I don’t know if this can be kept simple but what kind of polices have you all established when it comes to negotiating price on a job?
I know that there is a whole other way of doing business that pretty much negates this part of the process, but for those of us, or for the times when you have given out a proposal or even a verbal quote to a potential client, how do you deal with the issue of negotiating price.
I’m not talking about barters, or cash under the table, the ho just asks you if you can ‘sharpen your pencil’.
I would say that the very vast majority of people I have dealt with over the years have felt that I offered them a fair and honest deal and said ok, lets go ahead and do the work.
I know many of you would like to hit me for this, but I have several customers who will ask me for a verbal quote (jobs less than 10k or so) and just say fine on the spot, how much money do you want now? I will receipt them and invoice them, but no proposals or contracts, nothing, and not a word of greif from either of us. I think that this tends to warp my sense of reallity perhaps.
Every once in a while I get one who thinks the price ‘might be just a little to high’. For me, I get completely turned off, I’m about ready to walk. I think that even if the project proceeds, it sets a less than rosey tone for the entire project. But, we have to eat.
So, how do YOU deal with negotiating? Any reading materials to offer up?
Thanks,
Eric
Edited 7/24/2004 2:10 pm ET by firebird
Replies
be prepared with a couple of alternates.. eg:"well , if we leave off the painting then we can take so much off the original price"
.. but never just reduce your price unless you are also reducing the scope of the work..if you can arbitrarily reduce your price, then it must have been too high to begin with.. reducing it tends to confirm in the HO's mind that you were "gouging" them...
and if it comes to the owner taking over some of the scope.. make sure you are still carrying some O&P for that portion they are taking over, ... because YOU are still going to be touched by it, one way or another
keep in mind that your price has NOTHING to do with someone else's price.. you know only what YOU can do the job for.. your "competition may, or may not know what their costs are.. and are almost NEVER bidding on the same job as you
Mike Smith Rhode Island : Design / Build / Repair / Restore
Thanks Mike,
What are we both doing inside on a Sat afternoon. Your answer is helpful, but to throw you a curve, lets say the proposal is specified exactly the way they want? What do you say, 'well if we leave out the vanity. or if we don't tile the shower'.
I don't mean to sound like a wise crack, but where do you go then? The job I have in mind doesn't seem to have alot of wiggle. I could suggest that they use a regular tub rather than a whirlpool, or a framed shower door rather than frameless, but that is not what they want. There just doesn't seem to be one place to whack a coupla grand or enough small places to add up.
but never just reduce your price unless you are also reducing the scope of the work..
Wouldn't you think that the homeowners realize that if they expect you to work for less money, than they are going to get less of a job?? It doesn't exactly require a genius to figure that out. This particular job, I suggested that if all goes well. I could probably do a simple paint for them and it would be at no addittional cost. That is what will go if they successfuly negotiate my price down. Isit sop to include a bone like this?
I am trying to gain general knowledge using this job as a hypothetical, not asking how to negotiate this particular job.
Thanks,
Eric
BTW, do you know a contractor named Carl Johnson? Some friends just purchased a house in or near Westerly and are hiring him to do a big remodel.Every once in a while, something goes right!
firebird, what about saying, in effect, 'no, I can't sharpen my pencil... it's already dangerously sharp.... my proposal covers the scope of work you want, I've priced each item in the scope, I've itemized everything and accounted for everything, and if I lower the price it means I'm making less than my usual to do the job, so I might as well go to another job instead, where I can make what I usually make'
I guess some people assume you threw in a few extra thousand so you could upgrade the engine in your yacht or maybe a new paint job on the 59 'vette. That's what they mean by sharpening your pencil.
eric.. as dave says ... NO!.. but this is the art of negotiating so ... you don't say no.. and you don't say you'll throw in a freebie..
you have to return their serve... the best way i know is to offer to change the scope...
they have to feel you out, they are trying to confirm in their minds that they are not going to be sorry about hiring you.. in the end it has almost nothing to do with price... your price is YOUR price... if this were a middle eastern bazaar, then it would be expected of you to negotiate the price..
here in the US, it is not expected.. at least not with most customers...the wiggle room is in the return of service..." i can change the spec on the shower door"
or "you can do your own painting"...
they have to make the decision if they want you or they don't... don't get them to a place where they have to say no.. allow them to say yes , and be ready to sign a contract and get a deposit..
i don't know carl johnson.... but westerly is out of my market area anyways , so i'm not surprisedMike Smith Rhode Island : Design / Build / Repair / Restore
it's been awhile since I had anyone try to negotiate me down in price, by my answer is a little different than you all have been suggesting. you are saying that you can suggest leaving off the painting or the __________ or whatever for X number of dollars. I amswer instead with another question that leaves it firmly in their lap.
