Having been in the construction industry for 30 years and a licensed Contractor for 22, I find myself at a cross roads and am seriously contemplating opting for an alternative career.
Whether it is due to rapidly rising construction costs, troubled economic times, or just downright unrealistic expectations, I am landing- at best- maybe 10-15% of the jobs I bid. Some may say that this is acceptable and maybe under certain circumstances it is.
Being a very small remodeling and Custom Home design/build Contractor with only myself as a sales staff, (not to mention head of marketing, bookkeeping, customer service, web design, and everything else that goes under the construction cap), I don’t have 60-80 hours a month to spend meeting dead end clients and typing up proposals only to end up administering CPR and moving on.
It isn’t as if I am over bidding. As I follow up with clients I find that a great deal of them end up aborting their projects altogether after the reality sets in. I’ve even given some prospects a pre-bid ballpark number and have been asked to continue putting a bid package together and, after coming in below my ballpark figure, I’m told I am far exceeding their budget.
I am desperately seeking some screening methods in which I can diplomatically eliminate this excessive waste of time. I’ve been reading more & more about my contracting brothers and sisters out there who are charging for their time estimating and the countless meetings involved in the process. I find it difficult to conceive this in an environment where virtually none of the competition, (locally), does this. I would really like to know how I might justify this expense to a client as I believe this would be a great way to filter out the tire kickers and make my time spent profitable and more productive. Any input on how to avoid this unpaid time and energy will be greatly appreciated. I wouldn’t mind seeing some sample questionnaires that can be given to prospects that might raise some red flags as well.
Thank You,
Phil
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Replies
go back and read your whole post.
You are already trying to talk yourself out of a possible solution.
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Jeff,
If you're referring to charging for estimates, that is the most desirable solution I can see. But the problem again is, in an area where no one does this,(yet), I envision a lot of hang up calls. To point out the obvious, "Why should I pay for a bid when I can get em all over town for free?" To repeat myself, can someone explain to me how I might diplomatically implement this in my situation?
Thank You,
Phil
Edited 2/22/2007 5:18 pm ET by hiline
hiline.. i guess i've been charging for estimates ( never... i never charge for an "ESTIMATE" )... estimates have no value.. why should anyone pay for them ?
however.. i have been charging for Proposals on a pretty consistent basis
and i know of no one else in my marketing area that also charges.. most advertise "free estimates"... good for them..
first ... that list that calvin linked to.... it's pretty much what i do on a telephone interview ( i interview the people who call me )
if it sounds interesting i tell them there is no charge for our initial consultation... i go out and talk to them , i bring our "job photo " book
we talk.... i show them projects we've done.. eventually i ask them if they want me to prepare a Proposal for the work we've discussed.... it is not going to break out costs, or itemize prices
it will specify what we are going to do and what the price of the the job will be...
if you receive money for your Proposal, it means they think having a working relationship with you would be of value to tehm..in other words, you have to sell yourself and your company..
the ticket of admission is paying you to prepare your Proposal
if they buy in for that , then it is worthwhile going to the next step
if they don't buy into that , then obviously they think you offer no more value than the next guy they are going to call
and the one about declining to participate if they are soliciting other bids... yup.. that's right on.... how are you going to win in that set-up ?
you have no control over the other "bidders" and no control over "what" they are even "bidding " on... in 99% of residential work it is almost imposible to get true "competitive bids"
keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead highMike Smith Rhode Island : Design / Build / Repair / Restore
Good stuff!
I hope this string keeps going for awhile. Seems like we would all have some opinions in this area from past experience. In absorbing the comment about declining to bid against competitive bidders; at first I thought that was a little off. But in thinking about it, I really believe that is a right on concept. I mean, logically, most homeowners will ultimately take the cheapest bidder and that's not likely to be me, (I've always been the middle bidder among multiple bids), so why waste my time? I think that, although the following presentation might send a few people running, it may well generate a little intelligent thinking, not to mention some respect.
If you're planning on getting competetive bids for your project with the intent of selecting the lowest bidder, I think it would be in your best interest to pass me by as I can pretty much assure you my price won't be the lowest. Most of my work comes from referals from very satisfied customers and the time involved in putting together a formal proposal might be better spent with someone who wants to hire me based on my reputation.
Selling the design review is an interesting concept as well. I think that can be incorporated into the overall scheme of things. I still believe the ultimate solution for me is to figure out the proper verbage to justify charging for proposals without offending anyone. I ran that scenario by a friend of mine at lunch who I just did a remodel for and his comment was to the effect that; If someone told me they were going to charge me for an estimate I would tell them to go kick rocks.
Phil
<<<a friend of mine at lunch who I just did a remodel for and his comment was to the effect that; If someone told me they were going to charge me for an estimate >>>
couple of points in that conversation
1.... gotta get rid of the word "estimate" .. it has no meaning .. you are a contractor... i'm a contractor.. we write and execute contracts to do a specified scope of work for a specified amount of money... so what good does and estimate do ?
2.... did you point out to your friend that that would have been his loss ?... he would have wound up with someone else who wouldn't have done as good a jobMike Smith Rhode Island : Design / Build / Repair / Restore
Instead of "estimate" which gives you the idea that some of this is a guess, how about "probable construction cost".
when i'm talking to prospective customers, i like to use historical numbers..
like.. " this bath & two bedroom addition was $170,000"
or ......." this 2d floor addition was $56,000" .........
