I’ve seen several threads on BT recently where various posters have asked questions like:
“what is the going rate for xyz?”
or
“what should I charge for such-and-such job?”
While I certainly understand wanting to be competitive, etc…, discussion of prices on a forum like this can be interpreted as a violation of federal law (price-fixing). (Might not result in action against the posters, but could result in sanctions against FHB or Taunton for hosting the forum).
What CAN be discussed is HOW to arrive at fair/competitive prices (take your usual hourly rate, plus material cost, plus PITA factor, plus whatever…; or figure out how much you need to make on a given job, then estimate the number of hours and material costs and divide it out, etc.) (Obviously these are very simplified formulas; you all have your own tried-and-true methods that work for you…)
(I learned this while trying to determine fair prices for web consulting/design. I couldn’t figure out why I could find any discussions of pricing, and then I read that it was actually illegal to talk about specific pricing structures…)
Personally, I don’t care if pricing is discussed. I actually appreciate being able to get an idea of what various services are going for. Just posting as an FYI…
EDITED TO CLARIFY:
If I understand correctly, the “problem discussions” are those that go something like “what do you charge per (unit of measure) for (this job)?”, or similar questions. A question like “how much is a lift of 3/4″ Advantech in eastern Mass?” shouldn’t be a problem.
Edited 2/26/2006 6:48 pm by torn
Replies
If the FTC has the spare time to find and try to prosecute someone for the posts that go on here, they've got WAY too much free time, and they're focusing their efforts in entirely the wrong place.
I do agree with the second part of your post, about providing general info on how to price your work, rather than asking what "the going rate" is. Those posts are almost scary, when you think that someone would actually consider pricing a job based on what someone from across the country, who they don't know from Adam, told them.
Bob
Agreed, Bob. I'd just hate to ever see the forum shut down over something that could have been avoided...
I agree Bob. Maybe they should start chasing McDonalds for advertising their 99cent menu.
blue
there have been some excellent discussions of pricing principles - check further into the business folder and you'll find them -
I think many of the 'what's the going rate' questions are posted by HO - either trying to get a 'free estimate' or having been 'shocked' by an estimate - and I think it understandable - everything costs twice as much as I think it should also....
David,
I never thought of the HO doing reserach here but you might be right! They get sticker shock at what someone tells them and thinks "I'll look it up on the Net and see how bad this guy is trying to rip me off!" Then they see you can't compare apples to oranges...or crown molding to basement waterproofing...
"everything costs twice as much as I think it should also...."ain't it true!There are plenty of times when I'd like to get a rough idea of what something might cost, without going to the effort of doing enough planning to get an "official" estimate. But, funny thing, if I put in the time and thought to get my plans detailed enough to get a full estimate, I end up realizing that my initial "just give me a rough idea" ballpark quote wouldn't have actually ended up anywhere near the ballpark...
$1000.
blue
is that per foot or per hour?
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Piffin, I hate complicated formulas.
So...
$1000!
That's it. That's the whole enchilada. Just send the check in advance.
blue
ah-ha!A 'fixed' price!;)
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
it's a bargain for sure - I'll take two! the check is in the mail...
What is your legal background? I'm no lawyer, but I can't even stretch my imagination far enough to construe price questions or threads on this board as even coming close to a violation of the Sherman Antitrust Act. If it comes to that, I guess R.S. Means will be the first to go down!
"he...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
The Sherman Act simply prohibits "any contract, conspiracy or agreement in restraint of trade". (There is also the requirement that the "trade" affect interstate commerce.) That's so simple that thousands of judges and legal scholars have had to debate it's meaning and write opinions about it! <BG>
Back in the 70's, when I was in law school, I worked on a huge antitrust case against the gypsum manufacturers (USG, National, G-P and Celotex). In that case, the manufacturers allegedly traded information about how much they were discounting from the published price. The Justice Dept. certainly thought this was an "agreement" in restraint of trade. On the other hand, gathering and publishing of historical pricing data by, e.g., trade associations has been held to be legal.
