch DanT!
Where did either Frenchy or I brand anyone as lesser than? That is a slanderous stretch. Shame shame shame.
The question of "not capitalizing" is another story. I'll accept that statement because it's true. When a person raises a price objection and the seller takes it as an insult, then "feels like I don't want to work for this person", then they are not understanding the buyer, nor truly trying to meet their needs.
blue
And finally, I'd like to warn all newbie sales wannabes to never, ever "feel insulted" if someone asks for a price adjustment.
If you are indeed feeling insulted, then you probably don't understand your role as a sale professional. It's important to separate the two issues: your emotional state and their job. The two are not connected in any way, shape or form.
It's okay if you don't want to adjust your prices. In fact, it can be a very strong statement about you and your business. In fact, if you do reduce your price, you might lose the possibility of getting the job! It's okay to feel "insulted" too, but if it's happening to you, and you need more than 1000 hours of work per year, and you are somewhere in the beginning stages of your business cycle, maybe you might think about boning up on some basic selling skills.
Personally, I don't mind anyone asking for a better price. I love my money and I'm a great customer and most times, I ask for a better price myself. I don't think you could ever find an easier client than me. When I do ask for a price discount, I'm usually sending the buy signal but I hate buying things so bad that I'm uncomfortable saying "Okay, let's get the paperwork started". There are many, many different types of clients and everyone of them that asks about price are not a-holes!
End of dissertation.
Everyone can do it their own way. If you're serious about selling, get some training. I'm a horrible salesperson, but I do a lot better simply because I've taken some interest in it and the secrets behind the trade. I'm a better carpenter than I am a salesman, but I didn't learn my carpentry trade without cracking a few books and studying different techniques.
blue
"Everyone can do it their own way.'
And now we agree. DanT
Luka, what's a Bob Macey's store?
You made me go back and read my post !LOLI didn't say bob macey, I said bon macey.A local store was called the bon marche'. Ritzy, very high prices.They bought, or were bought by macey's. Now they call the place bon macey.
Are we there yet ?
Have you updated your forum profile lately? Please Do!
LOL! Guess I missed the whole thing. As they say... nevermind... ;)
"Can you imagine what kind of markup they have, if they can sell stuff for 80 percent off ?"Who said that they where making anything off it.Shop worn, 2 season old, out of style, etc.Better to get 20% for it than pay to haul it ot the dump.
There's a couple of questions I almost always ask when purchasing anything (product or service) of significant value: 1) Is that your best price? 2) I'm also looking at your competitor Joe Bloe, why would I choose you over them.The answers I get to those two questions tell me a lot about what the seller sees as their value. If what they see as their value (price, quality, service, experience, etc) corresponds with what I am looking for we'll generally make a deal. If they cannot articulate their value (or simply trash the competition), then I'll move on to someone else.Now, that doesn't mean that as part of the transaction I won't try to negotiate, but the end goal is a win-win. What I want is for the seller to make enough money that they are satisifed and for me to spend no more that the product / service is worth to me. However we won't even get to negotiating, if the seller can't convince me they are bring enough value to the table to make it worth my while.
That stuff they sell in a sort of bargain basement, or to the local thrift shops. (There are thrift shops here who would be out of business without bon maceys leftovers. LOL)The stuff on sale is the new stuff.I was in there just once, and was struck by the way the pricing was quite like it was run by government contractors. You know, 300 dollars for a screwdriver. That sort of thing.I didn't see anything in there that screamed quality any more than at sears or penneys, but everything was at least 3 times as much, to ten times as much. And at least half the stuff looked like it came off a wally mart shelf.I think it's like Jeff's customer up above. There are apparently enough people, (mostly women, for this store), who think that just because something is expensive it is better because it is... that the store can do this. My ex was that way. I confronted her about it, and yes, she was absolutely conviced that if you didn't pay 6 times what something was really worth, it was crap. I picked out an item, bought the cheaper one, (Not the cheapest), and showed her how the cheaper one might even have been a bit better quality. The expensive one was no better than the cheapest one.It's like a switch was turned off in her head. It didn't phase her a bit. She remained absolutely convinced she had to have the most expensive of items, or it was crap.That is the kind of woman who shops at this store. It doesn't phase them a bit that last week's 600 dollar dress, can be sold this week for 120 dollars, and the store is still making a profit.This week, another dress is selling for 600 dollars. Next week THAT dress will sell for 120 dollars. And the women will knock each other over for the priviledge of paying the 600 this week. Because when it is marked down to 120, it is now obviously inferior !!
Are we there yet ?
Have you updated your forum profile lately? Please Do!
So then If a contractor bids a job you hire him and comes to you and tells you " Ive under bid the job and Im going to have to charge morre" You go with it and pay him the extra..... I already know the answer
We've all took it in the shorts before.
But turn about is fair play.
Sure there are waysthe price can lowered such as the HO renting his own dumpster
getting permits, me ordering the mat'ls and the HO picking them up (depending on the job of course) ect but that is usuallly discussed during the bid ..and if they still ask if I can lower the price.....
I tell them there are people out there who can/will do it cheaper I suggest they go find them.
We have to be careful about who we work for. Just as careful as the HO has to be in choosing the right person to do the work.
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So then If a contractor bids a job you hire him and comes to you and tells you " I've under bid the job and I'm going to have to charge more" You go with it and pay him the extra..... I already know the answer. We've all took it in the shorts before. But turn about is fair play.
If we have a signed fixed-price contract and the cost difference is not due to a change order or the like, I would not pay more. Most contracts I have seen, however, have clauses for unforeseen issues. e.g. A roof job I recently had, included a clause for the potential replacement of plywood underlayment at $X per sq.ft.. Job was more than estimated, but I had no problem paying the up-charge.
Additionally, a time and materials job (with a cost estimate) often can cost more than that estimate, and I have paid the difference without hesitation. (In these cases, I have been aware of the process and the difference was not a surprise because of good communication between me and the contractor.)
getting permits, me ordering the mat'ls and the HO picking them up (depending on the job of course) ect but that is usuallly discussed during the bid ..and if they still ask if I can lower the price..... tell them there are people out there who can/will do it cheaper I suggest they go find them.
I agree completely. You are describing a negotiation where the homeowner is not offering anything in return for the second reduction, and clearly they do not value what you are bringing to the table. Also this may be a signal there will likely be more issues as the work progresses and I'm not sure I would want to work with that individual either. (I see the same thing as a consultant-- I don't work with those that keep haggling my rates/retainer/estimated hours, etc. I learned that even after all that hassle, I still have trouble collecting.)
I came to this discussion late. But to respond to your doctor fee question: Yes. In fact discounts are taken all the time and automatically by the HMOs and PPOs. If you're self pay, the doctors have a reduced fee schedule for you...trust me.Everything is negotiable, business world wouldn't work without it.
Funny story....So last night I have a paving contractor (referred through a friend of a friend, but not that tight) come up to give me an estimate for redoing our drive. A lot of work is involved, probably 3 weeks worth of work.
During our conversation of BS, I mention that my neighbor (A roofer) was going to redo his drive as well. Paver says "well, if you can get him to do it when i do yours, I'll cut you both down by 10%"
Now Paver comes with great references, he's very well known and very busy. He doesn't need to reduce his price and I didn't haggle with him one bit. I said "sounds great"
Then I asked about this recent discussion. He said "why wouldn't I...I get 2 jobs where i may have gotten one, and I stop the other guy from getting the job."
It makes sense...Hasn't anyone around here heard of bulk discounts? And anyone who says that the grocery store doesn't discount is missing the point. By most of your own admissions, you lower the price for elderly couple or special circumstances, which means there is flexibility in the price. You just choose not to lower it for the punk in the BMW.
Can any of you honestly say that you don't flex your price depending on the neighborhood? Car in the driveway? size of rock on the finger?
I'm sure the grocery store doesn't do that.
OK, the grocery store doesn't bargain, but the farmers market and the fish market and the flea market all do. Even our good lumber yard does to a certain extent (Ma'am if you change the exposure on that siding by a 1/4" I can get you in on this other mill run and you won't have to pay the set up fee on the knives...). One could say that the big boxes are ruining the fine art of the deal. I'm not a master bargainer or anything, I don't even like bargaining, but outside of car dealerships I've never just expected somebody to just come down on the price because I asked. Bargaining is just that - you alter the deal in little increments until both feel that they are getting value. As a homeowner, if I were to ask a general to look at the price I would want him to discuss possible changes in scope that could get me closer to my mental price. For example, if I alter the dimensions of the windows so they are a standard size could that save me money? Perhaps a change in materials (linoleum vs granite)?
