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I have a proposal out right now to a home owner for new interior flooring. The proposal is for flooring in the entire 3500 sf house. They want me to line item each room so they can budget. They also want to see separate line items for material and for labor.
I haven’t had to open bid a job in a few years and I certainly have not ever provided this much detail in a proposal. I come highly recommended to her so that is a selling point. There is good money in this job but they are starting to become difficult.
To me, such a request for line item is out of line. I have so much as said this but they are insistent. I believe this line item nonsense can be abused by the owner whereas they nickle and dime me to death. Of course I’ll walk before that happens but it is a job I want. Just won’t bend over that far.
Suggestions? Alternatives?
Replies
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It appears your options are line item bid the job so they can cherry pick the savings while you get squat for the time invested in a labor intensive bid. OR bid as a package with less time involved and get nothing. They obviously plan to negotiate your price.
In my experience you are better off with a one price quote. My prices are non negotiabile.
An alternative is let someone else do the line item bid then cherry pick what you want.
*I've never done anything BUT line item bids. I have built up a large client base because of it, not in spite of it. If they want to nickel and dime you, they will anyway - line item bid or not. They simply want a cost (to them) break down of the job, room by room. This is not unreasonable at all, and some of your competitors WILL give them this type of bid. Give them your numbers, and stand by them. If ya get the job, it will be a good one. If ya don't get the job, ya didn't want it in the first place. It would have been a nightmare. Insurance companies require bid breakdowns all the time. I get lots of referals from insurance companies because I DO break down my bids.Just a thought...James DuHamel
*Rich, If you are comforable breaking down the job and doing it in sections then I would break it down only to the point of your comfort, not theirs. ie; 1/3 or 1/2 of the job at a time. If you don't want to do it in sections then I would not bid it as such and would not be uncomfortable saying that this is as good as I can do with my proposal and please call me if you would like it scheduled. I have walked away from 2 jobs for the reason of it becoming too small to do profitably. As far as the division of labor and material I bill that but only on T&M jobs. DanT
*It's not my normal way of bidding, but I guess I'd do it if a customer asked. Why not? I'm not trying to hide anything. But I would make it clear (in writing) that although the bid is itemized, I will supply all materials and labor. If you are getting bad vibes before the job even starts, maybe you shouldn't bid on it in the first place.
*go room by room but add say 20% to each individual room so the totals of the rooms do NOT equal 100% , but rather , more... do NOT break out labor and materials.. they'll nit-pick you... the discount is for 100% of the job...any thing less COSTS YOU more per unit item..if you want to make a contribution to your customer, just take out your checkbook and write them a check..better yet... sell the job, it's business 101
*You guys all have good points. Geoff says the owners want to put the squeeze on me, but it's not at all obvious that that is what these folks want. They seem to be genuine about wanting the information for budgeting concerns. I built my biz on the added value of being able to give an informed answer so I tend to hang on a bit longer...and not walk at the drop of a hat. Sometimes people really are...just ignorant about the whole process.Jim, I have nothing to hide, but it IS labor intensive to provide such detail in a proposal. Even though this is a $1M property they appear to be uneducated buyers, don't know how or what to ask, and end up putting the burden on the contractor. My biggest gripe is they want it lump sum AND T & M. But they don't know that. I've explained so much to them already, but in one ear out the other, you know? They have already eaten 7 hours of my time. And they want a 2nd proposal. For a $18K job. I know I could do it in 3 weeks so it would be nice....Two things: I don't budge on unit price and I don't work for free. I went to close last week but they can't make up their mind or stay focused long enough to have a meaningful discussion. I've already decided I'm not doing another face-to-face unless we're signing. It would be a nice finish to the 1st quarter.Mike, a long time ago an old mason I know gave me a real good visual on that. When he goes out on bids he carries $100's in his pocket. When the owner starts in with that crap, ol George starts whipping out those bills. It's the same thing. And I no longer get into that discount crap. It is what it is. You give them an inch and they'll...BTW: If I don't get it I may just go fly myself on a long cross country. That is very enticing. That just may work to get me the job...you know, appear so disinterested, but came on a super referral, that they gotta' follow their heart since their head is weighing 'em down.
*Rich-Maybe I'm not understanding something but if the customer wants a budget number and you said 18k whats the problem? Either they can or cannot afford it. And James thanks for reminding me why I don't do insurance work anymore. Last one (5+years ago), one of the line items was to remove and dispose of 432 cubic/ft of wet blown in insulation in an attic with 3' headroom. They wanted to pay $16.00 for it. I told the adjuster I'd give him $32.00 if he would personally do it on his day off. He declined.
