I have pretty much stopped doing any remodeling or construction work for anyone but myself for the the last few years. I called a few roofing contractors for a small job I need done. Quotes were all over the map for a 16 square metal roof install.
The last guy that came out ask who else I got quotes from. Normally I don’t divulge competive bid information, but since there was such a large difference in quotes, I was courious as to what was going on. I told the guy the name of two of the contractors.
He tells me the price of the first one within a hundred bucks, and it is twice his price, because the guy is covered up with work. Says “If I had his work, you would have got the same price from me, but I’m slow right now.”
Seems like they qoute double thier normal rates for small jobs when they are busy, and will cut thier prices some when they are slow. ” If we get it at the higher price , we make a kill’n, and if we don’t , we still got plenty of work.”
In 30 plus years of construction and remodeling work, I have never used that approach to bidding work. I quote or bid based on the job, not my schedule. I always figured that screwing that one client would come back and haunt me at some point. not mention being on my conciouse forever.
What do you guys do? Is this the new “ethics” of doing business?
Dave
Replies
the next Q for him is, "Why are you having a slow period?"
A guy who is slow when all around him are busy is not likely your best quality contractor, tho sometimes it just happens that way.
Especially when he talks so much about his compeetition instead of aboutselling his own quality and reputation.
As to your Q - I have done a modified version of that once or twice. It is not about right and wrong or about conscience to me, but simple business cost/risk/rewards factors.
When I am already too busy adding another job increases my costs and risks exponentially, but if somebody is begging mne to fit it in, I may take a stab at it.
Back in the early eighties, I was asked to bid a roof for the State Highway Dept. Big old trck garage, eight or ten bays. Leaking and in need.
It was the end of their fiscal year and they had money enough to do the job left so they had sent out invitations through normal and no bids had come in yet with a week left before openning....
My partner and I had enough to keep busy and this was Sept with snow on the way so there was risk. Both that snow would increase costs and that other customers might get peeved by delays.
We figured we could hire extra help and that has cost and risk also...
So we calculated hard costs and doubled the amt for the bid, not caring whether we got it or not. IIRC, our bid was about 28K and one other bid came in from a big name union contractor 120 miles away for about 80K!
everything went well - even better than we expected, but we had the organization down perfect and didn't get snow on it. I pocketed 7K for three weeks work on top of wages.
Here is another example - I had about enough to keep busy when a guy here called wanting me to convert a room over garage into something liveable as a bedroom in three weeks or less. I told him I could do it, but that I would have to work around the clock and to make it worth while I would need to bill him double. He agreed and I worked three weeks at teen to fourteen hours a day to get it finished. He had created the need by not planning ahead.
I was so exhausted I couldn't work on anything else for another week after that, so some of that extra was wasted money justifying the charges.
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Piffin,
I did not ask for an immediate start date, just a labor quote for the roof. He said he was working abou 6 miles away and would run over at lunch and look at the job. He further stated that he would be finished with his current job on Thursday and would be going to the other side of the county for a job Saturday morning, so he could do my job Friday. He set his schedule, not me.
I was concerned about the second guy enough to ask that he provide an insurance certificate if he got the job. I got one of those "deer in the headlights looks" and a protracted pause before he said ok.
This is a rural county with a moderatly low income base over all. We are still outsiders to the good old boys, and in many instances that means fair game for shoddy work and high prices to them.
I can understand the risk/reward factors of making a good business decision. working someone into a full schedule or meeting a tight schedule does have a cost that the customer should be aware of, but if those factors are not present There should be no up charge, just because one thinks the client is ignorant enough to bite on it.
Dave
Dave, much like you in the same time period-no padding because of being busy. I have a hard enough time staying in their budget with a normal bid. This area doesn't support it.
A great place for Information, Comraderie, and a sucker punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
would you agree there can be times when it is a business decision rather than an ehtical decision?The one that gets me is some painters that price the work by what neighborhood they are in...
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Put it this way. The way we run our business over all the years is both (can be) an ethical and business decision. Getting to a state of referral only, takes the whole pkg. Too many "gouges" more than likely will get around. A quick shot now, might not mean a consistent future.
