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Well once again I spent 3 hours of my time visiting a prospective client, looking over the job, measuring carefully, making copious notes about existing conditions, and mentally thinking the job through so that I could give an curate estimate. The client is someone that I’m friendly with, so I didn’t mark up the materials as I normally do, I also cut the profit margin to the bare minimum. After wrangling with the estimate for an hour or so, I arrived at a very fair and reasonable price. I dropped the estimate off and after a few minutes of conversation left thinking I should go ahead and get this one on the schedule. When I called the client to inquire when he would like to get started you can only imagine my surprise when he told me that So and So down the street beat my bid by $400.00. I am a professional, I produce professional results that last for years, I’ve invested heavily in my craft and equipment, spent years honing my skills, I know the margins inside out, I know how much a job can be done for, so how on earth could some one beat my price by 15%. I fumed over this for a week, and the answer came to me, no matter how good or fair the price there is someone out there who will work for less, even at a loss either through inexperience or just plain stupidity. We can never realize the professional wages we deserve as craftsman unless and until everyone of us wakes up and decides enough is enough. If my craft is so easy that any Joe can do it, Pick up the hammer and go to work! It’s enough to make me want to go back into government service. I felt like a whore there, but at least it was a steady paycheck. Thanks for letting me blow off some steam.
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We have all been there. As said many times on this site, "The most profitable jobs can be the ones you don't get". There will always be low ball bidders to compete with. Many are new contractors hungry and learning from the school of hard knocks just as we all have. Many are contractors who simply make estimating mistakes, as we all have. What I have learned to do, is to "Sell the Job". Prepare the potential client for the low bid he may receive. I tell him upfront, I may not be the low bid. You may get a lower bid but this is why I'm the best choice for the job. I have insurance. I buy quality materials. I will finish on time. Here is a list of past clients we have done similar jobs for. Ask that low bidder for an extensive list of satisfied past customers. My service policy is ....ect. "Selling" gets you more profitable jobs. Bid jobs for friends just as any other job - no discounts. If you don't get a job, don't get upset with anyone but yourself. Do a better selling job next time. There will always be low bidders replacing the ones that went out of business. We have to accept that fact and learn to survive and prosper.
*And so it goes.... I have my own cabinet shop (paid for) tools (paid for) truck (paid for) no employees, and I only owe a little bit more and my house will be paid for. I have hardly any overhead. I can out bid practically anyone and still make a sizable profit. Lean and mean, thats business. Don't think just because you've been outbid that the guys not going to make a profit or perhaps even do a better job. If you're good you'll always find work. Competetion is the foundation for business in the U.S. for Christs sake....relax and enjoy the day. Am I being a smart ass?...probably...I just hate to hear a grown man cry.
*eddy murphy said it all...the bidness of bidness is bidness..(yogi probably said it before him )
*Thanks Jim your absolutely right. I was fuming because I thought I was doing the client a favor, incidentally, I stopped by the job to see how it was coming along, and I was right, I was doing the guy a favor. J. Word
*Bob, I appreciate your reply and it's right on target. I thought I did a great job of selling the job, In this particular case I found out through the grapevine, that price is the only motivator for this particular client. The GC priced the job accordding to what he paid a "few years ago" the times they are a changing.
*James,not to nit-pick here, but when you said you know your costs and your margins, you were going to cut them to give this client a good deal. I do not think this is a good idea. I used to do this also, but you know what, my overhead is the same today as it will be next week when I'm working on the "discounted" job. The time it takes to sell the job and service the client is the same as always, so why make less? You also still must carry the warranty for your work.The saying is true " When you work for family or friends, either do it for free or charge full price". Barry
*James,I believe in the free or full price, also. I've had a few bad experiences of my own when it comes to family and friends.I might add, a friend of mine who builds lots of houses told me once that when he started out he tried to build the best house in the allottment, he used real tile, better grade of mouldings, staircasing etc., but he couldn't sell the house cause he had to charge more than the other guys who used cheaper stuff. He said people only care about two things...price and square footage. Building big, cheap houses has made him a millionaire. People don't necessarily see the same as we do when they walk in a new home. They usually check out the paint job, closet space and stuff, but they don't see much beyond big and cheap. Competing in that arena is difficult if quality is your guiding force. Sorry for the crybaby statement, you're probably not or you wouldn't have recognized the fact.The thing about bidding is, as you mature in your trade you learn tricks and shortcuts that allow you to work faster and better than you once could. I can accomplish some things in an hour that once took me a whole day, therefore I may figure two days for a job that once would be a week. I make the same profit, but charge less, because of my experience, not the other way around.There's plenty of butchers out there, but they usually don't last, especially when times get tough. You'll lose out to them once in a while. I don't usually bid on a job. If a guy calls and says he's asking for bids, I tell him I'm not interested or I charge for my time. I can do that (for now anyway) because I've paid my dues and have built up a clientel. It seems whenever I finish a job, the phone rings. I just finished an addition for a little over 90 thousand and billed the guy as I went along, he ended up with a beautiful chalet type addition for far less then if he'd demanded a price in the beginning, probably ten thousand cheaper. He trusted me to do him right, and I did.Close to retirement and finally things are falling into line. :-)
*Once in a while you'll work a job that shoulda brought in more. Its difficult and risky to providea price that's "all in". However, you'll rarely beatyourself working time and materials. And when the unexpexted crops up you're covered. Your letter was well written and sounds as if you're a good mechanicwho's in it for the long haul. Good luck in '01!
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Well once again I spent 3 hours of my time visiting a prospective client, looking over the job, measuring carefully, making copious notes about existing conditions, and mentally thinking the job through so that I could give an curate estimate. The client is someone that I'm friendly with, so I didn't mark up the materials as I normally do, I also cut the profit margin to the bare minimum. After wrangling with the estimate for an hour or so, I arrived at a very fair and reasonable price. I dropped the estimate off and after a few minutes of conversation left thinking I should go ahead and get this one on the schedule. When I called the client to inquire when he would like to get started you can only imagine my surprise when he told me that So and So down the street beat my bid by $400.00. I am a professional, I produce professional results that last for years, I've invested heavily in my craft and equipment, spent years honing my skills, I know the margins inside out, I know how much a job can be done for, so how on earth could some one beat my price by 15%. I fumed over this for a week, and the answer came to me, no matter how good or fair the price there is someone out there who will work for less, even at a loss either through inexperience or just plain stupidity. We can never realize the professional wages we deserve as craftsman unless and until everyone of us wakes up and decides enough is enough. If my craft is so easy that any Joe can do it, Pick up the hammer and go to work! It's enough to make me want to go back into government service. I felt like a whore there, but at least it was a steady paycheck. Thanks for letting me blow off some steam.