" this front entry port co'chere was $26,000, but we reshingled the dormer at the same time "..... etc.
i hate sf. projections because it usually bears no resemblance to a final price
everything seems to wind up so different from everything else we do that projecting costs before we have a design always leads US ( not everyone has this problem ) into troubleMike Smith Rhode Island : Design / Build / Repair / Restore
You need to eliminate 90% of your potential customers. They are raising your costs and raising the price you need to charge to pay your overhead.
Mike Smith has a proven strategy that works for him.
Our company doesn't charge for estimates but we have a reputation for being expensive and unavailable most of the time which performs the same function.
As Mike says, your customers should be coming to you because they want YOU. If they don't know any different, all you have to sell is price and you won't win in that game. Good luck.
Excellent!
That last paragraph really hit the mark.
As Mike says, your customers should be coming to you because they want YOU. If they don't know any different, all you have to sell is price and you won't win in that game. Good luck.
Thanks big time to you Schelling, Mike, & the rest. Selling on price aint gonna get it.
Not to let this great thread get too far off track but I would like to mention to Ray that I have been drawing plans for my clients for 10 or 12 years and that's probably sold more work than anything aside from great referals. Everyone loves a one stop shop.
Keep this one alive guys & gals.
Thanks,
Phil
Edited 2/22/2007 9:13 pm ET by hiline
couple of questions:.. What are you using for a program for the plans?...how detailed are you getting with those drawings?... how much do you charge for the drawings. and would you still need them stamped by and engineer for the permit if ther was significant structural work?Ray
If you can get in the door by doing the design and drawing up a detailed proposal (for a fee), you will either get the job or know that you don't want it. This is of course assuming that the customer does not have plans and specs already. In either case you know that you have a serious person. That is all you can guarantee with any screening system and it will eliminate most people who are a waste of your time.
I don't think that you need a specific set of questions to ask but you do need to listen carefully to what the potential customer is saying. If you give them a chance, most people will talk freely about what they want. All you need is to give an occasional uhuh or nod and they will reveal all. If you don't think they are a good match for you, find a way to bail out early. Saying no to work is sometimes the best business decision you can make. What it saves in personal grief is not measurable.
Let me address Ray and Schelling's comments here;<!----><!----><!---->
Ray,<!----><!---->
I'm using Autocad Architectural Desktop but there is a very steep learning curve here. Unless you want to invest a lot of time learning, there are much easier programs to use. Not as good in my opinion, but easier to master.<!----><!---->
My drawings are as detailed as any draftsman around here. <!----><!---->
I charge 1.80 per square foot for new construction plus design fees,($80.00 per hour), if applicable. Remodels are usually based on a flat fee or an hourly rate.<!----><!---->
Pretty much everything here in <!----><!---->Northern Ca.<!----> needs to be reviewed and stamped by an engineer whose costs would be above and beyond mine.<!----><!---->
Schelling, I would say 3/4 of my calls are from clients who do not currently have working drawings. Many of whom don't even really know what they want. So I spend a great deal of time getting them to a point where I can even attempt to provide a ballpark number. I have friends in the business who tell these people to get back to them when they have a complete set of plans and only then will they be able to provide an accurate bid. To me, this is sending potential clients down the road. If I am able to get the client to commit to having me produce drawings for a fee, I usually get the job if they decide to go forward with it. However, I’m amazed at how many people will pay to have plans drawn and then abort the project when the real numbers start to come in. For me, assembling the “real numbers†can take 20-60 hours of my time on the larger projects, meeting subs at the site and going over the scope of work, producing the proposal and revising as needed, etc. I could get very long winded here with some recent scenarios that I’ve had to endure but I’m afraid I would lose too many readers with my novel post. The point is; I need to figure out how to avoid spending a great deal of time with so many dead end clients.
Thanks, Phil<!----><!---->
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"The point is; I need to figure out how to avoid spending a great deal of time with so many dead end clients."
If you are getting paid for the design, it shouldn't take that much longer to come up with a price. You are spending too much time on the estimate. Rather than spending so much time figuring out a price for every detail of the job, you need to use your past work as a guide for the prices. As long as you upgrade this for price increases, this is the most reliable guide for YOUR prices.
The riskiest part of estimating is leaving something out entirely. As you do the design, you should be making a list of every phase of the work. This is simple if you do it at this time (It shouldn't add more than 30 minutes) and you will be getting paid for it
hiline, it sounds like we are doing much the same thing...design / build.
Others may disagree, but I can not see that "estimates" are worthless. We provide estimates so clients seeking feasibilty won't spend time on a 5000 SF plan when they can only afford one that is 3500 SF.
I have been around long enough to provide a good estimate, accompanied by a disclaimer, attention to ESTIMATE ONLY and reference to the extensive plan and spec design process that must take place prior to a guaranteed bid from us.
Also, I can not see the fear, reluctance, primadona attitude or whatever it is that causes good contractors to shy away from competetive bidding. For those who do not know of our good name, a few meetings and presentation of our our processes, paperwok, design / build skills and management typically causes us to win most of the competetions. I have much more to sell than price.