*Rich, I just sent you "The Process". If you like it, revise it to your own personality and operation, and start getting paid for those Proposals. Let's see:1. They want to budget, is the excuse for a breakdown. If that's true, then what difference does it make if you give them a breakdown of one total price per room, or with material and labor broken down - separately per room?2. And why ALSO a T & M Proposal?I say they are dumb like foxes, and when presented with what they want, they will then have the fodder to start working you over on price., starting with:"Why is this room ..................?"How come the labor is so high?""Isn't that markup kind of high?"Like the song says: And the list goes on.
*Geoff, I think they want to go with me, know I gave my best number right off the bat, I won't budge from that, can't afford the whole thing at this time. This puts them in the pinch because they need to move in soon but have bare subfloors right now. It's not my problem...I'm not about to even suggest they get what they can now and cover the rest with lo grade carpet until a later date. That's not what I do.Sonny, you got me. They want a lump sum but start in with the T & M kind of break down. Dumb like foxes, I like that.Perhaps they have the idea we're all like wolves drooling over the prospect of work but I already served my time of being someone's patsy. I started a job today just down the way from their new house. Maybe I'll shuffle over tomorrow and tell them to s or get off the pot. Get a little brash, see what happens.
*I can see where a homeowner would like to know how much each room costs.they may want....1. berber in the playroom2. marble or tile in the bath3. rich pile for the living room.Why can't you just give them a square foot price for each room? If they want to spend more or less they could do that without jeopardizing your bottom line.The difference between hardwood flooring and vinyl would be great ,but your customer must realize that installation costs would differ greatly too.When I square foot price a deck, the customer knows up front that the price is for cedar,if they want Trex I back the cost of cedar out,add the cost for Trex plus increase the labor because it has to be screwed down instead of nailed.Your customer may suprize you and ask for a higher quality job than what you have already quoted.Bob
*My 2nd meeting was with the woman only. Basically spent more than 1 hour explaining the numbers in my proposal. Gave her a unit price. Explained what is/is not include in that. Explained materials and methods. Dumb like foxes, that's them. I'm done. Let them call me. Ball in their court. No more wasted time. I mean, no one else ever has a 'problem' reading my proposals.
*rich.... i detect antagonism in your post....aren't you losing sight of the quest... the goal ?give them what they NEED to make the decision...but turn it into a game with you as the winner...how can you SELL this job.. so that wether you get the whole enchilada or just the crumbs.. you still make your goal.. a profitable job..set it up so the 100% deal is their best bet... and each deduction makes it possible for them to have more flexibility in their budget... but more percentage (%) profit in your pocket..it's a game...play it .. don't pick up your ball and go home.... as my favorite salesman once told me.. don't let 'em drag you around by your belt loops... hah, hah, hah...
*Well, Mike, it's like this. I don't have a very highly developed sense of when people are playing me like a violin. The good news is I recognize this. So perhaps I am deferring to you guys. Cripes, I'll just blame Hubcap.OTOH, I'm not in the game to win, as in just to see if I can successfully close on this. What if I do SELL this and then find out I really don't want this job? Like that hasn't happened before...So I work with them to help them come up with a budget of which the original flooring is only a part. How do I bill my time? I mean, if they are really having budgeting problems at this point is it reasonable to expect they'll pay for a consulting? So I would have to SELL that too? (the prospect of a consulting fee of $200 or so.)That's it!!! We'll play "I'll show you mine if you show me yours". I'll agree to breakdown my numbers any way they please if they show me their bank statements. After that we can play my favorite game, "Circle Jerk". They'll be pulling on my belt loops while I tug on theirs. What a great idea! Oh, it'll be FUN! Thanks Mike!Not entirely smart ass.
*well, if they're jerks...you'll find out soon enough so you don't tender the proposal.. and i certainly agree with you... some jobs and people are not meant to be....... if i have trouble trying to determine how serious they are.. you're damn straight they'll pay for an estimate.. non-refundable and with no credit towards the job....had 1, nice job, complicated... and i thot they didn't have the right budget in their head.. so i told them i'd do the estimate for $3000.. they said they'd think about it.... well, 9 months and two contractors later they're still thinking about it....but at least i didn't piss 100 hours down the toilet putting the project together for nothing...there is another theme here...if you spend the time doing the intial consult, work up the estimate and the proposal , then you have a substantial investment... get the close in one visit and set up your technique so you can....or decide that you can't work with them and withhold your proposal...
