Lowballers Area Out In Full Force

ApgarNJ

i've sent out several bids over the past few weeks only to get, NONE of the jobs I bid. I didn't even raise my rate 1% over last year, yet all of my expenses went up like healthcare, GL insurance, diesel etc. I am charging a separate small fee per day for diesel, but for one example. I bid a kitchen renovation, 32k, not including the cost of cabinets. it did include a new floor, trim, built in bench with storage, custom shelves with pegs, new pantry closet, demo the existing kitchen, new marvin windows which needed cedar shake siding patched around them because they were slightly smaller, patching and installing new drywall in places. my price included plumbing, electrical, painting, and all my labor and materials.

the guy who got the job was, get this, 10k lower than me. but the HO wouldn't answer me whether his price included every single thing i did. I warned her that she will get change orders later because he didn't include this or that in his price. I don't get why people can't come back and say, how much if I paint it myself or if do the demo, how much can you lower your price. I think i only had 12,000 in labor in that whole job for myself and my worker(s) so even if i worked for free, i would just come to this next guys price.
it seems they are only looking at the cost and reading NONE of the scope of work that is included.

I bid a finished basement job, it already had some electrical work and carpeting but needed a zero clearance ceiling, two coats of drylock on the pour walls, studded out walls with insulation, drywall, paint, 6 doors instaled, one big room, with a smaller media room. all trimmed out.

the guy told me he found someone much much lower than my price.

I've been in business for 8 years and have always gotten a large % of my bids i send out, most of them are word of mouth too. and now all of a sudden this year, i'm losing every single bid i send out. not only is the work scarce but people are going with the lowest bid even if the guy is a total scum bag working for beer money, who has no insurance, and doesn't pay his taxes probably.

any of you guys in NJ getting the same deal? i'm sure others in other states are feeling it too.

the biggest thing is, how much can you lower your rate and still pay your bills and pay your overhead?

i've heard some other guys say, they've been approached by homeowners who think all us contractors are lowering our prices because work is harder to come by. not only is work hard to find but when you do find it, you are expected to cut your hourly rate by a lot to get the job?

i'm not out there price gouging my jobs. and yet last year i got a large % of my jobs and this year has been the worst in 8 years. to the point where i'm starting to wonder if i need to find a second job to help out. in my area though, there's not much i can do where i will make enough to cover my costs of living, not even talking business expenses.

I had a good year last year, upgraded my 11 year old truck and decided to go with the trailer route, and now i'm regretting doing any of that. i might have to sell off both of these things just to reduce my bills, even if the trailer is paid off.

what are we supposed to do?

EAE

I've had a similar struggle.

I sat down with all my new-found free time and polished up my presentation of the bid a bit. I even went so far as to ask the HO to compare the scope line by line and to please call with any questions. The most common call I get from this is "uhh, this other bid doesn't have (blank)... do you think they just include it?"

Opens up the opportunity for me to get my sales face on.

Celtic

You have an illegal tap on my phone?

I literally had that conversation w/my brother a few hours ago.

I tried to explain to him that his "theory" that contractors will be begging HIM for work (he's not a contractor, just a HO) is seriously flawed. He lives in Morris/Union county and is having a hard time getting contractors to work on his home.

IMHO, he's a bit delusional.
He's a perfectionist...but I don't think he has quite wrapped his brain around the fact that perfection from a contractor also comes at a premium. I suspect the contractors he is calling on are "new" to the business.

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ApgarNJ

no wire tap. but i just don't get it anymore. i think HO's think they have the ball in their court, and maybe they do right now, who knows.
i'm not going to lower my price so much that it's not even worth being in business. i'm just going to figure the amount of time it takes to do the job a little on the low side, and work even faster than we already do.

A W Smith

This is what I would ask them, Due to the economic slump which of the following would apply?

1. Oil companied lowering their prices?
2. Insurance companies more competitive due to businesses closing?
3. materials being discounted because of the housing slump?
4. advertising rates cut because of business closings?
5. health insurance costs cut due to loss of subscribers?

In the past I avoided doing repairs because i considered them nuisance calls. Today thats not the case. Thats whats paying my mortgage, health insurance, Business insurance and feeding me.