So if they ask, "How can we get you to shave something off the total cost?" I answer with, "Well, that's an interesting question. Help me out with the answer here. What would you like me to leave out of the job?"
That way, it is totally their doing and their decision and under their intitiative that things get cut back. It can avoid problems later. Suppose I suggested only doing primer paint on everything and letting them do the final coats. Then when they mess up the job and want to blame the final appearance on me...
Almost any cuback is a reduction in quality. I will reject many of their suggestions outright, explaining why and educating them at the same time.
One reason I am sensitive to this - when I was in Montrose, Colorado, things were tight there, and every single customer was asking for cuts in price, directly or implied. I could barely make wages as it was, given the local culture. Of course, this was in my "pre-Sonny Lycos" days too.
Right after I left, the economy there exploded, and all the good contractors started rolling in money, while the poor ones kept on with the same dog eat dog unbidding practices and crying "poor boy" tunes
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Thanks for the sound advice Piffin.
EricEvery once in a while, something goes right!
After finishing all the posts, I see my responce is pretty much a mix between Mike's and Jeff's. I ask a Q back at them and let them come up with the answer.
Something else, to help you with your insercurity on this issue - remember that they wouldn't be wasting the time "negotiating" with you if they hadn't already pretty much decided that they want you to do the work.
Kinda like that old jhoke about the millionaire who asks a woman if she'll go to bed with him for a million bucks and she says sure, then he askes if she'll do it for fifty bucks.
She gets all indignant and wants top know what does he think she is anyway. He replies, "We already established what you are, All we're doing now is haggling over the price"
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
Piffin,
>>Something else, to help you with your insercurity on this issue..........
Very insightful on your end, seriously, besides the fact that I am desperately seeking sound advice, what gives you the impression that I have insecurities sorrounding this issue?
>>remember that they wouldn't be wasting the time "negotiating" with you if they hadn't already pretty much decided that they want you to do the work.
That's a big 10-4 for sure. That is why it is so frustrating for me. My clients seem to be all over the map in the regard, especially the past coupla years maybe? Seems like just when you get it figured out(or you think you do) some wise guy has gotta start this crap again!
The past 2 or 3 years have been quite good for me, plus I have done alot of work for one client, probably more that 1/3 of my total income has been generated by this single client. We have developed a wonderful, trusting relationship that is second to none. I do mean solid. Having a client such as him, takes alot of other things out of perspective I think, kinda like welcome back to the real world!
Sometimes calling ourselves whores is not far from the mark, especially in bad time!
Thanks,
Eric
Every once in a while, something goes right!
YOUR job is to get your price - what the MARKET (not your client) can bear.
THE CLIENT'S job is to get the lowest price possible. Getting pricing and asking questions is, in most cases, free. What's to stop them?
This is business. You are negotiating your Contract AND your Relationship.
The following should also be clear in your head.
There are three basic components to pricing: a) Cost of materials/ fixtures b) overhead costs: ie phone, rent, gov't, ins, etc and c) your own costs/ incomes - labor, O&P, etc.
You can ask all your suppliers to give you a discount because the client asked for one, and when they give it to you (fat chance) you can pass it along to the client.
You can call the Gov't and ask to discount your WC, FDIC and when they give it to you, you can pass it along to the client.
You can call your cell company and ask them to give you a discount because the client asked for one..........
You can call your landlord/ mortgage officer and ask for a discount because the client asked for one..........
After you have called all of the above, and a few more which I have not mentioned, ask yourself what makes the rules different for you to permit you to discount your labor, O&P, etc?
