After being in business for about 9 months I’m prepared to attempt my first SCA. Here’s the scenario.
I had a lead about some work of undetermined scope in an area about 40 minutes away. At this point we’re chasing every lead we get because the practice helps and you never know what will come out of the bushes if you beat them a bit.
I met with the couple (both widowers and remarried, house is paid off and they are getting financing) last Thursday and discussed their needs and desires. New siding, new windows/ext. doors, deck addition, room addition, and digging out their dirt floor basement were among the topics breached.
They mentioned to me that they have had 6 or 7 people come out to look at different aspects of the job. One was a siding contractor, one window replacement, another looked at the room addition, and I don’t know about the other 3/4.
So I know these people are shopping around but I don’t think they’ve met with a full service firm that could meet all their needs yet. I did not get the gut feeling that they were the type to call out 12 guys to bid on the same project. I believe they have a lot of plans and don’t really have a concise plan of attack, so that explains the 7 different contractors. But I could be entirely wrong.
I’ve always intended to reach the place where we can sell SCA’s, both to distribute the overhead more equally and to weed out the casual leads. I know this job will require a lot of legwork to estimate effectively so I think this is a prime opportunity to start. I could give them a # on the window and door replacement, deck, or siding jobs without too much work.
But I think that they want a comprehensive solution to their problems. An SCA would allow me to devote the time necessary to plan the best course of action. So I’ve decided to go for it.
Now, I come to the mechanic’s of charging for estimates. I am looking at the house tomorrow in the daylight and will make notes for structuring my next meeting with them. They will be out of town this week so I have about 7 days to get all my stuff together.
I never told them anything about charging for estimates, but I never said I wouldn’t. I plan to give them a rough appraisal of their situation and hint as to what our company could do for them. Then I will present them with our SCA contract and ask for a signature and check.
What kind of agreement do you typically use for the SCA? How do you determine what you will charge?
I would assume you present them with your proposal at the same time as the SCA. Do you let them keep the SCA (since they paid for it)? Are there any disclaimers that you attach to the SCA to protect yourself in case they use if with another contractor? Do you give them a proposal to keep or does it leave with you if you don’t get a signature and check?
How do you structure your SCA? Do you ever include plans (or conceptual drawings) with the SCA? If plans are necessary (and not included with the SCA) does a design contract follow the SCA, then a proposal for the work?
As you can see I have a load of questions. I’m excited to finally give it a try and see how it goes. Maybe the effort in this preparation will be wasted on these people but I know that the practice will be good for our company.
Any help would be greatly appreciated.
Jon Blakemore
Replies
Jon, I don't know what others are doing, but I know what we've been offering.
So far we have about 6 offers out there and none sold, but no one has said no yet either. We're still in the game.
We're basically going out and doing a feasibilty interview with clients. We're interviewing them to see if they fit our criteria (nice people, decisive, clean homes, etc). If the project seems viable, we determine budget. If the budget is close enough to work with, we offer to do a SCA for them. We offered all six at $2500. For that, we include the plans, specifications and a line itemed estimate of items. I'll accompany the architect to meet with them on the measuring and will be present on the preliminary review. After the re-draw, we'll drag in the mechanical trades if necessary or bring them in during the measuring stage or preliminary review. I'll have my lead carpenter there on the measuring, with the architect.
So far, I've made the offer myself to 3 clients. Each wants some sort of addition. The first two haven't determined their financing and didn't want to write checks without knowing how they were going to finance the entire deal, so they are in a holding pattern as they use my "ballpark" as their base to obtain a financial committment.
The last guy I visited flat out told me that our archtectual service is too high, but he couldn't offer me a number that he thought was fair. I told him to go out and start shopping and find someone else to do all the drawing and specs and when he gets it done, I'd be glad to offer a firm price on the work. He then countered and said he didn't want to spend money on the drawings until he knew what the entire project was going to cost. I replied that I didn't intend to spend any more time doing an "estimate" or drawing something unless I was going to get paid for it. I told him that my "ballpark" was $100 per foot for a lot of differernt types of construction but that I really couldn't be sure because "I dont' have any drawings to do my estimating off of !". I explained that we were both in a catch 22. Without drawings, I'm only guessing and the number was actually pretty meaningless.
After a few rounds of discussing this, the guy finally understood the dilemma and agreed that it only made sense to get the drawings done, by someone, then let several contractors bid the work, making an APPles to Apples, bid.
One of the reasons that the guy finally came around was because I offered to give him an exact bid on the plans that he generates, either by finding a cheaper source to draw them or drawing them himself. I told him that it's possible that he might get someone to draw them for $1000 but I didn't think so and it wouldn't include any of my involvement an value engineering.
The conversation about his budget was just as entertaining for me. When he refused to give his budget, I used one of Jeff's lines. I said " I can think of two reasons why you don't want to discuss the budget. 1) you think your budget numbers are too low and your embarassed that you might not be able to afford this renovation or 2) you don't trust me. If you don't trust me, please tell me what I've said or done that gave you cause not to trust me". Then I shut up and listened.
That was a beautiful moment. I made the guy tell me that he liked how I've presented myself and understood the project, but he just wanted to get my unbiased opinion about the price. That allowed me to launch into my pricing explanation; "I can't give you any meaningful firm price without a detailed plan and a thorough list of specifications including every single part that is going into this project."
After a few more sparring rounds, he decided that he's going to shop around for an architect. I said "Great! I'd love to build this project for you. I know I'm the best contractor for this job and I'm 100% positive that I'll be able to be competitively priced with any professional remodeler that is going to offer the same level of service that we are". I continued "I know that our onsite panelization system is the right process for your job. We'll save you time, money and materials and expose your house for a shorter duration. Our lead carpenter will ensure a smooth constant flow of communication and no one will be working in your house unsupervised by him for even a minute!"
Jon, the most important thing that occurred is that I don't have to get into a bidding war on some intangible ideas. We'll go head to head with the other guys and they now have to bid the exact same thing and beat our lead carpenter system.
You might have to lose a few jobs while you tweak your SCA sales pitch, but when you logically explain it, they'll understand that the cost of the design is already being built in and paid for by them anyways, they might as well use it to their benifit to get exactly what they want for the best possible price.
blue
Just because you can, doesn't mean you should!
Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!
Great post, you are really going after it. I wonder what you mean by:
"If the project seems viable, we determine budget."
Does this mean you ask for their budget, or you ballpark one yourself? A lot of folks do not know what it will cost (or say they don't) and will tell you that they need an estimate in order to understand the likely cost--or at least that's what they tell me. Of the six you mention, how many have named their budget, and how many of those were reasonable?
David, we are getting after it. We KNOW for a fact that we will not be doing very much rough framing for builders very soon. Our stated goal is to be done forever by this winter. I think it's a very attainable goal.
Right now our earliest frame date is june 18th with a couple of more months already in the late stages of negotiation. We still don't have our lead carpenter booked anywhere, but those types of deals take a little more time to develop.
The question you asked is will the clients devulge their budget. Yes. We got straightforward answers out of the first five clients. This sixth one was the only one that felt a need to keep it quiet. He's a sales trainer, so he's well rehearsed on negotiating. The thing that he doesn't understand is that this is not a negotiable number. We're going to figure our costs and we are going to present him a number. IF he budgeted 100k and our number comes up to 50k, then we are presenting the 50k number.
I thing you've probably been following that Power Point thread. If you had, you'd know that I'm trying to develop a PP that I will be able to turn over to my sales manager, who will use it to teach salespeople. After this last client interview, I sat down with the sales agent that was in training (I haven't landed my sales manager yet), and we discussed what we need as an aid to explain our need for the budget numbers. We decided that we need to pull out a sheet of our PP to slap on the table that explains our need for the budget number. It will be created using some sort of visual display. I can't remember the exact method, but we devised a pretty good visual.
Of the budgets mentioned, all have been close enough for us to tell them to spend the money on design. None have been dreamers. The only one that seemed to have too low of a budget might be this last one. We'll see.
I told this guy that we need to know that he is budgeting a reasonable amount. Since he's not willing to tell me what his budget is, I'm not willing to spend any time trying to figure out what his costs will be other than to say that we can do new construction at 100 per square foot.
One idea of an effective PP aid would be to show an addition being added on. We could show several prices such as $20,000, 30,000, 40,000, 50,000 100,000. WE could ask the client which number that they think the addition costs. After they pick one, we could bring out the second part of the PP sheet. This sheet could cut the addition in half and show some huge differences: one plain room. One room decked out, one room loaded with gadgets, etc. Essentially every number could be right.
When they understand that evey number is possible, we then would tell them that our pricing strategy is based on a set system. We could then pull out another series of PP aids. This series demonstrates how some contractors do their bids. In the center is our system which states "Deliver the exact things that the homeowners want, at the lowest possible price." Surround that with four boxes showing "Contractor doesn't have plans and specs, high balls the estimate to cover contingencies", A second box shows "Constractor doesn't have plans and spec "lowballs the bid in anticipation of lots of extras and change orders". The third box reads "Contractor doesn't understand costs and bids low and will soon be out of business". Another box shows "Contractor bids high and high pressures each propspect".
