I was reading the stuff about Jason and his six estimates, and it got me thinking.
I HATE estimating. To me, this is not only the most difficult part of the job, but the most dangerous. Yeah, I could theoretically fall off a roof and bust my nut; but if I screw up an estimate badly enough, I could fall off the financial landscape and bust my reputation for good.
It takes me HOURS AND HOURS AND HOURS to estimate a big job, and that’s not counting the time out at the proposed site looking over the project. Over the last few years, I’ve started to charge hourly for part of the work involved in this process–if I have to make drawings for the customer’s approval, that’s billable. If I have to consult the municipality, that’s billable. But people get bent pretty fast if you tell them they’ve got to pay you $$$ per hour for you to figure out the bill of materials and estimate the number of hours of labour involved in something like a major add-on or complete tear-out and re-do.
Why is this? Lawyers charge $30 bucks an hour or more for their SECRETARIAL time–and that includes typing up your bill!!–but no one thinks that squawking about that is going to get them anywhere.
As a result of this, I now remind customers that AN ESTIMATE IS NOT A QUOTE. I charge cost plus 5% on materials and subs, and $xxx per hour for whatever labour I bring in personally. The final bill will be for hours actually worked and materials actually used.
Estimates for insurance jobs I charge by the hour, minimum 3 hours for the time it takes me to drive out, drive back, and write it up. I deduct half of that if I get the job later. This prevents me from supplying a nice, official looking estimate that some slob will send to his insurance company for a check, and then do the job himself or not at all.
Comments??
Dinosaur
Replies
I hate estimating also. (And I don't even have any of my own money at stake generally, either) I guess that's why there are a lot of questions posted here about estimating software - Everybody wants to get them done as quickly as possible.
I tried to talk my boss into charging for really, really messy quotes once. But he didn't think the customers would go for it. So when we get one I'm pretty sure is a waste of time I try to bid it by the square foot and just send 'em a nice letter with a SWAG price.
I've taken prints and spent as many as 30 hours doing all the engineering and estimating on the job, only to find out that they decided the house was too expensive to build. So they go back to the guy who draws their prints and PAY the guy to re-draw it. Then I get to re-engineer and estimate it for free all over again.
Don't really know if I addressed your question at all - That's just my 2 cent's worth........
Lord, I wish to find you, but spare me from those who have!
people do not want to pay for estimats or bids they will just call someone else.
i have recently started charging to measure for doors and windows i charge a flat fifty bucks to come out and measure . i started doing this because the local door and window showroom give my card out because they know that i will do a good job installing thair products.but customers kept calling me to give a bid on the work so i would come over take proper measurments and give a firm bid on the install and recommend what will work or not .then ahigh percentage of them would take my measurment back to the door showroom or to the home depoe to order and then hire one the local unlicensed scabs to install the doors or windows i used to charge 100 dollars to match a door to an existing jamb until i got a call from a door shop owner that had heard that i did good work but was not gharging enough we agreed that we would both start charging 200 and it has worked out pretty good so far
we agreed that we would both start charging 200 Gee, that sounds like price fixing. Probably not somethign you want to admit doing, especially in writing.
But your point about 'customers' taking your bids and going straight to the store is valid. Do you have to give a list of sizes in the bid? Can't you list the doors by location (kitchen, bedroom, entry, etc) and a corresponding price? That way they can see what each door costs, but there isn't enough info for someone else to use.
Do it right, or do it twice.
I used to give a breakdown of materials such as door and window sizes in my estimates. until I had a couple of my estimates show up a my local lumber yard, in the hands of an uninsured low rent hack. He bragged to one of the salesmen I deal with that he sure liked how easy I made it on him. Told the guy that the homeowners called him and showed him my estimate to see if he would be able to do the work a little cheaper.
Now when I send out an estimate it simply states materials and labor are expected to range from x to y and that any unforseen circumstances will lead to a change order being issued and agreed upon before work will proceed.
Customers do not see a detailed material list or buildable drawings until a contract is signed and they understand that those items are billed as a part of the job.TCW Specialists in Custom Remodeling.
You brought up a very good point that goes over most people's head. Estimates, by law, can vary +/- 15%. That can be quite a bit. My projects average $250,000. Therefore, I never give an estimate.
However, I never charge for a Proposal. I can easily spend 40 to 50 hours on one proposal. I will add the cost of that time, multiplied by two, into the cost. I get half of my proposals on average. After spending that much time mulling over the prints, asking questions of the architect, bringing problems to the owner's attention, I know that job inside and out before the permit gets issued. You also tend to not miss anything.
Another good reason for taking that kind of time is you can usually disqualify the other's lower bids. ( He didn't catch that? Hmmmmmmm.) I am very rarely the low bid, but my extras list is usually very low. This gains the client's trust more than anything you can do.
By the way, my jobs average up with a final cost being 60% OVER the original contract. It is lalmost always, "SInce you are here, what if we do this too?'
a final cost being 60% OVER the original contract. It is lalmost always, "SInce you are here, what if we do this too?' How do the final costs compare for the original scope of work?
Do it right, or do it twice.
My estimates are usually very close, and I'm still in business. I make a better margin on the extras, so the more they want, the more I make.
The last project contracted out at $235,000 and should end up around $400,000. The one before that started at $85,000 and total $137,000. It takes a little doing to keep the contract work and extras work seperated in job costing, and there are always overlaps and gray areas. But my reports say I'm doing ok as far as my estimating goes.
Pigs will get fat, but Hogs go to slaughter. (No offense Boss!)When all else fails, use duct tape!
I worked for a company that taught me alot about Estimating and Qualifying. I gave them 30% of each job. I usually made money, But Only If I did my home work. 30%,Thats standard By the way, for subs.