One new client who gets to know us may lead to 5 more who can not do without us. I experince this regulary, and have it going on currently. I am not bothered by the competetion. I like to compete because I know who we are, what we can do and how we do it. I hate to lose, but losing always give me additional education and toughness for the next competetion.
I entered into "competetion" with 5 other builder for a nice large home with horse stables and guest quarters. Bidding was not part of the process, it was about portfolio, references, financial strength, processes and profession presentation. It was initiated and monitored by an architectural firm. We have won the competetion, and are awaiting some final desicions design by the homeowner. We did not win on price, but it was a competetion.
Edited 2/23/2007 2:15 am ET by txlandlord
My competetive mind is at work.
I must add that our typical clients and most people are seeking more value than best price, as in: A comparably equipped Honda may cost more than a Pontiac, but where is the best overall and long term value? Relate this to the biggest investment most people make in buying a new home.
A typical conversation with those seeking multiple bids:
HO "We are searching for a builder and have contacted you and two others."
US "Do you have plans and specifications?"
HO "Not yet, we are first trying to select a builder, and were hoping to get some bids for comparrision."
US "We do not offer bids without complete plans and specs, we offer plan and specifications design services, or you can provide us with complete plans and specs. We operate as designers, seperate from our build services. We charge $___ per SF for our design work and the work includes (review of inclusions for a ready to build package).
Once we are paid for the design work, we will provide a guaranteed bid at no extra charge. The plans and spec design belong to us, but they are your to build one home. You can seek bids from alternate builders.
This is a winning situation for you, as seeking bids from alternate builders using the design package will assure you of an apples to apples comparrisions. If you read this document, you will realize that there are many other advinatages to a complet package"
At this point and honestly, 9 of 10 people will agree to a design work proposal from us. Once we complete the process and make a presentation, the HO is convinced of value and that the character displayed in the design work will be manifest in the actual build. The competetion is eliminated.
tex... our conversation goes much the same as yours..
<<<<"We do not offer bids without complete plans and specs, we offer plan and specifications design services, or you can provide us with complete plans and specs. We operate as designers, seperate from our build services. We charge $___ per SF for our design work and the work includes (review of inclusions for a ready to build package).
Once we are paid for the design work, we will provide a guaranteed bid at no extra charge. The plans and spec design belong to us, but they are your to build one home. You can seek bids from alternate builders. >>
however.....we differ on your last paragraph...
the plans and specs are ours... for us to build the project.. not for anyone else, so the bit about seeking bids from alternate builders may be true.. BUT.. they can't build from those plans and specs .. they have to get them redrawn..that's part of our design contract
do you carry "errors and ommissions" insurance ? are you going to allow someone else to build from your plans without you supervising the construction ?Mike Smith Rhode Island : Design / Build / Repair / Restore
do you carry "errors and ommissions" insurance ? are you going to allow someone else to build from your plans without you supervising the construction?
We do not need errors and ommissions insurance, because of the statements in our Design Proposal.
Additional statements release us from responsibilitiy at acceptance of the plans and specifications by the Homeowner and any bidding contractors.
Engineering is required, but typically an option, when our first step is to provide plans and specs only. Options are presented for engineering, exploration and discovery related to requirements of the governing code enforcement authorities, HOAs, MUD or public utility districts, etc. with the decision for further pragmatic help from us or others assigned to the Homeowner.
We do not pretend to be who we are not. The Design Proposal has multiple disclaimers related to codes and additional requirements. Should the HO decide to continue with our services, our engineer(s) have errors and ommissions and performance insurance.
The proposals are generally 7-8 pages of greatly detailed inclusions and ommissions. Tthe only inspection responsibilities in which we have may obligation is also optional and related to the contractors compliance with quality craftsmanship, the plans and specified materials.
I appreciate your concern as to my liability. If you would like, I could provide an exemplary copy of a Design Proposal. I would probably learn and benefit from your observations, and you may learn and benefit from my composition.
Meanwhile, I have two meetings today with clients won in builder competition, and another on Monday that has seen our work, talked to our clients and ceased convesations with another builder. It seems he can not do without us.
Life is good. Where is the next fight?
Edited 2/23/2007 9:18 am ET by txlandlord
not a day goes by i don't learn something new..
i sure would like to see your design proposal... do you belong to AIBD ?
the way i reasoned out the Design / Build budiness model is that we would keep the 2 linked.. if we design it , we build it
if we build it we have the liability anyways as the Builder, so there is no additional liability... and as you point out... we are supported by the Building Code and our supplier's engineering and professionals registered and licensed by the state ( surveyors and PE's )...
but i don't want other builders, i have no control over, building from our design since they may not practise the same due diligence and back up the design with outside support
anyways.... yes... i'll show you mine if you show me yours.. i'm sure it will be enlightening
email or fax ?Mike Smith Rhode Island : Design / Build / Repair / Restore
yes... i'll show you mine if you show me yours.. i'm sure it will be enlightening
email or fax ?
