Hey guys,
have not been on in quite some time, but need some insight on this one..
this scenario has come through twice in about 1 months time.
go look at a possible job. ask questions get to know the homeowner.
show them pictures of my work give them references,ect.
call them up give them the price….. they have that sound like Oh my god why so much? so of course i have to inquire as to what the other estimates came in at.
I know my job pretty well and how long it takes me to do it. I’m not perfect and I do make mistakes but I have now lost 2 jobs for being twice as much as the others.
I know i should not take it to heart but the phone is not ringing as much as in the past and well… you start getting a bit on edge when you feel like the everyone around you is cutting prices and under bidding to keep working.
I’m tired of trying to explain myself to homeowners as to why i charge what I charge.
just wondering what experience any of you have had with or are having with this sort of thing.
Ray 🙂
Replies
It's that way everywhere rihgt now. been happening to us a lot lately. you either ajust, become a better salesman or starve. the choice is all yours. not one you want to make but none the less you have to.
Ray , It's a very tough market even for long time established folks .
Just going off of the info you gave , first off regardless of the scope or exact type of work perhaps you should be making a presentation with drawings and pictures and conceptual ideas and design work .
Just on the phone may not cut it with some , try it in person . Also try pre qualifying your potential clients with a few to the point questions as well as their expectations as far as quality and other details are concerned .
In these times we all have to be sharper then in years past with the volume of activity down in general the pie has been sliced into many more smaller pieces.
good luck dusty
Ray, in these times, it's probably not a good idea to deliver quote over the phone. That might have worked when everyone is busy, but I think you've gotten your wakeup call now.
If you delivered the proposals in person and carefully went over anything, and you found out you were twice the price, it would be a legitimate request to view the written quotes to see if the scope is the same. They wouldn't have to show you, but you could discuss things line by line.
In the end, if you still don't get the job, you learn something about the process and maybe you will avoid the problem in the future.
Jim
I have to agree with you about doing the presentation in person.
however The types of jobs that i do alot may be considered small to medium to those of you who may build houses or additions for a living.I some times mail out the estimate/ contract which has a detailed description of what i will be doing and what products ill be used.I started telling leads up front that i would work up a price and call them back with the numbers. If that seemed to be in line or if they wanted to see a better detailed description of what was included with the price i would type it up and send it off.As much as i might agree with you idea about making your case in person, i would only do that for slightly larger jobs like maybe a kitchen or basement remodel but not for repairs.thanks for the reply.
Ray:)
a buddy just called me today to see how things went when I installed for a particular kitchen dealer. Said he was pretty sure he was bidding against them ... and was told he was way over the other guys price.
didn't suprise me ... I worked with them for about a year.
one month in particular ... I dedicated all my time to them, as they were crushed.
Think I did 5 or 6 full kitchens with a coupla small baths thrown in over a 4 week period. Worked straight thru for 3 weeks, took a weekend off then put in another 7 straight.
Over that time ... doing these K&B's mainly for "their biggest customer" ... a custom home builder ... the owner of the shop told me he was only breaking even on all the work combined.
What ever little markup he had on the cab's was going to pay my "higher install rates". And I only really made decent money because we were fast tracking everything and craming two and a half month's worth of work into one month, with them scheduling the jobs as clsoe to each other as possible.
First time ever I actually finished up one job at 10am on a Tues and started installing the next by 11am!
So ... sometimes ... there is no way to compete. Unless U wanna lose money quicker!
working for various kitchen dealers over the last coupla years I've certainly learned "how not to".
and caring what the enxt guy is charging seems to be rule number one.
like Dad says ... "U can lose less money by staying at home".
Jeff
Buck Construction
Artistry In Carpentry
Pittsburgh Pa
i tell people that if i want to work for nothing i would just stay at home and work on my own place at least i would end up with something to show for it
working around a few germans along the way i noticed they knew what monatery value to place on their work and if the client dident like it they just walked away
they never seemed desperate for the next job ( a habit i seemed to have acquired for a few years now ) i work to live i dont live to work is my motto !
Edited 8/27/2008 12:57 pm ET by dude
I'm tired of trying to explain myself to homeowners as to why i charge what I charge.
Yep. Same here. Something like 85% of contractors are out of business in first 5 years. So just to stay in business, you've probably got to be in top 15%. How do you fare when bidding against contractors who've been in business more than 5 years?