*I'm with you Rich. We've already discussed here that you want them, and any other client, to buy "you", not "a" price, otherwise, the "project" just becomes another "commodity" like wheat, and they go with the cheapest "supplier", thinking erroneously that all wheat, and all installed hard wood flooring is the same.Many years ago, when just getting into the business, a friend who had been a carpenter on his own for a few years gave me some advice. I didn't take it until I got burned. Then I lived by it.He said thatit's natural for most people to want to save a buck here and there, so don't get upset if someone asks you if you can shave your price a little. But he said, if they tend to make the price an issue by constantly referring back to that instead of the project, workmanship, details, etc. walk away fro them, because even if they finally agree to your firm price, when the job is done, you're not going to get what's due because they have already decided that.That happened, and I didn't. Since then I walk away. Like the old saying, you never lose money on the jobs you walk away from for good reason.Since then, I never, ever, look at the project price. Only at the "projected" net profit. Then I balance that amount against the potential problems and make my decision if I stay or walk. Every now and then it's a draw, and usually if I stay on those draws, I still end up getting burned for some money. Now that the issue has come up again here and jogged my memory about it, I'll start walking away from those "draws'' also.
*When I do insurance jobs, I bid them just like I would for anyone else. I either get the job at my price, or I don't. I do not discount, or make any adjustments to my bid in order to get the work. I have been very fortunate in that the insurance jobs I do get, the client pays me from the insurance money, not the insurance company. I turned down a good paying insurance job because the insurance company wanted to pay me, after they came out and inspected the finished work. No problem with that set up except for the time frame and delays in getting out to inspect, and then sending me a check from their "main office" in another state. My paperwork clearly states payment is due upon completion of work, not 6 weeks after. I am not gonna finance their project and then wait for payment. For those clients that want to only spend PART of the insurance money on the actual project, and then use the rest for themselves, I always tell them the same thing - "this is my price to do the work". Either they pay it, or they get someone else to do it for a lot less, and keep the rest of the money. I am starting to see this a lot around here. Lately I have walked a lot more frequently on these types of jobs than I have in the past. Also, when a potential client calls me up and asks for a bid for "Insurance Work", I immediately tell them that I charge for such a bid. If I get the job, I will discount the final bill by the amount I charge for the initial bid. I do this for a reason. People need a detailed, broken down bid for the insurance company around here. They get the bid, for free from those that will do it for free, then do the work themselves and keep the money. They are just using the contractor to get the paperwork they need. Same thing for those that call and tell me they need a detailed bid for the "bank". These people don't need a contractor, they need the bid paperwork. I ain't doing their paperwork for free. It is a service, and I will charge for this service, or let some other contractor do it for free. People who are not used to having remodeling or repair work done, and have never gone through the process of getting estimates and bids see things entirely different than we do. They see a retail environment where everything has a "sticker" price attached to it. They just want to see exactly what they are paying for, and what all is included. Problem is we are not a "retail environment". We do not do things that way. Our job then is to educate them of our process, and how we structure our way of doing things. They hear horror stories and lots of rumors about crooked contractors, and they get nervous. They get defensive from the very beginning, mainly because they don't know how else to be. This is where we need to be extremely professional in how we deal with them, and educate them on how things really are. Can they get a 2 x 4 cheaper if they went to the lumberyard and got it themselves? You bet they can. But after they spend the time and effort to go and get the lumber, and then find out it is all warped and can't be used, they start getting the message. I love it when a client asks me if they can get their own material. Saves me the trouble and expense of having to deal with it. In almost every case, they start out with that idea, then wind up telling me to go ahead and get the rest of the stuff myself. They get a lesson, I get my material markups, and everyone is happy. After that initial lesson, they never mention getting their own material again. They soon realize that there is much more to it than just running down to the lumberyard and saving a couple of bucks. This lesson educates them to the reasons for