Cool, my meetings and the prep I must enter after this post will occupy my day. ? I prefer email. You'll receive an electronic doc that you may want to pull from edit and use. But you jumped on me once upon a time about "private" exchanges. Your reputation on BT and the quality projects and information you provide had me cautious, but being the competetor I am, I jumped right back.
Gators and Colts, smash mouth dominating teams at years end. Lets see, ,who else played in those championshiop games? I can not remenmber, because their perfomacne was forgetable. : - )
I guess my open invitation to other bidders is based on the confidence I have in who we are, what we do and how we do it , as previously stated.
In a school yard pick-up game of BBall, where the HO is captain and picking from the group standing around, if you did not know who he was, but had seen him play and he was an available selection.....wouldn't you select Mr. "Fly Like an Eagle" Jordon?
I have that much confidence. I know you have seen MJ gear up and take over a game. I believe we are the Michael Jordon of builders in this area, and as the Beatles say "it getting better all the time."
Maybe a better comparrision for YOU would be to Tiger Woods, amazing record of late. We also have an unbeliveable win record when entering competition.
Don't we need to go to work? The competetion is active....maybe. Fortunately, in this business a large portion of success and having the best opportunities is just showing up.
and another analogy...
"you gotta know when to hold 'em, know when to fold 'em....
know when to walk away... know when to run"....
i'll watch my emails... thanksMike Smith Rhode Island : Design / Build / Repair / Restore
"you gotta know when to hold 'em, know when to fold 'em....
know when to walk away... know when to run"....
You are preaching to the choir. I could tell you some stories.
First meeting today went well. I am preping for another and testing a new laptop presentation I have recently started.
Docs, as built pics, CAD plans, spec sheet examples, various home styles, financial information, draw shedule examples, references, Texas Builder registaration, how to understand a blueprint, things to look for in a well planned home, home traffic flow issues, open plan and privicy zones, bank paperwork and closing process, definitions of construction and financila terms, construction loans, mortgage financing, life long maintenance, mechanical systems operations, etc. These are all possible inclusions and some are in place.
All is not complete yet (maybe 60%) It is all seperate and of various formats, but my goal is to incorporate all into a pdf electronic booklet that takes a HO from the "we need a plan" stage to maid service in the competed project, and future maintenance.
Our Church's media and computer geek who is very talented has suggested a CD or DVD format with music, short take movies as appropiate, narration that can be turned off for live presentation, power point and other bells and whistles.
proper verbage to justify charging for proposals without offending anyone.
Mr. and Mrs. hiline, you've given me a pretty good idea of what you want this beautiful project to look like. It's going to take me about 40 hours to research materials and fixtures and analyse the costs involved.
Because we are so busy right now, it will take me about three weeks to find 40 hours I can devote to your project.
What we will be developing for you is a bid package that includes a full specification sheet, a project timeline, and a detailed cost analysis. You can then use that package to insure that any comparison bids you request will be on an apples to apple basis and not be full of big surprises down the line.
Now, gimmeee all you money. He he! Ha ha! He he!
SamT
Anyone who doesn't take truth seriously in small matters cannot be trusted in large ones either. [Einstein] Tks, BossHogg.
Great post Mike. You hit two nails with one swat. I think both your opening paragraph and the wrap up should go down in Taunton's book. Thanks for the new tagline.
blue"keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead high
"
From the best of TauntonU.
What if you charged for the estimate but added a sentence to the contract that says something to the effect of:
"I will charge you XXXX for this estimate. Should you sign a contract, the fee for the estimate charge will be credited to your first invoice."
Thereby eliminating those who aren't willing to make the initial estimate charge but giving a slight "bonus" to those who are willing to pay the estimate fee.
Jen
a pre-bid ballpark number and have been asked to continue putting a bid package together
The pre-bid ballpark number is free, the bid package requires a deposit.
"Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Phil, maybe you haven't seen this thread. Not that I agree with whats in it, but can certainly understand your disgust with having to do the work of an estimate only to have it be rejected.
Best of luck in the future.
A great place for Information, Comraderie, and a sucker punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
on larger projects I like to ask for a budget. sometimes its hard to drag a number out of some people, understandably. they will always give you a figure that is 30 to 50% lower than they can afford. at least you'll have a starting point and you can provide a list of 30 to 50% more in upgrades bringing you back to that acceptable number. everyone is happy
explain to them its easier to taylor your estimate to their budget then it is to taylor the budget to the estimate.
Unless you have well detailed construction documents (which are rare in this area) offer free estimates but charge for plan review and clarification meetings with the HO and consequent specifications writing. The package is good for all bidders when complete and includes discovery work related to the site, codes, HOA, permits, utilities location, engineering, etc.
Sell the completed package and give them the free estimate or bid. We offer these type services with our plan design work, and tell the HO a complete plan package, with specs and related discovery work assigning to the bidding builders the same responsibilities is the only way to obtain apples to apples bids.
It is a win - win. You create or at least review the plans and priovide clarity, (most of the time missing) detailed specifications and total scope discovery work. In finishing your responsibilites, you have studied enough to know how to price the home. The HO has a complete package for presentation to other bidders, and a mini home building seminar in the review sessions with you.
Typically, we have plenty of actual construction and don't mind taking on design and discovery work that may be subject (when complete) to other builder bids, except that absolutely no one who has ordered our design packages has used another builder.
