We have a couple threads going on the subject of pricing. I would like to approach this from a different angle.
In general, my price is my price, and I stick to it. If I’m going to change it after it’s given, it’s because there has been a change in the job.
Yet, not every customer gets the same price for the same job.
The old “80/20 rule” applies here. 80% of my work comes from 20% of my customers. The proven customers, the ones who offer regular work, good working conditions, and prompt payment get the “sharp pencil.”
The ‘one-time’ customers, as well as the ‘over-specifiers,’ the undecided (change orders) and slow-pays get charged more.
I’ll even, at the end of a job, reduce my billing if the job went exceptionally well.
I see absolutely no reason to offer a discount price to someone who you will never see again. Along the same lines, promises of future work have NEVER panned out … and will result in my price going UP!
As for the “Joe will do it for less” approach … NEVER has one of those jobs been worth it. I always wish them well with “Joe.” Amazingly enough, this is almost always followed by “but Joe can’t do it for six months…” or some other reason Joe is not available. Oh, Well! … you want me, you take my price.
I don’t talk “stuff.” I don’t take “stuff.” I don’t give a “stuff.” I’m not in the “stuff” business.
Replies
No discounts period.
My price is my price.
I may juggle my schedule for one of my better clients.....but the numbers is, what the numbers is.
That's not to say that I don't on occassion RAISE my prices for a customer that I may foresee to be a hassle.
Democrats.
The other white meat.
Jaybird,
In my business, admittedly differant than yours, I can't give discounts to anyone.. Forklifts are bought one at a time in all but rare instances, even those guys I need to make an acceptable profit or I can't sell it.. so if you are Joe one time buyer or Mr. Bigshot multi owner the price remains the same..
The only thing I do do for good guys is bend on delivery. MR. Multi Owner steady customer gets his equipment ordered in advance of his actual need so they are on hand when called for. The rare dude who can't I can't deliver one quick enough to his specs might get a low cost loaner until his comes in.. I have the advantage of having enough machines on order from the factory that I can change specs on one already going down the line and get it 3 to 4 months ahead of when it would arrive via the normal ording process.
I give a slightly better price to established GC's who are on the ball and feed me a few frames per year. I don't lose anything in doing this. The "discount" is because I know what I'm getting into. I know the materials will be there on time. I know the plans will work. I know I'll have good site access and the freedom to do what I need to do to get the job done. I'll usually make better than average profit working for these types.
Kind hearted but discombobulated GC's get the standard pricing. If I have to leave after 7.5 hours instead of 9 hours because we're out of lumber, then I've just lost money. If the plans blow or are incomplete/inconclusive then that slows me down. Same thing goes for the "one and done" types and working directly for HO's. There's a built in "oh crap" factor in my pricing. If I'm reasonably sure I won't have any "oh crap" moments on your job, then I can work that buffer out of your bottom line. But that's earned and not just handed out.
But the nickle and dimers..... get nickled and dimed.
I definitely give schedule consideration (nights and weekends) and the best price to the older couple that trusted me enough to make the big jump from an engineering career to my own business in 1999.
They were my first clients (a whole house handicapped renovation), best advertising, and I have done little stuff for them as recent as last weekend.
It probably helped that she drove her daughter and me to kindergarten in 1968.
Forrest
We work for consumers. Same price for anyone. Someone who we know, repeat business and is good to work for. Same price, will probably do a few honey do's for free when we are there. DanT
I start with my standard rate and go up from there.
"the 'over-specifiers,' the undecided (change orders) and slow-pays get charged more."
Last year I did a proposal for some trim work for a repeat customer. Problem was, he was real anal about making sure I included all of these little details and language he wanted in the proposal. Bad habit of his job, being a "specifier" and all.
So I added $400.00 to the price just to put up with that. I finished the job w/o major incident but when the typed punchlist (generated by him) came, I decided to quit working for those types. Life is too short.
He wanted me to build him a deck after that, but I will always be too busy to get around to it.
I would like to know exactly what an over-specifier is, and how an over-specifier's actions cause you to have higher costs, and therefore charge more.
What are the scopes and ranges of your projects, anyhow, that detailed specs screw you up?
Gene,
That comment was sort of tongue in cheek. He works as a consultant who regularly specifies commercial roofing projects. He is very good at what he does and is very thorough. IMO, A large commercial roofing spec. requires a higher degree of accuracy and information than you would expect to see in a proposal for replacement of some residential interior trim.
My point was that I was giving a proposal for a straightforward job. He received it and then sent back a laundry list of items he wanted me to include in the proposal.
I have no problem with a detailed spec. Write me one and I can follow it, makes it easy for every one. But let's define who is writing the spec. What I don't like is a homeowner having me redraft my proposal/spec. to include language that they deem necessary simply because they are used to that level of detail.
