Maybe this is petty, but I don’t really know…
I do very detailed estimates and proposals for my residential remodeling company. Can the homeowner share the proposal including cost with competitors? Do they have to show everyone who bids all the proposals if they show one person?
I have a customer who I am certain is sharing my proposal with another contractor and undercutting me. While it is unlikely I would take any action, I just want to know if this is legal although it certainly seems unethical.
Replies
CJ,
Not a damn thing you can do about that expect get mad. (I've been there too...many of us have). This is why I used to charge for my estimates to at least make sure I made "something" off the work just in case I didn't get the job.
Folks used to take my detailed estimate and shop it to other guys who of course would say they could do it for "just a bit less". Capitalism at its finest.
Don't let it get to you too much as they may not have been folks you wanted to work for anyway.
But I must admit, when I did get some money for the estimate, I felt good about it even if I didn't get the job as at least I felt like they "bought" something and could do with it what they pleased. It never really paid for all my time but did make me feel better and weeded out the tire-kickers who were just dreaming about what they MIGHT want to do with no intentions of doing it!
Oak River MIke,
you're wrong! there are effective ways to deal with just that problem and still get the deal! Please ask me my 40 years of experiance can help you..
Consider a different strategy.
Bid your work lump sum fixed price, and charge handsomely for your proposals. Start right now.
If that won't work for you or in your particular market, do this. Meet with your client to deliver the proposal, carefully go over all the details, but leave them with nothing but the number. No more detail is left with them other than the price.
View Image
"A stripe is just as real as a goddamn flower."
Gene Davis 1920-1985
Gene Davis.
That works only when your competitors aren't agressive. Better ways of doing it.. More effective, more likely to succeed.
There is a way ( actually a several, one of which has already been posted) around this issue.
I quit allowing the customer to see my breakdown when i was forced into a bidding situation.
Bottom line price is all they know along with a complete list of specs. I give the specs with a lecture on how they can use them to compare mine against competitors specs.
Always stressing "Apples to Apples" when giving the lecture.
I give examples, all Door Hardware is not the same, All windows are not the same some are better and that is why they cost more.
Tell them there are ways to cut money out of the bid by choices THEY make and that you are willing to discuss that after you know that you have the job. You want them to be happy and satisfied they are getting their monies worth because you feel they deserve that as we all do.
dovetail,
You've got the cart before the horse. You only show your hand when you're ready to call. It's poker 101
I quit doing itemized estimates cause HO's used to try and break things up.
They'd see paint at $400 and say "we'll do that ourselves" there goes some profit.
So now they get a grand total at the bottom, it still doesnt get away from the sharing thing. As a matter of fact, i'm pretty sure I just did a bid last week just so the "bowling guys" had something to beat.
It sucks, but other than billing for estimates you're screwed.
I tell people that estimates are free, quotes cost money.
I'll guess for free, but when I sit down for more than 2 hours you're gonna pay.
I quit doing itemized estimates cause HO's used to try and break things up.
That's what I usually think when I get a bid. I don't care how much the paint costs, just tell me how much the job costs and what it will cover.
jt8
My advice to you is not to inquire why or whither, but just enjoy your ice cream while it's on your plate-- Thornton Wilder
Never do a detailed estimate until you have the job, otherwise you will be doing a lot of work for nothing. You have to learn to sell yourself and take the job. Free estimates aren't going to get you anywhere. It's different if you are doing something like roofing where it only takes a few minutes to figure square footage. If it's going to take you a few or more hours to prepare a price, don't do it for free.
Beat it to fit / Paint it to match
"Never do a detailed estimate until you have the job"don't understand.you don't "have" the job until you have the contract, which has the $ in it.IIRC in Mass an estimate is the same bid
bobl Volo, non valeo
Baloney detecter WFR
"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG
You can run yourself ragged doing detailed free estimates. If you sell yourself so you are the contractor they want then you can talk honestly about their budget and what they want to accomplish. Doing competitive bids is a losing proposition. It's never an apples to apples comparison.When I started out, I did the whole self promotion thing. Adds in the papers, signs on the trucks, meeting and greeting like a politician. I worked endless hours figuring jobs, putting together pretty proposals, often to be beat by a small amount from someone who added on extras, or used, to see if the BIL was shafting them. I was an experienced carpenter but I didn't know anything about business or sales. It didn't take me too long to figure that working for free won't pay the bills.Contractors run the gamut from crooks to saints, hacks to masters I don't want to be thrown into the same pit with all of them. Most experienced contractors know a ball park that jobs will or can fall into. Obviously, there is a wide range but if you pull into a development with mostly $275,000 homes, chances are they don't want a $100,000 kitchen. Builders know a range of materials and supplies from the entry level to the high end. In the majority of cases, I can tell a customer that their job typically falls in such and such a price category. The exact figure depends on a specific choices.I try to screen my customers. Most of the time they know someone I've done work for, friends, neighbors, relatives. I want to get a feel for their personality, the job, their ability to pay and see if it's a match for me. I try to make them feel comfortable with my abilities . I explain the procedures, choices, what it takes to do a detailed price and that competitive bidding isn't always a true reflection of what they will get in the end.I go to a potential clients home for free. I spend an hour or more talking about the job, take measurements, show my portfolio. I go prepared with brochures, magazines, a sketch pad, pictures of similar jobs. I tell them the problems and work involved in bidding and that I require a retainer before I will work up an exact price. It's not much, maybe $400-500 but it covers some of the time involved and it makes them commit to me as their contractor. Now I know that I have the job and it's a matter of working out details that hits their target expenditure and meets what they have in their vision. If I just go away to prepare a bid, it leaves the door open to other contractors, I'm not working with the customer, I'm just gambling.Customers don't like the bidding process much themselves. Some know exactly what they want but most are out of their element. When they haven't chosen bidders that are peers, prices can be all over the place. It's confusing, they don't know who to trust. They know if they are getting BSed and they can tell if you really know what you are talking about or not. It's a matter of salesmanship in putting them at ease and instilling them with a sense of confidence in you.Beat it to fit / Paint it to match
well said.