Many comments have been made with the same idea, "When we received and reviewed your complete design package, we were convinced of your character displayed in the value and throughness of the package. We feel like the same character will be manifest in the acutal build and do not see the need in soliciating other bids"
Also, hire a trusty and experienced helper, capable of taking orders and being eyes, ears and mouth on a site. Ecclesiastes tells us "two are better than one and a cord of three strands is not easily broken." I believe this, but have also found from experinece that this is true."
I was recently asked to provide a bid, but refused as there was no compete design package. The Ho called me a few days later and asked for a design package. We are meeting Monday for a first draft review. He has alos commented that he does not plan to soliciate other bids. He told me in an email today "lets get started", but I am too old and experienced to jump the gun. We will complete our required process.
Edited 2/22/2007 3:35 pm ET by txlandlord
Edited 2/22/2007 3:38 pm ET by txlandlord
That sucks. Different situation for us as a non-profit design firm, but we want to see our projects built. We try to put in a lot of time to make the drawings as clear as possible, meet with contractors, research for problems down the road with codes, zoning, etc., do rough estimates, find manufacturers and fabricators, take projects through historic commissions and design review boards (of which i'm about to do in a few minutes), and more. But we're subsidized by the city on many projects, so we get the tire-kickers who pay a nominal fee and then put our drawings in a closet or drawer and then forget about them. We've actually had clients come back after 5-6 years to do the same project over again because they never did it the first time.
After awhile we can pick out the ones who seem to be a bad risk. If we depended on these people to support us, there would be no way we could exist. Perhaps a polite refusal once in awhile becomes more than an option for you. It's not just about providing a service . . . you have rights also.
great thread!!! hope that there will be more discussion about this topic.
I'm still learning how to screen the cold calls so that I'm not using up too much time with folks who are only looking for another price to help quantify the lowest price for them.
Unfortunately I do get a lot of calls from people who have never met me and they are calling me for the first time.
many times the project may be too small to start involving an architect with plans. Such as the people who call and want their basement remodeled. some are large, meaning there will be multiple rooms and decisions to be made, yet they still don't even have a pencil drawing!!!!.
Then there is the basement remodel where there really is only one room that you are looking at. So how could you tell them (or why) that you are going to pass because they don't have a set of plans, so as to be bidding on an apples to apples basis.
I guess what I'm trying to get at is my business is not at a level where all the people who call me are referrals from existing customers so I think it becomes a delicate line where you are balancing between trying to weed out the tire kickers from those potential customers who may turn out to be great customers who refer you to other people.
Ray
PS: hope this thread goes further, i think there is great potential here:)
raymond... you could probably benefit from a simple cad program.. offer to draw up the basement project ... for a fee....
make it part of your service.. after all.... how can you sell any remodel if there is no plan ?
that will help to separate your from the packMike Smith Rhode Island : Design / Build / Repair / Restore
Mike I do have a simple drawing program from punch software. I think it is home design or something. and yes i have done a couple of plans for people. and i did charge for it as well. It may not be to the quality of architect but sometimes it does work for the permit.I'm just eager to get to the point that I know how to weed out the not so potential customers. It really boils down to just knowing what to say and what questions to ask..... which I'm still working on :)Thanks mikeRay
This goes to both Raymond and Hiline.
One of the first questions that I learned to ask when I decided I needed to weed out clients was "what is your budget for the proposed project?" This simple question instigated an incredible array of results including:
1) "I have no idea what this (insert Project type) costs. That what I need you to tell me"
2) "I am not going to tell you what I want to spend. All you'll do is say that is how much it costs"
3) "I need you to tell me where you are so I can compare to the others"
4) "We think this deck (3000 sf, three levels, all ipe ) should cost about $1200."
My reply to
1) "Well maam, these types of projects can run from $1000 to $100,000. I need some more info so I can figure out where you want to be" . This usually generates a reply of "well, we didn't want to spend more than $xxxx dollars.
2) "I guess I won't be able to help you".
3) "Well, please provide me with the plans and specifications that the others used to develop their prices and I will consider developing a price." Client reply was usually "well we don't have any plans, but the other guys said it should cost $xxxx. I would reply "Well maam, what did that price include? Client "Well, a kitchen remodel."
4) "Well after having spent three hours measuring out your house and laying out your deck and figuring out all your lumber. I don't think $1200 is going to be enough. Client "Well, that is all we have to spend right now. "
It was after event 4 that I figured I needed to learn to screen calls. Much thanks to all the folks here.
Bruce
Well said Hiker;I have only asked one woman what her budget was because with each statement i would make she would say well how much more will that cost.
so I had to just stop her right there and ask ... how much do you have to spend on this project??.. she told me.. I went off and worked up a price... still couldn't come close so i call her to let her know that XXXX $ is the best i can do.... I did'nt get the job even though it was a referral from a great customerin the end she was really just shopping for price.Thanks for the info HikerRay :-)
Then there is the basement remodel where there really is only one room that you are looking at. So how could you tell them (or why) that you are going to pass because they don't have a set of plans, so as to be bidding on an apples to apples basis.
If there is only one room to remodel, I guess I could give them a firm price right on the phone LOL!