>OK, the grocery store doesn't bargainBut they do set prices and pick specials, and even do product selection based on clientele and location, so some of the "bargaining" happens at a more global/neighborhood level.
And I would bet that they will bargin.Not on a jar or peanut butter not even if you agree to buy a loaf of bread and jar of jelly at the same time.But right now ours has flats of beddign plants set out in the front (and probably more around the side there the temporary greenhouse is) for 50% off.I suspect that if you went in there and wanted to take ALL that you could bargin a good price.
>And I would bet that they will bargin.Especially if you're buying food equiv to the average remodel. I betcha if I needed to buy $30,000 worth of picnic goodies they'd toss in an extra roll or two of Bounty. Or knock 2 cents of the price of a hot dog.
I'm a lawyer and clients frequently want to negotiate a fee. I'm never insulted and often will accommodate their request. My hourly rate is based on experience, etc. but what the market will bear is certainly a factor. Clients who give me a lot of work will get a better rate than a one time deal and people who pay promptly always get the best deal.
I'm negotiating with a contractor over the price for a substantial addition. I expect that if the price is higher than I can afford, I'll ask him : What can we do to reduce the price? I have some items on my wish list that I can live without and I expect he may be able to reduce the cost of some items as well. I understand he needs to make a living and he understands I'm not Billl Gates.
No one who is successful in business is going to always quote the bottom line price on something as complicated as a construction project.
The way I read the jist of this post was the guy (client) didnt want him to "just reduce the cost". He wanted him cut his rates ect.
I personally where my rep is on the line will not compromise. in your case OK you are willing to eliminate somethings and have the contractor cut his rates ect. But that is a differenent issue. FWIW most attorneys I had delt with give me a rate for a retainer. They dont negociate.
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Here's a tangent in this discussion about doctor prices. Nowadays, doctors have little wriggle room for negotiation because of contracts with insurance companies whereas in my father's and grandfather's time, the patient stood up at the end of the visit, took out his wallet and paid them. There were different charges for different people and some negotiation.
When I deal with the trades I figure value, not price. There is a difference. If I feel I got gypped once then I simply don't use that person again. I figure the bid is his/her best offer for the market. We are both free to then decide to act upon it.
Very true. That is why we and others recommend a client get multiple bids. Then they go with the one and company they feel most confortable with.
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When I do bid work, Haven't done much in the last three years due to finding a challenging job with a company but I still take on an occasional side job. As soon as someone wants me to come down or its usually before they ask. In my older age next I can sense the set up and I say you absolutely have the wrong guy, you had better find someone else. How much do they charge per hour?
Unless I really, really needed it which I don't I'm not coming down. This attitude comes from when I used to have a jolly roger painted on my gang box. And I would see any interesting work things that looked cool to me do, instantly, I had to do it. I set my self up, screwed myself time and time again. I had a lot of fun, had some cool times gained some valuable experience. I'm older now and don't wear tye dyes and a pony tail anymore or go camping in a Westfalia every weekend. Wish I did sometimes but things change. Come down with my price? Anymore? No way.
Edited 6/21/2005 6:33 pm ET by quicksilver
First we have to remeber that there are a lot of low ballers out there that if thy can see your bid, will underbid you. They will build crap, cash the check and run like hell, and give all of us a bad name
so a homeonwer might like you as a person, but is looking at saving money by using joe shmo who says he can build the exact same thing for x less
second. necessities people complain about, luxuray they dont. Fix your car, fix the house, complain. Fix the big screen, fix the pool heater, no problem.
third.dont lower your price even with substitutions, unless the economy is flat and your hungry. If you are trying to make a living and stay in biz for years to come, bite the bullet and pray. And dont do as I do but do as I say
Why do I say that. You have a job, this is wrong made up numbers, say its a million bucks. they push you and you adjust and go lower quality itmes , even wiht their knowledge and approval, and you get it down to 750 thousand. Project is done. complain complain complain, fix this fix that, this is bad, this is wroing, Im not paying you the final until you fix this and this and this, oh and here is my lawyers card, and what is your registration number again, Im calling the state to inquire and complain
guess what
they just got a millinon dollar house for 750k and you and the family are eating top ramen for years, disconnecting your phone to keep the bill collectors from calling you, and selling the house to move into a duplex with a barking dog two old cars up on blocks and a trailer hooked up woith a garden hose and extension cords in the dreiveway next door.
" they push you and you adjust and go lower quality items , even with their knowledge and approval, and you get it down to 750 thousand. Project is done. complain complain complain, fix this fix that, this is bad, this is wrong, I'm not paying you the final until you fix this and this and this, oh and here is my lawyers card, and what is your registration number again, I'm calling the state to inquire and complain 'You've touched on something here that I think is very important. I have a job, but my wife has a small painting business currently, so I'm not talking totally out of my you know what. A lot of tradesmen are in it heart and soul. Willing to even follow the work, the only thing that would make me consider leaving my present situation would be work, and challenge would be as important as money. For people to ask an artist to compromise their work would be unthinkable, but to an artisan, ah maybe but to a craftsmen, ya probably, to a tradesmen, every day. I believe that a lot of crappy work out there is due to ignorance. The cause of this ignorance is greed not only by homeowners but even more, I believe, by general contractors not willing to pay what it takes to get it down right (learned their business tactics from Walmart or our beloved HD, I never thought I'd see PC make junk). I think that there are to many of us trained in substandard methods. For example in near by posh Potomac Md, one could make an entire career fixing rotten cornice and exterior moulding on homes 5 and 10 years old. I hope I'm wrong but I'm afraid there are not enough quality men out there to pass down the knowledge. We as tradesmen have to protect the trade. It is really sacred, cosmic chain of knowledge passed down from man to man, generation to generation. It's our responsibility to pass it along. A lot of homeowners don't realize that for a compromised price you get a compromised job most of the time. And if you don't get a compromised job you are getting a tradesmen dealing with extra frustration. As tradesmen we have access to some of the coolest working situations available to anyone. Hard work, hand skills, accumulation of tricks of the trade, technological advancement, management and business skills, a concrete sense of accomplishment, the ability to actually stand back and swell with pride(I used to work with a guy who said that a couple times a week) etc. We, those of us who are serious enough to do what it takes to learn, put in the time to master the mechanics, and implement these skills in a way of life should be insulted by a home owner trying to save a buck because he wants something he really can't afford. If you can do it yourself, I don't want to do it. But if you need my skills I'm here, but this is my trade. It's how I make my living, support my family. We have to hold firm and say that's not me. I'm not in that class. I'm a professional.
Edited 6/21/2005 8:36 pm ET by quicksilver
Right on.The heck, you say?
amen!!
Thank you, thank you, thank you! You hit the "nail on the head!" I am the wife of a very talented contractor. We have struggled over the years partly due to homeowners wanting us to come down in price. My husband has over 15 years experience in his craft. He is an absolute perfectionist. If he builds something, you can count on it lasting longer than you and your grandkids, yet more often than not, we were almost forced to come down in price just to get the jobs. When it's not the initial price, it's "extras" they feel entitled to at no additional cost or next to nothing. So many GCs these days charge less, come in like gangbusters, bang the job out in a few days using "laborers" and a few months later the house is falling apart. It is then that the customer calls us to come fix what someone else did. Recently, "friends" of ours asked my husband for an estimate to do a dormer on their home. Our price wasn't the lowest, so naturally, they went the "cheap" route. Well, long story short, they are now battling in court because the contractor did a lousy job, and homeowner refuses to pay. Unfortunately, homeowners don't seem to want a "craftsman" they just want to job done quick and cheap. But done right!! P.S. this house is across the street from our home & looks ridiculous!The World Is Full Of Talented Poor People!
I feel honored that my ideas inspired only your fifth post in three years. I guess the only thing I can say is that I like you were addressing a certain type of general contractor and homeowner. Contractors and homeowners aren't all bad. But by now I've learned when my intuition tells me that the client is going to be a pain in the arse, to follow the famous words of first lady Nancy Reagan and "Just say NO". To me standing firm on my ground is a marketing necessity.