bobl Volo, non valeo
Baloney detecter WFR
"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG
bobl,
You should have an idea of your costs having built as much as you have. It's fair to tell the customer, "It sounds like you're in the ballpark of $XXXXXXX dollars.. rounding out is absolutely fair.
Here' is the critical words you must use, "Where have your other estimates been coming in at?"
If he claims lower you still haven't lost the deal, he may only be bluffing. So your next question needs to be listened to carefully. "Are you going to take the lowest bid?"
Flat out yes and you have to decide if that is what you want to be involved in. Hemming and hawing or a pause or hesitation. Watch his body language, eye contact. That will tell you if he's telling you the truth.
I know it sounds structured and unnatural but you must do it in that order.. any other way and it's checkmate! you lose..
"I know it sounds structured and unnatural but you must do it in that order.. any other way and it's checkmate! you lose.."It sounds structured and unnatural unless it's done naturally! I like your sequence and it certainly gets the information on the table. You have mastered your trade well Frenchy! Bob's next test date: 12/10/07
Thanks Blue,,
Ehhhhh,...... Would you mind telling someone else that so I can find a job please? <grin>
If you are such a great sales person, you should be able to sell yourself to someone that needs sales. Who doesn't need more sales in this economy? Seriously, you ought to call on every small quality minded one_man_ ten_hats contractor doing remodeling in your area. Offer to sell his company and tell him you'll find the leads. If you can sell a million dollars of remodeling in the next year, you should be able to gross 100k. Bob's next test date: 12/10/07
You know thinking about that its a great idea, Theres many construction and roofing companies could use a salesman. If a Good salesman went to one or even many and said, Listen let me go and sell and just give me a commission, Give me a desk or even a list of leads and it wont cost you a dime Ok maybe things slowed up in different parts of the country but i know 10 companies off hand here i could strike a deal with if i was a salesman
bobby's,
Locally siding, roofing etc. companies are all starving.. Most of the work they do is insurance type stuff or cases where they leaking roof became so bad something had to be done so the cheapest guy is going to do minimum work..
Honest there is a house two blocks away (remember I live where a starter house is 2 million+) has had a tarp on his roof now for well over a year. Conversation with his neighbors, says he's been living on his home equity since losing his job a while back..
There may be a lot of people who would like stuff done but many are either scared or worried enough about the future they aren't willing to make a commitment..
I did not know it was that bad there.
bobby's
At one report we were second in the nation for foreclosures. I know things are better now because banks have been quietly told to work things out if at all possible.. They are taking token payments every 3 to 6 months.
My daughter has to fly to Detriot on occasion and she reports things look on par here with some of the parts of Detriot as far has houses for sale etc..
Unemployment is slightly above national average but that doesn't count a lot of those who were working off the books before and now can't find a job.. Nor does it count discouraged workers etc.. (I think I fit that catagory)
I saw it coming over two years ago and I think if you read some of my old posts you'll hear my warnings.. before the equipment I sold was all going to builders who had sold or nearly sold houses before they were built. Starting over two years ago most of the builders were making spec homes.. as of last year at this time few had any jobs lined up.. Today only a handful of builders are still active..
I started circling the wagons a couple of years ago but did not quite make it, People were flipping here and walking away with tens of thousands of dollars.
I went against all advice and eliminated as much debt as i could. A few more chess moves and i would have had NO debt but time ran out. Just talked to a Broker friend and he said only a few closings since Jan, Thought about it maybe One hundred Real Estate agents, 3 sales, One Hundred big SUV payments.
Today only a handful of builders are still active..
Kind of a side note to that comment. I had to renew a certification with the state, and went online to print off the forms. While on their website I explored a little and found the licensed builders listed by area code. So I looked in the area codes I work. Holy cow are there the expired licenses hanging out there. They can still renew them, but they haven't been able to pull any permits since their certifications expired. Many names I recognized haven't been able to pull a permit in a year or two.
Ever think of selling Timber Frame packages for one of the national dealers, or maybe log homes, or SIPS? Just wondering as a contractor from here went over to western Wisconsin to put up a log home, and the log company wanted to know if he would stay there and be a dealer. He said no.
Bowz
Bowz,
Yeh, my panel company stopped making panels and they are pretty big (AFM) with national advertizeing etc.. I know if they aren't making panels they aren't selling timberframes or log homes..
I tried for a position selling ICF's but they'd just laid off one of their two reps. and don't think they can keep the other one.
I contacted all the factories who sell machinery in the area looking at the possiblity of a rep job with real disappointing prospects..
I admire your persistence. I know guys who've given up with way less effort. But you have to have faith that somewhere out there is the right job for you, even in this economy. It sounds like all that negativity out there is killing your faith in the possibility of finding work.