But then again, this from a dumb carpenter.A great place for Information, Comraderie, and a sucker punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
Yeah, it does all work together .Reputation is part of what helps charge more than the other guy, but sometimes there are individual jobs where the cost is made higher by the customer.I guess poart of my thinking is bent by some of these wealthy hoighty toighty customers. Some of them expect to pay more for the "instant service feature" I had one guy hitting my up that way so often I told him I haad to charge him three grand a year just as a retainer to be available. He was fine with that, but then he got to acting like I was his employee and doubled the hits, so the next year I told him ten grand. He never blinked an eye. He just siad, "I don't care what it costs, as long as you can give me what I want, when I want it."Another couple of years and I quit doing his work tho - not because of that, but because of personality conflicts with his caretaker. I was able to manage the customer more or less OK at arms length, but the poor caretaker was an employee and he got dumped on with high demands. His frustration with the owner would boil over in hissy fits when the owner was not there. Those higher paying jobs make for the old saying, "That's why we make the big money" sometimes said sarcasticly.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
He's good. but he isn't cheap.
Isn't there another sentence they could add in there after that intro?
I get tired of hearing it.
But that has not much to do with the topic at hand.A great place for Information, Comraderie, and a sucker punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
I'm missing whatever it is you are saying there, or maybe you missed what I was saying in offering up examples of situations where it is entirely reasonable and justified to charge more. That is all about the topic at hand.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Here's another attempt at an explanation. Without doubling the bid, I am considered good but not cheap. To some they would see the higher (normal to me) price to perhaps be gouging when placed next to the lower bid. In reality, no overcharging, no unethical padding.
or something like that.A great place for Information, Comraderie, and a sucker punch.
Remodeling Contractor just outside the Glass City.
http://www.quittintime.com/
Right. Different wording makes total sense
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Calvin,
That is how I operated as a full time or part time remodeling contractor for over thirty years. Early on I was overly concerned about getting enough work and tended to bid to low on many jobs. Learning from those mistakes, and some good advice from other remodelers, builders, and a few customers pointed me in the right direction. I also learned that in a few areas that I excelled at, I could be higher than another sub or contractor and still get many jobs and not be gouging. In those cases it was the customer that decided that my slightly higher cost was worth it, not me thinking I could "make a killin" on someones ignorance.
Dave
Dave.....I don't know how much of an "ethics" question this is.
Basically supply and demand.
Any product, when in high demand, will rise in cost. When there is a surplus, the price comes back down.
The contractor with the higher bid is obviously in greater demand. His services are greatly desired, yet limited, hence his price goes up.
I'll raise my rates on occassion for those customers who have to have it done yesterday, and my schedule is tight. I'm taking a risk by squeazing them in. That risk comes at a premium. (I do make them aware of this.)
But I don't believe anyone is being "screwed". They are given a quote for a job. They have the option of accepting the price, or looking elsewhere.
Democrats.
The other white meat.
<<Is this the new "ethics" of doing business?>>
That gives me a good chuckle.
What percentage of guys in the trades really understands what that word means? Or care, if they do? Many of the subs I've tried to work with are perfectly happy to take advantage of ignorance, charge double and do half-azzed work. That makes me feel mildly nauseous and a little angry. But they come from ignorance themselves, in almost every case, so dog eat dog is the way of their world. When they find a widow with a nice house, one who gives up too much information and allows them the opportunity to charge whatever they want, they'll take it happily and consider themselves gentlemen because they didn't steal anything from the house while they were there.
In my brief experience on Earth, virtue is it's own reward. Living according to a personal discipline which holds respect for one self and all others as part of a man's natural demeanor has allowed me to avoid temptations and walk my own path. That path has often led me to associate with others of like quality, true adventurers of the spirit whom I would never have met had I not embraced ethical principles and challenges.
Of course I'm still surrounded by the same worldly stuff, but it doesn't seem to touch me or even recognize my existence. Quiet fearlessness comes from virtuous living too so, without making any effort, I avoid being a target. What the mind dwells on, it becomes. Walk in light and one becomes light. The other way too.
This is not a rigid discipline. Nor is it a highly moral life, not according to anyone's subjective interpretations. It can be playful and often is. Living with respect for life means being part of all that exists, in a very simple, real way. Then the easy play of higher consciousness is alive, in every moment.
The discipline is in maintaining respect while learning how to play lovingly with those one meets.
To Dave and All ,
When I first started out over 25 years ago I would bid high on jobs I either didn't want or on jobs that I just wasn't sure about doing .
In reality many like type contractors bids will be fairly close to each other like maybe 5 - 15 % . When one bid is like double then the rest it makes that bidder look like a rip-off artist or less then professional .
I learned to pass on the jobs I don't want for what ever reason , this way my bids are always consistent not high one time and low the next .
The negative feedback of being called a ripper could be a much deeper blow then being out of work for a short period , imo .