If I give someone a price of $1000, and they say "can you do any better" I reply with yes, $1200.
Bear
Bear,
If I give someone a price of $1000, and they say "can you do any better" I reply with yes, $1200.
Love it! I will use this... would you like a royalty with each use?.... and whatever you charge... can you do any better? LOL
.........Quinhead
I'll give a price 21,000.00. They say I have a son who will help. How much then? I say 25,000.00
I understand whrere you are coming from. When I first started out I tried to make as much out of each job as I could. I soon learnt that I needed to get what was required out of each job not any more. That I got the cleints that paid and paid for what they got. I now give honest prices every time and get honest checks every time sofar.
All your anecdotes were really well worth reading. I have learned a lot about buying and selling strategies.
Two stories
When I was younger, along with 1/3 of my basement devoted to woodworking, I had a hobby letterpress printing business in another third. I printed billing sets, envelopes and business cards mostly for the trade who knew I did this. I soon learned I had a hard time estimating and being consistant with pricing so I bought a Radio Shack TRS80 Computer and taught myself enough BASIC programming to create an estimating and billing program. It allows for choices in variables like press speeds, paper quality, quantity and ink color. Built in is also the overhead and markup depending on the choices.
A potential customer and I would gather around the kitchen table, TRS80 all fired up and I would put in the answers to the questions the program asked such as how many, what kind of stock, what color, etc.
Hit "go" and the computer comes back with a price. 99/100 times they say "when can you have them". The one prospect that doesn't know me well will ask if "they can get it cheaper" or "can I can come down" or "the guy down the street..."
My polite response was "the computer knows what I need to get to give a good price for excellent service and it makes sure I get a reasonable return for my efforts" "let's run the program again and see what we can do to lower the price."
I printed on the side for 35 years. Printed every job that ever came though the door. Only had two [free] reprints because I made a typo. Only ate one job and that was to a 'fellow commercial printer' that I did a special favor for and worked on Sunday night to get him out of a real jam.
Story 2
I sold my hobby shop complete [everything was antique and in beautiful shape] to a person from Illinois. He was learning how to print and fell in love with the trade, so he said. Being emotionally attached to this stuff, I asked what I thought was a very good price actually using the costs that I paid 35 years ago figuring I am giving it a good home, it all goes at once, and I will be tearing up helping this guy load it onto the rental truck.
A month goes by and I get a call that he is in the neighborhood and wants to see the stuff. He looks it all over, I explain a great deal, and he says he is 75% sold and that I make it sound so good.
Three days later he agrees to buy it for the price I set and we set a pickup date.
A few days before he rolls in, he calls to ask if I can lower the price because the truck is costing so much more than he expected. I am on the east coast. He wants to lower the price by $2000, about a third for a room 12' x 26' full of antique printing equipment and supplies...a complete shop.
To my surprise, without a bit of confrontation in my voice, I hesitated for a few seconds in thought and then said "Well, I think we can probably do that...if I don't include the paper cutter and the power stitcher [machine uses a spool of wire to make staples for booklet and magazines] but that would be like breaking up a beautiful set of tools or furniture." Each machine new is well over $2000. His responce was that he needed the two items too and would be on time on Saturday.
In one scenario I justified the price with supporting documentation (the computer). In the second I justified the price by building value. Both techniques were mentioned in previous posts.
I hate getting screwed or finding out I paid more than others have paid for the same thing. Explain to me why this is a fair deal, and I will usually go along with it. Create questions, distrust or animosity in my mine and I will most likely look elsewhere.
Right on the money Jerry. Thank You!
There's a book on negotiating called "Start with No"
Might be worth taking a look at. I thought it was worthwhile.
Guys, I'm glad ya'll brought this up because its a topic that has been played out for me many times in the past. Everyone's always asking me, "Can you give me a good deal?" You know a good deal to me means I made enough not only to pay myself and my crew for the time on the job we spent, but to pay myself again for supervising, estimating, etc.
To JMAC: Sorry bro, but you've (as another poster said) engaged in an illegal transaction. I did this a couple times when I first started out. Now, I always ask for the CHECK to be in the company name (even tho I'm a S/P), and I always give a written, signed invoice stating they have paid. Cash is fine, too, but no discounts are made (that's just crappy--like being unlicensed or uninsured).
Frenchy: I've done as you said and made material substitutions or changed the scope of work when the price wasn't "right", but I will NOT come off my base labor rate (it pays me and my crew), and rarely do I come off the markup.
Today I gave a proposal to rebuild a porch for an elderly couple living off a fixed income. They've already bought most of the materials (and did a surprisingly good takeoff)--I'll supply labor and gun nails. They asked me to keep the price within a certain range--and it came out within that range. Had it overrun slightly, I'd prolly cut the fat a little for them.
OTOH, I've had clients driving new Benz's, living in waterfront homes, and eating the best Gulf shrimp money can buy, try and lowball me. Like I tell people, I don't work for the rich or the poor--the former won't pay and (bless their hearts) the latter can't pay. I pay my crew to frame 3-4 houses a year for HFH--that's my contribution to the poor. The rich can kiss off if they want a "deal". --SORRY SO LONGJason Pharez Construction
Framing & Exterior Remodeling
Jason,
The rich can kiss off if they want a deal? It's called negotiations. Asking doesn't cost anything, why not try? You need to understand that what just happened is the buyer gave you a closing oppertunitiy and how you handle it will determine if you go home with his money in your pocket..
Frenchy, perhaps you are correct, but let me just say this... I don't normally mark a job up more for a particular client than I would the next. I may take a slight cut for people who are honest and needy and who won't pick my work to shreds. When I give a pirce, it is normally what it costs me, plus whatever percent markup. SO, when people say, can you give me a good deal, I consider it a slight insult seeing that I have already given them a fair price and that I have not marked the job up MORE.Jason Pharez Construction
Framing & Exterior Remodeling
Oh my goodness ... an "illegal transaction"?
Golly Mrs Cleaver ... how will I sleep at nite!
as far as I know ... cash is still legal tender ... and when I tell them everyday after lunch ... No, keep the reciept ... am I suddenly breaking the law?
anyways ... who cares ... the burger was good.
and to "can ya do better" ... as a rule ... I don't "discount" ...
also as a rule ... I ask just about everywhere ... "Can ya do better?"
and btw ... Frenchy IS right. This is a prime opportunity to close the deal.
That said ... my rule about never discounting ... I break it all the time.
Just never give something w/o getting something else in return.
sometimes the "discount" is the old reduce the scope/materials ploy.
Other times ... to land a job ... it's better scheduling/payment terms.
Usually though .. it's ... I'll "discount this" ... if we "add" this to the scope.
I save them money ... and they spend more in the end.
That one is my favorite.
win/win ... they get a discount ... I get more time filled.
discounting is also an art that related to reading your customers. Some cultures/people just want to haggle ... did alot of work with one guy ... friend of my Dad's ... who just loved to fight about the price. So all his "bids" started 20% high ... then we haggled ... and I eventially dropped 20% ... I got my price .. he was happy.
Life in the real world?
he paid cash too and never wanted a reciept.
we both slept fine.
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
just so i get in on the rant....
Do you as a contractor expect to pay the same at the supply house as the guy off the street? so if someone gives you alot of work do they get a "discount" ?
I always ask for your "best price" when i'm getting a bid or quote... often I have to explain to people they "can't do it for that" and have to ask them to raise their price... I usually have a pretty good idea of what something should cost... IF I like someone and i think their price is high... I'll ask whats up... maybe something i missed or maybe a misunderstanding... 99% of the time I won't say anything I just won't use em.... very very rare I'll question a Labor price.... If someoen comes back to me and asks if they got the job... and i say no.... and then they tell me well I might be able to lower my price some... NOW they have lied to me because I asked for their best price on the front end... and unless they have a real good reason like... " man i'm do'n another job and if i get your job also i can buy XXX by the truckload and save everyone money and make a few extra dollars..."
