The Customer Wants A Breakdown

RidgeWalker

Something else has struck me about providing a breakdown if a client request's one. Transparency. In todays world when a single blog or forum post can bring huge company to their knees prospects are realizing that they want companies who are transparent, or in other words don't feel they have to hide information from their clinets. The second a prospect askes for a client breakdown you know if you refuse you just created a certian level of suspicion and distrust. They are asking themselves, what's he got to hide.

Many of us interpurate their motive as negative, and that they'll use the information against us or another peer. That's a risk of course, but if you are the only 1 out of 3 or 4 contractors they spoke with that gave them a breakdown how does that make you appear to them?

Transparent, trustworthy, and confident.

Wouldn't those be attributes we'd want to instil in our propsects who are trying to make an informed decision about hiring a contractor?

There's something else many of us need to take heed to. Every singe thing you post on forums is forever recorded on the internet and how we respond here can be seen by any one with just a few keystrokes and a mouse click. Many of us have linked to our web sites and our profiles actually give our locations. I personally think back at how I responded on post's and regret that it is forever recorded.

Yes this is probably better of as another thread but some of the responses here concern me in that we don't fully realize the implications and ramifications our postings can have on our industry as a whole and on our business individually.

I responded to a reply on this thread with with a "most excellent" remark. I retract that because I realize it could make outsiders precieve me in a manner which isn't consistant with how I conduct business.

So,
If the client askes for a breakdown choose yourself what you want to do, I know what I'd do. Transparancy!

PS: At the time I posted this the forum had 35 unrigistered viewers, who do you think they are?

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bwalley

I am not hiding anything by not giving a Potential client a complete breakdown on a bid.

how much transparency should we give the client?

Should they know exactly what we pay for everything and how much we pay for labor and then let them decide how much we should be able to make?

We would then get into explaining to the client the difference between soft costs, hard costs, overhead, etc.

When you buy a truck from a Ford dealer, you don't get a breakdown as to how much the parts were, how much the labor was, overhead, profit etc. you are buying based on lump sum, there is a sticker on the window giving MSRP and the price of add ons.

Change orders are different as they are a smaller items usually and they can have a little more detail in them.

The only jobs that require a breakdown are cost plus jobs and when I do those, I run a seperate check book that the client has full access, one client everytime I would give him a bill, there would be a disk in it with the checking account ledger in it and I would make him copies of every item purchased and a copy of every check, he finally told me to quit giving him so much crap and just give him a bill.

RidgeWalker

The level of transprancy you choose is entirely up to you, I didn't say you had to show them everything did I? For the record every single person who's asked me for a breakdown wasn't concerned with how much money I was making, they were concerned with what I was actually doing for the price I wanted. If they were not clear that I was providing that on the contract then who's fault would it be that they didn't understand? Mine.

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bwalley

Specifications are different than a breakdown on price.

Specifications are very important and need to be as clearly defined as possible.

You don't just write a contract to build a 3,000 sf 4 bedrom 3 bath house for $400,000, you put in specifications and use drawings as well as schedules to define the scope of work.

As the contractor and contract writer, it is our responsibility to make sure the client is informed about the job he is hiring us to do.

DetailHandyman

So why aren't the customers protesting Macy's or Guess?

As someone mentioned earlier: perceived value.

People think they are getting better a better quality product by buying Guess or shopping at Macy's, even though the Guess jean is made in China out of the same material as the $20 Wranglers.

But because construction services are viewed by many as commodities to only buy at the lowest price, customers get upset if one contractor is charging more for material (or whatever) than another.

Low bidders and price undercutting only serve to reinforce that perception.

So we need to sell "Macy's" services, instead of trying to make the customer happy with Walmart pricing.

Of course, this will not work on the pure price shoppers anyway. I am amazed how a HO with 2 Lexus in the garage and a 54" plasma TV will try to chew you down $20 on a part. (OK, that's only a certain "group" of people) <end rant>

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Paul Joseph

Ive always felt that when you break down a job you can only lose. If you are too high on an item they will bring it to your attention, however the converse is not true so you end up negotiating against yourself, a lose-lose situation
Paul
http://www.PrecisionPlusHomeImprovements.com

dubz

I've felt the "ball" has been in the home owners court for about a year now, (in my area anyway). They have had plenty of contractors willing to bid their project, which gives them the power to ask for more detail, which gives them better leverage for bargaining.

In the age of the internet, where people can check the prices of anything within seconds it doesn't help things either.

I sure wish I was one of the few old timers out there who have such an established rep that they can avoid doing these things but I'm one of the ones who's mortgage co is calling them.

Winchester

Job Quote:

$67,586.36

Breakdown:

Permit: $150.00
Demo & Rubbish Removal: $2,235.00
Electrical: $10,782.64
Plumbing: $16,873.76
Insulation & Drywall: $3,984.86
Painting: $1,895.07
Materials: $18,576.69
Labour: $29,975.00

TOTAL: $99,451.71

So, which price do you want to go with?

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Ryan

rbsremodeling

Why is labor, electric and material so much in the breakdown? What all does that include?

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dubz

I've got 12 other numbers i have to get yet, but is there anything you can do about the labor price? Four out of the nine guys before you had lower numbers. Also, my son is going to be home from college and he can help with the demolition and I will pick up everything. Why is the insulation so high? I have a flier right here from home crappo that says it's only....

ok I'll stop now

edit-rbs beat me anyway

Winchester

It's a complete bathroom remodel.

Rewiring the bathroom and fishing new circuits for the 2 new GFCI plugs and Floor heating. The Panel is on the opposite end of the 5000 sq.ft. home 2 floors down.

Our Labour includes the new factor just realized that the customer will waste a lot of our time asking questions and trying to get things for cheaper.

materials include high end vanities, and fixtures. Including a steam shower and a rainforest shower head with 8 jets in the walls.

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Ryan

Winchester

Sure I can adjust the labour price for you considerably. How does $36,846.75 sound?

Sure, your son can help with the demo. That will be an extra $879.45. Also there will be another $385.98 for the time it takes to add him to payroll and set up Workers Comp.

You can supply and install the insulation and we will take off the price of insulation and only add $1,764.87 to labour to go behind and fix your mistakes.

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Ryan

Mike Finley

Huge misconception that not giving a break down means the only alternative is you will convey non-trustworthiness and no confidence and suspicion.

That logic could be applied to anything.

Customer - I want to drive your truck everyday that you are here working, you won't need it so I want to drive it around.

Contractor - Well sure, of course. (I dont' want to make it seem like I don't trust him, he might lose his confidence in me and I might not get this job)

Customer - I also want a copy of your income taxes from last year.

Contractor - of course.

rbsremodeling

Seem like you have a bit of an attitude. I use to be an ex marine don't make me pull your intestine out your arse and feed it too you.

Get out my house

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Winchester

Certainly! Thanks you for your time and your consideration. here's my business card.

Would you like me to leave you with the adjusted proposal?

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Ryan

dubz

Plus he spells 'labor' funny.

Winchester

Who spells labour funny? I think you spell it funny! How dare you sit there eating your pink-coloured doughnuts and judge me! Have you no honour?!

You should be more friendly to your neighbours to the north! We still spell properly compared to your bastardized version of the english language!

The again, I expect no favours from you.

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Ryan

bwalley

You forgot to add Overhead and Profit.

rbsremodeling

I made light of your post Winchester. But that might actually be a good tactic to use when some one asks for a break down. I could get a lot of mileage out of that scenario.

You got me scratching my 48 hour beard on that idea. hmmmmm

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Bodger

Exactly! Or:
"Okay, how 'bout if buy the materials and you just give me the labor charge?"