We'll show him that PP slide and ask him which contractor he wants to deal with. The obvious choice will be ours...Specifications, plans and a firm tight bid.
The wheels are turning...
blueJust because you can, doesn't mean you should!
Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!
jon... i'll try to dig up some recent examples.. but i've got to meet with a guy who's paying me to figure out his window replacements this morning..
i never get hung up on the SCA part.. i just let them know i get paid to develop a fixed price Proposal..
what they get from me is a Proposal with only enough specs to do the job the way we intend to do it..
later, dudesMike Smith Rhode Island : Design / Build / Repair / Restore
I understand, Mike.Do you give them the proposal for your fee? Or do you retain control until they decide to sign on the dotted line (with check of course)?I don't like to give people our proposals because nothing good ever seems to come of it. Either they shop or pick at the minutia.If I present it to them in person either the objections can be dealt with or we retreat and regroup at a later meeting. But since they have paid me for the proposal I would imagine they would want posession.How do you handle this?
Jon Blakemore
Jon, son Tom has been very successful at getting paid for SCAs, also a separate fee for design work and plans He's in Tallahasse until Tuesday night at a Remodelers Council meeting, (he's the FL state Chair) but you can call his office, ask for my wife Barb, introduce yourself and ask if you can discuss the procedure he uses with one of his two salesmen, Bill or Mark. The number there is 239-263-9660. Meanwhile, I can let you know to expect a call from you.
Also, create a presentation as to the reasons for them to have one contractor do all of the work: scheduling, control, price is less, warranty, etc.
Just a couple of suggestions.
Jon, after reading Blue's post again, I should mention that Tom charges $4.00/sq. ft. for design & CAD work - adds up if he's doing a complete remodel on a 1500 - 2400 sq. ft. condo and the penthouses are much larger. Our permitting process required a scale floor plan of the entire house or condo, and then to highlight the areas dto be remodeled, so you can envision the time just to get all of the dimensions on paper including doors recepts, switches, etc. That means that even if you're only doing a $40K kitchen remodel here, the permit might be $1000, and include 7-9 inspections including the final CO, plus your time to create that scale drawing - maybe another $1K to $1.5K.
Of course, our permitting dept. is getting nuts here anyway. If you plan to remove a 3' closet wall, you also need an engineering stamp on the plan, mo money!
Edited 4/4/2005 12:23 am ET by Sonny Lykos
Thanks a lot Sonny. I will try to call Barb today or tomorrow.
Jon Blakemore
Jon,
I tried one last weekend. the situation is this: a mid-40s couple with 2 kids, that I did a repair job for about 2 years ago. ($4200). Now they have some more work that I looked at, and it ballparks at about $25,000.
Here is the good, the bad, and the ugly of how it went.
Bad: I haven't yet made the time to re-write Sonny's "Process" into my own words, so I wasn't able to give that to them.
Bad/Good: I wasn't as prepared a I could have been, but I was more prepared than usual. One thing I did was type out an agenda to follow. I didn't show it to them, but it was on top of my notes, next to me.
Bad: I assumed that both the husband and wife would be there, but only the husband was.
Good: Brought the photo album.
Good: Brought up budget right away after looking at photos.
Bad: They were thinking $10,000 to $15,000 but didn't really know for sure. didn't want to go over $30,000. I said $15,000 "would be a little constricting" and that we were more likely looking at about $25,000.
Good: Asked how long they plan on staying? At least 10 years. Did the divide and conquer. "Dividing the amount between $15,000 and $25,000 over 10 years is just $1,000 yr" Then explained a few things that needed to be done that they may not have thought of. Owner now understands more needs to be done.
Good: asked "So where do we go from here? What we need to do is come up with more specifics. Some in this trade like to call it an SCA. "
Ugly: Brain froze up and I could not remember what the "C" stood for!! But I muddled through explaining about specifications and analysis, and that I would be charging them $1,000, to come up with a concise plan. If they went forward with the project, that cost is rolled into the $25,000.
Then the unbelievable happened. "We have the $25,000 cash in the bank. My question is whether there would be any tax advantages to taking a loan, rather than paying cash for it. I'll have to go over it some with my wife, and she will want to see the options for the roof lines. Could we get together at the end of the week, or begining of next week? We have worked with you in the past, and we are not having anyone else look at this. We've looked at moving but haven't found anything we like, and we are tired of looking. My wife is the one who really wants this done. Could we get past the formality of the $1,000 check and just start with 1/3 down? Say like $8,000 when we get together next?"
Bad: Was totally un-prepared for this, and had to pick my jaw up off the table.
So I don't know if I sold an SCA or not. But I do know I have never brought up the budget that early in looking at a project, and I would not have brought it up that early if I hadn't been trying to do an SCA. What I had intended to come away with was a commitment to signing an SCA agreement, (which I only have partially put together, but would have finished and got back to them quickly).
As far as plans go, I brought along 2 different plans I had drawn for other projects. i pointed out that I draw enough to get permits, and to show the load paths, but that the fancy elevations were not my forte.
So we will see how this plays out,
Bowz
Congratulations man. Your struggling to get your jaw back in? Mine just fell out and I wasnt even there!
<G>
Everything, 100% of it, depends on how you look at it.
DW
That is pretty unexpected.I did myself a disservice by not having my plan together before I had my initial consultation. We'll see if this is an obstacle that can be overcome.Your $25k ballpark number, how much fat did you add in to cover the contingencies. I'm trying to determine how to handle the ballpark price question.Ultimately I'd like to be able to point them to our presentation book and look at the three projects that are very similar in scope to theirs. I can let them know what these cost without making any real promises on their project.
Jon Blakemore
Bowz, I see this as all good. You'll probably never be as bad again at trying to get this deed done!
Every failure is a stepping stone to success and your failures have landed you a very good chance to succeed.
I think the answer to your clients question "can we skip the SCA thing" should have been answered "NO. The SCA is designed to help you make value driven decisions. It's part of the cost of doing a project like this, just as much as the lumber bill is." Then pull out the paperwork, fill in the blanks and sign and go.
blueJust because you can, doesn't mean you should!
Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!
What is an SCA?
Specification and Cost Analysis
Jon Blakemore
"I never told them anything about charging for estimates,"
I would never pay a penny for you do an estimate for case like this and I hope that they wont' either.
They don't need an estimate. They can get estimates from the siding guy, the window guy, the deck guy, etc and all them all up.
You already said what they need is a PLAN.
Maybe they need someone that will develope that plan, after which they have some bases for getting estimates.
Your right Bill. I think the semantics can be trite but also very important. People use the term "estimate" with abandon.When I was in school I told a friend (knows nothing about building) that I had a class in estimating. He laughed. He said if it was an estimate why would you need to know what you're talking about?I think he got it before I did. People often get "estimates" then become irate when the actual cost is different. I'm working on my vocabulary to always use the correct term. I sell "proposals" that are fixed price and specific. The competition scratches their goatee and says "that will be about..."
Jon Blakemore
I think that you are missing my point.I used estimate because that is what you used. Whether it is an estimate or a fixed price. As a HO I ain't paying for it, PERIOD!That is your internal cost of developing it. Just as it cost you to develope your portfolio.How far do you think that you would get if you said it cost a lot to develope my portfolio and I will show it to you for $5 a page. How many pages do you want to look at.If I am PAYING FOR SOMETHING I WANT SOMETHING OF VALUE FOR IT, PERIOD!Now what do you have to offer of value to this HO?As you mentioned they need a PLAN.The plan is not a list of cost, but rather a list of problems and solutions. From that cost can be developed, but that is later.
Well Bill, I did misunderstand you.You know, I've heard this discussion hashed and rehashed. I could give examples of other professionals and how they structure their charges. But you already know that.It comes down to the direction I want our company to head in. Many don't appreciate how much time it takes me to do a thorough job on their proposal. A lot of people think nothing about asking a contractor for 2-40 hours of their time for free.Do I fault them for that? No. That's the culture we live in. Is it their duty to remunerate me for my proposal? No.Will I offer them a proposal without a check? NO.Just the way I want to do business. If you don't feel comfortable with it then it's your prerogative to seek professional services elsewhere.
Jon Blakemore
"Will I offer them a proposal without a check? NO."I never suggested that you do.What I said is that as a HO that before I pay for anything that I expect something of VALUE TO ME in return.Or do you go around an paying for things where you don't expect something of value in return?In this situation what do you have to offer that would be OF VALUE to the HO?
>>>>"In this situation what do you have to offer that would be OF VALUE to the HO?"They would get a comrehensive plan of how to complete the work along with the price for the work.