I think this idea of charging for proposals is geared toward a little more complicated project. If a guy calls me up and wants one room done, I'm going to give him a number and if he wants me to do the job, I'll come over to sign the contract, but I'm not running around town for anything either.
blue"...
keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead high...."
From the best of TauntonU.
Thanks Blue,I realize that most of what we're talking about here would be more involved projects than just one room. Would you just give the caller a ballpark number based on prior jobs that might be similar, then see if they bite in order not to have to go across town to meet with (what could be a dead end).Since a lot of work i do is smaller to medium projects. how do you screen them more efficiently. Obviously most of these projects are not going to have drawings . (some do though ) I'm still learning how to weed out those jobs that may be just dead ends or people looking for good work cheap.... and thats not how I work. Ray :-)
Ray,
In my opinion, a free one time consultation, evaluation, whatever you want to call it is a must. There are questions that should be asked before the first meeting to, hopefully, screen out some of the tire kickers. Like a brief description of the project and what the budget is. Going beyond that, (free consultation), is where decisions need to be made on if or how we should be accomodated. And for God's sake, giving a ballpark number over the phone on a large project is a big no way!
My 2 cents,
Good Luck,
Phil
In another thread on this topic I related a story of my own from a couple of years ago. I had some cash and credit available, enough to do a major addition to my home, and a desire to do it. The design/build firm I called had one of their designers call me back, and he fairly quickly got rid of me by telling me my proposed $80k budget was unrealistic and that the job would cost over $100k. That terminated our conversations, and unfortunately none of the other three builders I contacted even bothered to return my calls. Had the one firm offered me design and spec services I would have been interested. I suspect they didn't because they are a "design/build" firm, not a "design or build" firm.
My point is that like osme of the others are saing here, design and spec services have value that can be sold alone. It's not a substitute for you building business, but it can be a way to at least get paid for some of the time you are putting in on estimating jobs.
Another possibility is to closely analyze the jobs you have actually gotten and the ones you have put a lot of time into but haven't gotten. Look for the commong threads in the jobs you got, and the differences between those and the jobs you didn't get. It's not likely to be totally random, and if you can focus in on the factors that increase your chance of actually getting the job you can use those factors to weed out prospects on the front end.
Good luck.
"If the trout are lost, smash the state."
James, the guy did you a favor by not doing the plans specs. They knew from experience that you didn't have enough in your budget. They walked away without wasting any time or any of your money.
I've got paid for design/proposals that didn't get built. I felt like I let the clients down by not being more firm and decisive when I heard their budget. I should have walked away from one of them.
blue"...
keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead high...."
From the best of TauntonU.
So blue_eyed_devil, I"m really interest in how you went about estimating my job and concluding my budget was unrealistic. No wonder you're successful, if you can accurately estimate jobs you haven't even heard described,much less plans or specs. It's obvious the guy I talked to did the same thing. And it still puzzles me. 560 sq. ft, second floor add (no foundation work), and I was ready to do all the interior finishes myself. I wanted it dried in, rough plumbed, subfloored, exterior paint.
If that costs $100k+ then I'd be a fool NOT to do the work myself, even if if mteans taking a couple months off work.
"If the trout are lost, smash the state."
Edited 2/24/2007 10:26 am ET by JamesPio
james....
<<<<560 sq. ft, second floor add (no foundation work), and I was ready to do all the interior finishes myself. I wanted it dried in, rough plumbed, subfloored, exterior paint>>>>
24 x24 ... protect the first floor ?
yeah... it's iffy... depending on your market and what your contractor is used to building ( and the budgets they are used to building for )
but... don't quit your day job..... you still make more in your line than you could save by taking time off from work and doing it yourselfMike Smith Rhode Island : Design / Build / Repair / Restore
James, don't get so defensive.
I didn't estimate your job. The builder that you talked to declared that the budget needed to be 100k for his firm to be involved. Instead of waltzing with you and wasting his time, your time and some of your dollars, he declined to get involved. I'm saying you should be thankful, rather than pining about wanting him to do some plans and specs.
Why is is budget 100k? I don't know. He might have decided that he wants to buy his wife a new porche, twice a year. He's entitled to run his business anyway he wants and set his own threshold for budgets. You obviously didn't fit into his plans becuase you only had 80k available. There's nothing wrong with that and you should have kept shopping till your found a contractor that you could work with.
It's kinda like walking into that porche dealer and yelling at them because they don't have a new car available in the 20k range, like Kia does. Are either of those dealers wrong for targeting a certain market?
blue"...
keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead high...."
From the best of TauntonU.
If that costs $100k+ then I'd be a fool NOT to do the work myself, even if if mteans taking a couple months off work.
It's okay that you can beat that deal. I've never bid against any homeowner that I could beat, except my Mom. I do here work free.
blue"...
keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead high...."
From the best of TauntonU.
blue, perhaps I did get defensive, but I find it absolutely amazing that in a single thread a bunch of builders can simultaneously say that ballparking a large project over the phone is an absolute no-no, but that I should be grateful for someone who did exactly that.
