The Customer Wants A Breakdown

Thewoodman

I went and bid a job the other day for a garage additon. Normally I will not bid it if they do not have there plans drawn up. With things being kinda slow I went and looked at it and was able to put together a price for him.

It was pretty straight forward so I was able to put together a solid bid for him. After talking to him about the price he asked me for a break down of the costs. This is where I am kind of hesitant. I am afraid he is going to take my info and maybe General it himself using my breakdown.

Am I being parinoid?
Should I tell him that I will give him a breakdown after he signs with me to build it?

Your input will be greatly aprriciated.

Mark

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deckman22

Your price is his breakdown, another words don't give anything other than price. He gets XY&Z, you get paid ***X.

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DecksEtc

If you breakdown materials and labour, which is what I assume he wants, you're setting yourself up for a very difficult job. In my experience, people either do it to go the "GC" route as you mentioned or because they want you to cut your labour costs.

Have you asked why he wants the breakdown?

Personally, I'd NEVER do it but the decision is up to you.

Winchester

Charge for the breakdown.

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Ryan

MALCO.New.York

No Breakdown!!!

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AtlRemodeling

I never give a breakdown of our estimate. I did in my foolish youth and every time it led to trouble.

mnjconstruction

I think it depends on the client. I sometimes do breakdowns. I will give them a material list, with prices, est. labor time with rate. you can't be scared to let them know what your going to make on the job. If you are then your probley charging too much. I have a small crew, 4 men. I dont make a lot of money compared to some of you but i usally profit 1500-2500 a week. But I will say this I am busy. way up here in northern maine, still working. Dec. was a little slow but it picked right back up after x-mas. Sometime my customers want to get the material themselves. I let them. I then come in and charge them my hourly rate to do the work. I never try to get rich off 1 job. But I know where i live and work is alot different then alot of other people, above is just my way, but its worked for me for over 13 years now. use good judgement and do what you think is right

MBS

Either they want a garage, or they want a cost break down. I never give cost break downs. I'm not in that business. Any customer who insists on a cost break down is already busting your nuts on the costs. Just wait until the building starts. They are more concerned on how much money your making and not on the garage itself. In other words they don't respect your time, nor do they value it.

They will nickel and dime you to death. They will want you to buy your studs at Lowes because they are on sale this week. They will want you to drive 60 miles each way to buy shingles at some discount house that their friend knows about where they sell seconds. And they will expect to get the price reduced by that amount too! They don't know about quality, or what it takes to work efficiently, or how to manage your time.

They will drive you out of your skull. These people can be managed by having a fixed price and a very comprehensive contract, which you will need to remind them of periodically.

My advice: Don't do it. You will regret it. Recommend your competitors to them instead. Thats what these types of customers are for.

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duckdown

Breaking down costs is problematic for contractors who markup materials. If you are going down this path, indicate an estimated hours along with a higher hourly rate and then list your cost for materials without markup.

If a customer is shopping, they will discover and then question material markup prices quicker than labor rate.

DavidC

Here's how I would break it down for them.

You want a garage, I can build it, it will cost $***.

Probably more diplomatic than that, but that's the gist of it. You are selling a finished product, not a process.

He may be a problem customer if you get the job, but not necessarily. Might be working on advice from others and doesn't know what to ask. I would explain that he is asking for propietary information, which we don't share with anyone but our accountant, and steer the conversation to what he's getting for his money. Educate him on what's more important info for him.

Good Luck
Dave

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dakzaag

ThewoodmanThe customer wants a breakdown
"...they do not have there plans drawn up..."

Sounds like just kicking tires, I usually say something like undefined scope because of lack of plans, details likely to change, etc. I basically do not give breakdowns at all, but if I think it is necessary I will when I'm pretty sure I have the job. I have lost a few this way, usually turns out for the best.

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bwalley

Give them a break down, $1 material, the rest overhead and profit.

If they can do better, let them.

This is only the beginning of being micro managed, they are worried you will make money off of them.

Find another client.

modterry

Always ask why the break down. I have done it and it has worked successfully for me. I mark up each phase of a job for both labor and materials. Many times - I bid their project with ALL their wants and wishes and many times the bid is over their budget. By putting everything on their wish list - and having it broken down - I let them choose what to take out.

Most often - the customer comes up with the extra money to have the whole job. This amount is usually less than 20% of their target budget.

