A couple of months ago a retired lady called me to do a small remodel job. After looking at the job I gave her what I thought was a good estimate. However, I forgot to figure the paint and having the trim finished. I thought my estimate had enough cushion in it to absorb this mistake but as it stands I am going to be about $1500.00 over budget. That is without any profit to me. Ther have been a few extras that have popped up and I don’t have a problem billing for that. What I want to know is if I should bring up the paint issue or chalk it up as an expensive lesson?
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a spiritual pilgrim sweareth to his own hurt
Half of good living is staying out of bad situations.
That's a question only you can answer. Betting some will say...depending on your relationship with her......ask for more or try to split the costs...after all...it was an honest mistake.
Me.....I'd eat it. Think long term......is that the kind of contractor you want to be remembered as? Personally....I don't think it presents a professional attitude. If a plumber or mechanic did that with me......I'd probably pay the balance....but wouldn't use or refer him again.
I've been there....some days it pays more to stay at home! I've never taken the hit so hard that the money to finish came outta my bank account......but I've left a few jobs without anything to deposit! Jeff
She's exotic ,but not foreign, like an old Cadillac......she's a knockout!
This is where the word game gets a bit tricky.
If indeed you used the term ESTIMATE with her, and it says so on all the paperwork, then that is exactly what it is. It is an ESTIMATE on what the costs of the project are going to be. It could be higher, or lower, but this is the estimated amount that you told her. If this is the case, bill her, and feel good about it.
However, if in fact what you gave her was a BID, and the paperwork says BID, then you'll have to eat it and chalk it up to experience. A bid is much different than an estimate. A BID is what you have agreed to do the work for. Period.
If there is nothing in writing that tells this woman exactly what this is (bid vs estimate) then you are going to have to decide if she is a worthwhile client, and if you want to keep her happy. In almost every case like this where there is a misunderstanding about pricing, a split between client and contractor on costs is usually the way to go. It builds client satisfaction, and it builds your experience base about how to deal with this kind of problem BEFORE it ever gets to this stage again.
James DuHamel
J & M Home Maintenance Service
IMHO if you eat it you are more likely to clearly remember the pain and not repeat the mistake. If you don't you may loose both a customer, with any positive word of mouth, and a lesson that will stick with you for life.
Some times these things have a way of rebounding in your favor if you go the extra mile. Word gets around about honest contractors. It travels even faster for one who is honest and principled. A rare bird indeed that is sure to get notice. No guarantee but it seems to be a recurring theme.
I have to disagree with your distinction between a bid and an estimate. While you may be correct from a semantic viewpoint, most customers consider a bid and an estimate to be the same thing. This is true even if you spell it out for them. How many of us have had ballpark estimates come back to haunt us?
Nonetheless, it is possible to recoup something on an omission. Whether you are able to do this depends on the level of trust between you and the customer and generally how satisfied they are with your work. Admitting your mistake and being willing to meet them halfway will help your case and will not hurt your reputation in the long run.
Size up your customer. If he is a real stickler, chalk it up to experience and eat it.
Thanks for the input on this. I've really been struggling with what to do. On one hand I feel like I need to be a little tougher in these situations. However, the other hand says that I screwed up and I have to pay the price. The big picture looks a lot better if I end up with a happy customer.
Keek.
One crucial point is to have agreements in writing before commencing with the work. It may only need to be a list showing what is AND IS NOT included. This is also a good self checking tool before committing yourself.
I often think that there are only two reasons for getting an estimate wrong. First, you knew what the price should have been but didn't say so (dishonest). Second, you didn't say what the price should have been because you didn't know (inexperienced). Neither option is a very good look. Good luck with your decision.
EZ
Next time you do an estimate add 10% to your material total before you add in your regular mark up. This will cover forgotten items. It is impossible to remember everything every time and if you forget something then you get to buy it for your customer.
John.
I think thats a good point, and another reason for good record keeping. If you regularly compare your bids with final costs, and there is a 10% difference, then add 10% to your quotes. If you are always 25% off, add 25%. No one is doing any favours by losing money on a job.
EZ
Keek you might want to check out this
post and the parable it tells by Piffen in the Pricing for ‘perceived
value’ topic. Right now I think you'll just have to chalk this up to a
"lesson learned". happens to the best of us so keep your head up.
"Architecture is the
handwriting of Man." - Bernard
Maybeck.
I'm going to agree with the crowd that says eat it! As an example, from a customer point of view, I subcontracted siding work on my own house of all places. When the job was finished the siding contractor said "it's going to be $300 more because I used more coil stock than I anticipated". Thats not my fault! That really ticked me off! Like me, you have probably heard similar stories where an unhappy customer feels they were buffaloed into paying more than they expected.
What I would do (I'm not suggesting this for you because we're two different people) when the job is all done and I've collected the final payment. In a lighthearted manner, I would tell the customer the deal they got off of my mistake. At least I know the customer will not expect me at bargain basement prices again and I'm a firm believer that the goodwill will pay much more that it cost.
