I know this sounds absurd, but have you ever quoted way over what the job finally costed, and if so, what did you do?
I have a job right now of rebuilding the garage door openings for a friend. The price I quoted seemed outrageous to me at the time, but he said to go ahead (all 8 jack studs and one king had to be replaced, and we cleaned out 2 carp ant nests from the rotting framing.)
We will finish well ahead of what I thought it would take, and as such have begun thinking of knocking the price down. Is this crazy? BTW, my wife supports knocking the price back, but cautions to ensure that all expenses and profit are covered first.
And there is winter work that he wants to do.
I never met a tool I didn’t like!
Replies
Re"estimate it" with hindsight, tell him what happened and refund.
Right thing to do.
Good karma.
One heck of a referal.
SamT
Nick, I'll probably get slaughtered for this, but I'd knock it back.
I did a deck this summer for a GC with a much bigger outfit than I have. He throws me loads of work that he doesn't have time to do. Pays fast, easy to deal with etc. Anyway, we cranked that deck out in about 3/4 of the time I thought we would. I also somehow messed up my take-off and had about $300 of lumber left over. (oops). We finished the job and he came by to check it out. He saw the left over lumber and knew how long it took us to build it. He never said a word, just "let me grab a check for ya". I followed him to his truck and told him to knock $500 off the tab. He looked at me like I was crazy so I just said, "hey man I blew the take-off by about 3 bills, the digging was good, and we cranked it out"
Work just keeps coming and coming from those guys. Still made a great profit and covered overhead nicely. Giving back that 500 bones was money very well spent.
Besides, he's you friend right?
Just make sure you explain it to him so the next time you do work for him, he isn't insulted when you DON'T knock the bill down at the end. Or, heaven forbid, have to hit him with extras!
I'd knock it down too. I have had a job making True divided lite trapezoidal windows for a great customer, the Clear Doug fir was cheaper than I thought, the full size drawings I made were DEAD on, and the glass was less than I guessed...turns out I woulda been "OVER" by 2 grand...pure profit, but I gotta sleep at night..I completed the job with just the original deposit, no further invoice.
Over 5 or so yrs, he gave me 100k worth of work on his house..it all works out in the end.
Spheramid Enterprises Architectural Woodworks
Repairs, Remodeling, Restorations.
I would keep a portion for yourself and give the rest back to him in the form of work. Rather than write a check, ask if he has any other projects that are nagging him.
The reason that I say keep some for you is, and I know I'm not telling you anything new, if you were under most likely you would be left holding the bag. That's one of the biggest benefits of your own company: Potential for profit.
Jon Blakemore
Just got off the phone. He's already cut a check for the full amount of the firm quote. I offered to cut off about 10% of the quote. He appreciated the offer, and has decided to apply it to work he wants done in the winter. I view it as win-win (and an interest free loan?)
I also scaled back the figure slightly, realizing I had done more than the original proposal called for. All in all, he was very happy to hear about the 'rebate'.
Thanks for the replys, I wasn't sure how many would endorse the payback idea; given the quality of people that participates in this forum, I should have known better.
I never met a tool I didn't like!
Yeah, these guys have got it right......good karma.........I've done exactly that a coupla times.
You walk away, and it feels like you're walking on a cloud or something!
Just don't give the WHOLE farm away!
Eric
Nick, I agree with everyone here so far. Some clients you can't do this for, after all, if you were losing money, most clients would not offer more out of the kindness of their hearts.
However, there are certain professional relationships where reciprocity is assumed and a little good will can go a long way.
It has worked out well for me every time.
DRC
this is the opposite form of the same question we see here time after time that causes problems between customer and contractor. It appears that you repeat the same scenario that causes the problem. your wording suggests that you fail to differeentiate between a firm bid price and an estimate for cost plus or time and materials. Your heading says "estimate" but your description using "Quote" suggests firm price. No wonder you have yourself confused.
It should ALWAYS, ALWAYS, ALWAYS be xclear to both the customer and the contractor BEFORE the work starts, whether it is a variable floating estimate price or whether it is a firm fixed price. If this was a firm quote, you should charge and keep the full amount. When you do business this way, the high profit ones make up for the other times you get caught short, and you get to stay in business.
So, now that I'm all done scolding you, since it is a friend, I might consider revising the charges.
Edited 8/18/2004 9:13 pm ET by piffin
I don't know this guy Karma but I too would refigure it. Just figure the job as though you made the kind of money you always hope to make then give back the rest. Good for you, good for him. Friend or not I would do it. DanT
I typically ALWAYS ALWAYS ALWAYS give a firm number for what the project will cost in the proposal before I start. And I did in this one as well. (I don't like to use the word estimate, but that's what most of the customers want to call it. To me, the price in the proposal is what it will cost to complete the project with the appropriate margins for markup, profit, etc. I guess you could call it an estimate, but after a while, if you still have to estimate, you haven't learned much.)
In this instance, I had my son help me with the work. I factored in the cost of his help, but not the increased efficiency because of it. That is where the descrepancy between the initial figure and the real time bottom line occurred.