If jobs are not to be had, find some service you could offer, and start your own business. What if you advertised sales counseling, sales seminars, a booklet on sales tips, or who knows what? Antique auto restoration service? I don't know, but I think you gotta get away from your "network" - its killing your positivity right now, and get into something that has the potential for success.
View Image “Good work costs much more than poor imitation or factory product†– Charles GreeneCaliforniaRemodelingContractor.com
Edited 5/9/2008 7:23 pm by Huck
Huck,
Entry level jobs abound.. I can't afford to take one because the income won't allow me to even make my mortage payments..It's not pride or greed or anything like that. Good jobs at my level automatically set you aside if you've been working entry level.. They expect someone at my level to be able to sustain themselves for a while..
Nobody will hire me and pay a decent amount unless I bring something special to the table.. Those jobs exist.. people do retire, move away etc..I could go door to door knocking on doors untill my knuckles bleed but without the right intros or contacts or connections you're just another face, just another body..
Even the head hunter I work through isn't positive about jobs.. Not just for me but for anyone he handles..
He claims it's at least a year and sometimes more before he sees any of the companies he works with opening up and hiring..
Blue
That was my first idea and I could find a dozen jobs today if I could live on the results.
I network with some of those guys every single day and they keep telling me they haven't signed a deal in 6 months or more. The few deals they are getting are usually so lean by the time competitive bids get in they can't really even pay for the gas it took to get them signed..
I know and understand whining because someone isn't performing.. Heck even I've been guilty of that in the past. These guys aren't whining.. they are scared..
In the past a guy could fix his house up and get some cash out for other stuff. Now the bank demands 20% down before the loan and bank approval on the market value of the work.. He'd better have a pretty good credt rating as well.
Frenchy, I don't know much about sales but here is one fact tidbit that I was taught and it fits perfectly here: "In every conversation, someone is selling and someone is buying." And here's my reply to you: "I'm not buying your explanation!".You have exhibited huge volumes of sales ability. You now are agreeing that you couldn't sell anything because "...those guys every single day and they keep telling me they haven't signed a deal in 6 months ...". Aren't you a better sales agent than those guys? Are they contractors or are they sales experts? I'll agree with you on one condition: Go spend all day at your local lumber yards. If nothing is being picked up or shipped out, then there aren't any sales to be had. If anything is being shipped, then you are the man that should be collecting the commission!You can sell yourself short, but you ain't gonna sell me! Bob's next test date: 12/10/07
Blue,
According to my lumberyard network. Which I kept real close to since they were very good lead suppliers. the lumberyards are working with half or less of the staff they used to have. Nowdays a lot of owners are doing the take offs and estimates since so few come in.. some of those used to be performed by a staff of up to 5 and they've eliminated all of them..
One of the bigger lumberyards has closed three branches and I'm thinking they are selling off their inventory.. shelves are looking very bare considering they've closed three branches.. Walk in there today and the guy behind the desk comes out and pulls your order for you.. I suspect if you want it delived he'd be driving the truck as well.
Salesmen work on a commision.. if there is no or very little profit left in the deal they can't pay very much commision can they?
Frenchy,I'm only a couple hours from the Twin Cities and I'm busier than a one-armed wallpaper hanger. I'm booked out through August (which is about twice the backlog as usual) and the phone keeps ringing. I had to turn several jobs down in the last few weeks.There is some action in MN. As far as bids go, the competitive bidding process reduces contractors to commodities. I'm never the low bid, so I have to sell based on quality. I work with three builders who are all busy and they have been selling jobs for me.If you are bored and want to get in on some trim carpentry or just visit, drop me an email.I hope you get into a good gig,Brian
basswood,
Next time you see a Cat or Lull telehandler down your way chances are I sold it.. After I left Zieglar it was over 13 months before another one was sold down there and Then I started selling Gehls down your way which there should be a fair number of..
I love that part of Minnesota, how far south of La Crescent are you? The nice thing about the area down there is that when the Twin Cities die it's usually a year or even two before that area slows down. I sold my last new telehandler down in Rochester before they let me go.. (He lost it on a repo a while back) So not everything in the Rochester area is going strong.. it' must be the quality of your work that keeps you busy.
Frenchy,From La Cresent, I'm about 40 minutes upriver on the Mississippi, just outside of Winona (closer to the Twin Cities than La Cresent).Building has been trending down for several years in this area. We slowed down before the Twin Cities or Rochester...though we don't see the booms or busts.I did have a full-time guy for a year and a half, but could not keep him busy enough (a couple of years ago). More than enough work for me now though.I rent an old Lull from Tri-Mac Do it Best Lumber, when I need one.All the best,Brian
Are you selling me something that I'm not buying again?If there is one deal a day going out that door, it could be yours. Bob's next test date: 12/10/07
I don't know how anyone could move to the contract phase without a detailed bid. I'm not talking about someone specifying that they will use exactly 100 2X4's, etc., but I don't see how a buyer could know what they are getting without specifics. I've seen rough bids vary by more than 300%. I don't expect that the difference is just the level of GC profit. The higher bids are using higher assumptions for finish than the lower bids.
In my experience, I've used the detailed bids to create one uniform, apples-to-apples bid. It's a pain, but it was a good way for everyone to make sure that we were all on the same page as to what was included, and what wasn't. When doing that, I had one contractor increase his bid by $10's of thousands. Obviously, he wasn't including everything I thought he was in his initial bid. Had I chosen him, we both would have been really unhappy.