To be clear, I don't mind that the guy didn't do more work for me. In fact, I agree with you that if he was certain he couldn't do a second floor add on for less than $175/sf (without fixtures or interior finishes), then it was a good thing of him to tell me that. But I was really just trying to respond to hiline's question, which was what to do about the problem of homeowners who expect him to put a bunch of effort in on projects he doesn't get. A lot of you guys seem to think this is a binary process. Either you get the project and all is well, or you don't and you've wasted your time, and as a result of that many of you refuse to prepare detailed bids at all. Almost nothing in dealing with your fellow humans is binary. There is always another alternative or a middle path. Somone else suggested that seeling the design and spec work is one of the alternatives, and I was just agreeing that from a HO's perspective, those things do indeed have value.
"If the trout are lost, smash the state."
Somone else suggested that seeling the design and spec work is one of the alternatives, and I was just agreeing that from a HO's perspective, those things do indeed have value.
James, I'm on your side on this issue too. I see immense value to the homeowner and to the contractor too.
blue"...
keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead high...."
From the best of TauntonU.
Not that this really matters, but what is your occupation? I see legal services in your profile, are you a lawyer?
If you are a lawyer you charge for consultations right? Or do you meet with people for free at their homes, work for days on paperwork pertaining to the case for free? Probably not. Imagine if you had to do this for your job.
Do you ballpark legal fees over the phone for long drawn out cases? Child custody, felonies, power of attorney as some immediate examples that come to mind.
If this doesn't apply to your occupation then I apologize, I am just trying to put it in your perspective. Walking in our shoes so to speak.
A year and a half ago I hired an attorney. He told me over the phone how much it would cost and told me to bring a check to the meeting. If I wanted to hire him after the meeting, he would take the check. The deal worked out well for him but he didn't know that from the phone call. He was committed to representing his client no matter what it eventually cost. Like a good contractor he used his experience to give a ballpark that was high enough to keep him in business. It was well worth it from my perspective.
I was trying to give him an analogy that applied to his line of work, maybe. He seemed a little frustrated by some contractors way of doing business in his previous posts.
If the meeting with your lawyer didn't go the way he thought it would the price over the phone would have reflected that. More complicated case= more money in his pocket.
His numbers he gave you in the meeting were $X for Y hours and so much an hour over that? I doubt it was a fixed fee, or was it? I have never had an attorney so I have no idea, just what people have told me.
Now if he had run over those hours by two or three times that how would you have dealt with that? That ball park number has just emptied your wallet and your savings account.
we got this contractor in town, He about five to ten times higher than anybody else. He will alway come in on budget and on time. He will hire a crew to work night if he has too. All his supers drive King Ranch company truck. He tell me all the time, you get what you pay for. He has more work than he can handle. At last count he had 400 employees, been in business since 1954
Fixed fee. Who knows what would have happened if his expenses had run over that? He explained that he was taking the risk. I laughed at that saying that I understood the realities of the situation and that if the costs ran over, I was willing to pay more to get his best effort. He told me that this was not an option. His price would cover the most likely possibilities and contained a risk premium to compensate for the unexpected. He had apparently decided that for this type of case he wanted a full committment from the client.
Stilletto, while there are some paralells between my business and yours, there are not many.
I will do a free telephone consultation for anybody who manages to get me on the phone. It's not that I dodge phone calls, but I am sometimes busy, and callbacks may take a few days. These consults usually take from 20 minutes to an hour, occasionally longer. For hourly fee paying clients, beyond that I am likely to be on the clock, but not always. Sometimes, it takes several meetings to land a client, and when that is the case I don't really mind, if the work I am trying to get is substantial. But this sort of thing (having to spend serious time signing up a client) comes up quite rarely for me.
As for giving a "ballpark," I mainly do litigation, and it is nearly impossible to predict how much time a case will take, too many variables. For something small, like someone jsut needs some legal research and an answer or two, I can usually ballpark the number ofhours involved, and I will tell almost anybody what my hourly rates are for diffferent kinds of work.
On the other hand, I do some contingency fee litigation, in which case I am investing hundreds or thousands of hours without pay, hoping to win a case. Sometimes it works out, sometimes it doesn't. In that sense, it is similar to building spec houses. Except that it is far easier to make a good estimate of what a house of a certain size, in a certain location, of a given finish quality is worht on the market. While valuing a case is, IMHO, far more difficult.
I don't spend lots of time trying to pitch myself as a lawyer, but that has mainly to do with the fact that I have a very narrow niche, and my firm is entirely unique in our market. When I was in another market where there was more competition, I did marketing in a variety of ways, and I expected to spend from 100 to 300 hours per year on marketing of all types. Seems to me that providing estimates, writing bids, is a form of marketing, and any business person can decide how much marketing for how much pay off is worth it.
"If the trout are lost, smash the state."
Edited 2/25/2007 12:49 am ET by JamesPio
"And for God's sake, giving a ballpark number over the phone on a large project is a big no way!"Hell no ... i wouldn't even think about it. can't give a price on something i have not even seen yet.Question: how many of you are asking the prospective client what their budget is right off the bat on the initial call. Just wondering.and would it be fair to ask what their budget would be an a project smaller than an addition.ThanksRay.
Ray,
I ask if not on the first call, at the first meeting. I think it should be an automatic on any size job you're considering taking on.