They would, qualify the customer for me, in some ways . But installations are a little different than remodeling. They were supposed to explain to the customer, that if I came out to do the job they had to pay. One way Or another. If I could not do it for any reason. There would be a charge for the estimate. It didn't matter if the price i gave was too high for them or, If they missed the apointment if ,or it just couldn't be done. They would still be billed for that estimate. Unless, I was able to complete the job that day.
I do something similiar, when I do my own installations. I will tell the customer That There will be fee for the initial consultaion, which includes a written estimate if neccessary. In the event they decide to go with me for the job. I will deduct that amount for the job.
I started getting people, who were telling me to forget about it. So I stopped doing it. Simply for the chance to meet them in person. Assuming i would have the chance to work my magic. Thats not bad, when they call from your town. But driving 50 miles to get shot down sucks. So I always charge if I have to drive to far. Unless it is a big job.
You could only charge the people who you think will go for it. The only problem with that is, you create these predjudiced concepts, about people in your mind. ( which is by the way what customers do to we contractors ) after a while you start to realize that you are living in your own private idaho, and you really don't know #### from shineola. But everybody has a system right.
Well recently I have just been going into each Pre-estimate meeting, full steam, ahead playing it by ear. Trying to find the rythym. I have trouble with remodeling estimates because I haven't done enough of that kind of estimate. Also i have a hard time tacking on that extra 30% that i would normally give to the retail store I worked for. Although I should becuase I do a better job. I won't cut certain corners and I can't afford to do it for free. I no longer work for the big corporation.
I never lost money on a job. I just can't seem to make a profit. I bid all my jobs + or - 5%. of the estimate price. You shouldn't confuse that with the cost of the job. The cost of the job should have it's own % of variation.
"That is an estimate. not a quote ( or Contract price )". Although saying that gives you the power, When you hand them the bill . Well it took me a little more of this or that than I planned so it will be plus about 5%. It shouldn't be confused with the actual value of the job. Thats where customers don't understand. Especially the ones who have taken the time to price out materials at Home Depot.
Job Value, Is always be higher than job costs. And I have done jobs for cost. Not because i screwed up the estimate, but because I wanted the job, and other reasons. i never lost money.
Job value is what should give you an idea of how much you can make on a given job. and that number comes from many sources. That is what will determine if you get the job or not. If you're to low or to high. and your profit should come from your ability to do the job for less, due to experience and what have you.
Customers don't think we should make a profit. I guess. Hence the phrase "Do it your selfers".
I worked for That large retail outfit that hired subcontractors to install their products. Along with the salesman in the store . Who never saw the job site. ( sometimes I seriously questioned that, which is another topic )
I was instructed to qualify the customer and explain to them the extra costs, if there were any. Giving them an exact price for the job, before I even took my tools out of my truck. That was good experience. I hated to try and explain to them afterwards that i forgot, to price somthing. And in fact , I would take a loss before I would tell them I estimated wrong, sort of a self conditioning to make me estimate right next time. It didn't happen to many times, I learned in a hurry. these were all 1 day or 1/2 day installations. When ever you have to appologize it makes you an idiot. Also it forces them to re-resolve something , you helped them come to terms with , thru qualification.
I was very good at it. and I was able to install confidence in them, about the job, as well as the products. At least thats how I felt . I took it all very personally.
I dealt with every type of customer for years. And You start to learn how to work them, according the way they talk to you. Some customers can't be pleased, by the way. Imagine that. But for the most part, what people want, is some kind of re-assurance that, the job will be done right. And it is that simple.
If you tell the customer as your handing them a "out of hand" bill "if you want to do it right." It will cost... they will go for it, more often than not.
This of course was true during the Clinton administration, when everyone was to busy making money, to worry about spending a little more, than they thought was right . So i made out ok. I am still searching for the approach during this Bush Depression Revival Era We are going thru. I would love some suggestions.
Of course I had the reputation of a mega corporation behind me. So Accountability was less of an issue. I never had a call back for anything serious, and only 3 or 4 in total. Which were always customer or manufacturer errors. I also always went the extra yard , sometimes at my expense, but thats what made it mine. Infact my work was so nice that customers would even call the store, and ask for me by name. They wanted me to install at thier house, because their neighbors had seen my work. That didn't go over real well at the store. which i still can't understand.
I believe my current problem is that people think that, all i do is small installations , They don't realize that my experience in all the other things, I can do is what made me good at installations. Not because i was trained by the company i worked for. Now, I want to find a way to get more opportunities for, finished basements and bathrooms etc. I guess part of that is not screwing up the estimates, on the ones I get. So the pressure is on.Would love to here an advice. Where there's A wheel there's a way, got any wheels?
Another interesting point. People want a number quick and off the top of your head. The salesman had a price for every aspect of every "Standard" Installation. There is no such thing as a standard installation. People need to be qualified of the standard, so they can think of it and accept it. Then you can point out, why their job costs more. Alot more easily. It works a lot better than the "worst case scenerio" approach. Also it gives you a chance to weed out the non customers. You can usually tell, or they well tell you.
Where there's A wheel there's a way, got any wheels?
Edited 5/24/2003 12:00:06 PM ET by MuleSkinner
A little twist on this thread: I was working for a large Mfg Co. in the early 70's...about the time of the big gasoline shortage fiasco. The economy was in the tank...at least in my region in wood products.
All the Mechanical construction contractors were hungry....the outfit I was working for (one of the biggies) started requiring $1500 non-refundable fees to accompany bids. I thought "no way this will fly." But fly it did! Those guys couldn't get out their check books fast enough!
I thought that was CS and I think charging directly for bids or estimates is BS, too.
JMHO.