Clients ask you "to sharpen your pencil" because they have nothing to loose and lots to gain. Just don't fall for it. If it makes you feel uncomfortable all the better for them. But see, now you know the secret. You get it! Now go forth and apply it in the feild. You'll walk out of the meeting and feel like a billion bucks.
One last point to think about. "Sharpening your pencil" takes additional time and causes stress. For that, you are negotiating to work for less money and are working for free to get there. What's wrong with this picture?
EDIT: Another final point. If you insist on negotiating, then negotiate. But do not confuse negotiation as donation or freebie time. If they want to negotiate a lower price, fine. But what are THEY going to give YOU or not getting for a lower price? Cheaper materials (not always a cost savings after labor is concidered), smaller scope of work or less quality (HA!)?
F.
Edited 7/26/2004 11:39 am ET by Frankie
frankie....heh, heh, heh..... and the light comes on....Mike Smith Rhode Island : Design / Build / Repair / Restore
That's funny Frankie ...
That's how I work and shop ...
I very rarely give a "discount" ... very rarely consider "sharpening the pencil" ...
But ... when I buy something ... I'm always looking for/asking for a "special deal".
That's why customers that ask don't offend me ...
because I'd ask if I was them.
I never "expect" that special deal ... but when some salesguy agrees ....
gravy!
we're about to start seriously house shopping ...
there's gonna be alot of offended home owners out there soon ...
I like to think low ball ... and take about 20% off that as a good solid starting point!
same deal if I decide to get a new truck ... I'll be laughed off lots all across town till I find that one guy that wants to sell that one truck bad enough ...
Jeff
Buck Construction, llc Pittsburgh,PA
Artistry in Carpentry
on a real estate offer... if you're not embarrassed when you make it, it's not low enough.
I'm gonna steal that line and use it often!
JeffBuck Construction, llc Pittsburgh,PA
Artistry in Carpentry
Another thing to think about.
As Frankie pointed out, none of the parties that represent your costs (suppliers, IRS, lawyer, etc.) will likely offer you a discount by asking. So...
If you give a 5% discount on the master bath remodel that you referred to in another thread, your might actually be cutting your wages by 25%. If your material costs are 60% of the job, and your labor costs burden and overhead is half of the remaining 40%, that leaves 20% for you. If you discount a mere 5%, your income will decrease five times that amount .
That's always helped me when dealing with the question at hand. Am I really willing to decrease my earnings by one fourth so they can save a measley 5%? Not very likely.
Jon Blakemore
I'd say everyone here has really sharpened their pencils on this one.
I'm glad I asked is all I have to say.
Thanks,
EricEvery once in a while, something goes right!
This is the best point yet. Give someone a $500 break and that's $500 out of your pocket after taxes. Everyone else involved in the project still gets 100% of what they charge.
That's an excellent point, Jon, and one I hadn't really thought of. You sure can learn a lot here.
>>I guess some people assume you threw in a few extra thousand so you could upgrade the engine in your yacht or maybe a new paint job on the 59 'vette. That's what they mean by sharpening your pencil.
That's rich, really really rich!
Or maybe I just wanna pay for some health insurance, or replace my missing tooth, but I guess they don't consider that!
EricEvery once in a while, something goes right!
"but that is not what they want."
First ... want and need are two different things.
They want it all .. pay the price.
They need a new bath .... maybe you can hit their price.
as my old sales mentor would say ...
Never "give" the customer anything for "free" ...
Like Mike says ... cut the price .... cut the scope or materials. simple.
And ... the old sales pro would say ... even if you want to .. or can ... give them a break ... never do it for free.
2 weeks from now you are wide open and would love to book the job ...
"I can take 5% off the job if you agree we'll do in in two weeks" ...
make up something if you have to ...
"I'll take 5% off the job if after we're done and U are as satisfied as I know U will be, you sign this agreement to be an open door reference. I may call in the next year and ask when the best time to do a quick walk thru with a potential will be for you.
I can rationalize cutting the 5% if I can use you and the job as marketing ..."
better yet ... offer a combo deal discount.
I don't have any fat in the budget ... but if I can work up an agreeable price ... and you agree to have the new deck done at the same time ... I'll give a group rate discount on both projects ... buying in bulk, if you will.