Jon Blakemore
"Whether it is an estimate or a fixed price. As a HO I ain't paying for it, PERIOD!"Tell that to the dealership I paid $146 to for an electronic "diagnostic" fee to determine what was wrong with my minivan. Then the $200 or so electronic circuit board that was bad and it's installation was a separate charge.Is not an SCA the same as the electronic diagnostic fee?You think the contents of a detailed SCA is worthless?I give "estimates" for fee almost daily. I also give "ball barks" free almost daily. And both are nearly worthless.And if a HO wants to sign a contract based upon my "estimate" that's fine with me , because I got them by the azz, and because it's only an "estimate" and my contract would state that the final actual cost to them could be lower or higher - and that's what they would sign.A few months ago I went to a dentist. He examined my mouth, took xrays and charged me $180 for that examination and "estimate" of about $6000 for my dental work. Notice the $180 for the examination. And note that with both the dealership and my dentist, I had to take my "problem" to them - they didn't come to "my" house at "my" convenience.Was I a schumck for paying the dealer for his diagnostic fee, and my dentist for his examination?We' have discussed this issue before.Do you think I cold call three CPAs and ask them to come to my house to examine my tax paperwork. Then go back to their respective offices and fill in te tax forms; then bring them back to my house for me to evaluate - for FREE? And also I'd tell them that the one who give me the best price is the one I would award the job of doing my taxes. BOY! I'm sure any CPA would just jump at the chance of that arrangement!
Over the years I’ve grown tired of this garbage about a Proposal being worth nothing. If so, when why is it requested to begin with. If it’s worthless, why is it gone over line by line by the owner?Mechanics “Examine†our vehicles.Doctors, dentists, etc., all “examine’ our bodies, or those of our parents or children.Lawyers “examine†our potential cases.A CPA “examines†our tax paperwork.Even an appliance serviceman â€examines†our appliance that’s not working.I know of not a single person in the above industries “examines†anything for free. And the reason, is that unlike stupid contractors, the above all realize that 1) Time is not infinite, and 2)experience, expertise, knowledge, whatever name you wish to use, is worth money. And it’s worth money, because like any other asset, it took “money†to acquire it. A BS is worth money. An MBA is worth more money, and a Ph.D is worth even more money. Furthermore, as the above are supplemented by actual experience, their worth further increases. And that’s why I am worth much more to my customer than a 23 years old with only 1-2 years of experience.so if anyone here thinks that a detailed accurate Proposal is worthless, than they would neither offer it nor ask for it.Now if someone either has not the cahones to ask to get paid for a Proposal, or knows not how to sell it’s value as a document, is a separate issue, and does not, and never will , negate it’s value. If a moronic rich parent gives a Corvette to his/her son for their 17th birthday, and that son proceeds to total it the next week, it is the parent that is the moron, because the “childâ€, being a “child†has no capacity to appreciate what it has just received. The “value†of that Corvette still exists whether it’s being driven by a 17 year old, a 40 year old or an 80 year old, and regardless if it is driven or sits ina garage month after month.Ignorance may be bliss, but it too does not negate the value of anything that has value.
bill.... two months ago .. i went to see a customer.. siding ... replace windows... reroof.... replace the solar collector covers
i told them i'd prepare a proposal for their work.. and break it down into three prices:
windows
siding & roofing / solar collector covers
and i'd prepare the Proposal for $400..
they gave me the check.. right then and there
next week i'll give them our Proposal
there's a guy next house over from one of our jobs..... he never called me..
but he had his solar collector covers replaced.... and his roof redone...
this was last July.... started leaking first rain storm... he's had a 40' tarp on it ever since... called me in for a consult.. i gave him two hours, charged him $200...
he'll be in court until the cows come home... and that blue tarp will still be there
think he'd pay me for a Proposal ? hah,hah, hahMike Smith Rhode Island : Design / Build / Repair / Restore
"Tell that to the dealership I paid $146 to for an electronic "diagnostic" fee to determine what was wrong with my minivan. Then the $200 or so electronic circuit board that was bad and it's installation was a separate charge."Are you telling me that you went to the dealership and paid $146 and then they came out and said that it would be another $200 and that was it? Nothing about what or why? Just that they wanted another $200?"You think the contents of a detailed SCA is worthless?"I NEVER, NEVER, NEVER SAID THAT.IN FACT I SAID JSUT THE OPOSITE.HOW MANY TIME DO I HAVE TO SAY IT. IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME.IT HAS TO HAVE VALUE TO ME."A few months ago I went to a dentist. He examined my mouth, took xrays and charged me $180 for that examination and "estimate" of about $6000 for my dental work."Again he just came out that is $6000 without any discussion about what would be done or options about how to solve your problems. And that although you paid for the xrays that you could not have another dentist look at them for a 2nd opinion.
Bill,>>>>"Again he just came out that is $6000 without any discussion about what would be done or options about how to solve your problems. And that although you paid for the xrays that you could not have another dentist look at them for a 2nd opinion."Do you approve or disapprove of the denist and his methods? I can't make out if you're setting him up as one to emulate or to avoid?
Jon Blakemore
The service manager told be what the problem was and the cost to fix it. That was the result and explanation of the diagnostic. And that was fine with me. I got the information I needed, and having the circuit board replaced as my "option."The dentist also gave me what we can consider to be a 'proposal" of what was needed, by tooth, and the cost, plus the "estimated" cost for the extractions since they had to be done by an oral surgeon due to my medical history. My dentist is not an oral surgeon but knows the cost per extraction by the two surgeons he recommends. And that too was fine with me, since I received, in both case, information that I considered to be valuable.I guess I don't read very well, because I interpreted from your comments that you did not feel a Proposal was worth anything - to you.
Sonny,
That's the feeling I'm getting from Bill. He is saying " Just because you spent 40 hours developing detailed lists of work to be done, items to be purchased, subs to hire, costs, and cash flowand work flow schedules, doesn't mean it has value to me."
And if he (a client) says that to me, I'm going to say "Ok, I won't waste any more of your time. Good luck on your project. Bye."
SamT
Thanks, Sam. At least now I know I can still read, and I agree with your last comment, and have verabllized it more than once.
"That's the feeling I'm getting from Bill. He is saying " Just because you spent 40 hours developing detailed lists of work to be done, items to be purchased, subs to hire, costs, and cash flowand work flow schedules, doesn't mean it has value to me.""Of that what would I be getting? Some of those items such, as cash flow and work schedules are things that you would do after you get the job, in my mind.Now a couple of years ago I hire a lanscape arch. All he does is plans, no installations. $75 for consult and I think something like $500-750 to develope a set of detailed plans.For the $75 all I got was some arm waving and the name of a few plants and trees. But I was very happy with that.At that point I had a number of options about some possible additions and other things that would affect where more landscaping would go. So a detailed plan would have been wasted.But what I got was some information on the best way to run some unground lines to less affect the trees, some ideas what could be done with different areas and how that would affect any building plans and enough guidence to do one area that would not be affected by the building.
Some of those items such, as cash flow and work schedules are things that you would do after you get the job, in my mind.
You want to know when you have to pay how much as it comes up?
And when you have to be out of the house for three days the day before you have to rent a room somewhere?
Oh, I can see it now, "Mr. H. here's a bill for $3500."
Thee "But, I just gave you a check two days ago, I don't have any money in the account ATT."
Me "That's OK we'll just have to wait till you do, won't we." "OK boys. roll 'em up."
"Mr. H. We'll be back as soon as we can after you have the money to buy this big thing, Uh, no sooner than 39 days, though, 'cuz we're going to jump on this other job." He read his SCA and know exactly when all payments are due, so I don't foresee any stoppages on that job."
Ok, Bill, it's now 45 days later and we been on your job for the last week.
You come home from work thursday eve and there's this huge tent over the place with warning signs all over "Caution Cyanide, Arsenic, Radon, and Cow Farts! do noe enter for 72 hours!"
Thee "But my Tweety!" (his parakeet. ed)
(|:>)
SamT
>"That's the feeling I'm getting from Bill. He is saying " Just because you spent 40 hours developing detailed lists of work to be done, items to be purchased, subs to hire, costs, and cash flowand work flow schedules, doesn't mean it has value to me.""<1. Lists of work to be done.
