Hello everybody
I live in Ontaro Canada. I am a small contracter, recently started my own business, doing this for a living. Before I was doing it on the side and got paid hourly.
I touch on all trades. I do, plumming, electrical, rough carpentry, finish carpentry, floors and more (weird brain). I like to do small additions but a fair bit of my work are small jobs such as fireplace surrounds, kitchen upgrades, tiling and hardwood etc.
I am still strugglng with quoting and timing of jobs. Out of the many questions I have, I would like to ask the following one: on the small jobs I typically do, where the total job cost may be a couple of thousands, what is the accepted way of billing a customer? do we charge all at the end? or do we charge for materials as they are purchased or upfront? Is it different from large job where I understand you get a deposit?
Any and all advice will be wellcome.
Replies
i am in your same position right now and the way that I like to do it is if the job is a turnkey of any value I take a deposit and then go from there. my favorite phrase is that "I dont want to finance your job for you" to the homeowner. when hourly, pay labor after completed and materials when purchased.
will
I do smaller jobs too. I get a deposit up front, big enough to cover materials and my time & travel for running around; securing permits, special order stuff, etc.
I have a clause in my contract that if the customer cancels the job prior to the start of physical construction they take ownership of any materials I've already purchased (I won't do returns and then refund the materials deposit) plus a 5% cancellation fee. No complaints so far.
-Norm
Norm, thanks for responding to "stemreno." I've been appreciating your good business sense and willingness to offer advice. I'm new at this, too, and hoping to emulate you in a lot of respects. And that includes having time to bike and kayak this summer! (BTW, two years ago my wife and I spent our honeymoon in Vermont ... kayaks strapped to the roof rack).
Allen
Geez, thanks for the kind words Allen. All I can say is that I take a whole lot more from this site than I'm able to contribute. Hope that changes someday.
I was lucky enough to have a bunch of years in the business world before picking up a tool belt in order to put food on the table and some lessons are the same; service the customer & treat them with respect, don't sell yourself short - this ain't a hobby - it's a business (good customers understand that), and make time to recharge your lifes batteries.
Best, -Norm
on small jobs.. say up to $6,000 or so..
i want a deposit at signing to schedule: maybe $500
about 1/3 of balance to start
1/3 about half way & balance on completion
so maybe.... 10 %... 30%... 30%... 30%
on larger jobs: say $100K or more... i might get 10 payments.. and the last payment is always LESS than 10%
the basic premise is.. we use the customer's money... not ours.. and neer leave yourself vulnerable..
if you got stiffed for $10K.. could you survive ?
probably not.. so don't put yourself in that position
hey Mike ...
it's been a while.
so I will add ...
"beltloops!"
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
I am a small contractor similar to yourself except I have been doing it for 20 years, now my 2 sons work with me. Most of my jobs are under $5,000. Approx. 25% of are $10,000 - $30,000. Many are time and materials but some are fixed price.
I live in a small town in NW IA and most of the small jobs are billed at the end of the job. 1/2 our work is repeat customers. Most business in town is still done with your word and a handshake. Some jobs I sit in the driveway and write up the bill and hand it to them before I leave. If it's a week long job I have usually done a bill summary the night before so I just have to add the day's labor and any last minute materials.
On larger jobs I usually bill labor and materials (to date) every week or at the most every two weeks. It's best to get them billed and the money out of their account, it keeps the project realistic.
Where I have gotten into trouble over the years was when a remodeling job kept getting bigger and I didn't bill until the end, even though I informed them of the cost status.
Most horror stories I hear from HO involve the contractor getting paid most or all the amount up front and then he didn't perform the agreed upon work.
Enough of what I do, take Mike Smith's advice and get paid (30%) up front, your cash flow will love you.
Keep track of your jobs, materials prices quoted vs. actual and labor quoted vs. actual. I try not to give a quote on the spot. I like to go to my computer and figure material costs and labor ocsts on a spreadsheet and then send them a computer written estimate. I have been much more accurate that way. It's a bad situation when your shoot from the hip estimate is way off from the actual cost.