That said, the standard line antitrust lawyers have is that, if you are in a meeting and someone starts talking about prices, dump your hot coffee on the guy next to you (so everyone remembers you and your actions) and immediately announce loudly that discussing prices is illegal, and leave the room. However, many things that were formerly unquestionably illegal, regardless of the reason for the conduct ("per se violations") are now considered under a more lax standard - the rule of reason. So, if someone, someday, could contend that discussions on this site about "how much do you charge for (fill in the blank)" has a stabilizing effect -- up or down -- on prices affecting trade in interstate commerce, there could be an issue. However, unlike wallboard, which is fungible, it seems to me that very few jobs are the same. Kind of like somebody wanting to sell their VW Bug asking how much somebody else paid for their Chevy truck. Was there a price discussion? Yup. Did it affect how much to charge for the VW? Probably not. If I know that Joe Contractor charged $X/sq.ft. to hang and finish drywall on some job (the details of which are unknown to me) in New Mexico, is that really information that I can use to bid a job in New Jersey? Does that tend to affect my prices for drywall work, generally, or are there too many variables for it to have any appreciable affect? If the New Mexico job was priced 30% higher than what I would price my New Jersey job for, will I be able to charge the premium when my local competitors are bidding 30% lower? I don't think so. Further, it would be perfectly legal for me to find out what even my direct competitor charges simply by asking his customers. The bottom line is, there has to be an agreement (actual or implied) in restraint of trade.
Now, if there was a thread like this: "Hey guys. I can't make a decent profit on drywall work 'cause all my competitors (namely you guys) are bidding too low. Can't we all just add 15% to whatever our bids would normally be? We'd all be making a profit then." Now that would set off sirens!
Mike HennessyPittsburgh, PA
MikeYou had been what which you say in these forums.Another post like that just might be you banned." - the rule of reason - "REASON is NEVER allowed in these discussions.I believe that is one of the terms that you ahve to agree to when you join.
>>" - the rule of reason - "
>> REASON is NEVER allowed in these discussions.
LOL! I had actually originally commented in my post that using the words "reason" together with "lawyer" and/or "judge" in one paragraph might be considered a bit oxymoronic, but I edited it out, figuring y'all already knew that!
Mike HennessyPittsburgh, PA
your points are well taken, Mike - thanks!!
Now, if there was a thread like this: "Hey guys. I can't make a decent profit on drywall work 'cause all my competitors (namely you guys) are bidding too low. Can't we all just add 15% to whatever our bids would normally be? We'd all be making a profit then." Now that would set off sirens!
That's really funny. A coupla construction guys on internet saying Hey, why can't we make a profit like every other business? - that would set off sirens! Yep, lock 'em up. "he...never charged nothing for his preaching, and it was worth it, too" - Mark Twain
Like a couple of the other guys, I think you're wrong.
Price fixing is when 2 competitors discuss where to set their prices.
Virtually no one here competes with anyone else. And no one has done that as far as I can tell.
I'd assume that if this were a serious concern it would be mentioned in the "Terms of use" rules and regs we all agree to.
I know I can't call you a ####......but givin' you a drywall estimate from my neck-of-the-wood shouldn't be a problem.
Remodeling Contractor with no ties to the Glass City
BossHog, Blue, JDRHI... I appreciate your feedback and willingness to call BS when you think you smell it.
Please understand that I'm not trying to provide a legal opinion. I'm not a lawyer, though I had several law courses en route to my undergrad degree; I would certainly defer to Taunton's legal counsel were they to say that these discussions are legit.
Let me just cite my sources, and you all can decide for yourself...
http://www.webdeveloper.com/forum/pricing_faq.html (this is where I first became aware of the issue; the language is directed at web development services, but just replace it with your choice of construction terminology) I got curious, did a bit of Googling, and turned up the following:
http://www.morebusiness.com/running_your_business/legal/d935705578.brc
http://www.sitepoint.com/forums/showthread.php?s=ca5185981072ea6986894f4e107dc236&p=981905#post981905
http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf
http://www.usdoj.gov/atr/public/guidelines/211578.htm
I agree that it seems quite unlikely that DOJ would crack down on this forum; maybe the other forums that prohibit price discussions are being overly cautious. My point in originally posting was not to say "we shouldn't talk about price anymore", but just to interject a note of caution and perhaps start some discussion (which, apparently, I did <g>).
JFINK - what say you or your legal advisors?
from the Terms of Use...
--
Prohibited Materials and Activities: You agree not to post any material or content that is obscene, indecent, harassing, threatening, libelous, abusive, bigoted or hateful, constitutes SPAM or unauthorized advertising, invades anyone's privacy, or encourages conduct that would constitute a criminal offense, give rise to civil liability, or otherwise violate any local, state, national or international law or regulation. You agree to use the Site only for lawful purposes. In addition, you agree not to disrupt or interfere with the Site, or to alter or tamper with any information or materials on or associated with the Site.--
If price discussions are in fact illegal, they'd be covered by the ToU...
I didn't intend to blow off your concern.....I hope it didn't come across that way.
I just think that with the regularity of these (pricing) types of threads, the moderators would have, by now, attempted to stop them....or at least make us aware of the impropriety.
Remodeling Contractor with no ties to the Glass City