our markups, and lets them know that we are not really out to gouge them on material prices. You may have had different experiences than me. I still see no harm in people wanting to know the cost breakdown of a job (THEIR cost, not ours). I am not talking about getting nit picky and listing each type of fastener used, each tube of caulk, etc... but giving them a job by job cost (in this case, a room by room cost). When they have this information, they can make better decisions about how to spend their budget. Maybe they want to know if they can afford to upgrade the flooring in a room, or get a better quality sink in a kitchen remodel. I just don't run into the problems with nit picking my numbers to death like some of you seem to. I open up to the potential client, give them the information they NEED to make an informed decision about the project, and then sell my company to them, not the job. Maybe I have been fortunate. But when all is said and done, I find that communication, well written and documented bids and proposals, and the willingness to work with a potential client so that their project is better understood and more likely to succeed will usually get me a client for life. When I am in a meeting with a potential client, there is nothing else in this world, as far as I am concerned, except me and the potential client(s). Nothing else exists outside of the room in which we are meeting, and nothing else matters except them, their ideas, and their project. I find, under these circumstances, that they will usually open up and start a communication chain reaction unlike anything I have ever seen. They get excited about their project, and excited about the fact that someone (me, the contractor) is as excited as they are, and willing to actually listen to them and their ideas, and then discuss things rather than tell them how it is or isn't gonna be. Again, maybe it's just me.James DuHamel
*Well Jim quite a long post, but worth reading. I does a good job of repeating what a lot of other separate posts have said: If you are in business you have to communicate with the customer and sell them yourself and your product. This in the face of ignorance where they don't know anything much except the horror stories.That is just the price of doing business. Which brings the next point for Rich. What you put in your bid isn't your Cost, it is your Price. If you have a proper accounting system you have both sets of numbers right at hand. So, it shouldn't be a big deal to put it on paper.My take from what you've posted is that these folks are trying to get a handle on just what they can afford with you. They want a "Fine Home" which is Maximum Quality for the Buck. So, they want to know what things cost to them so they can make the decisions. Nothing sinful in that.So put on your best professional face, give them a bid, explain it, be prepared for some changes and then treat them like royalty when you do the job. You will have made some money, produced some happy customers and, best of all, gotten the best advertising possible in the process.
*I use what I call a Bidmaster or template for bidding. I review highlights when I present the proposal. I give them nothing that can be used against me. I never give my costs to anyone. I think its absurd and in poor taste to ask for it.I include as much detail as they ask for in the contract documents. I have little to hide after I get a signed contract.I would offer to include it as part of the contract.
*James I always get a kick out of people who want to supply their own materials, and I worry when I hear contractors say I wont get my mark ups if I dont supply the lumber.I need $xx dollars to cover overhead for a projectand $xx dollars of profit to stay in business.It doesnt matter where the materials come from the job will be marked up to support my costs.I think contractors lose sight of the fact that TIME (the amount of your most precious resource) is what should determine your markup. I still mark up jobs based on a percentage that is historical acurrate for my company,(and on par with most other contractors), but I always take my time to complete and amount of my recources that will be used and check to make sure that the job will be profitable.Not picking on you James just pointing out.DavidPS If i do not supply material, I DONT warrenty it, replace it if is stolen, or go to home depot to get the missing pieces that should have been in the box.
*once again.....credit Ron Magnoli...where ever you're selling your wares today! Beltloops......gotta love that story! Don't worry Mike....planning a hard assault against formidable foe as we speak! Kids gotta eat...now I'm just plain mean! Jeff
*when i do bids room by room, after first giving a fixed price, i always add set-up time as a line item for each and every room. i also bump my ohp. seems to get their attention. i bid each segment as an entirely separate job since that's the way they are looking at it.
*> they can't ......... stay focused long enough to have a meaningful discussion.That sounds like a huge red flag to me. .Maybe I missed something or am a little dense, but I don't get the visual thing with the mason and the $100 bills.