Now on a rush rush hurry type of job where due to lack of planning on the clients part they feel an emergency has been created on our part , I say they are wrong . I'll put the job into my schedule and get to it in turn , otherwise we make one set of people happy while the ones that were expecting completion will then be upset and disappointed with us , and that is not a good thing either .
Fortunately after 25 years in business we have developed a sort of sixth sense that sounds off when someone is trying to yank our chain , the savings of not dealing with the users and time wasters is money in your pocket .
Just the other day a pal that also owns a cabinet shop told me he has been working with a client for over 2 years on a large job that is ready to break . Back and forth plans and changes bid and bid again , adding more footage at each meeting , the job is now up to about 400' running feet of cabinetry , that's a huge job for a residence in our neck of the woods and will probably go for close to $100,000 .
The client left my friends shop and said well go ahead and get your material order together lets go. My friend had an opportunity to talk to another cabinetmaker we know later that day and he was told that the client had just dropped off the plans for the same job. He either wanted to keep the bidder honest or had doubts , in any case perhaps 8 or 10 hours of time would be spent bidding the plans and basically wasting #2 bidders time .
bottom line : both guy's are now refusing the job , the client is out of 2 of the best shops he could of used and is now considered damaged goods, although he is filthy rich his money is no good at some places including mine .
The work is not so bad , it's the customers that can make the difference
regards dusty
ethics has nothing to do with it.
if they quoted one price then doubled it after they started ... that's another story.
There is absolutely no shame what so ever being the absolutely best paid tradesman!
ride the tide when it's high.
or do charity work.
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
It's fairly common at present around here for certain contractors to double - or worse - their prices if they're busy. If the client bites anyway, they'll bump their schedule and take the gravy job. Now that's unethical in my book. Charging up in a busy market, fine. Screwing existing customers to take a 'who cares' job, not good.
I think it's normal business practice to adjust pricing according to the client and the market. Is this an ongoing customer who brings a lot of business each year? Price adjusted accordingly. Is there a likelihood of repeat business from this new client? Ditto. Is there more risk with this job than 'normal' jobs? Is this a landmark job that would offer real returns in exposure? And so on.
Dave, I would be a bit more squeemish, ethically---over you telling the last bidder who 2 of the other bidders were---- I am not sure why---but that would make me uncomfortable
but as to your original question----where is the ethical dilemma?------as already pointed out-----it's simple supply and demand----business 101.
If you have a contractor who does good work, generates a high rate of referralls and is always in demand-----he isn't " gouging " anybody------despite what envious, lower priced and "less in demand" competitors might like to imply.
in 20 years I have never held a gun to anyones head forcing them to sign on the line------they are ALWAYS free to get more proposals and talk to other roofers. Often they don't bother.
am I supposed to price my work based on what somebody else MIGHT charge if they bothered to show up and look at the project???---- I don't think so. what's ethical about letting presumably lesser qualified----and demonstrably less "in demand " roofers impact my price?????
BTW-- i learned a long time ago----one price does not fit all. I can give the same price in 3 very different neighborhoods---one neighborhood my price will look like gouging----one neighborhood it will be just about right--and one neighborhood it might seem suspiciously low-----------
you can't please everyone
Stephen
I enjoyed reading all the comments from both sides of the fence on this one. From the customer who expects the owner/operator/worker to charge an hourly rate the "rip off" rate seems unfair. This customer does not realize that person is operating a business and it is perfectly acceptable to make a profit!Doubling the price doesn't sound that bad after reading more. Sounds like a one day job since the roofer said he could do it Friday and it is a low wage area. More than likely the lowest bid has no insurance, illegal workers, gypsy crew. And owner works for wage, no profit. Highest bid pays insurance costs, living wage, health insurance, plus profit perhaps. No customer wants to pay for all the "extra" expense a legit contractor has but that's what makes it legit!Passing on the bid instead of giving a very high price is great advice. Do this respectfully and that customer will tell everyone how in demand you are and not how crazy your prices are! Very good move.Making a profit is not a crime. That is how to stay in business.Stu
I was thinking along the same lines MAsprayfoam. It's entirely possible that the "doubled" price is still low and the guy might still be operating in the red but doesnt know it.
My Stepfather owed a successful funeral homes and he always offered a couple of funerals under cost. Of course, there were also funerals avaialable at five and ten times the cost of the lowest priced funeral. He explained that he felt it was his duty to help those that couldn't afford more and that the "wealthier" clients subsidized the poorer ones whether they knew it or not. He also explained that occasionally he would have too many poor people referred to his home by well meaning ministers but that caused him to have to raise the price of his lowest offerings because he understood that every business has to turn a profit to survive.