If you guys remember the sprinker system for my loft project... i ended up getting 5 bids.. (usually 3 is max and just 1 if i know the people well) but the price ranged from about 40k to 210k and it was apples to apples....
when i was 16 i took my 1971 MG midget to get painted.. explained what i wanted and what i expected quailty wise (at that time I'd already done a few ground up restorations and was a pretty good prep & painter) but a lady had hit my car and was pay'n for it (my mom) dude gives me a price i thought was kinda high $750 so i ask... is there any way you can do it cheaper... without mis'n a beat he says... "sure i didn't know you wanted the $500 paint job" stopped me in my tracks... no i wanted and didn't say was i wanted the $750 job for $500... but I learned real quick someone can always do something cheaper if you want "cheap" anyway dude did a crappy job dirt in the paint.. overspray... things not removed & replaced like we talked about but just taped off... dude knew it was crap and refused to charge me know'n it'd cost him more to redo it than what he'd make... i hated it so much i sold the car....
I always ask when place'n a large (for me) order... can i get a discount if i pay COD or if it's a special order I'll offer to pay in advance... i usually get 2% off which is the same discount they offer large customers for pay'n on time or within 10 days... if they take Visa (min they lose is 1.5% some up to 4%) i ask if i can get a discount for pay'n cash.... if not i put it on a visa and let my bank make a few bucks...
I'm all for everyone make'n a living send'n the kids to school... go'n to Disney world... put'n a few bucks in a 401k.... but don't expect to do it all on me for 3 days work... granted you are a craftsman and have a skill but there is still a market value for what you do.... And yes if it's my job and my risk then i have every right to shop for the best deal for me... I'll never ask... "can you do it cheaper" because I know you can... and I understand Labor and Skills are not the same as me ask'n for a better price from the supply house where they just order more when they sell what they have... or don't even order it until it's sold... they can sell 1000 of something and still get more without have'n increased their cost of be'n there... where labor... only so many hours do you have to sell... you can't "order more"
ok I'm off my soap box
pony
Ok Jeff. There's nothing wrong with woirking for cash. And sometimes you do weekend jobs for friends and the money is off the books. But, in my opinion, if a contractor offers to do a regular job cheaper, and he does it by taking un-receipted cash, where does he make up the difference between that and his normal price? Don't take taxes out of it. Am I a prude and a do-gooder? Nope. But the tax man doesn't have a sense of humor, and if you get caught it's not a fun thing.
I'm sorry, I thought you wanted it done the right way.
In some cultures, haggling over the price is expected. When I work for Indians (not NavAms, imigrants from India) I know to add more to my price so they can ask me dowm to what I need to make. The first couple of times it happened I got pretty angry (I said $900 and they came back with "I was thinking more like $750" - Right buddy, what the hell do know about a crown molding?). Someone explained it to me that it is part of their culture to bargain down, not anything to do with being cheap, just a way some people have been doing business for thousands of years. Now I just adjust my upfront price accordingly. Additionally, they tend to respect craftmanship and will give me a lot of leeway when designing something - they assume you know what you are doing asthetically.
Had a buddy who sold cars in Chicago , Said that some Ortadox Jews would come in and haggle every nickle and dime on the price . If you haggled back till the deal was done , They would give him a tip that more than made up for the discounts that he haggled.
IMO it may be less an issue of taxes, your right about the tax man having a limited sense of fun, and more an issue of liability and insurance. Some people who push paying on the side in cash are also the same folks who are least supportive if someone working for them is injured. Accidents happen. With an established and documented relationship it is a relatively simple matter of filing with the insurance company. Without such documentation the scratch necessary to get you through those eight weeks it takes your broken leg to heal might be hard to come by.And this goes both ways. Accidental damage to the home are covered by the contractor's insurance. As long as there is a legally established relationship. Lacking this the HO can come after you personally and things can get knee deep in lawyers. One bad situation can eat all the profits from a dozen side jobs.
Ed, I'll take the opportunity to point out that cash doesn't bounce.Some cheques do.When I was a compositor, I used to offer some customers a discount for prompt payment. Times were tough, cash flow was low and I had a payroll to meet. When someone walked in off the street and wanted a job done, we took cash, not a cheque. It went on the books, whether or not we issued a receipt.Leon Jester
Ed, you are assuming (probably IMHO accurately) just like the judge in 60122.1 . This guy is now a registered sex offender simply because he cared about a 14 yr. old girls health. It is because of this attitude that I am getting fed up w/ America. Just cannot find a better place to live; however here, we are slowly giving up all our liberties.
Reading through the posts, I am surprised how indignant people can be about their bids. What's surprising is not that someone tried to negotiate, but that it does not happen all the time.
Who doesn't negotiate salaries, supplier prices, etc. What's the big deal? Everything in life is negotiable to some extent.
Simple example, similar to a situation I was in: Let's say you are a customer. You get 3 bids for a job; 5k, 6k, and 7k.
For the 5k guy, you do not like his approach to the job. The other 2 look about equal (from what you can tell), but the 6k guy will have you waiting an extra month. I would ask the 7k guy for a better deal, then balance the cost vs. the wait in my cost/benefit ratio. Ok, maybe the 7k guy is doing something extra, or better. This is his chance to sell me. Maybe the 7k guy just does not really want the job that bad, which would be a good thing to find out.
On the other side of the table, you would want to find out WHY the customer is asking for a lower price. Maybe they do not understand the value proposition of what you are offering. Maybe they do not understand the complexity of the job at hand. This is your chance to explain (and sell) yourself.
Negotiation is just normal business, not a personal affront. I guess an 'I want what I want' policy will work when demand is strong, but it's normally a losing strategy.
Joey B,
Once or twice a year someone will ask me" can you come down on the price?"
In general my response is to look 'em straight in the eye and reply" I am sorry but ---no"
Then I shut up and offer no further explanations or reasons.
I did budge on this this past winter when a customer in january or february asked me if I could come down some on the price. I did cut the price----but the customer agreed to wait untill mid-late march for us to do the work. ( I really didn't want to crawl around on his roof in january.
Basically---in regaurds to OTHER cultures predicated to haggling-------
I am not working in India---but the good ole u. s. of a. I am not interested in haggling.
In fact---as soon as a prospective customer asks me to cut the price----I feel they have accused me of somehow cheating them----and they have soured me on the whole project.
BTW-----I see you are from Richmond----y'all recovered from the flood( last year?)---and did Bottoms Up Pizza get washed out???????
Stephen
Man, the flood was insane. I sprang leaks in my roof from out of nowhere. 12 inches in 10 hours if I remember. It was a sad day. Many people died when their cars were pinned against guard rails, they couldn't get out, and the water just kept rising. There were a few articles in the paper about people calling loved ones while sitting in their cars waiting to die.
Some places never recovered, went out of business. Bottoms UP was wiped out, over a million in damage. They are rebuilding.Coming to you from beautiful Richmond, Va.
Even if things are tough sometimes, WALK! Im 46 been doing this for a living about 28 year. My Dad is 75 this year and still does it. We pour concrete. Walls, slabs, driveways is our game. If you are too high, you don't want to work for them. That's 55 years on the job. Good Luck
Some folks like the dance. If they ask and accept a simple 'no' there isn't much of an issue.
Some are like the guy I see regularly who makes a point of widely bragging that 'I never pays retail for anything'. He gets huffy when handed a simple 'no'. Somehow we have worked out a system: We know he is going to ask. We know he is going to take 'no' as an insult to his reputation that he never pays retail.
Our solution is we add an extra bit to the regular price. Then we have a cushion. I make a point of complimenting his bargaining skills and make noises about how we 'aren't making any money' as I give up the buffer a little at a time. We have played this game enough that I think he knows this. But then again he has gone through a lot of contractors who wouldn't play the game and this is service work so the cost is never the same.
In the end he usually pays about the same but sometimes a bit more. Then again he is paying for the dance, boosting of his ego and self-image as a bargainer. Getting this reinforcement from the friendly electricians is a whole lot cheaper than therapy, a trophy wife or a Ferrari.
Not entirely surprisingly it is almost always the people with money who we have the most trouble getting money from. A common type is the person who always tries to split the difference. If they owe you $100 they claim some sort of poverty and give up $50 with a promise that they will pay the other $50 in a week or so. A month later you have to corner them and they will try to pay only another $25. Then $12.50 a week later...
In the end they think they have won some sort of twisted moral victory when you don't collect the last $.50 because it just wasn't worth the PITA. They don't understand when you don't jump up to grab every job they offer and get insulted when word gets out that they they generally don't pay the agreed to amount on time. That they are difficult clients.
Had one gentleman become quite irate when we quoted a price half again the price his neighbor would pay for the same job.