2. Items to be purchased.
3. Subs to hire.Geez. That's all there is to making up a SCA? Boy, have I been wasting a lot of time over these last 35 years on all that extra "stuff" I thought that was mandated. As of now I'm changing my procedure to just the above three items, which of course will take only a few minutes
bill... my prospects start out as an entry in my day planner..
after the first free visit, they graduate to a job number adn name, and a file folder with their label on it..
if they agree to pay me to prepare a Proposal, we'll have some signed documents and a copy of the check in the folder... and 20 - 30 digital photos of existing conditions
small jobs stay in the file folder stage.. additions graduate to a 3-ring binder.. sometimes two..
a job with a price of $50K will have a 3-ring binder.. if there is no design work involved ,it will be boiled down to a one page Proposal ( which becomes the Contract after both parties sign and we receive the deposit ).. and there will be one to three pages of specs outlinig the scope of work in narrative form.. it will not be nuts and bolts.. it will satisfy both parties what is going to be done..
does it have value to the owner ?
suppose they paid me $500 for it.. but decide they don't want to hire me for the job..
i think they have $500 value.. they have a firm price that they know i will do the job for... they have the pertinent scope and specs.. and they can try to find someone else to do the the job.. either the same job .. of one with a different scope..
i'm guessing that over 90% of our customers sign , so i think that means a high satisfaction level..
one other thing... some will ask if the cost of preparing the Proposal can be applied as a credit to the job price..
i have always answered no.. it would be dishonest.. i would have to include it in the cost of the job.. twice .. so i could credit it once... i am positive that if i had offered that option, at least two very big jobs would have been mine.. and those customers would have been a lot happier with me than they were with the companies that wound up with the job.. i know this by word of mouth form the owners lips..
but i still can't bring myself to do it.. it seems so absurd to me.. and so obvious..the old free lunch..
BTW, Bill.. i respect your position about wanting value for your money... i just don't think that i would ever convince you that i was selling value.. so we would probably not do business.. you're not buying what i'm selling...
let's take an example.. real estate appraisal...
i want to sell my house.. i call 3 agents and they come out and give me a free appraisal of what they think the "fair market value " is... what's it worth ?
or .. i have a partner.. or the property is held in a trust for the heirs. they want to liquidate the property and divide the assets... one partner decides to buy the other out..
now we call a professional appraiser and get an appraisal we have to pay for... is it any better that the 3 free ones ? one would think so.. yes ?
in the case of mr & mrs. homeowner's project, they can call 3 contractors and get 3 free estimates.... or they can call me and pay for a ProposalMike Smith Rhode Island : Design / Build / Repair / Restore
"i think they have $500 value.. they have a firm price that they know i will do the job for... they have the pertinent scope and specs.. and they can try to find someone else to do the the job.. either the same job .. of one with a different scope.."Before you read this I want to make sure that you are sitting down and have your heart medicene ready.That sounds like something that would be of value to the customer.Now there are too long ongoing threads basically about how sell an SCA to a customer.And do you realize how many messages there have been and after many, many request this is the first time that anybody has hint of how it would be usefull for the client.A sales call like this - Smith:"Mr Hartmann before we can do an estimate for this project I need $500 for an SCA".Hartmann: "What is that for".Smith: "So that I don't have to work as hard and I can play golf".Hartmann; "What do I get for that money".Smith: "I will tell you how much it will cost".Now that is EXACLTY what I have been seeing here.I ain't paying $500 for that and nobody with any sense would not either. But I will admit that there are a number of persons that don't have any sense and might pay for it.Now I wouldn't pay for an estimate on a reroofing my house with comp shingles.But if I was thinking about maybe going with a tile roof, or metal, or comp. Things that where where a number of comparisons and looking at what kind of alterations would be need to use those different systems, then I would pay for something like that.Now in the next year or two I will need to replace my HVAC. I currently have 2 FWA gas furnaces with AC only on one. The one furacne is oversized, the other one is drastically oversized, maybe by a factor of 3.Cranking some number based on our energy rates it appears that my best bet is to go with heat pumps with resistive backup.Now I too many HVAC salesman use the "it looks like x tons" or you current system is xx so that is what we will use". But if I find someone that I convinced will do load calculations for each floor, measure or compute duct flows, look a the available space, look at what ducts are accessable, and make a comparison of dual systems or zone I am willing to pay for that information.
bill .. my hvac guy does that.. but he doesn't charge for proposals.. his charge is built into his price.. and his price is a lot higher than other hvac guys..
if there is anything at all complicated with the hvac, i tell my customers that he is the only guy i will recommend... because i know enough about hvac to know that the proper duct sizing and equipment specification makes all the difference in the world in terms of performance and duability..
so.. i guess we have 4 situations.. one .. the guy who gives free estimates and that's what they're worth
two.. the guy who spends a lot of time preparing well thought-out bids , but doesn't charge for them , and often doesn't win them , because his more comprehensive proposal better defines the strue scope of work
three... the guy who does the same thing but has the cost built into his prices
or four.. guys like me.. who get compensated up front for the Proposal
as a customer.. 3 out 4 ain't bad
but me.... i think business plan #4 is the way to go for meMike Smith Rhode Island : Design / Build / Repair / Restore
Care to expand on what I left out?
I'm still learning about business, yah no?
SAmT
You and I know exactly what Bill left out. He seems to think that the creation of a Proposal is a piece of cake that take only a few minutes.I'd like him to put together a Proposal for a typical 5 x 9 bathroom complete remodel, and then come back with the total of those few minutes it took him. And of course he would include the time to drive to the customers house, spend time with them, get photos and measurements, then drive back to his home, and proceed from there. Of course he's then drive back to "their" home to present the Proposal and it's contents. Then I want him to tell us how he feels when 1-3 weeks later he finds out that they gave the job to someone else, and of course, never bothered to call him to tell him that. And all because the Proposal and what went into creating it, was to the customer, and "entitlement." As such, how dare he ask to be paid for his time and expertise as an estimating, design, product, installation, and educator - consultant. The gall!And if he is a 1, 2, or 3 man operation, he is "expected" to work 40 hours per week on jobs as a tradesman and supervisor, and do his sales calls, design work, estimating, an product research at night, Saturdays and Sundays - for free of course. and for free of course, because if he increased his labor rate or markup to cover that 20 - 30 hours for his nights and week ends he would be ripping them off. Outrageous! That's part of running a business. After all, he gets paid when he does something on the job, right? Only all blue and most white collar workers are entitled to get time and a half or double time for anything over 40 hours. We are beneath them so we get zilch.And of course, sharpening his chisels, maintaining his tools and equipment, organizing his shop or garage if he works from their, is also expected to be done for free. And it's expected to be done for free, because with large corporations, their building and equipment maintenance staff work for free.That's how it works.
"And of course, sharpening his chisels, maintaining his tools and equipment, organizing his shop or garage if he works from their, is also expected to be done for free. And it's expected to be done for free, because with large corporations, their building and equipment maintenance staff work for free."I never said anything like that.And if you look back at the last couple of messages in this thread I gave some examples about when I would pay for such a proposal.And when I would not.In fact you have seem to have missed it so I am repeating the whole message.*****************************
"i think they have $500 value.. they have a firm price that they know i will do the job for... they have the pertinent scope and specs.. and they can try to find someone else to do the the job.. either the same job .. of one with a different scope.."Before you read this I want to make sure that you are sitting down and have your heart medicene ready.That sounds like something that would be of value to the customer.Now there are too long ongoing threads basically about how sell an SCA to a customer.And do you realize how many messages there have been and after many, many request this is the first time that anybody has hint of how it would be usefull for the client.A sales call like this - Smith:"Mr Hartmann before we can do an estimate for this project I need $500 for an SCA".Hartmann: "What is that for".Smith: "So that I don't have to work as hard and I can play golf".Hartmann; "What do I get for that money".Smith: "I will tell you how much it will cost".Now that is EXACLTY what I have been seeing here.I ain't paying $500 for that and nobody with any sense would not either. But I will admit that there are a number of persons that don't have any sense and might pay for it.Now I wouldn't pay for an estimate on a reroofing my house with comp shingles.But if I was thinking about maybe going with a tile roof, or metal, or comp. Things that where where a number of comparisons and looking at what kind of alterations would be need to use those different systems, then I would pay for something like that.Now in the next year or two I will need to replace my HVAC. I currently have 2 FWA gas furnaces with AC only on one. The one furacne is oversized, the other one is drastically oversized, maybe by a factor of 3.Cranking some number based on our energy rates it appears that my best bet is to go with heat pumps with resistive backup.Now I too many HVAC salesman use the "it looks like x tons" or you current system is xx so that is what we will use".But if I find someone that I convinced will do load calculations for each floor, measure or compute duct flows, look a the available space, look at what ducts are accessable, and make a comparison of dual systems or zone I am willing to pay for that information.
****************************
Edited 4/10/2005 12:39 pm ET by Bill Hartmann
Bill, I'll bet you would also not want to pay a contractor for his overhead that included "X" amount for warranty work, or "X" amount for bad debt or theft. Yet every time we buy someting from Sears, Wal-Mart, or any retail store, that's exactly what we do. We pay for the free service on our trucks, cars, TVs refrigerators done during the warranty work. And we all pay for theft, be it by employees or customers, from retailers.All m saying is that you have an unrealistic idea of what it costs to create a business and operate it.Someone mentoined here about his staff being unproductive. OUr entire industry, and especially remodeling and repair work is not only unproductive, but highly uproductive. And the reason is because what we do for a living is to virtually create a "prototype", something that has never ever before been remodeled or repaired in EXACTLY the same way, if ever. Building the first prototype car before it's refined and goes to "production", I've been told, costs dozens of times the cost of actual "producton" cost of "one" car on that production line. Try a half million dollars to several million dollars for that "prototype" car, as opposed to the $20K that same car costs during production.We build prototypes every day of our lives. Even "production" builders build prototypes but to a lessor degree, because even they do not enjoy the luxury of the tight controls of building in a factory.
