Replies

1. 
   EricPaulson | Dec 12, 2008 02:00am | #1

   You are struggling to compete with the other guys.

   Find a way to set yourself apart................way apart if you have to.

   Then, you are not competing, you are offering a one of a kind product.

   We will give you a gift certificate to a local restaurant once a week while your kitchen is down.

   We will have our cleaning service come in at the end of the project and clean the entire house.

   We will pay your cleaning people extra if need be for the duration of the project.

   Did you know that we are neat freaks? Everything will be closed off and we use air scrubbers daily. We vaccum at the end of the day.

    

1. 
   JerraldHayes | Dec 12, 2008 02:05am | #2

   Ceasar, following your topic Framing prices in N.E. and now reading this I can't help but notice how fixated on price you are. While that is understandly to a degree in these tight times but I can't help but wonder do you guys have anything to offer your clients other than price? I often say when contractors(and any service business for that matter) say that their price was rejected it is becuase they failed to sell to their prospective client their "value proposition". In fact with many contractors saddly they just don't have one.

   View Image

2. 
   Ceasar | Dec 12, 2008 02:13am | #3

   EP,
   Wow! You brought up some great points! I do think that would stand out in the minds of homeowners. The money spent on those tips could be rewarded greatly!! I still feel like odds are better being the last one in, no?

1. 
   EricPaulson | Dec 12, 2008 02:25am | #4

   I understand how you feel. But trying to be the last one in, puts you right back to competing again.

   Those were some suggestions, come up with a few of your own.

   And, if you know going in that these folks are going to take the last/lowest bid, are these people you want to work with? (I know the answer)

   You could bluff them and try to squeeze a deposit out of them by telling them they can get a special spot on your schedule; you're all booke dup mostly!

   Fess up, tell them very politely that you REALLY need the work, you have a couple of familys depending on you and you will show your appreciation by giving them the absolute best work you have ever done, and mean it, and do it!

   I'm out of ideas.............. 

2. 
   davidmeiland | Dec 12, 2008 02:39am | #5

   You titled your thread 'estimating strategy' but it's really about sales strategy.

   First of all, to some extent Jerrald may be right, you may need to improve your presentation to make it clear to the owner that you are the best choice even if you're a little higher on cost. That is the subject of many books, and many other threads on construction forums. My own experience is that you may win more projects based on a stellar sales approach, but that there are people out there looking at the bottom line and they don't care about much else. Obviously you want to avoid customers like that whenever possible, but these are unusual times.

   That said, the last guy in the door has the distinct advantage. If you really want the job, and are willing to "win" it by beating another guy's price, try to get the last meeting. After presenting your numbers, ask if they are numbers that will get you the job. If so, it's yours. If not, ask what number will get you the job. Decide if you want to play ball or not.

   Personally, I think this is a race to the bottom, but if you do it carefully, you may be able to tread water longer than the other guys and avoid drowning.

    

1. 
   EricPaulson | Dec 12, 2008 03:06am | #6

   That said, the last guy in the door has the distinct advantage. If you really want the job, and are willing to "win" it by beating another guy's price, try to get the last meeting. After presenting your numbers, ask if they are numbers that will get you the job. If so, it's yours. If not, ask what number will get you the job. Decide if you want to play ball or not.

   Personally, I think this is a race to the bottom, but if you do it carefully, you may be able to tread water longer than the other guys and avoid drowning.

   Good words. 

3. 
   rjw | Dec 12, 2008 05:04am | #7

   Some really good observations here.

   Another: go to your library and get any book by Zig Ziggler on sales

   And remember - most sales people fail because they forget to ask for the sale!

   ---

   "Ask not what the world needs. Ask what makes you come alive... then go do it. Because what the world needs is people who have come alive."

   Howard Thurman

4. 
   holy hammer | Dec 12, 2008 06:41am | #8

   You always want to be the last to present your bid. Good move. On the final sales call be sure and show a presentation book with copies of your license, insurance, photos of work, and testimonials. We have clients that don't want us to leave when the job is done. We make sure to leave phone numbers of these clients who are more than happy to give us a great referral.

   We close the sale by saying, "We may be a little higher in price than our competition, but we WANT to be higher. The lowest bidder nine times out of ten will also give you the lowest quality. We have a track record that has a long history of happy clients. There are too many horror stories out there and I can assure you it won't happen with our company. We are dedicated to quality. When would you like us to start?"

   Good luck, hope you get the job.

   Constructing in metric...

   every inch of the way.

5. 
   constmgt | Dec 12, 2008 04:51pm | #9

   I think it's high time that we all started acting like professionals and insist that sealed bids be opened by the owner at a certain time.  Agree to bid against 2 or 3 other serious, qualified competitors.