A line I remember out of a book or article, that I've used, sorry I can't remember the source.... Maybe it was even Sonny?
Goes something like this,
The price on the proposal is the best price I can offer you This Job for, If I could come down on the price that would imply I wasn't giving you the best deal from the start, if I wasn't giving you the best deal from the start I couldn't expect you trust me, and for this to work we need to be able to trust each other.
Now, if you would like to lower the price or have a particular budget you are trying to meet, I'm sure we can alter the scope of work to bring the price down or meet your budget, but it is going to involve lessening the scope of work.
I had a guy last month say our cost was to high because his banker said it was, he was told he could get his basement finished for $25-30 a square foot, our bid came out to about $47 a square foot. It made for an interesting conversation and he just wasn't getting it. I kept asking him which room in the basement was less important or what space he could leave unfinished to lessen the price, he kept saying none and asking how much lower I could drop the price, but didn't want to give anything up.
He'd think about was what he said when I was making my exit, so I call to follow up and now he's getting another bid to show us how high we are. "He'd like us to do the work, but he's going to show us the other guys number to prove to us we're to high... and then we'll come down in price..."
yeah likely.
the best part, I asked him if he would mind telling me who we were competing against with the other bid... he says " I don't know, some number out of the yellow pages he can't remember"
sorry that last part was just a rant, but I'd still love a conversation with that f'n banker.
Rant away, friend. I just think that it's human nature to haggle a bit. Those with less money... like your little, old lady... have less of a sense of empowerment to try to work a deal. Those that are better off have gotten that way by actively pursuing wealth, and that means turning a deal to their advantage. Don't let your emotions get in the way... make deals that serve your advantage and pass on those that disserve you or put you at a break-even point. As long as you hold up your end by giving the customer quality work, you should be confident about your price and be able to rationally explain the basis for your pricing policy. Hang in there and don't let it get to you...
Neil
One more thought, as if you needed one more thought. When the client sells the house, the prospective buyer will certainly be asking, "Can you come down on price?" So why would the client not expect the same line of reasoning when the house is priced to be built?
Man..... Have you ever opened up a lively discussion. I can see the arguments on both sides of this issue. Great thread..that seems to never end.
...........Quinhead
I think you might be taking this kind of thing too personally.
To me, it's a matter of two parties negotiating a trade - money for materials/services. Both parties want a say in the terms of that trade. Why wouldn't they? No one likes having terms dictated to them.
If you go to a homeowners discussion board, you'll see people on the other side of the fence that are just as upset as you.
Many homeowners view contractors suspiciously, thinking that they are getting fat during this building boom. Many contractors view homeowners with equal suspicion.
I don't think it's helpful for either party to think that way. Instead of thinking "watch out. this guy will try to screw me!", try to see things from their point of view.
In your case, keep in mind that the homeowner often has no idea of how you arrived at your price. Is it as accurate assessment of your costs plus a fair profit? Is it a rough guess of cost & profit plus a healthy margin to cover the unknown/unexpected? Is it an inflated "I don't really need this job, but if he'll pay X I'll do it." bid?
You can't expect a complete stranger to simply accept your word as gospel. As others have pointed out, show them the foundation for your numbers and most people will have a greater respect for you and your bid.
Also remember that most homeowners have no idea what your costs are. They see the finished product and assign some value to it. They think "I ought to be able to get that deck built for $5000." They don't think "I'm specifying redwood decking, and that alone will cost $5000."
Example 1. I ran a woodworking business for a while. People often asked for bids on complicated built-ins and entertainment centers and complained that they were too high. They'd expect me to build custom furniture for the same price as some Sauder particleboard POS they saw at Sears. They weren't trying to screw me. They just didn't understand the difference in material and workmanship cost. I'd explain the difference to them. Most of the time, they'd go buy the cheap one, because price was the primary driver. One in a couple dozen folks would appreciate the quality of handcrafted solid-wood furniture and pay what it cost.
Example 2. I got a couple bids on installing 20 sq of arch shingles on my workshop. One guy threw out a price of $12,500. That's $625 a square. He wasn't trying to rob me. I think he was probably just fishing for high-profit jobs. I'm not sure because he wasn't willing to itemize the bid for me.
I didn't take either situation personally. The customers just wanted the most value for their dollars. The contractor wanted the most value for his labor. No harm, no foul.
One last thing, it's not right to expect people who are "well to do" to pay more. Would you allow them to pay you less because you were driving a $40k pickup truck? You're obviously well to do and don't need the money. A fair price is a fair price, no matter who the client is.
Jon
One last thing, it's not right to expect people who are "well to do" to pay more.
I don't agree.
In this society, it's okay to charge the wealthy more, which in a roundabout way, subsidizes the less fortunate. Personally, I don't have any trouble thinking in terms of a two-tiered price system.
My father-in-law owned and operated a funeral home. In his display room, he had about 20 caskets, each with a different price tag. He told me that the two lowest priced funerals were losers for him. He offered these below cost funerals as a community service for those that needed the break. It was his way of giving back to the community. He also mentioned that he was always concerned that too many preacher's/priests would steer too many disadvantaged families to him. His concern was that if he had to absorb too many below cost funerals, especially by those that could afford more, he'd have to raise the prices on them and that would cut out the discount that the truly needy received.
There's more than one way to set prices. I offer courtesy discounts, quantity discounts, and am willing to horsetrade. I take no offense if someone seeks a better deal. It doesn't matter if they are wholesale clients or retail clients. I don't mind them asking because I possess the final authority to give a discount or refuse it.
One simple way to give a small discount would be to ask for full pay upfront. For instance: "Mrs Jones, I'd be delighted to give you $50 off that new entry door if you'll prepay the full $2500 up front. By paying full price cash upfront, I'll be able to reduce my exposure and risk and I may even be able to get a small discount when I order the door myself".
Anyone else have any good reasons for giving a small discount?
blue
I agree. It is legal, and ethical in my opinion, to charge different prices to different people. But this usually means that the rich tend to pay less not more. They have more leverage. More than one home, input into who they hire for projects through their positions and social or political connections that can tip the scales on access to lucrative jobs.Sometimes this pans out. Sometimes it is more come-on than reality. I too generally charge the righteously destitute less. Sometimes working close to or at cost. My unwillingness to cut prices to well heeled clients has more than once cost me a bit. A lot of folks with money, and/or power, assume it earns them special treatment, lower prices. Often in this culture it does. But this game sometimes goes both ways. Some contractors will price the basics low and gouge them on the change orders they know the well heeled and entitled are sure to racking up. Stealth Robin Hood.
4LORN1
That is a stragedy that is often followed.. One of our local contrators who usually builds high end homes always comes in with a low bid.. He figures he can frame and stuff as cheaply as anyone can. Where he makes his money is with the up charges..
He drops off Enkenboll catalogs and literature before the trim stage, He shows Schonebeck lighting catalogs when they pick out lights, selection of anything he shows expensive options and let's their ego's spend more (plus high end stuff like that has a higher mark up and you're working with bigger dollars..
Just to give you and example of his technique. His bid for one house locally was over $500,000 cheaper than the lowest other bids.. (yep a half a million)
The final project came in at $19,000,000, 3.5 million over his first bid.. All the result of signed change orders..
He "sold" two giant crystal Chandeliers which with the electric lower and raise mechanism for cleaning cost nearly $100,000. When a later redesign required a shorter chandelier for the dinning room (these where custom designed and not returnable) They wound up in ,... The garage! He was more pleased with that than the not too inconsiderable profit he made..
This reply is really directed to JJSHAW----although for some reason Taunton won't let me post when clicking on his "reply" button--------------
I used to think that " a fair price was a fair price, no matter who the client is", just like JJshaw says
and I proceeded from that prospective for 5 or 6 years------that little bit of naivete kept my wife shopping for our clothes at Goodwill WAAAAAAY to long.
then about 10 years ago I realized---that a fair price to ME---isn't the same as a fair price to you------and YOUR idea of a fair price will be quite a bit different than the guy who lives across town-------.
