I have a stair repair job coming up and I have no idea if it will take 3 days or 3 weeks…
But I will need startup $$
How should I word my contract and figure my down payment?
Maybee estimate a worst case scenario and get my 50% of that??
Materials plus 25% plus one week and bill weeklyafter that??
thanx in advance…
.
.
.
.
.
.
I have Transcended the need for Pants….
oooohhhhmmmmmm……
Get expert guidance on finding a fixer-upper that's worth the effort.
"I have learned so much thanks to the searchable articles on the FHB website. I can confidently say that I expect to be a life-long subscriber." - M.K.
Dig into cutting-edge approaches and decades of proven solutions with total access to our experts and tradespeople.
Start Free Trial NowGet instant access to the latest developments in green building, research, and reports from the field.
Start Free Trial Now
Replies
I have used $$$ to start/ First draw of $$ to start / $$$ for materials to start all have worked fine.
One of the reasons you leave the Profit in the company coffers is so the company can afford to pay you when these profitable jobs that can't be Front Loaded come up.
It is impossible to Front load this job because it's T&M and you can't reasonably estimate how much Time will be involved.
You do know that it will take at least three days, so the Deposit should be Material + M/U + 1.5 days labor + M/U.
Then Suck It UP, until your Operating Capital gets high enough that this situation is no longer a worry.
BTW, You might want to consider adding 1.5% No Pay risk to your M/U when working on your dime. 1.5% = 1 in 30 clients are No Payers, half of them will succeed in not paying. YMMV. That money must stay in your Operating Capital account until you get a N/P.
SamT
So if 1 in 30 clients are no payers, how many contractors are no shows after taking the deposit? 1 in 50? 1 in 25? 1 in 10?Sorry for the hijack, but I'm sitting here out my deposit on an iron railing that I paid months ago, for a railing that should have been installed in late June, and now the phone number is disconnected. And I'm plenty PO'd.And you wonder why customers don't like paying deposits.
It works both ways, some customers AND some contractors are aszholes.
good luck with your railing, from the sounds of it, doesn't sound good
ain't life grand?
Unfortunately, it is a fact that 85 out 100 contractors go out of business in the first 5 years. The reason for that is simply that it takes 5 years to learn the business of business.The easiest way to eliminate 90% of the bad contractors you *could* hire is to use no one with a license issued this century.SamT
I can definitely understand your anger. I've been left high and dry by subs in the past. I even was told by my chiropractor the other day that someone I play hockey with took his 50% deposit and never did the work. I hate to hear that stuff. makes the guys who are fair and honest look bad. I advise people to check the better business bereau before hiring and get references. all you can do. and also never give more that a third down."it aint the work I mind,
It's the feeling of falling further behind."Bozini Latinihttp://www.ingrainedwoodworking.com
We looked up vendors of iron railings in Angie's List, this guy had very good ratings, decent prices, was not a hassle to deal with.And admittedly, it is only $250. But a bunch of my time, and I need the railing installed before my MIL comes to visit again (probably Dec.).So now I start over.
email Doug Hubbard.
bet he can line up the railings and send Trent over to install them.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
Hi Jeff,I'm finding several Doug Hubbards in the phone directory. Do you have an e-mail or phone number?
I'll email ya.
Jeff Buck Construction
Artistry In Carpentry
Pittsburgh Pa
"I need the railing installed before my MIL comes to visit again "With some MILs that is money well spent;)
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Personally I'd like a 8' fence anchored 4' deep with sharp pointy things across the top....
even on t&m .. i'm still not the bank
i think he can get a draw and credit it to the first invoice.. and i'd write the contract accordingly
take a deposit in whatever amount the cash flow requirements are and word the contract to show that that will be a credit against the first invoiceMike Smith Rhode Island : Design / Build / Repair / Restore
T--
I do all my work on T&M, so I'm used to this. Here's what I do:
First, give the guy a ballpark estimate no charge; that takes 10 minutes at the site and is worth what I charge for it but gives him an idea if we're gonna do business together.
Second, do a detailed estimate, drawings, and B of M, for which I charge by the hour and he pays whether he accepts the estimate or not. That's understood up front and I don't go into that stage until he says OK.
Third, with the estimate go my terms of service; that includes a provision to the effect that I must receive a deposit of 50% of the estimate before the job will even be scheduled. If it is a very large job, I specify the amount of initial deposit (usually several thou) and the weekly/bi-weekly progress payments that must be made.
I have never had someone refuse to give me a job because of these terms; if they balk at paying a deposit, it's just an excuse because they don't like something else...almost always it's the overall price. But we don't usually get that far before he and I have already figured that out and parted ways.
Dinosaur
How now, Mighty Sauron, that thou art not brought
low by this? For thine evil pales before that which
foolish men call Justice....