   This won't prevent being underbid by large amounts by lowballers, but it will make the lowballer have to actually do an estimate and work the job to his low price rather than skating in at the last minute and saying he can do the job for $500 less than your bid which took you 40 hrs to prepare.

    

1. 
   PaulBinCT | Dec 12, 2008 05:25pm | #10

    

   "I think it's high time that we all started acting like professionals and insist that sealed bids be opened by the owner at a certain time.  Agree to bid against 2 or 3 other serious, qualified competitors."

   With all due respect (and empathy)... good luck with that.  "We" aren't going to change the dynamics of how the residential construction market works. That said, I have to admit how humbled I often am at the business acumen and wisdom of a lot of the people here.  I don't profess to having a fraction of the construction knowledge of many here but I do know marketing.  In fact, right now I'm supplementing my non existant construction income by doing some consulting for a company halfway across the country.  Anyway... enough soothing my own ego.  Eric, and some others, hit the nail on the head.  This isn't a bidding issue as much as it's a marketing one.  Your price has a perceived value.  You wouldn't pay 1000 for a Timex, but you'd snap up a Rolex for that.  Both are excellent brands, but you have a perception of what they are, and what they are worth.  Assuming your bid has the appropriate value (that is to say it is competitive for what you are offering) it is only "high" if you have either failed to differentiate yourself from the other bidders, or you are selling to the wrong market.  In other words, you are trying to sell Rolex to a Timex market.

   If you read nothing else regarding marketing, read this list of "The 22 Immutable Laws of Marketing" by Trout and Ries:

    1. It is better to be first than it is to be better.  2. If you can't be first in a category, set up a new category you can be first in.  3. It is better to be first in the mind than to be first in the marketplace.  4. Marketing is not a battle of products, it's a battle of perceptions.  5. The most powerful concept in marketing is owning a word in the prospect's mind.  6. Two companies cannot own the same word in the prospect's mind.  7. The strategy to use depends on which rung you occupy on the ladder.  8. In the long run, every market becomes a two horse race.  9. If you are shooting for second place, your strategy is determined by the leader.10. Over time, a category will divide and become two or more categories.11. Marketing effects take place over an extended period of time.12. There is an irresistible pressure to extend the equity of the brand.13. You have to give up something to get something.14. For every attribute, there is an opposite, effective attribute.15. When you admit a negative, the prospect will give you a positive.16. In each situation, only one move will produce substantial results.17. Unless you write your competitor's plans, you can't predict the future.18. Success often leads to arrogance, and arrogance to failure.19. Failure is to be expected and accepted.20. The situation is often the opposite of the way it appears in the press.21. Successful programs are not built on fads, they're built on trends.22. Without adequate funding, an idea won't get off the ground.

   In my market, the one guy I know of who is by all appearances untouched by the economy is the most expensive outfit in town...

   PaulB

   http://www.makeabettertomorrow.com

   http://www.finecontracting.com

   Edited 12/12/2008 9:26 am ET by PaulBinCT

1. 
   davidmeiland | Dec 12, 2008 06:18pm | #11

   I don't think your point #1 above necessarily applies to the situation in this post. Sometimes a buyer wants the lowest price. Unless they perceive a major difference between products, it's about price. Some homeowners just do not have big issues with quality and all the other things we talk about here, the just want the lowest price. There are plenty of examples of major retailers offering to beat the competition... Amazon is one. Same strategy can be applied to selling a lot of things.

1. 
   PaulBinCT | Dec 12, 2008 07:03pm | #12

   I agree that people shop price David... but if as the OP stated he's losing bids over small differences I'd bet that it's often because he has failed to convince the prospect that instead of him being slightly more expensive than the lower bidder, he is in fact a bargain inasmuch as he will provide a superior value (not price).  Again, this presupposes that he is selling to the right market.  To beat the analogy into the ground further, you're not going to sell Chevys at a Mercedes Benz price point.