The final decision isn't just about price. That's certainly a factor, but it's not the only one. If someone has enough business that they don't want to provide detailed bids - more power to 'em. I know for me, I will never, ever, give someone a contract without a detailed bid again and I would advise any other HO to do the same.
Yes, free bids where you don't get the project are a waste of time. But, lots of industries have that practice. It's just a cost of doing business.
"I don't know how anyone could move to the contract phase without a detailed bid. "I think we've all had this discussion hundreds of times in many various threads. My thoughts on this subject is: you are putting the cart before the horse if you give a detailed bid without a detailed set of construction drawings and a full set of component specifications. So, most proposals are loaded up with plenty of "outs" and allowances. The most secure way, for both parties to the contract, is to have two contracts. The first contract is for the construction drawings and specs to be created and paid for by the client. Then, the actual proposal and contract for the build is created using the plans and specs as an attachment. It's really the only way the client will know what he's getting. Bob's next test date: 12/10/07
You have the job when you have an agreement and then you can draw up a contract. Technically it happens when the contract is signed. It's the float time between the agreement and the contract that people can change their mind and that's happened to me.I never show the breakdown anymore.
Not true. On my jobs I have a good feel for what my subs will come in at. I give a baseline. I then explain that sub numbers are close and will be modified (either up or down) when they are on site.
If the client is still interested, then I have my guys come in and give a closer price. This saves alot of people time. My guys dont have to drive out to a maybe and the HO doenst have to open their home to a dozen guys to look at the same job.
Hammer
Better answer! I don't know if this was your intent or not so I won't "correct you" But You've got it right! Don't show your hand untill the deal is done! Poker 101
Frenchy, I'm not playing poker or any other game with my potential customers. I'm honest, capable and experienced. This is my 28th year in business. I want the customer to be a long term repeat one and hopefully include their friends neighbors and relatives. I treat them like I want to be treated, plain and simple.I don't know how this free estimate deal got started. It's one thing if your work can be easily priced by the foot but it's quite another when you are talking about all the things included in a remodeling or new construction job. Do reasonable people expect you to work 4-5 or more hours, for free, and for your subs to do the same, with no guaranty of getting the job? There are too many competitors that are playing games and they don't play fair. You figure that out very quickly.I have some friends that build highways and bridges. There are only a few other companies in the area that have the capability to do that work. They have to bid on jobs. They have estimators, engineers and business managers on the payroll and on these multi-million dollar jobs, the competition is often within a few thousand dollars. That's a different deal than a small working contractor like me. I'm not a large developer that has built the exact same house 50 times either. I know what it costs to do a job and I have a variety of options to offer to make it happen. I'll still be there next year and the year after. My cards are face up on the table.Beat it to fit / Paint it to match
hammer1
I don't know who told you that you could do a poor job of anything and expect good results.. You can't.
I've been a professional salesman for 40+ years, the last 17 in the construction business.. Surprise! most of my customers were referalls or repeat business.
I hate sleezy salesmen who do a lousy job of selling. They give my business the same reputation that lousy contractors give the home remodeling industry.. they don't know what they are doing and as a result they do it poorly!
You are a contractor! That doesn't mean you are also a salesman.. those are two differant skill set's. Just like being a dentist or being a fisherman.
Without training how can you expect to do things well? You may have been able to stumble through the process and remain in business but with some skills and learning some things I have no doubt that you can do a better job of it in the furture..
It's not magic or underhanded (not if you are honest and respectable) It will result in increased sales and profits. More to the point, you will learn how to deal effectively without making it seems like you won at their expense.
Those contractors who have managed selling skills in my area remain in business. Those who didn't are looking for work elseswhere..
Welcome to the real world.
Gene Davis makes a good suggestion. Show the details but do not leave them with the HO. Just the number.
A good way to charge for an estimate is to offer to credit it to the job if you do the work. This will discourage people that are just shopping around but not those who are serious about hiring you.
Don't take any of this too much to heart. Even if you just give the HO a number, they will still be talking to other people and unless they are taking sealed bids, they will mention the other estimates. Never mind that the estimates may not cover the same work. All they remember are the numbers.
You will get your share of work if your price is realistic. You will get it from people who understand the value of good work and that is who you want to work for. Be patient and don't worry about what other people are doing.
Great response Schelling!
The only thing I would add is NEVER take the customer for their word or for granted as I have had previous customers I lost due to them still shopping the price after they had been happy with previous jobs I did for them.
Loyalty never really outlives saving a buck for some people.
that reminds me of an old saying "buyers are lyers!"
"Loyalty never really outlives saving a buck for some people."why do they "owe" you loyalty?
bobl Volo, non valeo
Baloney detecter WFR
"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG
Schelling,
You're almost there! Details make the differance, this being the internet you may have simply taken a shortcut but you sound like you have the right idea!
Each piece of paper has a purpose, and trying to make that one piece do different things is one way this problem comes up.
For example, let's say a customer asks your price to build a shed. Your reply ought to be along the lines of "I can build to your print for $ XX.xx ." Now is also a good time to mention various additional charges that might come up - special inspection fees, engineering charges, equipment rentals, etc.
If you made the print, and worked with the customer already to work out design details, your first 'piece of paper' should have been "I will work with you to design that shed and make a simple drawing for #XX.xx ." You've kept it simple and basic.
In short, you list the final result, and the final price .... keeping it as simple as you can.