*David,i PS If i do not supply material, I DONT warrenty it, replace it if is stolen, or go to home depot to get the missing pieces that should have been in the box. I don't either, and tell them that IN DETAIL before we ever sign a contract. I also tell them, in detail, that I must make a profit, or I don't need to be in business. The profit comes from material AND labor. If I lose some of the profit on them supplying the material, I have to make it up in labor. I separate the business from a tradesman right then and there, and let them know that I am not a carpenter working on the side for wages, but a business that is in need of making a profit. They understand this, and understand that they are hiring a company (business) and not just someone doing this on the side. They know that as a business, if there is ever a problem, they can come to us and it will be taken care of. By using a tradesman trying to make money on the side, they (in most cases) would be out of luck should a problem arise.I do have clients that want to provide some of the materials, and I have no problem with that. They are repeat clients usually, and know full well what is expected, and demanded of them when they do. They really just want to get involved with the project, and I don't mind a bit. I give them a list (or they can use the bid sheet) to get exactly the name brand, model number, etc... of the material for that project. I do NOT let them get lumber, fasteners, sealants/adhesives, or hardware. I know BEFORE we sign a contract EXACTLY what materials they are to supply, and they understand WHEN these materials must be at the job site.m Protection and storage of these materials is THEIR responsibility. If it gets broken, stolen, missing parts, etc... then THEY are responsible for the replacement of the item. If there is a problem with the product, then it is a warranty issue between THEM and the manufacturer. I am completely out of the picture at that point. That alone changes most people's minds about supplying the material. If they choose to go with a different dishwasher than what the bid listed, they understand that the bid and contract will have to be looked over to see if a change will be taking place. If a change is necessary, a Change Order/Add Work Order will be used. I make sure they understand ALL of this type of information BEFORE the contract is signed, and before the project begins, and will remind them of it when they start off to get their own materials. Again, I only allow certain materials to be supplied by them, and make sure they understand this BEFORE we sign a contract, again WHILE we are signing the contract, and remind them as the work progresses. If they show up with a stack of 2 x 4's and want them used INSTEAD, I will not allow it. I have taken the time and effort to supply the material I have on hand, so I am sure gonna use. Otherwise, I would have to use theirs, and still charge them for mine. I just don't have the problems that some of you seem to have when I do this. If I did have those problems, I would stop allowing them to supply their own materials. James DuHamel
*"I don't either, and tell them that IN DETAIL before we ever sign a contract. I also tell them, in detail, that I must make a profit, or I don't need to be in business. The profit comes from material AND labor. If I lose some of the profit on them supplying the material, I have to make it up in labor. I separate the business from a tradesman right then and there, and let them know that I am not a carpenter working on the side for wages, but a business that is in need of making a profit. They understand this, and understand that they are hiring a company (business) and not just someone doing this on the side. They know that as a business, if there is ever a problem, they can come to us and it will be taken care of. By using a tradesman trying to make money on the side, they (in most cases) would be out of luck should a problem arise."And therein is our industry problem. That we feel the above discussion even has to be verbalized!We represent BUSINESESS! We are not the live in butler who has to justify taking a second piece of pie!
*Sonny,That is NOT our industry problem.If a customer asks, you better have an answer. If you cannot answer, then one of two things is happening. Either you just don't know, or you are trying to hide something. Either way, you just lost a client. Now when I say you don't know, then I am talking about those that truly don't know WHY they are more expensive, why the client should or should not provide materials, why or why not a client can get involved in any way in the actual work, or why or why not a client needs to know information. Potential clients want to know if your higher price is because you have so much more overhead running your business, you want to make higher profits, you are gouging them, or if you offer more to the project. I do not discuss overhead in detail, but do let those that ask know about insurance, taxes, etc... in an overview. No details about what I pay, or why I pay that much. I also let them know what we provide, in detail, that makes us a better candidate for their project. THIS information is what they want, and need, to determine if you are the best choice for them. Telling a potential client that "This is just my price, and if you want it for less, go see someone else" is a death sentence for getting a signed contract. THIS attitude is the biggest problem facing our industry. If you are so afraid that telling a client information is gonna give them ammo, or an upper hand in trying to beat you down on price, then you need to go back and learn how to deal with clients, and how to choose and qualify quality clients. Trying to beat me down on price is a very, very rare thing for me, so I do not see it as a problem. When a question about my prices comes up, I have an answer about WHY I charge the prices I do. I learned to explain it without arrogance or lack of tact also. That in itself may make a difference. I just do not get offended when someone asks questions about price. I know what my prices need to be, and I have no problem explaiining this to a client. When I say you are hiding something, I mean those that are more expensive by a long shot, and have no reason to justify it, or don't want to relate to the client WHY they are so much more expensive. Heck, if I charged $500 an hour, and a customer asks why I charge so much, I either have an answer/explanation, or I don't. If I don't, and do it just because I think I'm worth it, then I'm gonna be SOL in selling my company to that client. Whenever people go shopping for anything, they ask questions. It is normal, it is expected, and it is justified. If I see a particular item that I am interested in, and I see several types, with varying