Occasionally, contractors and subs use this same concept. Yes, they'll roof a house for a poor ole lady at bare bones prices but somewhere in the year they have to offset that job with one that pays more. Are they going to get that balance by doubling the price of another poor ole lady, or get it from some robust yuppie that can afford to pay more?
I don't see this as a question of ethics because as my departed step father in law showed, sometimes charging double is the right thing to do.
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.
RE: Subsidized Work.I do this as often as possible, and have clients who are well aware of it, because we're very up front about it. I don't bat an eye when someone asked about how much more its gonna cost them because they live in such and such neighborhood, I just tell them. "Sure we're gonna charge you more becasue of your address, but not a lot more, and we're worth it. This house is worth it, too." Understanding economics isn't the least bit unethical, your price is what you can get when supply and demand are factors, so long as you're not chasing storm damage or disaster victims. And when we can, we give it back. We had a client's architect mis-call a few windows on a recent job. We caught the mistakes on all but one and had a very nice 7'0 8'0 picture window on site we couldn't use because of it. I told them they had to pay for it but I had a good idea about what we could do with it.Took it over to my fixed income, recently house-bound due to stroke old lady neighbor down the road. She'd been wanting to see the sunsets out of her living room for thirty years, she said, but never had the money for a window. Me and my best laborer/apprentice had it cut and plugged in five hours on a Saturday. She cried when we told her it was free, my client was happy to foot the bill for the window. Everybody won on that deal, and if I didn't charge the "neigborhood tax" I'd never have the time, the extras, or the well paid employees that don't mind putting in a Saturday for a good cause. I couldn't agree more with your assertion, or your father in-law's, that sometimes charging more is entirely the right thing to do.-duke
That's awesome, Duke.SamT
There are three kinds of people: Predaters, Prey, and Paladins. For the life of me, I can't see why Prey feels safer from predators by disarming and emasculating Paladins.
Duke, you are awesome! I probably could guess that there are many more beautiful stories like yours but it's always nice to hear 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.
Sometimes certain trades sub jobs out to other guys who used to work for them or who they trust not to tarnish their reputations. They know the added expense of both paying the other sub and assuring quality, so their bid price reflects it.
Sometimes I get a call from another framer who has a job they can't get to and they ask if I'm available . If I am they will pad their bid a little for being middleman.
I would consider unethical of myself to ask who else has submitted bids and when I hear the name of a guy who pushes me work, to underbid him.
This may be your case. In this situation, if I was bidding a job for another framer as well as a homeowner, I would defer to the other sub and explain to the homeowner or GC that I couldn't bid because I was working in tandem with someone else and they would be getting the extra benefit the two of us working together, i.e. a third party who makes sure the quality is 100%.
It's kind of hard to explain, but sometimes a middleman can create more value. The middleman can drive the sub harder and demand more because his price is fixed and he wants quality, and is not so much driven by profit.
It works that way for me anyway, with the guy who pushes work to me. He makes my quality better and it rubs off on other jobs I do where he's not involved. That's why I wouldn't underbid in that situation.
JK
All I know about pricing I learned from a lady at the Mustang Ranch ... a legal brothel at the time. For real - I'm not kidding here.
I asked her how she handled things when, for whatever reason, she was not eager to deal with a particular customer. Her response was simple ... simple genius.
"I just charge more. It's amazing how much inconvenience an extra $20 will cover!"
My experience has confirmed this. Regular, reliable, repeat customers get my best pricing. Jobs with additional challenges get additional charges. If I don't want a job ... perhaps due to a scheduling conflict ... I will deliberately quote high.
This does give me a fall-back position. If my schedule does open up ... perhaps due to a delay on the previously scheduled job .... I can re-visit the customer, and offer a lower price.
All I know about pricing I learned from a lady at the Mustang Ranch...
That is priceless. Business advice from a hooker....
Sweet.
<G>
Here in Connecticut, the richest state in the nation, I charge the same, rich or poor alike. A single mom with two kids and a crappy job I might give a break to. i.e. Throw in left over materials from another project for free. And in retrospect, I think that I like working for the blue collar folks. They understand better the effort that goes into doing quality work and I never had to put a mechanics lean on a blue collar guy's house. White collar folks... different story.
Best to you and yours, Chris.
Building as thou art paranoid never harmed anyone.
"...I think that I like working for the blue collar folks. They understand better the effort that goes into doing quality work"Amen. Working people are always my best clients in terms of ease of dealing with and understanding the importance of doing a job correctly vs. doing the lowest cost possible.