That one actually works better than you'd think. Especially when combining little projects .... I explain I can do it cheaper ... because I have no down time between jobs to fill ... and set up/major clean up time is cut in half .... etc.
so that's the offer .... BUT ... they now have to wait untill you can fit both jobs in ....
Or at least .... offer a break if they are willing to make the job go quicker.
Say you'll need both garage bays for the whole time ... and you'll need %50 up front ... to order and stock every last part and piece on site beofre you begin. All decisions have to be made within one week ... and everything is to be ordered immediatly .. so it's all sitting there in the garage ready to go from day one ...
That alone will more than make up for the discount in efficiency.
That ... and NO Change Orders .... none.
If you don't like it ... sorry .. it's installed .. and will be changed out as an extra ... stand alone job ... for the full goping rate ... after the initial job is completed and you have time to get back.
That'll make them think about wanting a discount!
Nothing for free .....
Jeff
Buck Construction, llc Pittsburgh,PA
Artistry in Carpentry
"money for nuttin, chicks for free !"
Mike Smith Rhode Island : Design / Build / Repair / Restore
Edited 7/24/2004 5:00 pm ET by Mike Smith
I don't back off a number with a new customer. As far as I am concerned it is as much a posturing move as anything. I have not lost a job yet because of it. I may someday but am willing to do so because I believe that if you back off at the beginning there will be no end to the chiseling, ever change order, every material that can be upgraded etc. An established customer will once in awhile flinch and I will bend a little to get them in under a given number if I can but only if we have established a relationship I feel good about. DanT
Dan ..
along your line of thinking ...
had another great sales teacher ... when I was selling new cars ...
Lee Miller ... who I hated .. but respected ...
his famous last words ...
"He who speaks first .... looses!"
in other words .. present the price ... mark where to sign .. and slide the contract over ...
and then ...
in the words of Lee ...
"Shut The F Up!"
silence is golden ...
the longer they stare ... the more you want to blurt out something stupoid to fill the void ... usually something like ... "OK ok .. I can do it for less!"
Everytime I slide that contract across the table ...
I have a mental pic of Lee standing behind me ... yelling ...
"OK ... Now Shut The F Up!" ...
get's pretty uncomfortable at times ... but really helps identify any objections ...
they either sign ... or start talking.
and ...
He who talks first ... loses.
Then .. we're on to identify ... objectify ... overcome.
Jeff
Buck Construction, llc Pittsburgh,PA
Artistry in Carpentry
I am not a fan of sales. I simply don't like doing it. But through reading here, books and business magazines I have become at least ok at it. And I had read that theory before. And I agree with it. Seems like it works.
I also read an article once that said you should be willing to give everyone a "deal" so set the price a little high in the beginning. I think that would work if you were strictly the salesman and never dealing with them again but in my case, and yours, when you are a small company we are not only the salesman but then the project manager and often the laborer too. So in my opinion you have to keep control of the situation as there is no one else to move up to on the food chain for a line of defense. What do you think? Seems to work for me but I could be wrong. DanT
"I also read an article once that said you should be willing to give everyone a "deal" so set the price a little high in the beginning. "
That's one line of thinking .... but you'd become the discount king ...
Volume Volume Volume!
I try to opposite route ...
I work up what I think is a good price ... what I'm wiling to do it for ... and that includes taking the time to get it as close to perfect as possible ... plus coming back for punchlist/fixes if need be without hating the people ...
And I (try to) stick to it. I don't give anyone a "deal" ....
unless .. like I said ... they'll combine projects and go for the group discount.
and in times of weakness ... if I do lower my price ... they gotta give me something in return ... agree to be an open door reference ... agree to pass out 20 biz cars at work ... what ever. Just gotta be something.
But ... what usually works best ... stating the price ... then shutting up.
Too high ... too bad.
I think if you are among the top bidders ... and can explain why ....
You give the impression you are the best. And the best doesn't lower their standards ... or prices.
The only downside ... ya better be ready to give them the best product and service.
Jeff
Buck Construction, llc Pittsburgh,PA
Artistry in Carpentry
We use a similar approach and view point. I feel the same. I appreciate your take on it with your sales background. DanT
>>As far as I am concerned it is as much a posturing move as anything.