degrees of cost, I want to know why one is more expensive than the other. If it is better, and worth more, I want to know. If they are actually the same, and one costs more, I want to know that too. These questions, and answers that I receive are gonna be a determining factor in how I choose to spend my money. Educating the client is one of your biggest topics, yet whenever someone mentions actually educating the client, then you decide that only CERTAIN information should be given. Educating the client means educating the client about our industry, our standards, our way of doing things, why some are more expensive than others, why some contractors are better suited to a particular client, etc..., etc..., etc... We educate by passing along information. The more info the client has, the better they become at decision making, and the easier our projects run. There are always exceptions, but the better the client is educated in our way of doing things, and why, the smoother the project will run. Some clients don't want to know anything other than how much, and when will you be finished.Items I discuss with the client, and I must reaasert that this is important, is WHY I provide base material for the job, why I use certain brands or types of materials, and advantages/disadvantages of them providing their own materials. The ones I educate do not even attempt to provide base materials after that. The ones that think I am trying to pad my profits, and milk them are the ones that hire someone else. Then, that client becomes another contractor's problem. Good thing too, cause I don't want them for a client anyway. We now live in an information society. Clients want info, expect info, and if you want to be successful, you better learn to provide some info. Details about your overhead, expenses, etc... is not a topic of discussion, no more than THEIR expenses, bank info, etc... is our business. Details of their specific project, and the costs associated with it ARE their business, and ours. Discussing the hows and why's of the cost factor is necessary in order to educate them. Just a thought...James DuHamel
*James, let me go back and shorten your paragraph that I referred to the particular statements: "I also tell them, in detail, that I must make a profit, or I don't need to be in business. The profit comes from material AND labor. If I lose some of the profit on them supplying the material, I have to make it up in labor. I separate the business from a tradesman right then and there, and let them know that I am not a carpenter working on the side for wages, but a business that is in need of making a profit".The above should not be necessary. Does a car dealership do that, tell them that they must recapture part of their overhead and profit in both materials and labor? Granted the dealership selling something already made and with a model # stamped on it.However, if a potential client does not realize that any business, be it a one man or a 100 man business has operating expenses and is supposed to also turn a profit unless it's a charity, then they are incredulous stupid. Unless of course, they are 6 years old.And why use the word "hiding?"Several years ago I finally stopped offering Construction Business 101 to each client who brought up construction business finance to me.And as you know, many contractors are higher simply because they realize the true costs of operating their business, which has absolutely nothing to do with net profit. I refuse to explain that to them, because I'd become an "educator" as in business finance, instead of a consulting remodeler."I am higher because I don't take short cuts, my applications and perhaps materials are better, and the rest is in the reason I was recommended to you by Mr. Jones. Furthermore, why do some personal injury lawyers charge $125/hr while others charge not $150, but $300/hr? Are they not all lawyers whose specialty is litigation of personal injuries, as mine is remodeling of all "contractors."? However, if you feel that what I offer does not represent a value to you, please hire the other contractors you've interviewed.See, I never got into operating expenses, profit, where and how I make it, etc.I will admit, since in the three states that I started a remodeling business I quickly got to the point (within months) that 100% of my sales were repeats or referrals so I rarely, to this day, get those questions. I have become so self-confident that I may even be arrogant. If my prices are questioned other than casually, I don't want the job. If I did what I have over the years to build the "Brand" that my name represents, why did I bother? My reputation speaks for itself and IMHO, represents volumes about my prices and myself. OK, after typing in that last sentence I realize I probably am arrogant.This is why I've advocated that every one quickly got to the point that 100% of all sales are from repeats and referals. One's "brand" says one hell of a lot and does not have to be explained or justified. Having one's name "presells" what it represents to the public that recognizes it, and referals fall into that "recognition" category.
*Sonny and James, Great stuff! The few times I have been asked about my pricing I discuss value first. And rarely have to go further. I have a real estate agent that needed some foreclosed houses winterized and relocked. She asked my rate and I told her. I thought she was going to pass out but let me do 3 of them anyway. When she got the bill she said "this isn't bad at all, its close to what I was paying". I explained briefly that we all have to make a living and pay bills, that usually a guy not charging much has to either over book or cheat to make ends meet. That I told her is value. I now do all of the properties she has based on this one conversation. I do also think James is correct that your answers must be honest, straight forward, and stated with confidence or you have lost the confidence of the customer. And no whining during the job, always look as though you have the answer or no where to get it. Last thing a customer wants is for you to worry. DanT
*i Maybe I missed something or am a little dense, but I don't get the visual thing with the mason and the $100 bills.Picture this; you go out on a bid. The project owner says I like you but you are $100 too high. So, you reach around, grab your wallet, hand that guy a Franklin. (Thet's a C-note to ya'll poor sumbidches who aint never seen thet much money at wan time.)But maybe he says you are $200 too high. Wall, you're ready for that eventuality. You reach around, grab your wallet, hand that guy 2 hunnert doller bills. ETC, etc.That is exactly what you are doing when you agree to cut your price. The visual works because it's such a meaningful illustration.
*Sonny,RE: Post #26Dang straight!