The next step comes when the customer asks you to actually do the work. Now is when you review, in great detail, the final design and job details. That's when you say "I will build THIS shed for $XX.xx"
Meanwhile, back at the office, you have another set of paper. Here's where you did your homework, determining your parts list in detail, checking your material and labor costs, etc. The customer has no need to see these details. You might even work up the job in different ways, using different methods and materials. This step will let you present the customer with options, or adjust the price for changes.
Then will come the call from the customer that someone else has quoted the job for less than you. The first thing you need to learn is if the quote was on the same thing. Did you quote a stick-built shed, and the other guy propose a pre-fab metal shed? If there are differences, review your quote. If not, wish the customer good luck.
It's worth keeping communication open with the customer, especially during the early stages of construction. It's always possible that the customer will get tired of dealing with the 'trunk-slammer,' and you may save the job yet.
that reads like bait and switch.
bobl Volo, non valeo
Baloney detecter WFR
"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG
I don't follow you ... where's the bait, and what's the switch? The customer asks you for a price to do something, and you reply that you will do what he asks for a certain price. What you DON'T do is tell the customer how you arrived at the price, etc. That's not his concern. Should the customer reply that someone else was cheaper, it's absolutely proper for you to inquire whether the lower price is in response to the same request. If the lower price was for the same job - well, all;s fair in such transactions. If the customer changed his specs, it's only fair that you be allowed to reconsider your price. If the other contractor is making promises and not delivering - the bum has just screwed you, and deserves to be caught.
"For example, let's say a customer asks your price to build a shed. Your reply ought to be along the lines of "I can build to your print for $ XX.xx .""
Hey I can get my shed for $XX.xx
no, wait a minute
"Now is also a good time to mention various additional charges that might come up - special inspection fees, engineering charges, equipment rentals, etc."
Uh, you didn't know about those things when you give me the other figure?"If you made the print, and worked with the customer already to work out design details, your first 'piece of paper' should have been "I will work with you to design that shed and make a simple drawing for #XX.xx ." You've kept it simple and basic.In short, you list the final result, and the final price .... keeping it as simple as you can.""The next step comes when the customer asks you to actually do the work. Now is when you review, in great detail, the final design and job details. That's when you say "I will build THIS shed for $XX.xx"Meanwhile, back at the office, you have another set of paper. Here's where you did your homework, determining your parts list in detail, checking your material and labor costs, etc. The customer has no need to see these details. You might even work up the job in different ways, using different methods and materials. This step will let you present the customer with options, or adjust the price for changes."again, give one figure, and then want to change it by wanting to provide something different.
bobl Volo, non valeo
Baloney detecter WFR
"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG
Again, you manage to deliberately misunderstand what I said. Options .... like giving the customer a 'good, better, best' scenario. Or if he says 'that's more than I want to spend.' It is smart for you to be able to say "replace the siding with T-111, and the price will be $X less." Changes. There's hardly a job out there that doesn't have changes. It's wise to be prepared, so when the customer says "why don't we make that a double door" you are ready to reply "the will cost $X more." Uncontrollable expenses. Like when the city suddenly decides they need a soil test, or the water department to sign off, or ... whatever. Or, despite your best efforts at hand-digging, the sewer line collapses into dust as soon as the sun strikes it. Or you hit that underground jet fuel pipeline that the 'call before you dig' folks insisted wasn't there. Oops. These are things fit for the contract.... but not for the bid. Ironically, the 'cheap guys' are all too aware of these things, and all too often make sure they come up during the course of the job. No wonder the customer feels bushwhacked! That's why I advised that you keep informed as the job progresses .... there may come an opportunity for the customer to cut loose from the crook - and for you to step in. If all that seems in any way improper, I cherish your innocence.
"Again, you manage to deliberately misunderstand what I said."No, I didn't deliberately misunderstand what you said, I went by how you said it.what you say about options, changes, and unexpected things I agree with, I was commenting on how you said them previously. The picture I saw when I read it."These are things fit for the contract.... but not for the bid."IMO they should be covered by the bid, at least to the extent that they make the customer know what is covered, what is not, and not to be surprised.Terminology is often a problem. Sometime back I got into a discussion regarding bid and estimate, where it was pointed out to me that they were the same for practical purposes. that is, an offer to do a job for a certain $ amount. depending on the job, the estimate/bid can be the contract when signed by both parties.
bobl Volo, non valeo
Baloney detecter WFR
"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG
When buying a new car or truck, we all have probably used one dealer's price as a bargaining chip at another dealer. It's not much different.
You might try to turn your bid in a little bit late--maybe then the client would let you compare your bid to your competitor's bid--not the other way around.
I like the idea of just giving the client only the total cost--not the details. It seems like then the competitor would have to submit an "honest" bid, not just a bid to undercut yours.
Explain to your client that you will be happy to discuss item by item--with options--after being awarded the job.
"I like the idea of just giving the client only the total cost--not the details. It seems like then the competitor would have to submit an "honest" bid, not just a bid to undercut yours.the only thing your competitor has to be lower on, is the bottom number."Explain to your client that you will be happy to discuss item by item--with options--after being awarded the job."sounds like bait and switch at worst, having to deal with change orders at best.
bobl Volo, non valeo
Baloney detecter WFR
"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG
I think the point of my approach is that you gotta figure the client will shop to get the best deal.
And why not? Who among us doesn't? Whether it is a gas tank fill-up or a room addition, only a fool doesn't check.
And a check is not done for price alone. There is a whole host of things the buyer is looking for, and cost is not necessarily the first of them.
The reason I propose leaving nothing behind other than the lump sum number is that I do not want to make it easy for a competitor to undercut me and then say his specs and details are all like mine.