CaliforniaRemodelingContractor.com
Hey huck
Like i mentioned in the original post.
this has only happened twice in about a month or two.
but in the past 5-6 years it only happened once wher i was twice the cost of the other contractors.
Now that particular job I knew the others did not know what was truly need to do the job. It was a rotted wood repair on a porch.I explianed myself to the customer. she thanked me and said she was going with the middle guy. later she calls back the other guy never got back to her. long story short... i got the job, i just worked it out with and changed some of the materials used and got the cost down enough for her.So the end result here is I have gotten plenty of work in the past even when i was the high bidder because the people checked my references and found they had a better report with me. Since this whole "i'm out of the ball park thing has been a more recent development, i'm begining to guess that there are a few too many guy selling out and under cutting me and themselves in the long run.I guess it boils down to do i start lowering my prices to stay abit more competitive???Thanks for the reply Ray :)
See if you can get the customer to give you the name(s) of guys they're talking to so you can verify if you're competing against a legit contractor or a member of the rusty truck brigade. Better yet if they'll show you the other guys quote. Make sure the scope of work is apples-to-apples as well as dust protection, warranty, etc.
I include copies of my contractor license and insurance certificate with every quote - 95% of the other guys don't. It helps seperate me and justify a higher price - if that stuff is important to the HO. In some cases the HO is going with the cheapest guy no matter what.
I've accumulated a pretty good collection of half-assed work pics; rather than just show them my finsihed work I show the 'cheaper guys' stuff as well; wall cabs riddled with drywall screws, exterior trim rotted after 3-4 years due to non-existant flashing details, doors that look like they were installed in the circus fun house, decks with no hangers & the ledger simply nailed to the house...
You (and me too!) need to a better job pre-qualifying a customers budget before going too far down the quote path. Some people just don't have a clue what things cost and you (me) become their first dose of reality.
-Norm
Norm ,
Agree with the majority of what you said with one exception .
Personally I do not talk down on the other competitors work nor do I show them pictures of it . I believe in selling off the merits of the product I build (cabinets) and my materials used and hardware and such even the finish materials .
Showing pictures of completed jobs and telling them that one cost $10,000 that bath was $4500 gives them a glimpse of costs . You could say that one was 50 lineal feet and went for $12,000 yours is 75' and Cherry .
If the folks were referred, your in usually if you have no connection then the next best thing is take them to an already installed or completed job to see feel and touch . This works well for me , in over 26 years I only lost one job that went to see my work. The other shop bidding was in a mood to work at cost just to freeze some smaller shops out , now 20 years later he's gone I'm still here .
regards dusty
NormI like the idea of giving a copy of the license and ins. cert. with the estimate.Do you give it to the customer at the time of your fist meeting or just with a written estimate??I do show up with a picture book of past projects of mine and give the customer a reference list so they can check if they like.Thanks for the inputRay :)
"As much as i might agree with you idea about making your case in person, i would only do that for slightly larger jobs like maybe a kitchen or basement remodel but not for repairs.""guess it boils down to do i start lowering my prices to stay abit more competitive???""I like the idea of giving a copy of the license and ins. cert. with the estimate.
Do you give it to the customer at the time of your fist meeting or just with a written estimate??"Raymond, here are three quotes from you. I'm gonna try to tie them together. First, you're saying that your closing numbers are down. You then are thinking of lowering your price first as the solution. I'm going to suggest that you first try a few things. You might be surprised at how effective they are....and heres a tip I got from one of the gurus."Always hold a little something back. Don't give up all your goodies on the first meeting". So, I'd suggest that you make it your goal to get in front of everyone of your leads with your full price written proposal, even if it's only a four hour repair job. Get hungry with your leads and shoot for the gold on every proposal. Now, how do you get in front of them on every proposal? Answer: during the interview when you are discovering their needs, you should be probing for information about what the best time to meet with them again would be. You do that by asking questions to help you understand their lifestyle so you can schedule the work to not annoy them. Then, during this interview, you don't spill too much about how you are going to solve their problem. I know it's hard, but it's critical. Don't be a know it all...take it slow...give yourself time to sort it all out and set the appointment to get back to them with the solution. So, at this point, you should be thinking..."I know when they will be available to hear my proposal, but what do I have in my back pocket to give them." If you have thought of something of value that you can show them tomorrow (yes, set the appointment for tomorrow!), then you don't need to hold back the insurance papers. If the job is so mundane that there's nothing more that you could bring tomorrow, hold back the insurance papers and bring them tomorrow with the proposal. It would be better to bring them specific info or pictures or some other technical stuff but bringing the certs is better than nothing. after showing them the insurance information, go over EXACTLY the solutions to their problems and specifically state each specific item that they expressed concern for. Show them where that detail is specified, in writing, on your very complete and comprehensive proposal. I will guarantee that you will gain either more clients, at full price, or learn enough from each failure to prepare you to get the next one. This is a "can't miss" idea. Cutting your prices is not the answer until you know this other idea won't work.One of the main reasons it works is that people are much more willing to say no to your over the phone or anonymously by email.