*Daniel T mentioned talking 'value'.I concur. When on a res remodel job, my strongest asset is my service. This is the value which the customer finds attractive. Residential construction is mainly a service.But, I can talk 'value' 'til the cows come home and no matter how I present it, it just doesn't take with some folks. Sensing this, I start in with a Q & A session. Like, "Is it the initial price which has you distracted to the point that you don't see the real value of buying the best you can afford?" (In so many words)While I'd like to say my business is in a position that I can be selective of who my customers are, the reality is that that is true only a small percentage of the time. Mostly, I am open to all comers. I try to work with them and understand their perspective. (That gets right back to the value I can offer) But every so often there is the potential customer who remains steadfast in their, this word comes to mind, ignorance about the reality of what is about to transpire.At this point they become more problematic than I care to deal with. The result is I have disqualified them from receiving my services. Even though I try to extend myself to 'problem' customers. Bottom line: I'll meet you at least half way, even further if you present some circumstance which motivates me to continue. But there is always the line where enough is enough. Past this line words become meaningless.I don't finance your job and I don't work for free.
*Reading between the lines of my posts over these past several months, it's obvious that I do consultative selling; I am not arrogant, and I am tactful. In fact, I bend over double backwards to answer questions and service the hell out of them. And they, since they called me due to the fact that I was recommended to them, or they are a repeat, already know Me, and what Me represents. I do not and will not justify my pricing structure any more than a LincolnTown Car salesman had to justify his car against a Buick LaSaber. They didn't just pick out my name from the phone book.Look, James has presented one perspective of this issue and I have presented another. They may be even three or four additionial perspective or variations. I only know that I live by mine and James probably lives by his. It's up to everyone else to, if they haven't already, determine how, when and why, they say and offer the comments used during a sales discussion.My contention is simply that it's about time we all stopped acting like the butler, or the child being questioned by the adult as to why s/he didn't throw out the garbage."Oh, pleeeeease let me explain why......................"Not this guy!As my old Dad used to say to his customers: "The apples are a nickel each." Period! As to honesty, looking them stratight in the eye when talking to them, listening, and offering correct information - isn't that all a given?
*One of the best clients that I have ever had asked me a straight forward question once about my pricing. I answered her honestly, immediately, and factually. She immediately understood, and then realized that she had the whole concept figured out totally wrong. By answereing her professionally, I just EDUCATED this client. Her question was simple: "How on earth can you justify $45 per hour. Heck, I don't make that much, and I don't know anyone that does". My answer, which relates directly to what I have been saying about giving helpful, and needed info, was this: "I don't make that much either, and I don't know anyone that does. My COMPANY charges $45 per hour. Overhead, insurance, expenses, taxes, etc... have to come out of that, plus a profit. My wages are part of the business expenses." I never mentioned that I was SOOOOO much better than my competition, was justified in my pricing because I was worth it, or any other such wording. I simply told her about the pricing of my company. Period. She never thought of that, nor did she ever question my pricing again. What I had to do, being a one man operatin, was educate her on the fact that being a one man operation does not make me any less of a company than one having 10 or 12 employees. In her mind's eye, I was just a tradesman, making whatever I charged her per hour as my wages. I have done several large projects for her, and I enjoy her jobs immensley. If I had been arrogant, or refused to answer her querry, I would never have had the opportunity to work with her. I am not advocating giving all the detailed operational info about our company, how we run things, expenses down to the dollar, etc... I am advocating EDUCATING the public about WHY there are differences in pricing, and why those differences exist. After the initial meeting, with all the info given that SHOULD be given, the client is now better informed of the process, the details of our industry, and why there is such differences in pricing between contractors. With this info, they are now better able to make an informed decision about who to hire for their project. If it is me, GREAT. If it is someone else, at least NOW the client is more aware of our process, and more knowledgeable about how to find the best contractor for their project. When a potential client asks what I feel are legitimate questions about how we operate, our pricing structure, or our techniques, then I will answer them as best I can. MOST already have a grasp of this type of stuff, but some just do not. I educate, inform, and answer any and all questions pertaining to THIS particular project. Pricing and quality is just part of it. I mentioned the part about making sure they understood about providing their own materials because in my experience, they always seem to forget, or didn't quite understand. At least they act that way. I am just making absolutely sure that if they decide to provide materials, that they understand fully EXACTLY what all that means. One of the MAIN reasons I advocate giving lots of information to the client is the fact that I very, very rarely have any miscommunication problems, or any other problems. Communication and understanding is paramount to any successful business. James DuHamel
*James. Sonny, Rich and y'all:What an inspiring discussion. I'm presently deciding between leaving the renovation field or staying and this is making my decision even harder!! Keep up these lively discussions, they elevate us and remind us what we are worth. My first lesson in "the apples are a nickel apiece" came when I quoted a large deck. A notoriously bad negotiator, I came out of the closing meeting with a signed contract some 15-20% lower than I had wanted. Strolling down the fellows long drive I couldn't help but notice that he had some 75G worth of cars parked there; the irony was not lost on me. I felt like packing it in then and there, but learned my lesson and haven't been burned like that again." I don't subsidize your project and I don't work for free"... I like that!CheersAndy
*Good for you Andy.Frankly, I've really been surprised about the discussions here for the last week or two and I was attracted to stay for a while. Hotly contested opinions yet no sarcasm, no swearing, and no personal attacks.Mmmmm. Are we all feeling the pressure of "in your face professionalism", and owning up to it?Like a great suit; it wears well.