"Bill, I'll bet you would also not want to pay a contractor for his overhead that included "X" amount for warranty work, or "X" amount for bad debt or theft. Yet every time we buy someting from Sears, Wal-Mart, or any retail store, that's exactly what we do. We pay for the free service on our trucks, cars, TVs refrigerators done during the warranty work. And we all pay for theft, be it by employees or customers, from retailers."I have never said anything like that nor implied it.
Bill, a guy next door just ahd his roof stripped and roofed. He hired the same guy who did the one across the street and one about 3 doors down.Piece of cake right - just a roofing job.1. 24†instead of 36†valley strip - against our code.
2. 5 nails per shingle as opposed to 7 per our wind resistant application code.
3. #15 felt instead of #30 per our code.But all three HO got “free†estimates - about 4 sentences on it, and saved about $200 - $300 each for a detailed SCA. So they sure got a deal! Unfortunately, the same day the singles were installed, their warranty (30 years) was voided! But again, they saved the cost of an SCA from a professional roofer.Now let’s talk about caulking. It’s just caulking, right? Well, the job I’m just finishing up this Monday is for several thousands of dollars of repairs or replacement wood jambs, wood casements with wood eyebrow windows over them, wood screen doors (8) - all due to improper caulking material and it’s application along with not the greatest “painting†job. But then again, it’s a only a painting job too, right?I showed the GEOCEL Sealant Manual (below is Chapter 1-3) to the owner and after flipping thru a few pages I said: â€So much for that saying: ‘Just caulk it.†I “validated†my expertise and what came out of my mouth by then pulling a continuous piece of caulk from the bottom of an eyebrow. It came off in one 54†long piece because it was applied to - ready? - dirt. I then went on to explain that I don’t use mineral spirits to clean the substrates first because it leave a residue. Instead, I use alcohol because it leaves o residue and evaporates quickly.But than again, what do I know? I’m the rip off artist who charges for SCAs that have absolutely no value to HO for the above circumstances..Even some of the pieces of wood that were previously installed as replacements for rotted jambs were themselves rotted - again, because:1. Treated wood was not used
2. PVC was not used
3. Back priming if wood was not done.
4. A louse cheap caulking job was done at the copper thresholds. Yes, this is an over a million dollars condo - spanish design.Nah, only reroofing, only painting, only caulking - save money on the cost of an SC because neither of the above three include sizing AC ducts or HVAC room load demands, or anything as important as that, right? I'll post the est of the Manual on a separate post.
Here's the rest:
First thanks for the Geocel info. I had been looking for similar information from GE and they don't have any.And the "page" that you uploaded (sealant.html) does not work. Apparently you did a SaveAs for the whole web page and it converted thee links into relative address (on your computer) and then when you try to download it thinks that they are prospero address.And I try searching on Geocel's web site and could not find it. Doesn't look like that have it any more.But back to your comments.Are you saying that Mikes HVAC guy is no good because he does not charge for an SCA?Are you saying that everyone that does charge for an SCA will do a good job. That seems to be what you are saying.I will put the same question to you as I put to Mike.Are you willing to guarantee that anyone that pays for an SCA and then uses that contractor will end up with a satisfacotry job. And if not you will personally make it right?I am still waiting for Mike's reply.
bill... when did you ask me that question? and what retorical purpose did your question serve ?
ya wanna buy an appraisal on some property ?Mike Smith Rhode Island : Design / Build / Repair / Restore
Because both you and Sonny have said, to the affect, pay me and get and SCA or take your chances and get a Crappy Job.But both of you are saying that getting an SCA is not a guarantee.Now these two threads are not about someone getting an SCA from you or Sonny. They are about buying an SCA from some "unknow". Blue is a good example. He has not done remodeling work in a long time and does not have a local rep or a portfolio.What can he tell the potential client that they are getting for the money? Simple question that I have asked a couple of dozen times and only recently gotten anykind of logical responses.
>>>"What can he tell the potential client that they are getting for the money? Simple question that I have asked a couple of dozen times and only recently gotten anykind of logical responses."Bill, I'm in a situation similar to Blue. I envy Mike and Sonny's portfolios- 25 jobs, 1/2 of them probably within walking distance of the new client.I'm sure I will have more difficulty charging than either of those guys but I'll just have to be more determined.As to what the HO gets for their money? It might sound conceited to say this but they get the chance to work with me (or Mike, or Sonny). Some customers are elated that they can get a contractor to show up and meet with them. In certain markets I don't have a problem charging just for taking up my time. Other professionals do it so why shouldn't we?
Jon Blakemore
"As to what the HO gets for their money? It might sound conceited to say this but they get the chance to work with me (or Mike, or Sonny). Some customers are elated that they can get a contractor to show up and meet with them. In certain markets I don't have a problem charging just for taking up my time. Other professionals do it so why shouldn't we?"You are right about there being a large range of markets. And that range is includes social/ecomonic/type of serivce/type of clients."I don't have a problem charging just for taking up my time. Other professionals do it so why shouldn't we?""But let me put it to you this way.Are YOU willing to pay a professional just so that you can "take up their time" or you willing to pay them so that YOU get some serice/product/information that you want?Lets put you in the client's chair.You want a CPA to help with your account and to do your taxes at the end of the year.You call call a couple and ask them if they have any exepirence with contractors or small business."Blue" well I have just opened up my private practice, but I have 20 years experiece with XYZ Corp and international taxes. Come on down and for $100 I will tell you how good I am."Mike" I have 2 GC, a painter, and HVAC contractor. And all of the clients have 50 employees or less. Come on down and for $100 I will go over your last years return with you and see how we fit.
Bill,My CPA gave me about 30 minutes of his time before we started our relationship. I asked him some questions and he responded. He printed out some forms that I needed and we went on our separate ways.I did not bring my copy of quickbooks for him to analyze our company's financial position. I did not ask him to fill out my quarterly reports. I was there for an initial consultation so we could size each other up. Taking advantage of his time would not be something I would feel comfortable with.I don't know how Mike and Sonny handle the first visit, but I would do it for free. If the client is pre-qualified I will go out and discuss their project and our company. If things seem like a match we have a go.If a HO is considering a $120k addition, don't you think it would be somewhat beneficial to get a firm offer and concise statement of what will be done and how? Unlike a automobile, article of clothing, or piece of electronic equipment, we are selling ideas and plans.Compared to the contracts that most contractors offer, I think the peace of mind that a HO would get from the specifics would be a prudent investment.
Jon Blakemore
Jon, I think Mike's first visit is free also, just as it is with Tom (his salesman) and mine.BTW, Tom's here with his family for dinner. If you want to talk to him about salesmen, call me at home. 239-793-609, and punch in 6600 when you hear the message that we have call blocking for marketers. Or call my cell at 239-253-3899.
"My CPA gave me about 30 minutes of his time before we started our relationship. I asked him some questions and he responded. He printed out some forms that I needed and we went on our separate ways."Exactly. And from that you got some idea of his crediability and match.Now a "Mike" has his portfolio and can point to several house down the street so that the potential client. Some idea of what Mike and do and if it is the type of project that the client is interested in.But a "Blue" how does a client qualify him.One way would be to see if he can come up with a proposal.
Bill,I'm in pretty much the same situation as Blue.My business partner and I can successfully run remodeling jobs ranging from rot repair to second story additions.The problem is we have not had a great deal of our "own" jobs that we can provide as a portfolio/reference. I have pics from jobs we've both done for employers that I could share but I feel that if I show a customer a job that I worked on but didn't sign the papers I have to disclose this information. I think that brings up too many questions that I don't want to deal with.So, we don't have a stacked portfolio (although it's growing quickly) that we can wow the potential client with. That is why I really have to be on top of my game when meeting with leads. They don't have 35 years of projects to appraise so my communication must be clear, my identification of their needs must be accurate, and my solution for meeting their needs (which of course always includes Rappahannock Building & Remodeling, INC.) must be elegant.Hopefully I will be successful and be able to sell them a SCA, and all the tangible benefits that go along with a SCA <g
Jon Blakemore
I have pics from jobs we've both done for employers that I could share but I feel that if I show a customer a job that I worked on but didn't sign the papers I have to disclose this information. I think that brings up too many questions that I don't want to deal with.
Jon, I think you are wrong about how your portfolio is perceived.
I'm not at all ashamed to tell clients that my last remodeling project was 15 years ago. I quickly followup that statement and point out that our crews have been in the trenches building custom homes every day since then and that WE will be the ones doing the framing, and that we ARE EXPERTS AT THAT and framing is the most important specialty contractor phase of the job!