In brief----Joe Sixpacks' idea of a fair price----is different than Suzie Chardonays' idea of a fair price. In GENERAL-----if I try to sell to Suzie at the same price that Joe Sixpack is happy with-----Suzie doesn't think she is gettin a fair price----she thinks I am an unqualified, fly-by-night hack who is cutting corners.
the reality is---once I realized this---I started selling better projects to better customers in better neighborhoods. some neighborhoods I haven't worked in---in 8 years------my price isn't " fair" from their perspective.
some people----the more you charge them----the happier they are.
some people---school teachers, nurses, policemen etc. are delightfull people to work for------
Other people---for example engineers---are giant pains in the rear---question,question,question, what If, what If, What If??????---always trying to re-invent the wheel----and are typically so disruptive to deal with----I am NEVER gonna give them the same price as Ms. frizzle the 4th grade science teacher LOL
sooooo, I have a basic rate that I start at----I am never gonna discount below that rate. Prices only move in one direction---UP. always looking for an opportunity to price ABOVE the basic rate( just like any other business)
Very best wishes, Stephen
The only real thing to add to your comment Steve about priceing is.....
I was building country style display cabs for a lady who was reselling them.
It seemed she would complain and whine and make a big deal out of things I had to develope eye strain to notice. Seriously One she said a divider was "horribable, It was leaning to one side..how could I make something like that" I couldnt tell,wife and friends couldnt tell I had to have the wife hold it against the wall and stand accross the room..then guess which divider she was talking about. She was the most nic picking person who I ever met.
I talked to a good friend of mine who built (built b/c he passed on) only high end /high dollar items.
I told him what was happening....He said..."Its simple Just raise the price "
He said "The more people pay for something the less they complain."
I did in fact I almost doubled the price....
He was right the complaints stopped.
Dont ask me why people are like that. But its true. I charge what I want and if they take it great if not..well they can go to IKEA cuz there is someone who will
and no head aches.
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Other people---for example engineers---are giant pains in the rear---question,question,question, what If, what If, What If??????---always trying to re-invent the wheel----and are typically so disruptive to deal with----I am NEVER gonna give them the same price as Ms. frizzle the 4th grade science teacher LOL
Boy, you smacked that nail right on the head. I'm waiting on final payment on a gutter system 'til it rains so the engineer customer can make sure all the h2o goes in the gutter. $1000 job and he's called me at least 20 times (probably more like 30) with design ideas for a 40' and an 8' run of copper half round gutter. He slipped up on me. I'm gonna start having them fill out a reference sheet before I give them a proposal.
On the other hand, I'm bidding some work for a project the architecture college is building, and I've been handed a set of completely detail free plans. A floor plan, a roof plan, and 4 elevations. The plans state " copper standing seam roof, copper gutters, copper siding." Don't have a clue how they want any of it done, other than maybe I'm supposed to figure it all out for them. Normally, I'm given too many details, REMEMBER THE BOSTON BATWANGER.
Use a hose and the hose the HO. NEVER, And I mean NEVER go against your price. It is your livelyhood. This thread has gone on too long and has been the message has been to drawn out. We are in this for our daily bread, and are asked to compete against moonlighters,etc,etc,etc. Therefore NEVER second guess yourself, go for the full price. And, can you do better? Add $200 for the insult. Its better in your pocket then theirs.
re your last post about pricing ....
long story short. Many years ago ... started working for a carpet cleaning company.
One sat, riding with the owner, we did one job in a middle class neighborhood for (let's say, I forget the exact numbers) $200.
Very next job .. drive an hour across Houston to a very rich neighborhood. I look at the quote sheet ... very same job. Same st ft ... same couch .. same chair ... etc.
His price listed ... $800.
Me ... I say .. that ain't fair. We just did the same ... $200 ... can't cost $800.
Him ... OK ... what do U think is fair. U can tell the lady.
We ring the bell ... Hi, we're the carpet guys ... yada yady yada ... and we can do this job for $300.
I'm expecting hugs and kisses ...
she says ... and this part I do remember clearly ...
"Oh, that's ok. I'll call someone else that knows what they are doing. I usually pay around a thousand dollars to have this work done ... you obviously don't know how to clean fine furniture" ....
Got back to the truck .. boss just looks and says ... U just cost me $800 ... and I knew U were going to. It was money well spent if you learned and don't make the same mistake again.
people pay good money for prestidge ...
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
exactly Jeff.
I think most everybody in our business who works for a variety of people learn this lesson
or they are driven out of business
or they spend their careers working for slum lords etc.
If I hadn;t learned that lesson my wife would still be shopping at Goodwill---and any " vacation" would involve a smelly tent and sleeping on the ground( fun at 19---less fun at 43)
Best wishes, Stephen
I find that to be true also. Demanding prices on the upside of the scale is a way of marketing yourself. Saying no I'm busy or I'm not interested but I think I know someone who can help you work similarly.
I think that the real issue, and the reason your wife was shopping at Goodwill longer than you liked, was a problem in your business model.
First, let me say that if you are running your own successful business, you have my undying respect. Everyone who runs thier own business, from Trump to the guy selling hot dogs outside the stadium, has my respect. You are the backbone of this economy. We worker bees would be sunk without guys like you.
I'm no business wiz, but it seems that you need either volume or margin for your wife to shop in the style that you feel is appropriate. (for the record, I don't think there's anything wrong with shopping at Goodwill...or K-Mart, or Sears, or Hechts, or Rodeo Drive. I've shopped at Goodwill. I'm at work now in clothes I bought at Costco.)
If you're going after margin, then you need to concentrate on mid- to high- income clients. Charge a consistent high markup and work only for folks who are willing and able to pay it.
If you're going after volume, then the number of perspective clients is much larger. You can charge them all a consistent modest markup and still do well.
In either case, a fair price is still a fair price. You just have to pick your market. It's only when you start mixing the models that confusion enters. If you're trying to be both Walmart and Neiman Marcus, then you lose the ability to set a fair price. Instead, you set your price based on your preconceived notions about each client.
This kind of thing can get pretty dicey. Already, the discussion has slipped into some pretty serious stereotypes. As soon as you decide that every engineer is a certain type of person, or every rich client (if you can even agree on what constitutes "rich") acts a certain way, then you really aren't too far away from all the racial, religious, gender stereotypes that have plagued society. You might as well say you'll never work with anyone from a certain country because they're all lazy and stupid. Better charge that Jewish client more, because you know they're going to be a pain in your @ss.
Do you charge less to people you like? Charge ugly people more? Charge right-thinking white Christians less? I know all of this is a real world reality. It's human nature. But it's not fair, and it's not the behavior we should strive for.
Stereotypes tend to be self-reinforcing. We look for examples that fit our prejudices, ignore the examples that don't fit, then congratulate ourselves on our wisdom. We see a blond woman who isn't the sharpest tool in the shed... or a Mexican guy who doesn't work especially hard... or a Black teenage boy in trouble with the law, and we say "You SEE!" But the fact that we found one example that fits our prejudice does not change the fact that the prejudice itself is bullsh*t.
Some financially successful people are pretentious snobs. Some of them are not. My guess is that most of them are not. We probably don't even recognize them as "rich", because they don't fit the picture we have. Most stereotypes are wrong more often than they're right, and I suspect this one is too.
Of course, beyond the prejudice and stereotypes, there's a capitalism vs socialism undercurrent here. That's a lengthily debate - probably more than we want to add to the end of a thread that's already 100 posts long. In a nutshell, you're talking about higher productivity and higher average personal income vs higher minimum income and lower spread from bottom to top of the income range.
The men who created this country choose Capitalism. You can debate that choice. Men like FDR disagreed and have done what they can to alter that choice. But in my opinion, Capitalism is what made this country what it is today. If you provide people with a financial incentive for hard work and innovation, you'll generally get their best effort and the overall economy will be more productive.
Most of the "rich" people that are being refered to here have done nothing wrong. They've simply succeeded in the system that our Founding Fathers established. I don't see why they should be punished or scorned for that.
I'd also suggest that it's good to remember that "rich" is a relative thing. Every one of us here is "rich" in someone's eyes, "poor" in someone else's view, and probably "doing ok" in our own opinion.
Just my opinion.
"Listen, strange women lying in ponds distributing swords is no basis for a system of government."Jon
Actually JJSHAW,
If you read what you say in your last post to me 59664.107
You are saying just about exactly what I have been consistently saying----you are just saying it in different words----words like High margin.
Because----really when you try to talk me down in price---aren't you really just trying to talk me out of the" margin" I have already determined??????
If you read any of the business threads I have participated in here for---oh 8 years or so------there is no problem with my " business model". The roofing business has been very good to me----good enough that it is the basis for being able to start moving into other " hobbies" pretty much full time.