Basically I ended up spending much more time meeting his needs than is typical for replacement of interior doors, casing and baseboard. I've got no problem doing that, I just want to be compensated for the time I spend meeting his needs.
Examples:
Baseboard shall be prefinished with two coats of semi-gloss latex paint, color-matched to the Andersen interior window finish. No baseboard will be installed in closets or behind the office desk. (Vintage Construction shall supply sufficient, full length pieces of prefinished baseboard to the owner for future installation in the office).
Paint shall be brush-applied to the millwork and shall have neat/clean lines where millwork meets the wall surface, as per industry standards
Vintage Construction will make reasonable efforts to protect adjacent furnishings and finishes from dust, debris, damage and unintended paint. We will provide and install polyethylene sheeting to protect furnishings, and will remove sheeting upon completion.
(blue text, his additions.)
I looked back in my files to pull these examples and it reminded me that I did three separate jobs for this guy, under three separate proposals. In each folder there is the original proposal and then a revised copy. So I spent a lot more time with him than I typically do with other clients.
We could start a completely different thread on whether I should have worked for the guy or not.
Dont start a new thread...just talk about it here.
Guys like him get a good price from me because I know exactly what he wants. I don't have to guess and add a fudge factor. Typically, the guys that don't take care of business get scared of guys like him and bump their price much higher. That puts us on the same plateau.
blue"...
keep looking for customers who want to hire YOU.. all the rest are looking for commodities.. are you a commodity ?... if you get sucked into "free estimates" and "soliciting bids"... then you are a commodity... if your operation is set up to compete as a commodity, then have at it..... but be prepared to keep your margins low and your overhead high...."
From the best of TauntonU.
Blue,
I agree that a detailed spec. levels the field and makes it easier to price and execute the project.
But, in my situation, I spent a lot of time revising proposals to an unnecessary level of detail. And then completing his never ending punchlist items.
I was really just expressing the opinion that when someone is going to need a lot more hand holding, or attention to get their job done, the price of the job goes up because I will invariably spend more time doing their job.
I don't have direct control over pricing. But I know how to play the game well enough to either raise or lower a price if I need to.Long term, loyal customers get my best efforts. They're the ones I call to say "We can do this a bit differently and make it less expensive". I work hard to make sure their prices are fair, and not inflated for any reason. I try my best to see that they get their trusses delivered when they want 'em.The customers who are one timers get treated fairly. But I don't go out of my way to help them out unless they're really nice to me, or if the Wife brings the plans in and she has really big boobs. (Just kidding)The customers who piss me of or seem like a problem waiting to happen get higher pricing. Extra trusses accidentally get added to their estimates through mysterious computer errors. For some reason, the design program adds a bunch of extra webs to the trusses and I just don't notice it before it's priced.Life is too short to work with jerks if I don't have to.
Have you ever imagined a world with no hypothetical situations?
Long term, loyal customers get my best efforts. They're the ones I call to say "We can do this a bit differently and make it less expensive".
Good point Boss. As I said....I don't lower my prices...even for the best of customers....but I will go above and beyond to find alternate means of achieving results.
Democrats.The other white meat.
Someone replied to me in this thread, then deleted the message. Would someone mind posting to me so it clears this out of my system ???thanks much...
A good leader takes a little more than his share of the blame and a little less than his share of the credit. [Unknown]
I got yer back dude. Can't say I was the original offender though.View Image
oooh... ooooh.... hey....lemme ....over here.. i know the answer..
<<<<<<
I would like to know exactly what an over-specifier is, and how an over-specifier's actions cause you to have higher costs, and therefore charge more.>>>>
an overspecifier is someone who demonstrates to an experienced contractor that they are not going to be able to satisfy this guys needs without raising his price considerably....
OR... they may never be able to satisfy this guy's desires.. and should be avoided..
engineers ( as an oversimplification ) TEND to fall into this category
if you don't know what one is ... you may be on the wrong side of the equation
Mike Smith Rhode Island : Design / Build / Repair / Restore
Edited 3/25/2007 8:46 pm ET by MikeSmith
Mike,
The example of my client is about as close to an engineer as I have ever been. I agree that this type of customer tends to drive up the price by requiring a lot more hand holding.
It took some research here, and some advice from other local contractors to realize that I cannot do all those extras for free.
In the end, I guess I need to learn how to better weed out those customers.
BTW, I would love to hear your input on my "Can you educate the consumer" thread.
Good try but you are wrong.
The worst is a "home schooling wife" whose husband is an Engineer, who you never meet, but leaves notes that portray such important information as - " I was thinking something better".