With most all John and Jane Doe homeowner projects, there exists no detailed set of specs, details, and product callouts. There may be some drawings, but most of the time they are nonspecific when it comes to the specs and details.
It is for those very reasons that no two contractors can quote the same job to a client. And you, as the one making a proposal, need to make it as clear as you can, with a long verbal litany of detail, what your price includes. You can even have it on paper, and have two sets available, so you and the client can look at it together.
If you have been paid for your proposal, and you should be in a perfect world, then you are obligated to leave the paperwork with the client. But if you haven't been paid, you've every right to insist it leave with you after the meeting, after you have carefully explained why you will do so.
You did valuable work in developing all the detail, and the work product is yours alone until you have been awarded the job. To leave it with the client, you have provided them with a means of having a competitor quote what he or she will call the exact same scope, at a lower price, or to "value engineer" it for a lower price.
That discussion of details and specs, and why you don't intend to leave them behind, needs to include a discussion of why the client should and will have you back to discuss the job, after other competitive prices are taken. You need to agree that as with any complex undertaking, costs can be lowered by doing things differently, and that a good discussion about that can be had when all the numbers are on the table.
The word "loyalty" means nothing to me when it comes to the dealings between homeowner clients and contractors. It is the wrong word for what should be part of the relationship, while other words like "comfort," "trust," and "assurance" have real resonance.
I can say I am "loyal" to a subcontractor or supplier, while knowing I am paying a higher cost for services or goods than otherwise, if there is a value being furnished such as timeliness or service. A property owner can be "loyal" to a remodeling contractor who has done multiple projects for the owner, and done them well, so that a relationship based on trust has developed.
For a first-time deal between you and a client, you need to develop, during that proposal meeting, the beginnings of that mutual trust, in insisting that you get the last look at the job.
View Image
"A stripe is just as real as a goddamn flower."
Gene Davis 1920-1985
Why not state on your proposal that this quotation is propriatory..not to b shared or shown to anyone else.
Cause once you leave, you have no control over what the cllient does. Try proving they shared.
At least it will make them think about it and I'd say 70% would not share because of the fear factor. Anyways, how did the originator of this thread learn about it?
The last time it happened to me, I found out cause the people out right told me.
When I left it sounded like I had the job. I got no signature cause the husband wasnt home to agree with the wife.
When I called back a couple of days later, I was told the bowling guys were gonna do the job. I'm certain they were given my number and told how much to beat it by.
"When I left it sounded like I had the job. I got no signature cause the husband wasnt home to agree with the wife."You were the victim of the "higher power" objection. Mike insists on presenting the proposal to both decision makers at the right time. He is exactly right. Even though the proposal might not get accepted, at least you'll be able to get to the root cause of the objection (price) and offer your response. If the lowballers are coming in and bidding without the cost of GL insurance or WC, you can explain that they are risking EVERYTHING THEY OWN to save a few thousand dollars. "Mr and Mrs Jones...I love to gamble too but I would not risk everything I own for a couple thousand dollar gain, even though the odds were substantially in my favor. If you opt to save the $2000 and snake eyes come up, are you willing to pay for some other man's health bills for the rest of his life?" Bob's next test date: 12/10/07
"If the lowballers are coming in and bidding without the cost of GL insurance or WC,"how would you know that? in another thread some one mentioned being $2k lower, but IMO the lower guy has the insurance.In that case the "lowballer" is lower than Lowes' figure.
bobl Volo, non valeo
Baloney detecter WFR
"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG
"If the lowballers are coming in and bidding without the cost of GL insurance or WC..."
how would you know that?
He didn't say he knew that. He started his sentence with "If". Guess you missed it. "If" means its a possiblity. Hmmm, now how would he know that....?View Image “Good work costs much more than poor imitation or factory product†– Charles GreeneCaliforniaRemodelingContractor.com
You're right I missed the "if" but the rest of the para made me think as if the "if" wasn't there.BTW IIRC I used the info about someone being 40% lower than a Lowes price, do you think that guy doesn't have insurance etc?
bobl Volo, non valeo
Baloney detecter WFR
"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG
You are right...I did qualify the statement with the word "if". The intent is to steer the discussion into the reasons why some offers are lower but don't really deliver the same value. Bob's next test date: 12/10/07
I don't know that. I think that because they were doing business in the bowling alley LOL.
Bob's next test date: 12/10/07
Mike insists on presenting the proposal to both decision makers at the right time. He is exactly right. Even though the proposal might not get accepted, at least you'll be able to get to the root cause of the objection (price) and offer your response
That is excellent advice. Otherwise DH comes home and DW says "$50k". DH says, "$50k!" and without even looking at the proposal he is looking for another guy to do the bid and probably going to use the line, "the last guy wanted to charge $50k!" right off the bat, so if nothing else, the second bidder can undercut that by a bit.
First bidder still takes it in the shorts.
jt8
My advice to you is not to inquire why or whither, but just enjoy your ice cream while it's on your plate-- Thornton Wilder
Good call Jim, but sometimes you get what you get. In retrospect, I should've pryed a little more when she told me the bowling guys were gonna do the job cause I would've had alot more to say.
Things are really tuff up here right now. I went and looked at a very small job (replacing 8' of soffit and fascia) the HO had more than 4 guys coming out to price it.
I gave her my sales pitch about how I always backprime exterior trim and gave her a price. I called her last night and she said her husband hasnt had a chance to go over estimates yet?! Come on, its a 2 hour job for $200, how picky are you gonna be?