I participate here to learn from folks like Mike Smith ( who I am VERY much looking forward to meeting and thanking in person this august at Calvins)----------------and to share with other little guys how I have done things and how it might work for THEM. What I do won't work for everyone---I am sure,----but for some others---it will work perfectly.
Very best wishes to you,
Stephen
Actually, I don’t think we’re saying quite the same thing at all.
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Mixing our metaphors, I believe you were saying that you used to try to be Walmart to every client. But you eventually decided that Suzie Chardonay was the client you wanted wanted to target, and she didn’t want to shop at Walmart. So, you’ve adapted by being Walmart to Joe Sixpack and Nordstroms to Suzie Chardonay.
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You say that maintaining your sense of fairness – charging what you felt was a fair price to every client – was naïve and was hurting your family financially.
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My point was that you could have simply decided that being Walmart for Joe Sixpack wasn't really working out for you. Instead, you could have become a Nordstroms to every client. In that way, you could have maintained your ideal of fairness and still increased your income.
I didn’t say you needed to do this. Obviously, you’re quite successful and don’t need to change a thing. I just think it was inaccurate for you to blame your ideals for your perceived lack of early financial success. It seems to me – based only on a couple paragraph description of your work – that moving into that higher-end market had more to do with your success than abandoning the ideal that “fair is fair.” <!---->
Finally, and I can guarantee this to be true, not all school teachers, nurses, policemen are delightful people. Nor are all engineers giant pains in the rear. That kind of generalization is not the greatest thing we humans indulge in.
"Listen, strange women lying in ponds distributing swords is no basis for a system of government."Jon
JJ, I am afraid you are either mis-reading or mis-metaphoring LOL.
I despise Walmart
At the time, I had no idea Nordstroms was even a possibility---and even the vaguest notion it existed---( now JC Penney???, Sears?????--maybe that LOL)
I don't particularly like Susy Chardonay either---but I love Joe Six Pack
read carefully----Susy will not Buy at Joe Six Packs pricing level--------( read Jeff Bucks post---HE knows what I mean)
Joe---can't afford the price Suzy expects either
spending any time bringing Nordstroms to Joe------------
Or trying to get Suzy to shop ar Walmart----puts Stevo in the poorhouse LOL
And---taking Joe to Walmart----doesn't meet Stevo's predetermined " Margin"
and since Stevo doesn't really like dealing with Susy
He brings Nordstroms pricing to his own neighborhood and faithfully serves a 12 block radius of Fred Fireman, Al Accountant, Ian Insurance Agent, Cicely Civil Servant, Sally Schoolteacher, Pete Policeman, Ralph Retired Factory Worker---and a ever widening circle of their friends,family and co-workers----many/most of whom have known Stevo and or his family for decades/generations.
and---buy bringing the right price and the right service to the right people----Stevo only works 1000 hours a year, lives side by side with his customer base, sends his kids to private schools, has time to go to ALL their sporting events, saves for retirement, takes a reasonably nice middle class vacation, pays his taxes, blah,blah,blah
now---if there is any other way we can force more metaphores, similes, and pretentiously forced simplistic alliteration into this thread----wouldn't that be fun???? LOL
Really and truly JJ---very best wishes to you---whatever line of work you are in.
stephen
Edited 6/27/2005 6:50 pm ET by Stephen_Haz
I see your point. Personally, I think wealth redistribution is a really bad idea, but there are folks who think is a good thing. I won’t debate that here.
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I don’t see why you think it would be a two-tiered system. Would families with an annual income of $99,999 pay one price, while families that earn $2 more pay a higher price? That’s kind of weird. Seems like it would have to be a graduated scale.
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Also, unless you’re going to pull financial records on each perspective client, you’re going to have to base your fees on apparent wealth. That would be a tricky and subjective task. “Oh. I didn’t know you owned a boat. I’ll have to charge you 2% more for that addition.”
Finally, doesn’t this same type of reasoning apply to the contractor? If customers that are in higher income brackets have to pay more, shouldn’t contractors in higher income brackets charge less?
"Listen, strange women lying in ponds distributing swords is no basis for a system of government."Jon
Blue,
I am sorry, but no.
See how that works?????
In the scenario you put forth in your last post----
MY response to the customer would be simply" I am sorry but no"
See how that works????
It accomplishes the same thing as your attempt at humor with the short nailing remark( not funny by the way)
some people---like you and Frenchy are likely "people persons"---you enjoy the human interaction so much that you ignore other means of communication-----------
like the printed word
haven't you read ANYTHING I wrote here LOL.
I have enough Sales, I have enough money, i have enough work at under 1000 hours----I don't need any more.
On any job I look at----I don't care if I get it or not---it's the same to me----in fact, any more I would probably prefer NOT to get it----It would just mean more work!!!!!
Now-----a salesman like Frenchy craves face time----person to person contact with a sales prospect------in the home improvement game, as you know, that's called "being good in the living room"----sit down perched on the edge of the sofa with your briefcase at your feet---and sell,sell SELL. Overcome your customers objections and sell. Explain the benefits of YOUR product and sell, point, by point,by point.
Let me put this as CLEARLY as possible.
If I reach the point where I have to sit in a prospective customers living room and "sell"---I have lost. I should get out of the business-----I haven't been doing my job properly.
A good salesman "overcomes objections"," turns no into yes "etc. blah,blah,blah.
I, on the other hand , am an" order taker"---a term a professional salesman would find insulting.--- to ME however, it's an achievement.
remember----I concentrate on serving a pretty small area--- a radius of 12 blocks or so-----and by extension the family friends and co-workers of the folks within that 12 block radius.
In all liklihood-------any prospective customer----- I will know them, I know when their house was built, I know who roofed it last, I know where their kids went to school, my parents knew their parents 40 years ago, our older brothers went to school together, my wife teaches their grand daughter in 4th grade, I roofed their 140 square brand new church---donated a chunk of money to it---and another chunk to the New Gym, I coached their kids in baseball, Tball, basketball years ago, they see my signs, my truck every day, we meet at the grocery store, the gas station, church, the 4th of july parade-----------------
and my customers will know the same amount about me---and more---LOOOOOOOONG before they ever begin thinking about a new roof, or a new door, or new siding etc.
when the time comes----if I ever have to try to "sell", if I ever have to try to "negotiate"---hell---if there are any "objections to overcome"----i have failed. I SHOULD be an order taker----look at my homefield advantage!!!!!!
Believe me, these folks know who I am, what I do, my approximate level of cost, how much I can be trusted etc. Long before I ever step foot in their yard with a clipboard. Essentially, I have spent 42 years constructing this enviornment to reach this point.
the approach you and Frenchy want me to take will negate ALL of that homefield advantage.
Very best wishes, Stephen
BTW, blue---it wasn't untill 8-10 years ago that I realized what a paradise my little neighborhood could be for me----the opportunity was always here----I just didn't fully appreciate how to operate within the possibilities.
Who here thinks there's only one correct way to handle selling and pricing? Show of hands please!?Perhaps....just perhaps....what works for one person in one situation will not work the same for another or in a different situation. The business we're in--roofing vs equipment vs new house vs remodel--affects the selling process. Our temperament--extrovert vs introvert vs emotional vs logical--affects our effectiveness with different methods. Our stage in life--starting out vs prime of career vs foot in grave--affects our desire for the work and the selling game.What's most useful is not everyone telling everyone else how wrong they are--sporting though that may be--but everyone telling what has been effective for them, so that us mortals can decide what style best fits ourselves.
"What's most useful is not everyone telling everyone else how wrong they are--sporting though that may be"
I'm sure you're right... but it sure makes for some fun and informative reading! (OK, as long as everyone keeps the "chill" factor at comfortable levels!) Man I learn a lot from this place.
cloud,
I gaurantee that the advice Blue gives, or Frenchy gives is absolutely perfect for someone "out there".
blue, Frenchy, and I all have different goals in life, values, experience etc. why should our approach be the same.
but I will also gaurantee---that "out there"----maybe in Chicago, or New Orleans, or San Fran Cisco----there is a guy who can do exactly what I am suggesting----it will work for him---in" his "situation.----It won't work for everyone----but it will be perfect for the right person. ( heck---it wouldn't work for me if I was in a slightly different line of work----say kitchen remodeling---as I have already noted)
If I operated by conventional wisdom----I would have been forced out of business years ago-----but----
the opportunity to do things MY WAY----to put my money where my mouth is----to operate according to MY priorities----and to accept the consequences-----Priceless!!!!!!!