Yeah, and thety ruined ANY chance of warm fuzzies on this job! That's in my contract by the way........client/contractor relationship must produce warm fuzzy feeling for both parties.
Thanks,
Eric
Every once in a while, something goes right!
Edited 7/25/2004 8:12 pm ET by firebird
Jeff,
Good words for sure. You have a lot of good creative thinking going on!
I hope your van is ok. Busted trucks are the biggest bummer.
Thanks,
EricEvery once in a while, something goes right!
jeff... Helen used another one of her swamp-yankee phrases ..
everytime she says it, i crack up...
anyways.. a good salesman .
.."can talk a dog off a meat truck"Mike Smith Rhode Island : Design / Build / Repair / Restore
I agree 100% with Mike. Sometimes you have to think sideways to go forward. A couple of years ago my BIL gave me a book about negotiating called Getting to Yes... which emphasizes the need to find win-win situations and is filled with tips on how to do this in situations a lot tougher than contract negotiations. It is worth exploring these strategies for all of us who are in business for ourselves.
I don't know what you'll get out of this story, but it's one of my favourites:
A very large bank presents 4 large computer companies with a Request For Pricing (RFP). This is a complex document detailing the computer hardware, software, and services requirements of a complex project. Millions of dollars. The bank makes it clear that cost is an issue, and that they expect the 4 companies to quote the lowest price possible.
The bank receives the 4 quotes, and then replies to each vendor: "Is this absolutely your lowest possible price?"
Two of the 4 vendors agree that they could "sharpen their pencil" and go a bit lower. Hey, we're talking millions of $ here. There's room to maneuver.
The bank tells the 2 vendors who conceded that they could lower their price that they are no longer being considered for winning the bid. "When we said originally that we wanted your lowest price, we meant it. Get out."
And that's what I expect when I buy goods and services: that I'm going to receive the vendor's lowest price. I want a relationship built on honesty and trust. Jeff Buck's suggestion of tied selling works, but I don't like it personally. Funny, I just thought of it: I get offers of preferential pricing and tied selling mainly from my bank and my insurance company. I can't think of a corporation that raises my blood pressure higher than those two. Coincidence?
If a potential customer asks me to sharpen my pencil, I reply: "You're looking to hire someone who is honesty and trustworthy. I am that person. I've given you a very fair price; I can't go any lower. I don't think you'll find my quality at a better price. But if you can...hire him!"
For those customers who absolutely must bargain...probably not the type I wanted to work for anyway.
Regards,
Tim Ruttan
" I can't think of a corporation that raises my blood pressure higher than those two"
How about cell phone/telephone companies?
of course, they do the same thing with "Plans", by selling yopu a group of services, and a grouping of minutes instead of selliong individual minutes at the lowest price.
Welcome to the Taunton University of Knowledge FHB Campus at Breaktime. where ... Excellence is its own reward!
>>"You're looking to hire someone who is honesty and trustworthy. I am that person. I've given you a very fair price; I can't go any lower. I don't think you'll find my quality at a better price.
Funny how clients will agree with you to the first 2 sentences and then try to chisel you!
I rarely get bargain hunters. I have found out that this persons occupation invloves a lot of negotiating around money, so maybe it is something that he just needs to do.
Thanks,
EricEvery once in a while, something goes right!
It's rare that a HO would rather pay less for materials rather than paying less for the contractor.
If you lower your price it will be the easiest money the HO has ever made. For a question requiring 15 seconds to ask, he/ she gets a $1, $2, or $3K discount. Wonder what that calculates out per hour?
This is a standard question HOs ask to a) See how firm your numbers are, b) How much thought you put into the proposal, c) If you can be influenced/ intimidated, and/ or d) To prove to themselves that they did their best in getting the best price.
This question also serves you as an oppertunity to establish who's driving the bus. Who knows the construction biz best, you or the client? Sticking to your guns demonstrates that you are firm and confident. It also establishes the precedent for future discussions. Give in now and they will expect you to give in most of the time.
Most jobs are awarded because of relationships. Are you a good pairing?
My response to this inquirey is "If I could lower the price it means I did not give you my best price from the outset and I have been lying to you. This is the wrong way to begin a relationship. That is my price for this scope of work. If you would like to discuss other less expensive materials or fixtures I would be happy to provide you with alternatives."