Very nice system. Fair and equitable.SamT
for this particular job, I wouldn't even be asking for an advance if it was a regular customer with good pay history.But I wanted to respond to your 50%. I do a lot of jobs that are 6-12 months long and run a half million and more.So a deposit of 50% would meet resistance. I try to get what I expect my burn rate will be for a month if I am billing monthly, or what it will be for two weeks if I am billing bi-monthly.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
For a job that's a few days long, I'd be embarrassed to ask for a down payment. Maybe it's the small town nature of where I work, but there is nothing at all that I pay cash for, and a deposit would actually be an added piece of paperwork and data entry to handle. Exception might be special order material, but if it's just lumberyard stuff to go repair a staircase then I'd be fronting 100%... hate to admit it... but it's true.
I wouldn't even be asking for an advance if it was a regular customer with good pay history.
Me neither, of course. The printed terms I send out are my default position; all my regulars know I'll work with them as long as they'll work with me. And if I can afford it, I'll 'finance' a good client for my labour on a small job as long as they cover my materials costs before I have to pay my suppliers.
I do a lot of jobs that are 6-12 months long and run a half million and more. So a deposit of 50% would meet resistance.
Yes, at that cost level 50% is 'way too high for an initial deposit. I don't work at that level (boo-hoo!) but in cases where the job is going to run into five digits, I ask for $2500 to start and specify bi-weekly progress payments by dividing the balance of the estimate by the number of two-week periods I figure it'll take me to complete. That will usually equal my 'burn rate' pretty closely. Any difference can be made up on the final bill.
But for new clients and for 'normal' sized jobs, I want that 50% to prove they're serious because if they cancel at the moment of truth that means I have probably lost a job I turnd down because I was booked, and I can't afford that. I've only got 6 months out of the year to make hay; the rest of the year I'm waiting on weather or 'working for the man'.
Right now, for instance, I'm grousing and sitting on my thumbs because two sometimes-clients who are screaming to get their roofs torn off and replaced before winter sets in are both screwing around claiming they'll have the money 'soon'...and have been since mid-June.
Fine. As 'soon' as they have it, I'll start working on their roofs. In the meantime, anyone else who shows up with cash in hand goes first...and if that means their roof jobs get put over till April, that's not my problem.
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
Yeah, that deposit money can get you advanced on the schedule.One thing I started to learn this past year - deposits can still be good even with small jobs. I ended up spread over 7-8 small jobs, none of them large enough that I thought I initially needed a deposit. But due to various circumstances - delayed shipments, wait for sparky or painter, or what ever, I couldn't get much to a completion point for billing or I would think - only another three days before...which would stretch to three weeks delay and soon, I was sitting with fifty granmd spread out on unbilled work.That can pinch!
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
I try like hell to do only one project at a time, but sometimes it's hard because people just can't understand that 'oh, it's just a little job; can't you squeeze me in because...' means you've got to pull tools/people/equipment off somebody else's job even if only for a (few hours) (day) (few days) (pick one).
One of the reasons I'm so grumpy right now is I've been trying to keep three people happy simultaneously...and none of them are trying to keep me happy by understanding what their dicking around does to my ability to keep promises to other people.
I'm probably not charging enough. If I were they'd have more respect.
Yeah, that's gotta be it....
Dinosaur
How now, Mighty Sauron, that thou art not broughtlow by this? For thine evil pales before that whichfoolish men call Justice....
Stopped in to the job to refresh my memory and start the brainstorming.Looks like I may take down a railing and dissassemble a 3/4 flight.
risers are all separating from the treads.HO also wants cieling molding (looks like shinglemold!!) continued up the stairs and thru the upstairs hall.plus shes got 6 or more doors that need attention...plus she thinks there is more....if you don't hear from me for a while......
.
.
.
.
.
I have Transcended the need for Pants....oooohhhhmmmmmm......
I get a "Deposit" to be applied to final payment.
make it as big as you need to buy materials for a small job like this.
Or make it 30% of best guess
Welcome to the
Taunton University of Knowledge FHB Campus at Breaktime.
where ...
Excellence is its own reward!
I like the idea of applying the deposit to the final payment rather then the first payment, positive cash-flow is a great thing isn't it?
I give a range to our customers, for example, 8-12 hours & 200-300 of material. We ask for half of the total lower value as a down-payment with balance due upon completion.
If it's going to be along term T&M job, which I only do if the nature of the project would not allow me to make a fixed price contract, It's a certain amount down, usually enough to cover a weeks worth of work and then billed and collected on a weekly basis.
If I think the client may be shifty, then no check on Friday = no work on Monday.
But I usually won't sell to anyone I have type of feeling about anyway.
On one recent job - good customers, I had a ten thousand dollar deposit. As we were almost done, I applied it to the billing/statement since we only had a couple of punch items left to bill forward.Then we started getting the "While you are here" add-ons.Time I tallied up the actual final, it was around seventeen grand.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
I only worktime and material. I might give a rough time frame but I tell them it is really rough. I try to get them to buy all the material or set up an account at the supplier for me but if I have to buyt the material I expect payment immediately upon arrival at the site. I also tell them I am to be paid at the end of each week when I present them with my hours.
I do this to all my jobs whether it is half a day or a month. I keep it really simple and as a one man band it works just great for me. In fact it is so simple, some people can't get their brain around it. I make money on my labour. That's it period.
roger
roger