Or the J.O. who, as his own GC had the whole place built - under his watchful eye - and decides that after the drywall is hung and finished that there is a "hump" or a "dip" in the wall, - and it must be someone else's problem. It couldn't possibly be that they have no clue what they are doing in the first place.Remodeling Contractor just on the other side of the Glass City
I give a pretty good discount to neighbors since:
I don't have to load and unload my tools,
I don't have to fight rush hour traffic,
I don't have to burn a lot of $3.09/gal gas,
If I forget something, I can walk home for it and be back in just a few minutes,
90% of the time, their jobs are "fillers" that I can do when I have a slow day.
Everyone else pays full price and I even tack on a premium for customers over 15 miles away (Bay area rush hour is BRUTAL!!)
Thanks, Mike, but I wanted the answer from the guy I asked, and he kindly replied.
<<<<an overspecifier is someone who demonstrates to an experienced contractor that they are not going to be able to satisfy this guys needs without raising his price considerably.... OR... they may never be able to satisfy this guy's desires.. and should be avoided.. engineers ( as an oversimplification ) TEND to fall into this category>>>>They'll also tend to spend their time watching and critiquing your every move and distracting you from getting anything done. Someone I've worked with once told me that when he bids jobs, it's an extra 15% markup for any engineer; 20% if he smokes a pipe.
Even if I were to charge the same to everyone, some jobs only require a guy to be street smart, some need magazine smart, and the hard ones combine politican smart with lion-tamer smart.
When we help save some electrican time it's $160/hr. (2 bodies x $80) that stays in the client's pocket.
By talking the engineer into more economical framing solutions that are just as strong we've saved thousands in materials, again back in the clients' pockets.
By saving architect time it's $200/hr. that's never spent.
By staying in the good graces of most of those around us, we hear through the grape vine when one more simple question to the engineer/arch/etc. will trigger a new $500 invoice and when it won't.
By practicing those interpersonal skills we finese a few favorable plan review issues in our favor which then get indirectly passed on to the client.
Someone asked why we give a hoot when most jobs are T&M and it seems the answer is a lot like defining eithics as what you do when no one is around. Good business is working in the clients' best interest even when they aren't there, can't understand, or simply don't appreciate it.
Good building!
Beer was created so carpenters wouldn't rule the world.
I suppose I ought to clarify by what I meant when I said "over-specifier." I had a particular type of difficult customer in mind. Such a person will give the painter the "third degree" over his primer, his paint, his masking ... even tell him how to hold the brush. They will tell you how to park, where to stage your material, and how to set up your working area. Anything they've never seen before will be unacceptable - though their exposure is very limited. You bring in some plywood from Home Depot, and they wonder why you didn't go to Lowes. The electrician puts in receptacles at ADA height, they demand to know 'why so high; he matches the existing height. and they ask "why so low- and what about ADA?" You work on the left side of the room, they want you on the right; move to the right, and they worry about the left. Every question they ask you they also ask your boss, the engineer, the inspector, and the paperboy. In short, a CUSStomer.
The overspecifier that you describes sounds more like a "meddler".
The book "Toxic People" suggests two courses of action for dealing with a meddler (if you must). The first is to give em hell&yell. The second is to disengage entirely. I guess the million dollar question is: why does anyone enter into contracts with people like them?
I'd be looking for the highest building to jump off.
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.
Mom...<g> buic
"As for the "Joe will do it for less" approach ... NEVER has one of those jobs been worth it. I always wish them well with "Joe." Amazingly enough, this is almost always followed by "but Joe can't do it for six months..." or some other reason Joe is not available. Oh, Well! ... you want me, you take my price."
There used to be a local talk show and one of his frequent guest would talk about the "old days" and his uncle was a butcher.
This was back in the 30's or 40's. And he was telling how his uncle had this customer that wanted porkchops and told her that they where 15 cents a pound.
But she complained that Joe down the street had them for 13 cent. He said why don't you buy them from Joe.
She said that he was out of them.
The uncle said that when I am out of porkchops they are 10 cents a lb.
.
A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
I sub and do retail.
my sub rates are lower than my retail rates.
I rationalize it this way ...
when I sub thru an organized GC ... I just show up and work.
most of the thinking should have been done by the time I get there.
I price/sub only "known quantities" this way ... trim, tile and cabinet installs.
if the situation comes up where I'm subbing "remodeling" ... that gets prices like any other remodeling work ... ie ... the retail work.
But ... for both .... the quoted price is the quoted price.
I will "renegotiate" ... I'll give a "group rate discount" if they increase the scope of the job and throw me more work. Used to do this alot with on GC.
I'd price the kitchen install ... he'd call and wanna talk. I'd go in ... he'd tell me how he really wanted me to do the work ... but the money just wasn't in the budget ... so ...
we'd dance. In the end ... 9 out of 10 times ... I left there with the kitchen job "discounted" ... and the trim work in the kitchen ... and all the tile ....
Lots more work booked ... not much money left on the table.
sub work should be less of a hassle ... so I can drop down a bit from the customer direct stuff.