I have the same attitude as Mike. If they don't like our company and tell us to go away, that's okay with me, because it's their loss.
Attitude is everything and I know for a fact that I will deliver a better job than 99% of the competition using our gathered group of specialty contractors and my 30 years of devotion to the carpentry framing industry.
I would not hesitate to include in my portfolio any jobs that I oversaw as an employee. My sales pitch at that juncture would be to explain that the Contractor might be handling the paperwork, but it is my field expertise that is getting the job done correctly. I then immediately explain how I'm handling the paperwork using my own company expertise and I am still the guy out in the field getting their job done correctly. I let them decide whether they want an expert paper pusher or an expert craftsman in charge of their job.
If you've got pictures of jobs that were GC'd by someone else, they are still valuable to your portfolio. I'd not hesitate to divulge my exact relationship and even offer the contractors name and number as a reference. If they decide to call that number and offer that contractor a chance to bid, so be it, because I know I'm going to be able to offer better value than him too!
blueJust because you can, doesn't mean you should!
Warning! Be cautious when taking any framing advice from me. There are some in here who think I'm a hackmeister...they might be right! Of course, they might be wrong too!
I am going to put my oar in with this. If I am repeating something already said, my apologies.
The question "What does a customer get for a paid SCA"?
So far as I can see ONE thing. Power
They get information on products, application methods, they know that if they have products installed as per manufacturer specs, then the warranty is valid. All this info adds up to power for them. Security for them. They now KNOW that if their nice new Hardiglaze lined bathroom walls develop a crack, that the 15 year warranty is valid because it was installed correctly.
Without that knowledge they are hoping, trusting that everything will be done right. All they have is trust and hope that YOU are honest and competant, because if they already had the knowledge and information then they wouldnt need us. Right?
When they pay for an SCA, it is of course no guarantee that the person doing the work is indeed honest or competant. However, how many ratbag types that cut corners and try to fleece the HO in someway are going to put in the time required to work up an SCA and then present it? Very very few I would imagine.
As for paying for an SCA......why the hell not? In a former life I was in a white collar profession. People would call and make an appt. From the moment they made that appt, they owned it. Cancel more than 3 days out and no problem. Blow me off and not turn up, they pay. For the simple reason, if they dont show up, I dont get paid for that time slot. I may have turned down others that I would have been payed for.
This is a standard situation, not one I came up with on my own.
I also did free consults. How much paid up work did I get from those freebies....nothing. Not a cent. The initial consult was free, so it had no value to the customer.
If I provide a HO with some of my considerable experience and time, then I should be paid for it. A tool repair shop will charge $50 as a 'diagnostic fee'. Fair enough, If it takes an hour to figgure out whats wrong, they get 10 tools in for repair in one day, then if they dont charge they just worked a long day for nothing. They dont do it, why should the trades?
Banks dont give a damn what you charge or dont for your time, they want their mortgage payment NOW or you lose your house. Banks for example give away NOTHING, EVER. People pay what they ask. Why should the trades be different?
Some folks on seeing the job being done will comment "Oh thats not so hard". With a "Hell, I could have done that" tone.
Short answer to that is, if it is so easy, how come they dont do their own jobs?
The reason it looks easy is cos I have 20 years of experience in this.
Right now I work about 70 to 80 hours a week and get paid for 45 to 50. Imagine the response from the HO, if their boss said they had to work 6 full days, but were only going to get paid for 4. They would be out looking for a new job in about 5 minutes with FU being muttered under their breath the whole way.
Why should the trades be any different?
I am very soon going to start charging for SCA's. A classic example was 2 weeks ago.
Got a referral from my plumbing merchant. Used to be the neighbour of the person who referred me. ( only reason I ran with it as far as I did )
Went round on my way home. Time spent when I could have already been home.
Saw the bathroom, very dated, pretty messed up. Needed a full gut out and a redo to do it right. HO thought she could get all the work done for 2.5k
Not likely I said.....more like 5.
She gasped, asked what she could get for 2.5k?..........( here we go I thought )
I told her the shower would give the biggest effect and would cost pretty much 2.5
She also wanted the vanity top changed and could I give a 'quote'.
5 days later I got a phone message.......'have you done my quote yet...?'
12 hours later, nother message 'done my quote yet....?'
I didnt want to waste the printer paper, so I called the next day, got her husband and told him the price, what was included etc. Came to 3.2k
A week later, no prizes for guessing who I havent heard from. Pizzes me off.
THAT alone is good reason to charge for an SCA. weed out some tirekickers and get more time with my wife, not spend my nights in the office working up numbers for some selfish type who just wants one thing. What THEY want, NOW and CHEAP
Everything, 100% of it, depends on how you look at it.
DW
That was a great essay and analogy.
You have to wonder where it is that peopple come up with these ideas of how much something is gonna cost. Like they know something about the business??
I think one of the greatest obstacles to overcome in this business is the fact that people don't believe that we actually run a business. It's fun, it's a hobby; whatever!
They simply don't understand that this is how our bills get paid, what puts our kids through college, and what will grow a retirement account for us.
I didn't just wake up one morning with a truck full of tools, and a head full of 25 years of knowledge and experience.
EricI Love A Hand That Meets My Own,
With A Hold That Causes Some Sensation.
[email protected]
"You have to wonder where it is that peopple come up with these ideas of how much something is gonna cost"You tell me?This is one of the great chicken and egg problems.Where is the average person going to get anykind of idea if the job is a $500 or $50,000.Now the price of fixtures is commonly available. And you see ads. For example Rich said that he runs a special tax refund to redo a bath for $2500 IIRC. Now that is strickly strip and replace jog and with low end, but reasonable quality goods.And they see the jobs in the magazines run $50,000. But those are a room addtions that is bigger than the MBR, have separate soak tub, whirlpool tub, and shower. Built in TV in the shower. Fixture imported from Italy and tile hand made in Tibet and exported on mule back.So based on those 3 price points (fixtures, $2500, $50,000) the HO wants to redo there bathroom. Now unknown to them there has been years of serious water damage to the one wall and the joist.They want to rearange it move the one wall into the closet on the other side of the wall which happens to be load bearing.And not to mention that the place was old and that there where serious code & maintace issues with the plumbing and electrical that needed to be updated. And included things likes like a new vent line through the tile roof and a new drainline through the foundation and connecting outside.But the typical HO does not know about any of those things and even if they had an idea that some of them needed to be done that don't have any reference AT ALL about what it would cost.And they want a some nicer fixtures, nothing fancy, just a slight upgrade.So what do they figure. Basic bath for $2500. Another $500 for better fixtures and what does it take to reframe and DW a closet. That can't be more than $500.So that job should be $3500. Right.
Edited 4/16/2005 9:37 am ET by Bill Hartmann
I'm not sure what point it is you are trying to make Bill.
I made the statement in a rhetorical frustrated kinda way I guess.
When I go to buy a rake, a steak, or tires for my bicycle, I know the range of prices available because I can read, and the information is public.
If I go to have surgery, or dental work, that is something I have no knowledge of, and I must either accept the price as fair and honest, or decide that I can wait to have the work done until I have enough money in my budjet.
So, where do people come up with these numbers?? They are likely just guessing based on what they think they can afford. But, they have set themselves up in a way to be let down.
The h/o would be better off hiring a proffesional to establish a plan and deliver a cost estimate, and do so with an open mind.
On the other hand, if the h/o wants to guess at a price range based on similiar work done by the same g/c that's probably not too bad of an idea. But then again, why not just keep an open mind and ask?? It's a yes or no situation, either you wish to spend the money or not.
EricI Love A Hand That Meets My Own,
With A Hold That Causes Some Sensation.
[email protected]
"So, where do people come up with these numbers??"I just gave you one example. Probably not an unreasonable example.Here is another. They had a bath done 10 years ago or they know someone that did for $2500. It is not that they are dumb and don't realize that there has been inflation. But rather it is something that they don't price everyday so they don't realize the changes. That is common human nature and I suspect that everyone of us has fallen into that trap. Had something in the back of our mind to purchase and then years later when you are ready to it is much more than you remembered.So anyway they get a $1500 bonus and think what they can do with it and remember the bath. Decide that they can set aside any extra $1000 during the next year." They are likely just guessing based on what they think they can afford."But without ANYOTHER INFORMATION how much are they going know even when to call. Do you REALLY want everyone that has $500-1000 set aside to be calling you to get a desgin and pricing, even if they pay for it, for a project that they can't do for 5 years and at that time a lot of it needs to be redone?"But, they have set themselves up in a way to be let down."As I said that it is a chicken and egg problems.I blame "you" more than the HO."you" being the remodeling industry.Not that I know of any simple solution.