The good/sad part is, my son leaves for college next week. It's great to see him mature into adulthood, but I won't find a better helper; that kid can anticipate. Thanks for the reply.
I never met a tool I didn't like!
Yeah, I know that deal. What is it with kids? You raise them, feed them, get them to where you finally enjoy working with them and off they go to get educated and be somehting. I don't get it. Mine just left for his Junior year. Man I miss his help. This summer he worked an internship for the state highway dept. So I didn't even get to work with him then. Oh well, they gotta grow up I guess. DanT
I give out "proposals". I propose to do "x" amount of work for "y" amount of dollars. I got smoked on several jobs last fall when plywood went thru the ceiling. I'm making a little better than my average on a job I'm currently working on. It hopefully averages out. Most people want to know in advance what the project is going to cost (me included-I'm in the market for new A/C), before it starts. Sometimes a premium must be paid for that. Now, all that being said, I thrive on repeat customers. Most of my work is as a sub. Some of the GC's that I work for are old school and want to argue every proposal. Others accept anything I propose without question. In the situation you're in, I would refund part of the money to a contractor who is going to hire me again and again. How much would depend on how much he regularly tries to beat me down on my prices. I'd have a hard time refunding to a homeowner, but I often do little uncharged extras when I'm working for homeowners if things are going well on the project.
One of my bosses that I respected a great deal said something similar to that - The jobs you over-estimate make up for the ones you estimate too low. And you'll under-estimate about 50 jobs for every one you over-estimate.
Seems like my experience has pretty much run along those lines.An honest man is he who knows he cannot consume more than he has produced.
I think you should knock the price down some, but only 1/2 the amount you are thinking of. Just think of those jobs you did where you underbid, and the others where you ended up doing uncompensated extra work. Also, think about some of those many free estaimates you have given...
How much money are we talking about?
I am thinking along the same lines as Piffin. Having a job like this every once in a while offsets the times where you under bid/ quoted.
The knife has to cut both ways. If you give YOUR money back this time, will THEY give you more money when you run short next time?
Did you agree on a price or did you say "It'll cost around..." or "Something between x and y"?
Keep in mind that whatever you do you will be setting a precedent for the future. Give money back and they always expect a rebate in future work. It's human nature to expect the past practices to repeat themselves. We are all striving for consistancy.
Now, if this "over price" puts you into another tax bracket, or otherwise affects your earnings at the end of the year, then buy the guy a trip to Europe.
If you feel guilty, buy your friend and his wife a few steaks/ lobsters and a couple bottles of wine. Or buy him a great tool box filled with some great tools, that as a layman he would never buy himself.
I've got a much better idea: If you've got a hunk of money you're feeling guilty about, send it to me!
always one in every crowd! that was hilarious!!!!!
Hey!! I was serious!
i gathered that, thats what made me choke on my dr. pepper!
Okay, I've read most of the comments and I would refund "most" of the overage back. He'll more than likely appreciate the honesty and spread your name around like crazy. This is the chance for "positive word of mouth advertizing".
Now, fir the money you keep ... I accept cash or check for the professional consultation.David H. "Splinky" Polston
Founder of Sawdust, Norfolk, Virginia
Check's in the mail. To whom, though, is the question... : )
I never met a tool I didn't like!
If youve got enough to pay all expenses plus your normal profit, there is no reason not to reduce the final price. Not only will it make you look professional and honest, it will produce referrals.
Your client will spread the word, and thats the best advertising dollar youll never spend.
I have done plenty of work for friends and the best way I have found to handle it is by being upfront with an honest bid and explaining that material is X and labor is Y and if things go well, than you pay what I pay, if things go south (miserable cedar shake tear-off, which is mostly what I get into) than it is what it is. I only pull what I personally need out of friends to make it worth my while which is minimal. The X and Y variables are what they are and they understand that. At the end I refigure it based on actual costs and we settle there. Plywood can kill an estimate from week to week or day to day. I have since gotten a truck to reduce dump fees whichh help with estimates. But the next two roofs were based on high $ plywood and dumpsters which will cut almost $1000 from each project. When $1000 is involved with friends there will sure to be ten referrals from each. but the key that has worked is the honesty up front and the fair market value estimate.
It's hard to forget a girl when you buy her a gift on time.
Since it is a friend, split the difference, or give it all back.
On the other hand, if your crew is so wonderful and you were so organized - and that is the reason you completed the job in 3/4 of the time, pay yourself extra $ per hour for being the best!
I give a discount on the final payment only when there is less work and materials involved than I had initially anticipated. If we finish the job - as spec'd - faster due to motivation, organization, luck - I keep the cash, and the customer gets the reward of a job well done, completed with time to spare. Everybody's Happy.
That sounds like a good business policy, but what happens when a job requires more materials and/or labor than you anticipated? Matt
I would give any "guilt" money back, (that's after the complete accounting) and finding the profit I should get,then feel justified...
Scribe once, cut once!