Phil
HilineWas just wondering how the typical response from the homeowner was to the question.I typically have not asked that question in the past but sure may adopt it for the future. Granted .. a good portion of the other guys here have been at this for quite a while... Me about 5-6 years now, so still working on getting the kinks out. I'm in it for the long haul so I crave info that not only helps me but helps the industry as a whole.Ray :)
Ray,
Can't say anybody balks too much. I have to be honest though, I've only started doing this on a regular basis fairly recently, (asking for budget). I think people generally understand where you're coming from. If they don't, it shouldn't be too hard to explain.
Phil
I would agree with mike smith on the idea that this situation provides an opportunity to provide a set of drawings / specifications for the job. Also, be advised that if you are not an architect or engineer and need a set of stamped drawings for a permit, you may end up hiring a professional anyway. I actually have found an architect who like to take on small jobs because she is also a stay at home mom. It makes her perfect for smaller jobs, remodels, additions.
It might make sense to look to meet someone you could refer clients to to create the drawings. MAybe even hir the person yourself after working up the specs with the owner. of course, this is not a freebe. this is a service you would be willing to charge for to help them articulate and clarify what the project is and assure them of estimates based on the same scope of work."it aint the work I mind,
It's the feeling of falling further behind."Bozini Latini
Thanks HVI recently found out that one of my neighbors is an architect. I'm going to check in with him soon to see if he would be interested in some side projects in the future. This would help me out greatly.I definitely feel if I can help to provide this service there will be a fee to be paid by the customer..... I'm in business to make money not do favors.Ray:)
Hiline,
Very few tradesmen are real good at selling themselves or their services. We have to let our work and our personal reputation speak for us...unless we can get some professional assistance.
You say you're leading a one man band...with available help and subs when needed, I'd guess. I worked that way in rural communities for many years, making good money while seldom bidding against anyone. How? Referrals, often from real estate agents. I worked closely with real estate sales people, helping them by repairing and repainting older homes, getting them on the market quickly. That made me a living, won me their gratitude and, in turn, referrals from them to new home owners who wanted more substantial remodeling work done.
Having a real estate salesperson or two in your corner is a great way to get free help from a pivotal person who knows how to sell you and your service.
If you want to keep it simple, this method works nicely. If you want the bigger custom jobs, become friends with architects. Success in any business is often about who you know...first, and what you know...second.
Best wishes, Peter
Edited 2/24/2007 5:24 am ET by Hudson Valley Carpenter
Phil,
I know exactly what you're talking about. I too am tired of dead enders and wasting my time educating people on just how involved and expensive their projects will be. That's a tough question, charging for estimates, and you're right, nobody charges for estimates. I'm learning now that it's all part of the game. You had the right idea of "ballparking", this is what I've been doing lately. I'll say: "well, what you've explained to me over the phone sounds like this" and if they're still breathing, then I'll say "but I can give you an exact number once I come and see it in person". This does help to weed out the time-wasters. This is what comes with being self-employed. There is no clock to punch because your work day never ends....
Mike
Homeowner here with thoughts from the other side of the fence. Keep in mind that for every "terrible customer" story there's a "terrible contractor" story--your potential customers are at least as worried about you as you are about them. Suspect that the source of discomfort on both sides is largely fear of the unknown and fear of looking stupid. Following are things that would help me, hopefully without being any more disruptive to you in the long run than giving away detailed estimates.
Most contractors seem to be fundamentally opposed to them, but a ballpark estimate, perhaps given as a range, after 10 minutes-worth of phone discussion regarding my project, would tell me if I need to rethink my entire scope or if I'm close enough that we can probably make something work.
Perhaps the ballpark could be accompanied by something along the lines of "If this is out of line with what you were thinking, for $75 we offer a service to spend an hour with you to see if we're misunderstanding what you want, help you see where you might cut back, determine if you would like to continue with the project anyway, etc. $75 will be credited to your account if we decide to go forward." This stage would be a consultation service--not a design service. You are educating the customer and helping to manage expectations. From my point of view, I'm only out $75 if you're no good or a jerk--which is a whole lot better than discovering that in the middle of a $50K project with my house all torn up.
Someone else here suggested examples: "I redid this bathroom for this amount." "This house is in X, has XX ft2, has these special features, and here are some examples of the finishes. It cost $X." A brochure or website with stuff like this would really help me in aligning my expectations and budget before talking to a contractor--same general thing as the ballpark, but with a bit more substance. ("Brochure" can be as simple as 3-5 sheets of standard copy paper, printed on a decent color inkjet, stapled together.) Also, given, say, three pictures of three levels of finish on a bathroom with three different dollar amounts, I'd guess most cutomers would pick the photo that's closest to what they want to spend. This has the added effect of bringing up the customer's budget without asking directly: customer--"This is kind of what I'm thinking." You--"So, you're looking at a budget of around $XX for this project?"
I would not be opposed to paying for a completed design package IF I were sure that you would listen to me, explain your rationales for doing things, etc., AND I knew what I'd be getting and what it would cost up front. (The 1-hour consultation would lead nicely into this next level of service.) I would guess some sample design packages would be useful in explaining this service.
Kathleen