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Al Smith
http://www.awsmith.com

ChillaWatt

Anyone hear of the "R" word? Could it be? Add that to the fact that business is always slower in March and April for taxes.

A W Smith

But many normal working people (who are not self employed) get refunds. If they owe then their employer is not taking enough out of their paycheck for taxes. I'm still trying to figure out what the difference is between the "R" word and the "D" word.

__________________
Al Smith
http://www.awsmith.com

Jason Whipple

And those folks are the ones looking for "deals". The big fish are paying their taxes.

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Jason E Whipple, General Manager
Historic House Restoration, Cincinnati, Ohio
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buildenterprise

The big fish find ways around taxes, that's part of the reason they became big fish. If you're banking on getting decent work from people who are waiting on tax rebate checks, good luck.

JBBS

It's not just the residential market. I just bid on a hotel EIFS redo. Total hack job done about 15 years ago. Everything needs reskimmed / meshed. $80,000 job. Owner says "Im leaning towards the $18,000 bid to paint it" Good luck with that.

Jason Whipple

Now thats ridiculous, I know quite a few people that make 100k+. Not one of them "find ways around taxes". They're all paying taxes.

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Jason E Whipple, General Manager
Historic House Restoration, Cincinnati, Ohio
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ruskent

Making over 100k does not make you a big fish. A big fish has a team of lawyers and cpa's working full time looking for every deduction!

buildenterprise

100k plus is not "big fish"-if so, I'm almost a big fish.....I'm talking the people that have several times that to play with, they find ways to invest and re-invest that keeps their money out of Uncle Sam's hands.

constrkings

yes, we've been running into that more recently here in Nj than before and I think I figured out why.
i went to do a deck estimate the other day and the lady looked at the price and then asked "who are your workers?" I didn't know what she meant and so I asked her what she meant. She told me that she had a contractor come in to give her an estimate and before he left, he told her "Save all your other estimates and I will bring in a team of Brazilians and guarantee to beat any price by $5000" (yes you see three zeros there). So I explained to her that my crew are all american citizens, pay taxes, and are fully covered by wc, etc. I told her that if she wanted I could write her a fake estimate (using a fake name) and quote her $5001 and see if the guy would honor his guarantee. he also told her that he works all over jersey along with his brother (i think?) and someone else. So the point is that there are at least 3 guys out there who openly admit to ho's that they use illegals and cheap labor to get every job.

so what are we supposed to do? apparently hire brazilians.

did i get the deck job? don't know yet. she had to meet with someone else still and i am supposed to get back with her sometime this week.

Jason Whipple

Well, I didn't say 100k was a big fish #1.

And #2; There is no way that any one over that pays ZERO dollars in taxes each year

Maybe you're just one of those that feel they don't pay enough.

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Jason E Whipple, General Manager
Historic House Restoration, Cincinnati, Ohio
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Jdove

There are plenty of big-fish who pay little or no taxes each year, they form corporations and with the help of Attorneys and Accountants they show losses and furthermore they buy everything through there corporations with tax free money. Robert Kiyosaki does a great job of explaining this in "Rich Dad, Poor Dad."

Back to the original post though, this is a simple issue of supply and demand. There are plenty of contractors right now willing to work but the work is much more scarce compared to the last few years. I know I got ridiculed before for saying this but the US is in some deep economic trouble, if you don't believe me look at the value of the US dollar in comparison to the Euro or the British Pound. It's lost almost 50% of it's value in the last year. That's why the price of crude oil is constantly rising. Investors are pouring there money into China and India because of there unprecedented growth. With all of these issues you can rest assure the market will become even more competitive for all of us.

"It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world."
-Thomas Jefferson

Jason Whipple

One last point and I'll stop hijacking this thread. My Uncle, Charlie Whipple, was the Chief Executive Officer of Ames Tools until he passed two years ago. He made in excess of 1mill+ each year. He had all the lawyers and CPA's.....................

He paid taxes, and plenty!

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Jason E Whipple, General Manager
Historic House Restoration, Cincinnati, Ohio
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buildenterprise

No one said zero dollars, just not as much as the regular working stiffs like us.

buildenterprise

Just finished reading that.....good book.

buildenterprise

So where is this deck job? Just curious, I have to meet with "a lady" tomorrow who I've already given a proposal.