You gotta learn to be a horse trader. Those kind of jobs are basically a service call anyways so you might as well offer to do it at their budget. Just ask them what they want to do it for and then make a decision. Bob's next test date: 12/10/07
Never give a detailed estimate.
Always give a detailed contract.
On larger jobs I always suggest the owner get a designer/archy so they can compare apples to apples, otherwise after talking to just a few contractors the jobspecs will creep to a point where there is no comparison. I have been third in line looking at a job asking questions like, what brand of windows... what kind of hardwood floor... your roofing can't be matched... all answered with the other guy never asked or told me that.
Whatever price those guys came up with was meaningless, I'm way too busy to waste my time quoting those sort of jobs.
Change the way you are doing business with them so they can't compare apples to apples. Instead of a detailed bid, mix it up with part a cost plus or T&M and another part a bid. Tie the two together, make the bid low and the T&M more profitable and you'll look like a winner.
Over all don't compete on price, but differentiate yourself.
Beer was created so carpenters wouldn't rule the world.
"Change the way you are doing business with them so they can't compare apples to apples. Instead of a detailed bid, mix it up with part a cost plus or T&M and another part a bid. Tie the two together, make the bid low and the T&M more profitable and you'll look like a winner."one way to interpret this is that you want to confuse the customer so he doesn't know what he is contracting for.
bobl Volo, non valeo
Baloney detecter WFR
"But when you're a kibbutzer and have no responsibility to decide the facts and apply the law, you can reach any conclusion you want because it doesn't matter." SHG
one way to interpret this is that you want to confuse the customer so he doesn't know what he is contracting for.
It is no less confusing to a client to throw out a fixed bid unless the specifications are very detailed, more detailed than a lay person can produce, and the work is closely supervised, again outside the abilities of 99% of clients. Two bids can be exactly the same, yet the end result will be totally different, especially as far as quality is concerned.
For something as complicated as a building project, a client with little or no background in construction is at the mercy of the contractor if they are soliciting bids. Even a small commercial job with construction specifications will fill many full size plan sheets and still leave a lot of interpretation. A step further we have a well documented spec sheet and it is the equivelent of reading 100 pages of your favorite dictionary and will include acceptible brands, models, etc. of most if not all materials.
Ethically, I feel it would be better for me to not hand a client a fixed bid if he's going to compare it in any way to the blow-and-go guy. I'm actually doing him a disservice unless I differentiate myself by breaking the bid up.
What hurts clients more than anything are the quick fix shows and books on how to be your own contractor in 20 minutes. They paint a picture of building that is overly simplistic and offer "10 ways to make sure you're getting a good bid" in bulleted form as good advice. It's easy for any experienced contractor to find a dozen ways to work around any simplistic set of bidding guidlines if they wanted to.
In reality it's not a problem because I rarely bid anything and if I do there is a warning that it's going to be higher than need be to cover my risks. Since I don't normally bid, I don't benefit from the averaging effects of under and over bidding so the cost is higher to ensure everything is covered.
Beer was created so carpenters wouldn't rule the world.
carpenterjohn.
That is so commonly done that there are sales techniques you need to use to protect yourself from it happening again and again and again.
Please ask or it will continue to happen to you and anyone else who uses bids to get the deal..
I've been a professional salesman for 40+ years and there are moral and effective ways to deal with the issue (and still win the bid)
one way to avoid that is to present your proposal in person
at the end, ask for a deposit and a signature
if they want to think about it... take everything with you... don't leave any materials
if they object, tell them you have ####$ invested in the preparation and it belongs to you
if you charged for your proposal then it belongs to them
if they liked your proposal they will sign.... or if they think about it , and still like it... they will call you back
if they are scumbags, no problem... thye saved you some heartache
Good suggestion Mike! You're always good for a tidbit or two. Bob's next test date: 12/10/07
Mike,
I like what you're saying but if you read my "Bowling Guys" thread, I dont think taking my proposal with me would have helped at all.
I'm sure my HO simply went back to bowling night and told these guys what I said, they shot back an undercut and that was that.
I dont itemize my estimates (only give a bottom line) so the HO only has to remember one number, not exactly brain surgery.
I dont itemize my estimates (only give a bottom line) so the HO only has to remember one number, not exactly brain surgery.
I don't think you should itemize either, but would suggest that you give them a summary of what is included. And also that you point out where you're using a superior product/technique over your competitors (and therefore why their bids might be less). And then sell them on the better product/technique and in turn you're selling them on you.
jt8
My advice to you is not to inquire why or whither, but just enjoy your ice cream while it's on your plate-- Thornton Wilder
Edited 5/15/2008 1:00 pm by JohnT8
I do itemize job scope, just not money. They know exactly what their money is buying. The problem I was running into was things like paint. If I itemized that all of a sudden I was giving a bid to Picasso and they would paint themselves.
I cant stand that cause sometimes (line per line) I may discount one thing and make it up on another.
A good example of that is coming to me Monday. I have a lady that wants a bathroom done and she asked for the demo cost seperately. I use alot of subs on my bath jobs and quite frankly most of my profit comes on the demo.
It may not even be worth my going to talk to this lady. Granted i'm relatively new to the business but I have never seen anything like this. people think that because its slow they will get extremely cheap labor and alot of the times their right. They just wont get it from me.