I understand your position. But look at it from a HO's position (me) I've had three subs want front money(usually 25-30%), work a couple of days and never show up again. No such number, no such zone. Small town, have to import my help now.
I rarely get money up front. I've heard your story too often. I usually perform the work and then get paid. I rarely get burned by the HO. But if I was in the big city , or did bigger jobs I might think differently.
Here is how to avoid your problem with subs: Find a good GC, then give him ALL of your business, everything you have done on your house and on your commercial property if you own any.
HOs are always eager to save money by "cutting out the middleman". Well, your mileage may vary. A good GC knows which subs are good. And when a sub gets 100 jobs a year from me, he has a different attitude than he would with a HO he's likely to never seee again.
DG/Builder
I also do alot of small jobs and some larger ones. On the small ones I collect all at the completion of the job. On the larger ones I order the materials, but have the client call the yard with their credit card and pay for the materials. I then get paid by the HO every Fri. during the course of the job. Alot of my work now is repeat clients, they like my system. Doing the work T&M allows them to change their mind, although too many changes gets awkward for me because it can delay the start of the next job too long. Kind of a tightrope to walk there, keeping the current and next client happy at the same time.
I'm glad you brought this up. I'm in CA and just got my license after doing business for awhile. I've been gun shy about doing quotes and have been doing T&M primarily and doing weekly invoices. I find that my clients like having a sense of control and have no problem with doing it weekly.
It is good to see this is not just my way of dodging having to do an estimate and that many others are doing business the same way.
10% to get put on the schedule. 50% of the balance the morning work begins. The balance the day the work is completed.
If the job is under $500 I still get the 10% but the balance is paid at the end.
If the job is over 5k or is longer than 2 weeks (rare for us) I may break it down to 3 payments.
I use a hand shake on any job up to 1k. 1-5k I use a 3 page contractors agreement. Anything over 5k I use a full blown contract.
I use the 10% as a way of keeping everyone "interested" and not running out with their money and buying a new car a week before the job starts. My contracts both refer to it as non refundable but I really don't think I could or would keep it. I rarely bill anyone unless they are a regular customer and not home then I just leave the invoice on the table. Nice not to have recievables. DanT
Depends on the project, really. One way to to look at it is, "How long will the project take?"
If it's less than a week, you can often just bill at the end. That depends, too--do you have a busy schedule with multiple clients? If (when) you do, you will likely want some "up front" money. Or, if you need to get material for a project, it can be better to have the customer pay for the material up front, then the labor at the end.
If the project will take more than a month, it can be a good idea to work out some sort of "draw" or similar pay scheme (unless your business model will "work" with that sort of irregular income).
That's the real answer, though--what is your planned business model? You are running a business, you know. You have to keep the business 'open' while you are busy laboring to generate the profits. If you have bills to pay, you have a reasonable reason to bill the clients. But, it's the model your business follows that sets the rules.
Mikesmith's got the right idea, 10% on signing (of course three days to cancel),30% to start, 30% at a half way point (agreed upon in advance) and the balance upon completion. I ALWAYS get customer to sign off on any additions or deletions. I also ALWAYS get a deposit. Almost without exception I get stiffed if I don't. Example: Sure I'll replace the post for $150.00, I'll be by next Wednesday. I buy the post and aluminum stand-off ($35.00). I call Tuesday eve and say I'll be by in the morn to fix your post mam. "Oh, my hubby did it this weekend we won't need you to do it." "But mam I have a signed estimate." "Well, young man if that's going to be your attitude - CLICK......) ALWAYS get a deposit even from little old ladies.
I, too, am a one man operation (helper only when needed), in business going on 5 years now.
I never give estimates on the spot. Figure it up in the privacy of your office.
I do T&M a lot, but make more money on bids.
I like to have the control of the project, not my customer.
If there are ANY special order items, I get 50% down, remainder upon completion. That would be windows, doors, special hardware, large quantities of lumber, etc.
If they are repeat customers in good standing, I can wait for cash, unless it is a large project.
Don't give out your rates over the phone (it's your competition checking up on you!!)
Grunge on. http://grungefm.com