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
>>>>>>>>when I sub thru an organized GC ... I just show up and work.>>>>>>>>>most of the thinking should have been done by the time I get there.That used to be the way it was for me. Now, several of them have started trying to get me to do the "thinnin 'round here" and I've had to start charging for that.http://logancustomcopper.com
http://grantlogan.net/
"We have enough youth, how about a fountain of smart?"
The client who gets the lowest price is the one who I can clearly see actually needs help that I am capable of giving...
The older single grandmother struggling to raise the grandkids .
The old man who has no family and needs something done .
The Family who just lost their breadwinner.
You get the idea.....
Same rate to everyone.
Welcome to the
Taunton University of Knowledge FHB Campus at Breaktime.
where ...
Excellence is its own reward!
MY PRICE IS MY PRICE I FIGURE IF YOU'RE GONNA HAGGLE WITH ME BEFORE I START THE JOB WHAT'GOING TO HAPPEN AT THE END. THAT THING ABOUT "JOE CAN DO IT CHEAPER" BUT YOU'D RATHER USE ME IF I MEET HIS PRICE TO THAT I SAY "QUALITY, PRICE & SERVICE YOU GET WHAT YOU PAY FOR" YOUR CHOICE.
ZEEYA
Zeeya -
Turn off your caps lock! We don't like to be shouted at...
& fill in your profile, & we will give you the proper BT welcome!
Kate
Please Oh please forgive me
Sorry I shouted at you is this better.
ZEEYA
Much better! Welcome to BT!
I always want to see the other guys bid. this way I can point out all the stuff the other guy left out.
I don't talk "stuff." I don't take "stuff." I don't give a "stuff." I'm not in the "stuff" business.
I like that!
I have two prices, regular price and free. Regular for almost everybody and free to people like my mom and ..........cant think of anybody else.
Doug
Wow, what a charge to read this thread after just backing out of a job that I began to suspect was going to be a complete nightmare. HO's wanted a large and complicate remodel, had contacted them long prior, then got caught up with work in front of me, including another large remodel and never heard from them. When I got a breather, I called to catch up on stragglers, and sure enough they were still waiting for a quote. Worked on a design and gave them an estimate, based on initial sub quotes and the initial design. Also referred them to a kitchen cabinet designer/dealer that I have used with good luck. They bad mouthed them, lied to me and said they had no design (which I found out a few days later they in fact did have in hand), insisted on getting my subcontractor/exact cost breakdown (not having signed anything with me yet mind you) and started to whine about the price. Also, HO had decided that without consulting us, where they were going to put their temporary live-in trailer, which I found was dangerously close to the jobsite. Also, they started to make demands that I find 'other' subs and provide them with their detailed bids, itemized and run around making comparisons.Now, I don't know about all you folks, but I value my relationships with my subs and like to work with people I trust and know are professional. A job is only as good as the teamwork on the job. Anyway, after discussing preliminaries with an engineer, other issues began to arise, but the HO seemed unconcerned and still stuck to getting the price 'down' to where they wanted. I suggested they forgo some of the elaborate finish work in the bathroom and whatever they wanted in the kitchen (which was only vague) to which they replied, "No, if we're going to spend this kind of money, we want to have something we'll really like forever." Well, I concluded that I'd had enough, increased my markup accordingly and told them that that is the price and they can find other contractors who could bid more what they want. I also stated that I wasn't about to give them all my breakdowns or my designs/plans without the payment they agreed to verbally prior. I haven't heard from them, but frankly I'm relieved as I could see the wolf coming out of the sheep's clothing as the man of the family in particular started getting pretty hostile.As someone else here said, we'll go out of our way to assist a good customer, throwing in small favors here and there and to help out those who really need the help. Hell we donated our labor last weekend to build a wheelchair ramp for a older guy we know who's recently confined to a wheelchair. But some people seem to think that I work for the fun and games and that they deserve that gargantuan addition, garage, dream house and I am just evil and greedy for suggesting we do this for a living and not on a volunteer basis.I've had good luck for the years I've been in this, but have wasted my time twice with people like this in the past year. I have been thinking about re-examining how I qualify potential customers prior to working up a bid.
girl.... you were working on a design /build with no deposit ?
shame on you ....
but good that you parted company
it sounds like they thought they were going to be the GC and you were going to be the facilitatorMike Smith Rhode Island : Design / Build / Repair / Restore
Who gets the best price from you?
Everybody.
SamT
Anyone who doesn't take truth seriously in small matters cannot be trusted in large ones either. [Einstein] Tks, BossHogg.
Very Simple! My price is my price ... as I explainto our clients, I want their neighbors to be able to compare with them and for the prices to be similar. My only exception would be when I have a significant drive time involved, or if I expect them to be a problem client. Realize that a 10% discount off of your selling price is equal to about a 25% loss of profit (you cannot change your cost so your discount is coming off of your profit!