Jim
Thanks for the response.I shall try to implement your ideas on the next meeting i have with a potential customer.PS I knew i was going to catch some flak for mentioning the lowering of my prices. I know it it is the wrong thing to do.
I do like your ideas and feel as though they will help separate me from the other and maybe the customer will feel more apt to sign on the dotted line than to send me packing. great info i'll keep you posted as to how it works then next time i get the chance to put it to use.Thanks againRay:)
Raymond, we just closed on another nice job. Again, we were the highest bidder. It was a bathroom job already demoed. The other contractor petered out. The 40k job was a nice referral but the client told us that one of the things that impressed her the most was our thorough proposal and contract. Ironically, although it covers everything, it is mainly a long drawn out document to cover us!!!! It does cover everything: demo, frame, plumbing, elect, heating, painting, trim, insulation etc, etc. Since the last contractor's proposals were mouthy vague things...guess which emotion we were a perfect fit for?The point is that we get jobs because we separate ourselves from the pack with something as simple as a document that we have stored on the computer. It takes us five minutes to edit it but it looks like we are night and day different from the "competition". We solve problems and alleviate their conscerns with our paperwork. I know you'll have greater success if you do some of these things. I will guarantee it.
Sounds good to me, Ill be trying this soon and i'll let you know how it goes. I can already feel the jobs coming in (or at least i hope so) :)Thanks for the input jimRay ;)
Ray - I include copies of my insurance & license with the written proposal. Of course I tell them during the initial meeting so the hard copy is to reinforce my statement.
I've used part-time helpers on occasion but in my area they're tough to find; just not the available workforce/population to draw from and the guys even willing to do this work have 'issues' to put it mildly. And as others have said making them 'legit' with insurance, et al, is expensive. That $10/hour quickly becomes $20/hr or more.
I've run a couple of guys thru a local temp agency, they supply the insurance and payroll service for taxes but I still have to be the taxi, the AA counselor, the 'no smoking on the job site' ####, etc. For most of my jobs the overhead and pita factor to manage these guys crimps my productivity to the point that it's not worth it.
-Norm
That is exactly what my point was as far as hiring less expensive help.I have been down this road before with a few under the table workers and it never lasts long especially with their "issues" and having to be the taxi etc.I do have a guy who is helping me now and he has insurance and comp so it's not perfect because i pay him pretty well but he has his own tools and his own truck and now major issues so far. But a good worker Ray;)
What's your closing percentage? Where are your leads coming from, and who are "competing against?"
We're in the higher end price wise compared to most of the so called competition around here. There are probably 5 other companies I can think of in my market that we are usually on par with, or at least within a given percentage price wise.
The rest are much lower. There's a difference between a remodeling COMPANY and a remodeler who is working solo. I have higher over-head and we stay legit in terms of insurance, permits, etc.
Right now you are probably "competing" against a bunch of people who would otherwise be unemployed. They do not know their true cost of being in business, they do not usually carry the cost of insurance, they don't have a marketing budget, or probably no budget at all, they are happy to work for a wage and do not understand the necessity of profit, they won't be around to provide warranty work in the future, and they may not even be able to provide a quality product or customer service.
There are plenty of people in our market who lost their jobs from local builders who all of a sudden think they know how to remodel and the customer know's them from a friend of a friend etc. This is not a real competitor.
If you know your price is right for you to make the money you need to stay in business then keep it up and don't fall to false pricing pressure.
Did you see the thread I started about sell a business.It was an article out fo the Starless and one of the companies mentioned was a Larrytown roofer..
.
A-holes. Hey every group has to have one. And I have been elected to be the one. I should make that my tagline.
NEVER CALL BACK!!!!!!!!!!!
I insist on presenting my estimates in person just for the reasons you point out.