The lady is thinking of doing the demo herself. I'd offer a $500 credit for demo and haulaway. Bob's next test date: 12/10/07
I know what you're saying. I get a grand for demo but they dont have to get all the credit.
Maybe we ought to consider the "Concorde Solution." When Britain and France were designing the Concorde, they became aware that the Soviets were stealing the design work .... so the designers began including errors on their documents. The result? The Soviet clone of the Concorde, the TU-144, has a history of remarkable crashes. The Concorde, by comparison, had a record of perfect safety - until done in by a flat tire (of all things!)
Two years ago. I got a call to estimate windows for a three story apartment window. I was on the ladder taking measurements, and my brother was writing them down. I noticed that the HO was also busy scribbling something in a little notebook. Anyway, I give him the price, he thanks me, and innocently asks if those are the final sizes, and I reply, also innocently, that to be safe I would take off half an inch.In Montreal, all windows are made to measure, and they are absolutely not returnable. Much to my delight, I found out through the grapevine that the HO ordered $14,000 worth of windows , and none of them fit the openings. To make them fit, they would have to rip out bricks and concrete sills.The free estimate is a hook that gives you an opportunity to sell yourself and your services, not to give away valuable information. The best way to get away from free estimates is to have a storefront.Mark
carpenterjon, your original question(s) here was,
"Can the homeowner share the proposal including cost with the competitors?"
Yes, but I dont know why a homeowner would want to reveal your proposal,
it really just defeats the whole bidding concept.
If the homeowner is dumb enough to do that, you are probably better off not to do business with them anyway.
"Do they have to show everyone who bids all the proposals if they show one person? "
No.
Edited 5/10/2008 10:48 am ET by wood4rd
I went to give a roof bid once and the homeowner told me his "secret" to getting a good price.,
He got 3 contractors to bid an addition or house and had them list all the subs and there prices.
Then he cherry picked the cheapest subs and did it himself with those subs.
Strange how he was bragging about it but im glad i learned how some people think.
Watch out for the pushy people there the ones most apt to do this kinda stuff and they act all put out if you dont share all your info.
If your sub is giving you the same price to you as he will give to the homeowner, it's time for a talk. In business, there is such a thing as wholesale prices and retail prices. If your sub is not giving you a wholesale price, it's time for a new sub. Bob's next test date: 12/10/07
I can't speak for anyone else .... but there are any number of things that can make my price go up, as well as down. Any inkling that the customer will try to bargain, cherry pick, or play games only makes my price go up. Indeed, with new customers, my price tends to be 20% more than what I would charge a proven, reliable repeat customer. OTOH, difficult customers are likely to get - unknown to them - a 50-100% "surcharge." There are even some folks for whom my talents are not available - at any price.
There are some folks for whom my talents are not available. At any price.
VERY WELL SAID. I have had a few of them.
There are even some folks for whom my talents are not available - at any price.
That is good thinking, but how long did it take you to come to that point? And how many bad projects?
Seems like every few months we see a thread about 'customer from hades" where the contractor would have done well to take your advice.
jt8
My advice to you is not to inquire why or whither, but just enjoy your ice cream while it's on your plate-- Thornton Wilder
A fair question. Generally, a person get on my "no work" list by doing one of these things:- I did one job for them, and it was a nightmare;- They have been nightmare customers for others; or,- They have, IMO, taken part in disreputable behaviour. An example of the first is a certain customer, whose job had the following happen, repeatedly;
- He would answer questions with lies, guesses, or what he thought was the most expeditious answer at the time;
- Nothing was ever 'settled;' constant revision and review was the rule; and,
- "payment when complete" was understood to be "maybe after six more months of haggling and trying to re-negotiate." An example of the second is a certain prosperous gent here, who NEVER pays his bills, until you sue him. He attempts to use the pressures of time to force you to accept a lesser amount ... inventing specious reasons to object, dragging out payments, etc. Finally, an example of the third category is a nightclub that -in a city that had announced a moratorium on topless clubs - asked for a "burlesque" license, claiming that they had no desire to be a 'topless bar,' but wanted to continue to have 'wet t-shirt contests' without fear of being found in violation of any ordinances. Of course, once they got the license, the nightclub immediately became a 'topless bar.' If they'll play that game with the city - they're sure to try it on me.
When I took a purchasing class the instructor said it was illegal under the Uniform Commercial Code. And it is unethical, though most home owners would not know that. You can consult a lawyer to be sure.
I think Grant Logan supplied me with some contract language in a document that prevented the clients from sharing information. Basically, there is certain information (pricing is the most important) that the clients are privy to after a proposal is submitted but they don't have the right to expose that with the language that Grant sent me. Bob's next test date: 12/10/07
I'm sure your contract is enforceable, but unless your lawyer is masquerading as a competing contractor, how are you going to know for sure this what the lead is doing?
Jon Blakemore RappahannockINC.com Fredericksburg, VA
You wouldn't know for sure, but there is always the possibility that the party that gained your information might testify to that fact. A homeowner might make copies of the information and distribute it. The other contractor might use the information and send it to the lumber company in the same exact form. It might be on a desk when you go in for your bid and see it. The purpose is to create some legal language that would prevent the sharing. Without the legal language, they legally could share. The clause is free. It will bind people who are ethical and tell them that you are supplying them with important information that is not to be shared with the competition. I think it's a good clause. Bob's next test date: 12/10/07
Has anyone mentioned that you should put a copyright notice and nondisclosure notice on your bid? Not much help legally, but it does put the FOG in the customer.