Do you REALLY want everyone that has $500-1000 set aside to be calling you to get a desgin and pricing, even if they pay for it, for a project that they can't do for 5 years and at that time a lot of it needs to be redone?
YES!!
I wouldn't mind doing just that! $500.-1000.00 for 8-12 hours worth of work, not bad in my book.
And if they want it done in five years, they're SOL cause the quote is only gonna be good for 90 days tops.
EricI Love A Hand That Meets My Own,
With A Hold That Causes Some Sensation.
[email protected]
"And if they want it done in five years, they're SOL cause the quote is only gonna be good for 90 days tops."But they won't be calling your back because they feel that they have wasted their money.
With an SCA in hand that clearly states that the quote is good for 90 days, they decide to put the job off for 5 years and somehow figure that I wasted their money??
HUH?
EricI Love A Hand That Meets My Own,
With A Hold That Causes Some Sensation.
[email protected]
Bill, that's why a "professional" contractor , as opposed to an average "no system" contractor, qualifies the potential customer over the phone, or in the worse case scenario, a the firs sales call. I never ask for a budget, and I never ask, because like buying a car, people will somehow find the money to pay for something they really want.
So based upon a phone call to me, and a few questions to them, I can tell them right over the phone that they are looking at between $5000 - $7500 depending upon this or that. No time spent driving there, spending time looking it their area - just a ball park over the phone. Now they have some idea of the cost of what they want to do. Now the next time the call another contractor, they will be prepared for him to say it will cost between $4500 - $8000 depending upon the contractor.What does it cost to have a cleaning lady come to my house and clean it each week? $50-$80How much is a dress? $40 - $500What does a pair of jeans cost? $20 - $150How much will a dinner in a restaurant cost? $12 - $50We all have general ideas of the above, even dental work as well. But remodeling entails so many variable there is just no idea of it's cost without first "qualifying" the prospect as to size, scope of work, idea of new products to be included, etc. And all of that can be ballparked over the phone. However, as I used to do, most small contractors are so anxious for any job that they are only to eager to drive there at night after super, or Saturday, or worse yet, Sunday. And then THEY get mad at the prospect upon finding out that their idea of costs are unbelievably unrealistic. They should get mad at themselves for not qualifying them over the phone. Doing so will not waste either side's time.Furthermore, in 2005 with so many people owning digital cameras and email addresses, more time and better accuracy can be accomplished if the contractor asks the prospect to email him a few photos, explaining that this "process" will get the prospect a must faster ball park price for what they would like to do. I've been doing just that for several months. About 65% of my senioir citizens have email address and about a third of them have cameras, so about 21% (not an unsubstantial #) save us both time, and when I do go there, I'm much more prepared, as they are.BTW, guys. One of the best ways to justify charging for an SCA is to show (at the 1st meeting) a sample SCA for a similar job scope (price optional) , AND with an attached sheet delineating each operation with time frames you spent in order to reach the point where you could then total up the costs and actually type up that SCA.Show them what they are paying for, besides just telling them. It’s a proven fact that people (including us) are much more likely to believe what they can read and/or touch, as opposed to just verbalizations.
Edited 4/16/2005 3:11 pm ET by Sonny Lykos
"So based upon a phone call to me, and a few questions to them, I can tell them right over the phone that they are looking at between $5000 - $7500 depending upon this or that."You are not only qualifying them you are giving them important information that they need to proceed."Furthermore, in 2005 with so many people owning digital cameras and email addresses, more time and better accuracy can be accomplished if the contractor asks the prospect to email him a few photos, explaining that this "process" will get the prospect a must faster ball park price for what they would like to do. I've been doing just that for several months. About 65% of my senioir citizens have email address and about a third of them have cameras, so about 21% (not an unsubstantial #) save us both time, and when I do go there, I'm much more prepared, as they are."That is a great idea.
Edited 4/16/2005 3:19 pm ET by Bill Hartmann
Bill, I'm actually doing both. I'm qualifying them for myself.I'm giving them pertinent info besides pricing info.I'm also offering suggestions and options - things to consider. For example, I never remodel a bathroom without including a 36" grab bar in tub or shower and an additional 12" - 16" vertically installed bar at the entrance to the shower of tub - and explain why, besides the practice of showering (opr "tubbing") being a hazzarous procedure, for 5 year olds or 85 year olds. Then we decide if it's a good idea for us to proceed by meeting. So it's really beneficial for both of us. These "systems" or procedures all just makes common sense to me.
There is an easy answer to what Bill said about customers not knowing what things cost.
They have no experience to base their assumptions on. None.
What it cost Grandpa to built his whole house 60 years ago is worthless info, how much the beauty salon lady paid some hack to paint a wall is worthless info.
PLUS, a HO will look at that light he has wanted moved for 3 years and decide that its only a small job, just undo the thing and move it right? How long could it take?
Because they have no idea, they dont see the ancient wiring that has to be replaced, the cracked connectors in the light, the solid block of framing the sparky somehow has to magic a wire through without damaging the wallpaper.............
Then they come up with a number that they think is reasonable, like oooooooh a 100 bucks. ( a hundred for 1/2 an hours work is damn good money right?.....)
The bill for $467.00 leads them to the obvious conclusion. The sparky is running some sorta scam.
The weird thing is, I suspect most HO are like me when they buy consumer goods. like say, a TV
I go and look at the different models, sizes etc. Then usually I will ask why two similar looking TV's are $120 difference in price. Often the answer is something like, "This one has a multi-positronic whiffle blocker for better reception, the other will work fine in 90% of homes, but a weak signal means less than perfect reception"
Oh, OK, I will take the more expensive one then.
I just got educated and with that new knowledge made a choice. If I wasnt told and couldnt figgure the crappy reception, and later found out about the whiffle blocker I woulda been pizzed.
I looked at another job the other day. Lady said she was mucho pregnant and needed the bathroom done in about 4 weeks. I told her I couldnt, way too busy to squeeze it in. She said she had some others to call, thanks anyway.....
Called back 20 minutes later. Could I come and have a look?
This is the part whereI shot myself in the foot. I didnt tell her the average cost for such a job, or ask how many others were looking.
I looked, asked, measured. Showed her samples of quality products, explained how this needed to be done to maintain product warrantee etc etc.
Gave her a ball park...................Oh, we were hoping to get it for less than that. We have a retired guy coming round next week who might be able to do it sooner.
I could have saved a trip by doing what Sonny does. Next time I will.
Everything, 100% of it, depends on how you look at it.
DW
You brought up an important point - "The other guy."We never know who he is, what he is - anything about him. And to far too many customers all that matters is his price.About a month ago a guy called me about a problem with his new washer and dryer. They were too deep for the closet type opening in his condo and so his bifolds would not work. Having email and a camera I asked him to email a couple of photos and measurements. I've corrected a few of these situations by running a 1x2 or 2x2 of poplar or fir on the outside of the opening and even with the jambs and header, trimming them with door stop of similar, repositioning the track and bottom brackets, caulk, prime and paint - maybe three hours max. So I gave him a price of $348. He was shocked. Said another guy had done a couple for some other unit owners for - READY --------- $90!I asked how much he thought that I would for it for $50? But see I slipped up. These condos sell for about $120K - about the cheapest in town, so I should have known better than to even waste 3 minutes with him. If it was a customer of one of my regular condo associations I could have charged $448 and they would have been thrilled to have me do it.So you see, give a new Mercedes to a 5 year old or a severely retarded adult and they have no comprehension of what is being placed before them. Ditto for the person who eats sandwiches each day for dinner and never eats out. Ignorance and values, and the worse of the lot is a combination of ignorance and outright cheap. In other words, they are incapable of determining value much less recognize it when it slaps them in their face.Qualify - always. Regardless of your age, pretend that you will die exactly three years from now and during those next three years you wanted to maximize your income so you leave your family as much money/assets as possible. Your new qualifying tactics would make me look like a novice. Make me look like a novice starting right now. It's called being a professional businessman BEFORE being a professional tradesman.You cannot do your "trade(s)" until you sell first.You cannot sell first unless you qualilfy to whom you will TRY to sell. Time is not infinite.You cannot sell to anyone without getting YOUR price because only you know your expenses and the time needed to do the "trade(s)".
Edited 4/16/2005 8:48 pm ET by Sonny Lykos
Bill, to clarify, I don’t charge everyone for an SCA. I do a lot of repeat work for both condo associations and for private parties. I know the job is mine, but it’s just a matter of giving them a price (some are the type where I just do the work and invoice them). In those jobs I use as a “sales expenseâ€, 7% (recently increased it from 5%) as a line item on my estimating sheet. So the decision to charge for a SCA also allows me to use that “fee†as a a tactic of qualifying a potential customer. their reaction helps tell me their priorities, and if money is really emphasized #1, I generally decline to go further with them. None of us want to spend any more than we have to regardless of the purchase, but when priorities are what I consider to be out of whack, I beg off. And by out of whack I mean the guy with two cars in his garage worth a total of $100K but wants “the best deal†on a $10K remodel - I’m out the door if I even made it there to begin with.So none of us should view the fee for a SCA as a money making tactic. It’s simply what it is - reimbursement for services to be rendered, and to further qualify people. Now if a person wants to value or devalue the “services rendered†is their business. I just react to their verbalized “perception.â€I sell this widget for “X amount. If the widget has no value to you then don’t buy it. As with any other service or product, it’s simply an exchange of one thing for another.So refer back to my example of the roofing, painting and caulking scenario. What's the difference if my Proposal says: 1. Caulk all windows, and doorways.