Terry

DavidC

If a customer is shopping it is important to find out what they are shopping for. Many will mention price and breakdowns because they don't know what else to ask. Give them the info they need.

Markup is a part of business in any field and should not be overlooked. Many cover their OH by marking up materials, others recoup on the labor. Neither method is wrong as long as it works.

On one hand you are being open and transparent with your customer but on the other you are making propietary info available to your competition by putting it out there. How many weekends will the client spend tinkering in his new garage mulling over your markup? I think you competitors would make better use of the info.

What is problematic for contractors who markup their materials is people who keep fueling the idea that it is wrong. Especially if they have to fabricate higher labor rates to cover there guilt. Be honest with your clients, we don't share that info but here is what we will do for you. This is what we do, that is what it cost. Don't apologize, don't explain. Sell.

Good Luck
Dave

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Aggie67

When we go after large projects in chemical plants, we get requests to break it down. I've been on the other side of the fence so I know why: people use labor and material breakdowns to 1) help explain to their superiors why their capital budget request differs from the quotes they're getting, and 2) if the quotes coming in are spread apart, it lets them know why (if a guy comes in real low on his labor number, it's a tip that he's either missed some of the work, or he's going in low to get the work and possibly make it up on change orders, or if their material is low, they definitely missed something).

But with a homeowner, its tough to say what's going through his head. Maybe he wants to GC it, maybe he just wants to know to compare, maybe he's in the business and that's how he was trained.

Maybe what you need now is a script or some language that will help you communicate the right message to the client: that you want the work, can do a good job, but you won't break the price down.

Here's a stab at it, and maybe others can suggest some tips also:

"Hi Mr. HO, I wanted to touch base again about breaking our number down. Hopefully the scope I provided in the bid covered everything you wanted. And if you're getting other numbers, hopefully they were as a thorough in describing what will be built as we were, so you can compare apples to apples. I'm confident I had a solid grasp of what you were looking for, even without drawings. We do great work, and we know we'll make you happy you chose us. But frankly when we bid work, we roll a lot of unit costs together to come up with a number, and it's not an easy task to break labor apart from materials. If your concern is controlling costs while still getting a good job done, then as long as the bidders are bidding on the same scope of work, your apples to apples dollar comparison will fall out right there on paper. If you have something else that's concerning you, let's talk about it and see if we can address them. But unfortunately breaking the bid down further isn't normal, and it sends up red flags when we see that in lump sum bids. We've never done that before."

Also, without drawings, make sure you specifically describe what he's getting in your proposal. Finishes, windows, doors, etc. The last thing you want is him coming to you saying "I want this", and you say "we didn't include that, we included something else", and he comes back with "show me where that's spelled out in your proposal, otherwise, this is what I wanted."

Jason Whipple

We commonly give a breakdown at the signing of the contract, but never with an estimate. We bill by progression and it's a tool for us to gauge our payments on. The breakdown is titled "Schedule of Payments" and our customers seem to love it. It's also hard to dispute payments when you use a professional document like this.

Most customers have no idea of the type of materials needed or the amount so I would say your safe in regards to them knowing if your materials are marked up or not. We all should have some degree of mark up on materials to off set the risk and occasional shortages due to normal, day to day happenings on the job site. If you're not doing that then you're just gambling on your paycheck that you'll have a perfect job with no waste, miss-cuts or oversights. I've personally never had the luxury of a perfect job and have pretty much found it doesn't exists.

You might want to offer to do a "Construction Cost Analysis". You could provide them with written specifications for the project, a formal proposal, and a schedule of payments for a fee. We also do this frequently.

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Historic House Restoration, Cincinnati, Ohio
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Aggie67

Jason, in our market, we call it a Schedule of Values, and it's how we bill progress payments.

Jason Whipple

I'm familiar with that term as well

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Thewoodman

This is what I love about this for site. I can post a problem at 11:00pm and by 7:30 am the next day I have enough input from other Professionals to make an informed decision. You guys stay up way to late or get up way to early.

Thanks

Mark

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silvertree

I've been on the fence on this issue. Personally, when a client asks for a breakdown, more often than not I have to resell the job. Like a kitchen/ bath I did last year. I broke everything down for the customers loan officer. The banker then says to these people that my markup was huge (50%). That the average markup was 10%. They hired me anyway because all the bids were pretty close.

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