*Sonny, James, etc. etc. In my deal one of the issues I bring up is trust. Since I do a lot of small jobs and repairs, often after building a relationship I am given a key to the house when work is needed. 75% of my work is done T&M so relationship building is important to me and trust is a main factor. I like what James keeps bringing up about direct, immediate answers as I think this is the key. Most home owners who need repairs or remodels are dealing in an area of ignorance. They are often scared and worried about being screwed. Many in our industry give vague answers which I am sure is as much a butt covering move vs trickery. Immediate, confident resposes to both trade and business questions are reassuring to the customer and help build trust and the relationship. One of my clients said what she liked best about me is that I always seem to know what I am doing and do it in a confident mannner. (fooled her! LOL) Also, if you don't know, say so! And that is how you can charge more money. DanT
*Amen Danial,I do the same type of work you do, and my clients leave their keys with me also. You are absolutely correct that trust is everything in these types of relationships. Sonny,I really like it when we knock heads. Not that I like the fact that sometimes we disagree, but that when we do knock heads, two things happen. First is I learn something. Second is, I get to see how professional people here CAN be. You are a gentleman, and a true professional. You and I never do seem to get into frays, and I really appreciate it. I learn a lot in discussions just like these, and you (and sometimes Jerry) help keep these discussions alive, and interesting. James DuHamel
*Thanks James. I'm glad to see this forum being realigned correctly.Dan, you and James have the right attitude. "Trust" transends everything else and I think a second behind trust is "credibility." To me that are on the same plane. I too would be dead in the water if I didn't place the highest value upon both.As a side note, another thing I like about discussions like this is they represent a reminder to each of us of exactly why our clients say "Go ahead and do it."It's too tempting after just being, shall I say, "worked over" by a client, to say to ourselves: "From now on....................."Certain basic personal character traits should be etched in stone, regardless of attacks upon it. Once in a wile, rare but it's happened, when I saw a discussion with a cleint going in a direction I didn't like, I intentionally some how manuvered the talk to integrity and ethics. Then I told the client that I operated under the highest standards of integrity anyone could have - and expected, no, "demanded" the same from my employees, friends, family, other business associates, and even clients that I serve, otherwise, there is no foundation from which to base a relationship to build upon. That's a sticky subject for me since I was raised that I should die before betraying a trust.It's been a bitch, but the head is still very high.
*Sonny, I agree with you on the issue of temptation. I have a client that is manic depressent on no medication. Never know who your dealing with. Pays on time. But at times little satisfaction as she will direct a job a certain way then hate it. Frustrating. And I do at times think I should bill her for an extra hour for putting me through this. But I don't as its against what I am building this business on. You can always make money but I do it this way because I want to and feel better about it than in the professions I have been involved with. And that is what it is all about. DanT
*UPDATEThis aftn the lady come down to were I am working. She looked rather nervous, as if she had something terribly important to say but didn't know how to say it. After some small talk she seemed calmed down enough to say her piece.She was apolgetic for not hiring me because...they are out of money. I said it's too bad, don't worry about me, everyone has money problems when working on a big budget item, you made the right decision to save your money instead of spending your last dollar on flooring, etc.She seemed genuinely concerned for me. She kept repeating how she feels it's out of her hands--cause of the blown budget--but if she could, she would have me do the work. I ended the conversation with the standard, "When you are ready, please contact me." Sounds like I wrote her off, but that's not the case. I believe I have a future customer. And I am very glad I didn't spend any more time on the pre-contract work.
*Rich, Thanks for the update. Sometimes you wonder how these things end. DanT
*one question that you might have liked an answer to...do you know who referred this client to you? brian
*Brian,I already knew who it was. But it's always a good idea to inquire if you don't know. Give the referral a gift.