2. Put on two coats of Sherwin Williams semigloss paint. (Bill, note no grade is mentioned) And:To the window trim, door jambs and brick molding perform the following:1. Cut and remove all existing caulk at all termination and wood to wood joints.
2. Clean all substrate to be sealed with alcohol and wash all trim, and jambs with Liquid Sandpaper to remove any contaminants.
3. Apply brown urethane sealant to all of the above areas per attached application procedure.
4. Upon flashing over, apply one coat of oil base exterior primer to items in #3.
5. Apply two finish coats of Sherwin Williams Super paint in a semigloss finish to all window trim and all jambs and brick molding to obtain a final dry film of a minimum of 4 mils.All of the above workmanship is guaranteed for three years. Owner has agreed to hire Sonny Lykos to make annual inspections of the above areas about 2 months before our rainy season begins, and provide a subsequent written report to owner.
Whether one charges for an SCA or not does not determine his honesty or competence. I just feel that I could no longer include my time doing SCA from which I did not get the job to be paid for by those who did give me the job. IMO, charging someone for that is unethical.But I have seen far too many BS, ambiguous Proposals simply because it was free and the contractor did not want to spend any more time on hit than necessary to get the job - not good for the consumer.I too noticed the Geocel site no longer offers the manual. I can burn a few CDs since I got it months ago, and I can mail it out to anyone interested. Since I'm on a new Mac, I just have to read the instructions on how to "burn."Here's that page again. It's just a page listing the 5 chapter headings and their logo. I use manuals like this one and other "sources" as selling/marketing tools. Another point about the SCA fee is that it allows me to take the time to get into more detail as to the whats and whys, of particular "applications". An example was with the caulking I spoke of. BTW, it was 4 nails where it should have been 6 - not 5 and 7. Two nails at each throat and one at each end. This roofer also nailed the shingles in the tar strip instead of between that strip and the top of the throats - they were regular three tab fiberglass shingles, not dimensional shingles.
Edited 4/10/2005 3:45 pm ET by Sonny Lykos
"Another point about the SCA fee is that it allows me to take the time to get into more detail as to the whats and whys, of particular "applications"."How again you are giving some specific reasons why it can be a benifit for the customers.The customer does not care how much money you make. Of course he don't want you to starve to death he might want to use you again. But that is not his primary concern.Both of these threads have been on SELLING an SCA to a potential client. But all of the discussion is about why it is good for the contractor.When the contractor says that I want $xxx for an SCA I will ask "what do I get for that".And I expect an logical respons of "this, this, and this".That I will look at it and see if "that, that, and that" are worth it for me to pay for. Very simple. I would think that almost anyone does that on any purchase.That is all I am asking for very, very simple. But the basic two responses I have gotten are "I want to make more money" and Joe did not buy my SCA and ended up with a loosy job.
Bill, the others maybe don't, but I see exactly what you are getting at.
I think what it boils down to is that those who are able to charge for the time they spend on telling people what their projects are going to cost them should do so, and those who can't will have to manage without
I bet car salesmen would like to be able to charge for the time they spend with customers who don't end up buying a car from them
John
john..... are you a contractor?. if you are, don't sell yourself short..
remember this conversation... and the next time you get shut out on a bid , and you have nothing to show for your 40 hours invested... ask yourself what would have happened if you had asked for a fee to figure the job?
one of two things.... either they would have paid the fee.. ( and you'd not only get the fee , but you would PROBABLY get the job)
or they would show you the door and you could invest your 40 hours with someone else..
do you think it was easy for me to come to this realization ?
do you think it was easy for eric to say "enough" ?
it ain't easy.. but don't tell me that you work in a market where you can't do it..
that is BS ... it's a cop-out... you're just too scared of rejection.... i'm not scared of being rejected by Bill... heck, i'm going to screen that tire -kicker out in the first phone call...
" Show me the money !"
Bill .. you still haven't answered the question about the appraisals.. what's the difference between the "free " ones you get from the real estate agent.. and the one you pay for from an appraisal company ?Mike Smith Rhode Island : Design / Build / Repair / Restore
"Bill .. you still haven't answered the question about the appraisals.. what's the difference between the "free " ones you get from the real estate agent.. and the one you pay for from an appraisal company ?"Often only the certified stamp.My friend is an RE and mentioned that a couple of times she has given unoffical appraisals to attorneys. Did not know what the purpose was, but they did not need offical appriasals.But a lot depends on the type of property. In an area of many house of in a same range the RE agents estimate of market value (I think that is the term that they use) should be as "good" as one from an appriasor.Now I have been involved with 3 appraisals. The first time the apprasor said that he did commercial, but they where slack and residential was hot and he ask how much I was borrowing and I think that he based it on that. That was before the days when you got a copy.When I refi'd I got that copy. Now where I am houses range from UC to 80 yo. From $80k to $600k (or more) and those might be next door to each other. And there are not a large volumn of sales.So that guy did some work finding comps and doing adjustments.Then I was involved in the sales of a church. The appraisor came recommend from the demonation and has do another church for them before.He downright blew it. Had material facts wrong about the property. Picked comps that where old, far away, and where not close to size while ignoring ones that where a better matched.In the end his report stated that churhces are hard to appriase and his guess was $xxx.There where many, many other issues going on with the chruch as the time that this was drop, otherwise we would have at least had some words with him.
so... does that mean you would pay for an appraisal ?...
you must be in some kind of business.. i don't know what you do.. but you do realize that there are good fits and bad fits between vendors and customers..
some people will never do business with me .. and vice versa.. i'm a relationship type of vendor and as a consumer i look for the same thing.. it's what i look for in my auto mechanic... my family doctor.. my insurance agent
it's what i look for in my subs.. my customers tend to be realtionship -type people also.. they see value in my offer to sell them a Proposal..
people who are not into creating realtionships .. or people who are cynical... or people who think that a good set of specs and a good set of plans will get the same job from different contractors ( different prices for the same set of specs ) , will probably not do business with me
the thing is.. i stopped worrying about them.. their loss, not mine..
Mike Smith Rhode Island : Design / Build / Repair / Restore
"so... does that mean you would pay for an appraisal ?.."Depends on the circumstance. If it is for the loan then I will. I get significant value in the loan.If I was thinking about moving it would call a couple of RE agents.If I wanting to know general what my assests where for "life planning" then I would call and RE Agent. But I would be upfront with them. Some would and some would not get a free market evaluation for that.But they don't have portfolios so that is one way they can "advertise".
Sonny,
First, before I pizz u off. I would love a CD, I know you sent it to me via Email before, but Mail.com couldn't handle it.
Sam Tyler 6851 Creasy Springs RdColumbia, MO.6.5.2.0.2. (No dots for zip)
Any kind of info you would like in return? You name it and I may have it. Sample forms and spreadsheets, toys, helps, maybe a surprise grab bag?
Uhm. . . That SCA outline you got on Bill about was a C&P from my post. I wasn't trying to give Bill what is needed to produce an SCA, just give enough SCA content to show some "Client Value."
SamT
Sam, I'll do it tonight and get it out tomorrow.
Sam, I didn't realize how easy it is to burn a CD. It's done, packaged, and will be sent tomorrow. Not the prettiest package but the only brown envelop I had.
Jon,
So you asked for a check in advance for the SCA (or were going to before they started to talk about throwing even more money at you and frazzeled you a bit)? Is this usual?
Do people get paid in advance for their Proposals and SCA's?
Live light enough to see the humour and long enough to see change.
-Ani DiFranco
penny.. i either get paid in full, in advance, or half down and balance on submittalMike Smith Rhode Island : Design / Build / Repair / Restore
Lucky,>>>>"So you asked for a check in advance for the SCA (or were going to before they started to talk about throwing even more money at you and frazzeled you a bit)? Is this usual?"I think I may have not been clear. To date I have not discussed anything along the lines of SCA's or paid proposals with this couple. In fact I think I will not on this job because I don't feel I approached the job correctly from the beginning.I will discuss the work that they are considering that I can put a price on without much difficulty. For the remainder I'm going to see how they respond and what direction they want to head.The work that is more involved will need design if they're serious, so if they give the green light I'll get a design contract that will include our proposal.Next time I will be prepared.-edited for spellingJon Blakemore
Edited 4/10/2005 3:52 pm ET by Jon Blakemore