Are you the guy who designs concrete dome houses?????? I bet conventional business thinking would shoot that idea down pretty quick as well!!! LOL
Very best wishes to all, Stephen
>but I will also gaurantee---that "out there"----it will work for him---in" his "situation.----It won't work for everyone----but it will be perfect for the right person.That was my point, too. I was fine with all the stories and perspectives. Then there was a bit too much "You're wrong" "No, you're wrong" and it got in the way of the good content.>the opportunity to do things MY WAY----to put my money where my mouth is----to operate according to MY priorities----and to accept the consequences-----Priceless!!!!!!!Yup>Are you the guy who designs concrete dome houses?????? I bet conventional business thinking would shoot that idea down pretty quick as well!!! LOL"Selling" them is certainly different than selling most commodities, or even necessities. In general, if I have to talk someone into it, I've already lost. Best situation is when they come in already convinced, and all I gotta do is not blow it. Having a client who's already sold before they call you is of course the Holy Grail for most of us.
Stephen, interesting points. Sounds like you're saying your leads are pre-qualified, & you've cut one or more steps out of the "traditional" sales process. FWIW, I think it may be easier to use your approach if you're an established company, with an abundance of leads, especially leads that are familiar with your work. Seems like your jobs are pre-sold, to a certain degree. Customers know what they're going to get from you in advance, & that's why they're calling you - they want the service you're selling. We've been trying to do something similar over the past year, so I can respect your position, especially because it sounds like you've been very successful at it. For me, the hardest part of this type of process was being able to walk away from a potential job by not negotiating price. Fact is we've become far more successful, & make a lot more money than we did when we negotiated. Our backlog is currently pushing into next year, which isn't bad for a remodeler around here.One other observation: Just as there are people that want to haggle, there are also those that don't. Consider Saturn motors, & their approach to car selling that's now being copied by other auto manufacturers. I think it's more important to find customers that are a "fit" with your business model, than it is to try to land every job. There's room for both approaches out there, though.
greg,
I just want wish you every possible success.
It gets easier and easier
and your confidence level grows
and it gets even easier.
I think---what you will find---is that people will say " call greg, he is expensive---but man--oh man ---is he ever WORTH it. I wouldn't even THINK of having anybody else do that project."
Tell them exactly what you are going to do, tell them how much it is going to cost----and deliver exactly what you promised. always--in everything. Make no excuses---ever. just deliver what you promise--when you promised.
what I find is that I play very well with the same types of people. teachers, firemen, nurses etc.---they refer ENTHUSIASTICALLY( I worked for a teacher this morning--- the 5th teacher this year------this is the 3rd job I have done for her in about a year---and today she referred me to her neighbor across the street---a school principal-----
Other types---engineers, "yuppies", lawyers ----for example------don't appreciate my approach as well.
I don't worry about trying to be all things to all people---just try to take extra good care of the right ones---the ones who like my approach.
I think you will find something similar---a natural customer base that you have an affinity for---that become "your goldmine". ( mine is geographic---my core 12 block radius----, religous---the catholic parish we belong to,and occupational---teachers etc. yours might be economic, or religous, or racial or whatever)
the ones that don't buy into your approach----what do you care---you didn't really want to work for them anyhow--did you??????
Again---just wanted to wish you the best----I hope you become insanely successfull---however YOU define success.
Stephen
Greg,
a guest showed up with his young daughter---and I forgot to mention-----
you mentioned that it would be easier to "not negotiate" if you were an established contractor with a surplus of calls------
Yes---I think probably so. Being known as being "established "is one of the reasons you shouldn't have to negotiate, I think.---I could talk about that for an hour LOL.
But as far as the surplus of calls------
I really only want to make 2- or 3 sales calls a week. any more than that---in combo with production work etc. and I would be too tired to handle the calls properly.
If I don't sell any of this weeks calls---I don't care.
If I don't sell any of next weeks calls---I don't care either
because I know statistically, the next week I am just as likely to sell ALL 3 CALLS.
BTW---I do realize if I had more employees, I would have more pressure to sell ---and to negotiate-----and keep the guys gainfully employed.
So , for me---downsizing is rightsizing.
Stephen
Stephen, thanks so much for the good thoughts.I must say that it's easier to run your business the way you see fit when you can validate your thinking. It's also easier when you get support, & can see a successful model of what's possible when you "think outside the box". For that, & people like you here at breaktime, I'm grateful.This place can certainly be contentious, but the knowledge here, as so often has been pointed out, is excellent, & the experience shared can't have a price attached. Greg
Steve, I've been following your recent posts closely, and I second your advice to GregB...I do believe there's a little luck involved in becoming the company you want, along with a little wheelin and dealin along the way. But do a couple of jobs for the right people at a good price (good both to you and your customer/client) and the business will come! I've always claimed "framing" as a specialty, but lately, all we've been doing are decks, garages, and carports--frame and roof, sometimes siding (which is usually subbed out). We've gotten good enough that we can turn around a job every few days, and more and more people are hearing about our "great work". The point for Greg is (that I'm sure you've already mastered as a roofer) is to pick one thing and do it often and well.
Greg, just to let you know, my company has grossed over 3x more this QUARTER than it did all year last year (on a two-year old company). My wife and I have been able to take vacations, pay off loans, and LIVE A LITTLE. Good employees don't hurt either! LOLJason Pharez Construction
Framing & Exterior Remodeling
Jason, congratulations! Feels good, doesn't it? I'm reminded by the quote from someone here: "Don't be afraid of the money." (Sorry, can't remember who said it).You make a good point about good employees. I'll go one further, & say as a G.C. we're only as good as our worst employee, sub, or supplier. We're fortunate to currently have a good group around us, & we continue to work to make things even better. Everyone wins that way, & headaches are minimized.I also agree it's easier for niche contractors to succeed. While we don't necessarily fit into the category of a niche contractor, what we do offer is good customer service - something that seems to be lacking in our market. Due to the comfort level our customers have with us, we managed to double 2003's volume last year, & this year, even though we're now charging more, we're projecting a 10-15% increase in volume over last year, but even more in profits. Like I said... Feels good.
Greg, it does feel good (especially giving myself a raise starting next week!) and believe me, GOOD cust. svc. will win you the job over competitors, even at a higher price. Many of my clients have said, "Your price is higher than expected/what others have quoted us, but we decided to go with you b/c you seem to care about what you're doing, etc." Don't ever sell yourself short! I think it's better worth it to go "on vacation" for a week (unpaid) than work for a potentially difficult client for less than the job requires.
Speaking of niches, the "niche" found us apparently...we were doing a variety of different jobs until this year. Since we've found our niche, referral business has taken off and we're more capable of producing those "ballpark estimates" that are within 5% of being accurate. Not to mention we are constantly shaving time off our production with the same quality results.
Even as a GC (which I've acted as before) you have to find that "niche", and I think you're well on your way with good (no, read: great) CS that you spoke of.Jason Pharez Construction
Framing & Exterior Remodeling
Now I get it; you live in Mayberry! Say hi to Aunt Bea and Floyd the barber the next time you see 'em!
BTW, this isn't a put down - you are in a potentially enviable position.-Jazzdogg-
"The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt." Bertrand Russell
"why do people ask if I can come down on my price?"
Joey,
One of the ways the rich stay rich is that they have learned to negotiate.
I used to work for a multi-millionaire whose practice when negotiating was to always ask for more, irrespective of the "fairness" of the deal, as a way of determining the price below which the party with which he was negotiating would not go. The reason: it cost nothing to ask, and if you don't, it's likely you're leaving money on the table.
-Jazzdogg-
Whether you think you can, or you think you can't, you're right.
I'm not a professional contractor, but I do put computers together for people (for a fee). If someone asks me if I can do better on the price, I usually say sure if you want to eliminate X, Y or Z from your specs.
From a business perspective, it paints you as a guy who they can work with and you are offering them viable alternatives (as long as you can mask your initial reaction - hard to do)
Sure I can get you a better price on your back deck if you eliminate one set of steps, go smaller, substitue a lower grade material, or keep it all on one level.
Most of the time, they will just go with the original package, but at least you've offered them alternatives without devaluing your labor.