   This also can get into a broader discussion of the time and place utility value of money.  I buy tons of stuff from Amazon, but in terms of books I probably spend  more at Barnes and Noble.  The reasons people buy what and when, and from whom, is very complex but without positioning and marketing yourself properly you are severely handicapped.PaulB

   http://www.makeabettertomorrow.com

   http://www.finecontracting.com

1. 
   MikeSmith | Dec 12, 2008 10:23pm | #15

   i used to be scared because we had a reputation around town as being "expensive".....

   really bothered me for many years...

    then i slowly realized that everything is relative.... and who in the world were they comparing me to ?

   did our nominal jobs cost more than someone else's nominal job ?   apparently...

   but .. gee....  if i was building a $30K garage  and someone else was building  a $20K garage.... i could easily find much more than  $10K additional value in our product

    

   after a while  i fianlly realized that construction is a peculiar product...  no two things are the same... there was almost zero  chance that  someone could produce the same product as me for the same money

   they may produce a better job for less money... but  they would only be losing money.. they might as well have gone to the homeowner and said  .... "here... not only will i beat Mike Smith's price... but i'll give you $10K besides"

   that's what they were really doing....

   give  me a set of drawings and some specs  and let me solicit bids from 3 GC's... all bidding on the same plans & specs...

   1)  none will deliver the same product as  one of the others

   2) price may or may not have anything to do with quality and value

   3) some will make money and some will lose money

   the only thing you really have to sell is your company... and perceived reputation is  the ace in the hole

    

   90% of the time we do not bid against anyone else...  and if i know ahead of time that we would be bidding agianst someone who will come in at a lower price, we will decline to bid.... 

    i tell the owner  we don't want to bid against that company because  we will deliver better quality than they will and we won't be bidding on the same thing...

    those that are buying quality will accept that..... those that are shopping price will be pizzed... what do i care ?   i wasn't going to beat anyone on price anyways...  if i did , i probably left something out of my bidMike Hussein Smith Rhode Island : Design / Build / Repair / Restore

2. 
   EricPaulson | Dec 13, 2008 02:07am | #16

    and if i know ahead of time that we would be bidding agianst someone who will come in at a lower price, we will decline to bid.... 

   Good point. The trick is discovering that fact.

   Care to extrapolate on that topic Mike? 

3. 
   Hazlett | Dec 13, 2008 05:05pm | #17

   Yes,
   I would like to hear more about that as well. In my case I know full well I am not in business to serve customers looking for the lowest possible price. during an intitial phone conversation- i try to get that idea across because i don't want to waste my time estimating a project I have zero chance of getting-------but it seems I often STILL end up estimating a project that there is NO way I was ever gonna get

   Personally- I would REALLY like to weed out any prospect who asks
   " do you give free estimates?"---because I then know that cost is way too high on their list of priorities for me to serve well. even for something as simple as roof estimates--weeding out 2-3 of those time wasters a week would easily up a half day/week better spent on other things.
   stephen

4. 
   davidmeiland | Dec 13, 2008 06:12pm | #18

   You could try flat-out asking them "are you looking for the contractor with the lowest price?"

   Most people will not give a straightforward "yes" to this but will answer in some way that will let you make your points about being a service oriented contractor and a person who specializes in the difficult details that make your jobs trouble-free.

   By asking some questions you engage them in the discussion.... better than just reeling off your list of points and lecturing them. Most people can listen to about 3 sentences before they glaze over.

5. 
   Hazlett | Dec 14, 2008 12:38am | #19

   I really wish it could be handled that simply!!!!My variation on that is to tell them up-front that it is extremely un-likely that I am going to be the lowest price---and that I put zero effort into producing a low price------but that up-front honesty doesn't seem to work!!! It seems to arouse curiousity---just to find out what my price is going to be.( which wastes my time)sometimes people will conversationally mention"we are not looking for the lowest price---just a good job at a fair price"-- Or they will say" I want to be fair"-----those two comments--un-solicited----seem to mean the same thing as "do you give free estimates?"----that is if they make a point of mentioning that they AREN"T looking for the lowest possible price-------they really are!interesting------many times after a project is completed--and the customer is handing over a check--they will remark" we just wanted to thank you for your work--it looks great------ you were by no means the lowest price we got---but we felt you were right for the job"---something like that------interesting how THOSE people were not looking for the lowest price----and didn't feel compelled to mention it up front.THOSE people were more likely to have had early questions about specific materials-or tije frame---or want references, or ask about liability insurance------pricing doesn't come up as much. I guess I am wondering if Mike has found an effective way to screen for this over the phone----since TELLING the prospect up front that I will not be the lowest price doesn't worksorry to ramble,
   stephen

6. 
   MikeSmith | Dec 14, 2008 01:03am | #20

   just started reading "Blink" again... i started it and then put it aside.....

   anyways... it made me review some of my past contacts... and i;ve  honed some of my thinking

   in a phone solicitation.... i will engage the caller as much as possible to see if they hold out promise

   i  ask them how they got my name... if it's a referral.... i will probably meet with them at our earliest convenience

   if it's some other source... then i want to know more about the background.... if they  make me aware that they are soliciting  multiple bids... i can usually blow them off with the  "first visit is free, but we charge for our proposal"

   if they understand that, then i schedule them..... as long as they are willing to invest in me, i know they are legit....and i know my odds of getting a contract at my price is good

   i don't always tell people that's how we work over the first telephone contact.... only if i suspect they may be soliciting multiple bids

   the thing about "Blink" is it reminded me that i blew a guy off about two years ago... and he turned around and hired someone else....on the spot...