F
Just a general question and thought to throw out into the ring here but lets say you give a client a price of $60,000 for a particular project how negotiable does that "appear". What kind of signal does that send out?
Is $60,450 a firmer non-negotiable or at least less-negotiable price?
What about $59,550?
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I would say that latter prices would appear to be more thought out and thus less negotiable.
The hypothetical job I refer to in this thread was priced out at $39, 220.00.
Now what's your point?
By the way, I was thinking of you recently while reading the Last Word article on the inside back cover of July Remodeling Magazine, titled; High-Price High Tech.
The article reminded me of a thread you started a while back about contractors unwillingness to accept technology.
If you haven't read it I would be glad to scan it and email or fax it to you. It's rather short and there are no great revelations contained within.
Good to hear from you,
EricEvery once in a while, something goes right!
Good responses from you all.......couldn't ask for better help.
Just checkin in, don't want you to think I ain't listening, gonna go hang with DW, I'll get back to you all tomorrow.
EricEvery once in a while, something goes right!
Jerrald, good to see you agin.
I am glad you asked that question, it helped me to decide to put $60,450 in the contract, but leave $60,454.49 in the detail sheet. Or somewhere in the paperwork the client gets.
Samt
jerrald ... are we going to see your smiling face at RhodeFest ?Mike Smith Rhode Island : Design / Build / Repair / Restore
Yup, certainly are. I guess I should read the Rhode Fest topics to catch up and see what's going on and what the plan is I guess? Sorry,... 'been really busy doing some new things and resurrecting some old activities too so I haven't been around much. I really don't even remember the exact date although I know its coming up in August and I do have it in my iCal application. Sorry I've been so lax....I was never concerned about finding accommodations since I'm going to try and combine the excursion with visiting two groups of cousins I have in Rhode Island and a trip I have to make up to Boston. Anything else I should know? I'll read the threads and check them out tomorrow.
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yes.. send money so i can order your lobster or steakMike Smith Rhode Island : Design / Build / Repair / Restore
You're such a hard azz Frankie ;)..........but absolutely right!
Thanks for the good words, I can't remember how many times I read similiar advice in the trade rags.
Thanks,
EricEvery once in a while, something goes right!
Firebird,
Two books that have helped me are "Secrets of Closing The Sale" by Zig Ziglar, and "How to Master the Art of Selling" by Tom Hopkins. My copies are 15 years old, but I think these guys are still around.
One of the techniques in Zig's book is to repeat their statement, "The price is too high", only repeat it to them as a question. "The price is too high?" . They must now explain their reasoning. That helps to smoke out the real reason, which you then offer a solution for (if possible), and ask for the work.
Another technique I picked up from a cabinet salesman, is to watch the wife. Women make 90% of the remodeling decisions. If you can tell she wants what you are selling, (cabinets, bath remodel etc) you only need to find a way for the husband to "save face". On a set of kitchen cabinets, and Corion counters where the husband was dragging his feet, this salesman suggested that the wife allow her husband to buy something he wanted. ( In this case it was a new rifle). Don't know if the husband ever got his rifle, but the wife got her kitchen.
2 more things that may seem commical, but I have actually done them are: 1. Work on your negotiating attitude buy playing Alice Cooper's "No More Mr. Nice Guy". at max volume. 2. Pretend that Sonny Lykos is standing there grading your negotiating performance.
This was beat to death in another discussion, but ... this is one reason why I have an itemized proposal. If they say the price is too high, I can point to line X and say that we could select a less expensive floor tile and here's how much you can save ... or not repaint the porch ceiling ... etc. But to answer the original question ... I don't reduce the price just to get the job.
Whenever you are asked if you can do a job, tell'em "Certainly, I can!" Then get busy and find out how to do it. T. Roosevelt
>>This was beat to death in another discussion, but ...
Thanks for the reply Ed, and I know this has been beat to death a number of times......but that doesn't mean that this old horse can't learn something new, or that someone else hasn't since the last thread and can share it now.
It seems a topic is never more pertinent to you than when you are the original poster.
Thanks,
EricEvery once in a while, something goes right!