My current customer/contractor agreement itemizes everything and it has saved me from disasters like yours a couple times. I've had customers say; "Scott... I thought xxxxxxx was included in your price, but when I looked at the list it wasn't there (they've signed it). Can you please give me a price to include xxxxx?"
Hope this helps, Please keep us posted on the outcome.
The discussions are interesting. Integrity and reputation are most important. If the mistake will really hurt you, an open book approach to the client may help. That is acknowledge the mistake to the client, and show him/her the actual costs of the work through invoices. Then with adding a reasonable markup, less than normal to account for your responsibility for an accurate estimate, ask if they would be willing to assist financially. But also indicate that you are willing to absorb the over budgeted cost if they don't agree.
Now you've shown honesty in your approach, while appealing to their willingness to be fair.
I don't think that you could lose anything with this approach.
Good luck.
Phil
Jerald dragged me in here so this is my two cents worth...
I read this as "estimate"
I let my customers know up front the difference betwen an estimate and a bid Sometimes, I'm willing to work off a bid. When I was roofing sub, I took measurements and had a known quantity to price. I produced a firm contract and stipulated that any unknowns such as rotten wood were to be billed as extras at such and such a rate.
In remodeling, I find it almost impossible to anticipate all the unknowns. I often find overruns of twenty percent so I do my estimates with a twenty percent contingency in the budget. If they demand a firm contract, I add fifty percent to cover the risk or walk away, based on my instinct.
If yours is an estimate, and the customer understood the diff from a contract, then I see no problem in billing for the extras. I can even remember a couple times in the past that I had a firm priced contract and when I found that I was losing money, I spoke to the other party, explaining the problem, appologizing for bringing it up and asking if they would mind helping me out, being sure to be clear that I was still willing to finish with quality work and at arranged cost if they wanted to stick to it. Given my rep for quality and honesty, I always had them volunteer to pony up without any hard feelings.
If you are still building your reputation, that has to be taken into account tho' and this may be a good learning experience for you.
Excellence is its own reward!
I had the same experience just a few months ago. Large, curved, cantilevered, poor access, blind fastened, low voltage, synthetic deck. On it for over a month. Definitely didn't bid this right and was expecting to eat the costs, as a learning experience. Customer comes out on weekends, while we're still working 7/12 on it. Pull me off to the side and asks how is it going. We had a great conversation about the estimate, and what we were doing for him, but did mention tactfully that although fun, this project will never be done again for this price...backing it up with facts (kind of open book). Made comparisons with our work/estimates and his own personal business. I had left a small $3K retainer until we were done. Let him know we would be finished this weekend. He then looks at the deck, the work, and the guys and let me know that he would be dropping off the last payment monday. When recieved, it had the final invoice, along with what he thought was a fair extra $3500. First time that has ever happened. Customer has also been an AWESOME reference for the last 5 or 6 customers too. Not saying that this will happen, but letting him know what we had missed and that we were willing to eat our oversights, along with relating to him and wanting him to be satisfied with our work, kind of put the ball in his court. (He could have just payed the 3K, but either way, we were honest and no harm done.)
Thanks for all the input. I was afraid you guys would all think I was a moron. I did sit down with the customer and we agreed to split the difference. It still hurts a little but I really learned alot. I am just starting out and I really want to keep the good rep that I have. In my area there are a ton of good builders. However there are also a ton more shady charachters. I'm firmly convinced it is worth the money to stay on the good side.
Glad to hear it worked out (sort of!) for you at least you didn't have to eat the whole thing. While I agreed with most on this I think part of being an honest contrator is giving the bad with the good. Sometimes the hardest part is just bringing it up. My own experiance (it happens to all of us) is to give the client some of my cards and ask if they were happy, to refer me to just one person( I really stress this so they know I'm seriouis) then I tell them just not to give anyone my exact price because I can't do this twice. They'll invariablyu ask why and presto you've opened the door and left the ball in their court. Do "they" do the right thing or not? Good luck in the future its a great life if you like what you do.
ask yourself this.
" If my "estimate" had come in $1500 the other way, would I give the client back the $1500. Would I sit down with the client and explain the situation and offer to split it?"
Edited 7/23/2002 6:03:41 AM ET by MARKCADIOLI
Real REAL good point Mark.
That maybe at least part of the reason I wont ever approach a client and ask
for appeasement when I discover I've made an error on the short side. I think
any error we make on the long side goes towards a "lesson learned"
in discovering what I've been babbling about in Pricing
for ‘perceived value’ discussion.
Another part of it is I feel if you are running your business as a real business
and not just a hand to mouth self-employment service then you should have something
of a contingency fund built up to cover for those kinds of errors.
"Architecture is the
handwriting of Man." - Bernard
Maybeck.
Keek-
I am a new contractor and have had a similar situation come up.
$1500 is small mistake to eat. Hopefully tou still payed yourself an hourly wage so all you lose is your profit. These things have a way of coming back to you ten fold.
Good for you for working it out with the client, but I think I would have eaten it.