   they are still working there... and i'm sure i would have had that job if i had merely gone to meet with him

   so.... i guess my answer is "use the defensive "paid proposal " ploy.... if they bite, you hold most of the cards and set the rulesMike Hussein Smith Rhode Island : Design / Build / Repair / Restore

7. 
   andybuildz | Dec 14, 2008 06:24am | #22

   so.... i guess my answer is "use the defensive "paid proposal " ploy.... if they bite, you hold most of the cards and set the rules

   I'm not going to get too deeply into it b/c I don't wanna jinx myself but.....remember back about 1MBTB (1 month b/4 the bannings) we all were talking about charging for estimates again and I mentioned a job I had a good shot at getting that was well over a half a mil and my last meeting with them had me doing the estimate for free b/c I was too afraid to open my mouth and ask to get paid for my time...thinking that would scare them away? Charging thousands for an estimate??? YIKES! Well...I think i might have told you?? When reality hit me...on my way over to their house after work one night I got to thinking how long and tedious it would be for me to spend probably a good week or more full time figuring it out....and I thought...no way am I gonna do that. On such a huge job it "forced" me to think about it realistically. This not only would take me away from my paying jobs and/or family time but here I am working out the entire process pretty much for these people for FREE!!?? I'm thinking ...that's insane! I was always able to justify it on jobs that'd "only?" take me a few hours??.... but DAYSSSSSS?...even over a week? No way. I may look stewpit but I really am not.

   After my 3-4th? time sitting down with them that night I told them that I have to charge probably somewhere over 2 thou....that when the plans were finalized from my archy I'd let them know.

   I'll tell ya what...I was real honest...REAL HONEST! I was transparent...I was authentic...I acted like I really cared...cause I always do. I acted like their project was going to be a big part of my life for months to come if they gave it to me and there is value to that...for them...and should be for me as well. It was not going to be just another job because none of my jobs are...I never feel that way. They're always projects I put my heart and soul into...by the end people always see that.

   Eventually I think word gets out!

   To my surprise they said fine...with giant smiles. i was kinda shocked. I think my sincerity and persistence with them over some time meant a real lot to them. I didn't try to sell myself AT ALL. I was just myself...I think that alone set me apart. Now reading this thread and thinking back to some of Sonny's old threads...oy..lol....I realize (finally) that it's not about trying to sell yourself. It's about being honest and authentic and of course having your potential customer know your work.

   I don't wanna linger on here but the people I'm doing a job for now who have become Katrina and my friends went out to dinner the other night and bumped into some strangers here in town while waiting for a table.Turned out after talking they (my customers) were raving about me and the other people were talking about their best friends that were soon going to have work done by some guy they......well...dig this letter my potential customer JUST wrote me....not in full cause it;s kinda long but here's the end of it..

   ________________________

   Andy

   How is your other job going ?  Coincidentally, a friend of mine met the couple whose house you are working on – they simply rave about you !!!!!  I’m so not surprised !  if I don’t speak to you, have a wonderful ( and warm ) holiday and new year. 

   ___________________

   So all these years I worried about charging for estimates and beating the lower price instead of being confident in who I am as a builder and person.

   Figures I only have another cpl a decades left in me to keep doing  this.....so to all you younger guys....well...figure it out : )

    

    

    

   http://www.cliffordrenovations.com

   http://www.ramdass.org

    