I prefaced my comment that way cuz it was I that got beat to death. Seems that few other here endorse the idea of an itemized proposal, but it always works for me.
Whenever you are asked if you can do a job, tell'em "Certainly, I can!" Then get busy and find out how to do it. T. Roosevelt
I cut and paste my proposal specs into the contract form..........done!
EricEvery once in a while, something goes right!
Thanks one and all for some much needed good advise.
Apparently there are a few of you who must be drowning in work. As much as I would like to always be able to say 'No, I cannot lower my price'. there is always the 'I gotta eat factor.
And that is where the good negotiating advice will come into play.
You may well realize that this thread was directly tied into the 1099 thread I started.
I will let you all know how I responded the the client as well as the outcome.
Thanks again very much,
Eric
ps, Lance Rules!!!
Every once in a while, something goes right!
>>Pretend that Sonny Lykos is standing there grading your negotiating performance.
Now why didn't I think of that?? This whole thread was for naught!!
Thanks for all the good suggestions for reading material.
EricEvery once in a while, something goes right!
I think it was Jerrald Hayes who said he answered the question of "could you sharpen your pencil" by replying with "I'm sorry, but I don't have a pencil as our office is fully computerized!"
Might work on the right customers to defer the question and lighten the mood.
Jon Blakemore
It sounds as though you already have a rapport with these people you normally deal with...I have found when the client is acquainted with my terms and knows my ethics and work quality,I give a numeric quote and little more, and get the job...The latest little hiccup I've had is on rental property, the owner made a large "wash-list" of handy-jobs to do and some siding replacement on the two houses,Two times he calls asking for written quotes and I say I've got the numbers just write-em- down! So an alarm is going off in my head telling me he's just gonna apples and oranges me against someone else...(says he wants the quotes "in front of him")I would ordinarily plan to seperate out properties on the invoice or contract form the day they want to sign for me to start...
Then there is an other way to deal,but never works for me,asking how much they have to spend,not even family will usually ever tell you that! Then,when they do it is like my latest washed out deal where the lady got the idea she could get a kitchen expanding room addn for $20,000 UGH! that's nearly what I need for the shell!
LOL...
Scribe once, cut once!(David Banes)
firebird,
Good points made by many on this thread.
I have used many of the techniques discussed, from outright refusal to decreasing the scope of work. If you're not sick of suggestions...
Do you take charge cards?
I had a customer a few years ago with a 'snowball' job. Couple of baths to remodel, yes we do floors, we can get the painting done, etc..
Client: "Wow, so were at $80,000!"
Me: "Yes, we are Kathy."
Client: "Can you sharpen your pencil?"
Me: Long pause... "Kathy, how are you guys paying for this? "
Client: "Well, we have this home equity line of credit, and we've saved about half."
Me: "I take credit cards. Do you guys have any mileage cards?"
Client: "We don't use credit cards. What's a mileage card?" (Imagine!)
Me: "Would you go ahead with all of this if it cost you $81,000 and change, and I got you and hubby a free second honeymoon in Europe?"
Client: "Hell yes!"
Me: "Kathy, go on the net, get the mileage cards, pay me with them, I will charge you my discount, I get my price, you pay the cards with the home equity line, and you've free airfare and stuff to Europe."
Client: "Wow! I'll call you tomorrow."
Next day... Client: "Let's go!"
Best,
skipj
It depends on how you present your bid (here's the total vs here are the numbers I used to get to that total), but from a homeowner perspective, when I question the price I am questioning whether I could change things to make it cheaper. So if I could bring down the labor costs by choosing one material over another (say PEX over copper), then I want to consider that decision. If my choice of stove in the kitchen requires a spectacularly expensive vent installation, then I'd like to know that a slightly different stove could save me $X,000 dollars. So I'd be open to changing the scope of the project in some ways to bring down the price. You are the expert here, so you can probably come up with these types of changes fairly easily, whereas I have no idea what is costing so much.
On the other hand, while I would welcome suggestions of possible ways to change the scope/price, I don't like to be told what I SHOULD do. I had a builder tell me that I didn't want tile instead of vinyl in the kitchen he wanted to build for me. With that one sentence he killed any chance that I would hire him.