You must sell why you cost more everytime. Quality, value, are they licensed & insured, service after the sale in the form of any callbacks that may happen.
The way I see it, if I dont care enough to drive back to try and sell then how much will I really care about the job when i'm there.
I know gas is expensive but its part of the job.
I use the best of everything I can find (parts, subs etc) and I can explain these things in person. You need to be there to be able to read body language from your potential client.
Another thing I like about selling on site is I can walk them through the job physically and actually point to things that will be done and kind of show how/why it wil cost what it will and what the other estimates may not have taken into consideration.
I just went on one where my competetion has bid moving a toilet for $200. Not too bad except he forgot the bathroom is on the second floor and he'll need to cross at least three floor joists with 4" pipe.
How is he going to be able to provide a safe floor after butchering three floor joists for $200?
Family.....They're always there when they need you.
Edited 8/27/2008 11:18 am ET by MSA1
You've gotten advice on presenting your side of the story.
Now I'm going to give you some different advice.
Are you actually trying to keep the COSTS down? The cost to the buyer, which means the costs to you. Do you:
1. Charge skilled labor rates for digging ditches or demolition? You need to find grunt labor for grunt work. I don't care if you won the Noble prize, I'm not paying master plumber rates for digging a trench. Not that you should make money on ditch diggers, but there is no justification for charging in excess of the rate for the specific task. So if you do all of the work, you may just have to come up with rates for each task that reflect the market for those tasks. And keep in mind the amount of time it will take people with the proper tools and backgrounds to do the job. If it will take you twice as long and you think you deserve a higher rate, you are going to be priced out.
2. Keep on top of prices for materials and make sure you are getting a good price?
3. And this is the most important: Doing unnecessary work? The most important skill you should bring to a job is the ability to schedule and sequence the job in such a way as to complete it in the shortest possible total (working) time period. If you are trying to bill for the time the drywall compound takes to dry and you are not using quick setting mud, then you are wasting the clients money. Which will mean your price is too high. Make sure you have the proper help at the proper time.
Bryan wrote
1. Charge skilled labor rates for digging ditches or demolition? You need to find grunt labor for grunt work. I don't care if you won the Noble prize, I'm not paying master plumber rates for digging a trench. Not that you should make money on ditch diggers, but there is no justification for charging in excess of the rate for the specific task. So if you do all of the work, you may just have to come up with rates for each task that reflect the market for those tasks. And keep in mind the amount of time it will take people with the proper tools and backgrounds to do the job. If it will take you twice as long and you think you deserve a higher rate, you are going to be priced out.I see where you are coming from with this , and yes i do most of the work. Now if i were to find some cheaper labor to do let's say some demo.
A: i'm using them because they are cheaper than me.
but how can they afford to has liabilty and comp if they work for me at a lower rate.If they don't have comp and liability then they doing me more harm than good in the long run.I do see you poit though about lowering my rate for less skilled tasks. That does have some merit.Now with that being said. Any of you guys out there work mostly alone and if so are you pricing your tasks separately or do you charge what you need to charge for a day's worth of your labor??Thanks for the inputRay:)
I'll explain that this way. I met a carpenter who was a good carpenter but he wanted to charge me $55 per hour. I showed him how he could run a midrange carpenter and a laborer and make $55 per hour leading them. I showed him how I couldn't afford him working alone for that rate. I've never used him again because he couldn't understand why I didn't like paying him on a particular job when he ran a power washer for four hours. That's $220 for a job that every competitor in town has a guy doing it for $9 per hour or less. So, instead of paying $220, I now hire d guys at $60. I saved $160 to prep a patio for staining. Put your self in the buyer's shoes.
I've been noticing the same thing. I price out twice as many things now to get the same amount of work I did in the past. I think people are undercutting each other and owners are tightening the belts. just keep looking for jobs to bid is what I've been doing. the bigger the job, the easier it is to get I'm noticing.
"it aint the work I mind,
It's the feeling of falling further behind."
Bozini Latini
http://www.ingrainedwoodworking.com
yeah the phone has been ringing a bit more but not much, so there is work out there, I'm just trying to make a living just like the rest.Hopefully with a bit of new found insight and a bit more diligence i will snag a few more of the jobs i look at.I realize that not everyone is looking for a quality job at a quality price.I read a quote somewhere that said"Quality just like happiness don't come cheap" Thanks for the reply
Ray:)