8. 
   Hazlett | Dec 15, 2008 03:49pm | #23

   Mike- i will try to dig up that book--it's by Malcom Gladwell?? Last few months I have been trying my own version of "charging for an estimate"Keeping in mind that a roof proposal is fairly simple---but between meeting the people, walking through the job-writing it all out,drive time etc.-----it's about 1-1/2 hours of my time. I AM willing to invest that 1-1/2 hour on a prospect for no money----but I expect THEM to invest the same amount of time-----if they won't make an appointment and instead just say---" take a look and let us know how much it would be"---well then I have to conclude they aren't as serious about how I want to work as I need them to be.Probably sounds like salesmanship 101 to you---but historically i have done a sizable % of my projects without EVER laying eyes on the actual customer BTW- had an "experience " last week.--A customer calls me( I roofed his house in October)-------customer has a son who needs a roof and some siding work done,BUT the son is working out of state---isn't at home----can I just go over and write up a proposal and give it to the father????Well- OK---I have done several jobs for people who used to live here--still own a house here but now live in FLA or whateverSo- I go over to look at the job----get out my ladder-take some measurements etc-------son comes strolling out of the house( turns out he is at home after-all!)-----son goes on a rant-------he wants an estimate---but the work has to be done for the amount of his insurance check----insurance company allowed $12,000 minus his $1000 deductible---so the son expects the work for $11,000.He then tells me-- he has an "unreasonable" proposal from someone else for about $18,000 the work is tear-off and replace roof on garage and 2 story,non-walkable house---and aluminum siding replaced on 2 sides of the house AND repaint the house
   -----for $11,000???? LOLTHAT would have been a handy bit of info to have extracted during the initial phone conversation with the fatherthing is--- i have in my briefcase a signed proposal for the second project we will do in the spring which is a roof almost identical to THIS guys' roof---the roof alone is $9860----so there is NO WAY---that 2 sides of this guys house are getting re-done in aluminum for$1140 !!!!!!--plus----- the paint job is a minimum of $2400( it can be sprayed in one day)So-- I blame this entire event on myself----this is all info I should have extracted during an initial phone conversation-----sheer negligence on my part. I have learned AFTER the fact-------that I get a lot of projects because I was the ONLY one who whould come out and look at the project---or I was the only one who showed up on time and treated the prospect respectfully But THIS project--- there was NO way I was ever gonna make that sale EVER---so it would have been better If I had more effectively screened this guy out over the phone Don't we all need a system for seperating the wheat from the chaff?
   stephen

9. 
   MikeSmith | Dec 15, 2008 06:24pm | #24

   i used to go out on those types of call

   like you described....    a third party   wants me to look at a job...

   what i tell those people  ( in your case... it would have been the father  )

   'sounds like a great job... why don't you have your son call me so i can set up a meeting ? "

    

   most of the time  they won't even call.. so that makes it easy...

   or , if they do call...  i get to  interview the party of the first part,  first hand...

    bet that guy would have revealed himself to you pretty easyMike Hussein Smith Rhode Island : Design / Build / Repair / Restore

10. 
    Hazlett | Dec 15, 2008 10:12pm | #25

    Yes---that is pretty much exactly what I typically do as well---- I want THEM calling me----not ME calling them but in this case----- I have casually known the father for 15 years---and his son was theoretically out of town--and i had just done the fathers roof in october but in the end--it's my fault because I broke my own rule---and, yes If i had talked to the son on the phone before hand----it would have quickly come out about the $11,000---and knowing the street his house is on-- I knew before I got there what the roof was going to be---and I would have known that the $11,000 wasn't going to fly.stephen
    BTW-- this is the time of year i make firm,iron clad plans and procedures for the next work season----which I eventually end up breaking,LOL.
    EVERY year I swear I am not starting production before april 1st---and every year I end up trying to jump the gun and sneak some stuff in in mid march--or late Feb.-----ALWAYS ends up taking twice as long as possibleso this year--gauranteed i am not starting untill the first FULL week of april---and a prospect MUST meet with me in order to earn a propsal I should really develope a phone call check sheet-----information to be extracted conversationally--BEFORE I make an appointment.
    Stephen

11. 
    timothale | Dec 14, 2008 03:16am | #21

    It's hard to get the jobs that are not based on the lowest bid.  My older brother designed and built a lot of high end homes before he retired.   they still list him as builder 30 years later when they are for resale.  he was to the point where he flat out told people he didn't do low bid work.  he did high quality at a fair price. he sometimes asked if they would look for the lowest bid if they need heart surgery,  and did they plan on living in the house more than a couple of years.  I worked for a contractor a few years ago that moved from urban renewal projecte to high end remodeling but his crews still were used to slam bang cover it up and get to the next job.

6. 
   VinceCarbone | Dec 12, 2008 07:35pm | #13

   Ceasar,

   I wouldn't have passed up the opportunity to be first,I'd much rather have the time to form a relationship with any potential customer.I like to spend as much time with them as possible,I want them to feel that I care more about their project then anyone else.

   I don't care what the other bids are ,I'm not selling price, I'm selling me.I try to make them want me in their house instead of you.I take an interest in them and their kids and their pets.I try to be open and honest and listen to what they want and what they say and why they want it.

   I want to be the guy that they compare the other guys to.

      Vince Carbone

   Riverside Builders

   Franklin,NY

1. 
   PaulBinCT | Dec 12, 2008 07:44pm | #14

   Bravo ;)PaulB

   http://www.makeabettertomorrow.com

   http://www.finecontracting.com