How To Explain Cost Per Job Vs Hourly Rate?

Kristina

We bid per job as most do. My builder works very efficiently. He's been building for 20 years and doesn't mess around. His work is excellent, his customer service is excellent, his job sites meticulous.

We recently had a client who needed repair done after a kitchen remodel relocated the vent hood. There was water damage extending up the roof to the chimney.

He replaced siding, sheathing, all flashing with copper, ice guard to all joints between the roof and the wall, added Tyvek to all the areas that were exposed, and trim boards were PVC board. He charged $4200 for the job. It took 2-8 hour days to complete.

The client agreed to the proposal and signed the contract. They had the 3 days for cancellation and the project started on the 4th day.

They were very happy with his work and wanted him to propose a roof job for them using composite slate tiles. We found a distributor, registered for an installation course and obtained marketing material. He went over yesterday to drop off the tile samples and asked "do you have any questions about the work I did? Is everything to your satisfaction?" The client replied that she was very pleased with the work and that she would discuss the roof with her husband and get back to us.

Last night we got a call at 9p from the husband. He was screaming. syaing we over charged him, he was reporting us to Consumer Protection, BBB and taking us to small claims court. He continued to yell saying that two different builders told him we had charged him 3-4 times as much as the job was worth. He had already sent the $1200 balance and we told him we would send it back. He asked for itemized bills and commented that my builder was only there 2 days. He refused to meet today face to face to discuss this and requested the information be sent in the mail. Then he hung up on us.

After gathering ourselves from the shock we reworked the numbers in CostEstimator. It was hard to come up with an hourly rate but we estimated $100/hour for 16 hours, $825 for materials and marked up 67%. Our estimated cost was off by about $150. Technically, this is what we *owe* him for a refund. He wants HALF! At this point, I don't think we are going to settle for anything less than the contract amount. Let him take us to court. Our mark-up is based on our State's Contractor Guidelines first of all and secondly, they signed the contract. If it was for $8000, they signed it and were happy with the work when it was completed, they owe. Period.

Now in a LETTER we have to justify the $100/hour rate which I'm sure is going to seem astronomical to this guy. We are a sole proprietorship, there aren't 19 guys working for us making $30/hour plus bennies. All this stuff comes directly out of our pockets. I broke everything down specifically and came up with a rate analysis.

Figuring in expenses like SS, WC, holiday/vacation pay, medical and truck costs in order to make $75/hour "pay", we need to charge the client $111.58. So our guess wasn't too far off.

How do I phrase all of this so the client understands how this works? I want to make it clear that paying "per job" rather than hourly is in HIS best interest since a slacker builder could drag a 16 hour job into 40.

This is the second time that a client has allowed us to complete a project only to decide the work wasn't "worth" what they paid for it. The first time we were stiffed $6000, now this one is $1200. Do people really think they don't have to honor contracts??

ProWallGuy

I wouldn't send the refund, and I wouldn't take the time to 'justify' my costs.
Plus, it seems the way you broke it down, your are legit.
Refer him to your lawyer and move along to the next client.

__________________
Wallpaper Hanger St. Louis
Digital Murals Installation

Grumpy

First off I wouldn't send a refund and I wouldn't send anything itemized other than a copy of the proposal they/she signed and an updated invoice with late fees.... unless ofcoarse... they agreed to hire me for the main roof, at which time I would tell them that I'd credit them $1,200 on the main roof. Afterall they already have the price for it so know you are legitimately knocking off a real $1,200 and not an imaginary inflated price.


Wait.. What? You were previously stiffed $6,000 and you did MORE WORK for the same person?

Kristina

First off I wouldn't send a refund and I wouldn't send anything itemized other than a copy of the proposal they/she signed and an updated invoice with late fees.... unless ofcoarse... they agreed to hire me for the main roof, at which time I would tell them that I'd credit them $1,200 on the main roof. Afterall they already have the price for it so know you are legitimately knocking off a real $1,200 and not an imaginary inflated price.

They don't have a price for the roof YET. We were working on the proposal. Or do you mean the price for the first job? Can we even SAY that?? It sounds like blackmail, which I'm not above doing, I just don't want to get thrown in jail for it.

So basically he shouldn't say anything about the specific costs of the job, just say that this is the proposed amount that they signed for and we stand by our pricing, take us to court if you have a problem with it?


Wait.. What? You were previously stiffed $6,000 and you did MORE WORK for the same person?

Oh no, we were stiffed by a whole other set of buttwipes.

ProWallGuy

That is my take on it too. Plus, after they acted this way, they would never get another proposal from me again, on any other work, ever. They would no longer be my customer for anything.

__________________
Wallpaper Hanger St. Louis
Digital Murals Installation

Kristina

That is my take on it too. Plus, after they acted this way, they would never get another proposal from me again, on any other work, ever. They would no longer be my customer for anything.

I agree 100%. Over my dead body would we work with someone like that. Unless he grovels at our feet, confesses he was an ignorant ass who acted like a 2 yr old (tantrum anyone?) and apologizes, we'll see him in court thankyouverymuch. ]

He's going to have to send the client some sort of correspondence. I guess he can just say there will be no refund, our figures are correct and based on state guidelines. If it's a problem we will be glad to address it through our attorney.

Oh the kicker? This was a job referred to him by a custom cabinet builder in town. I guess he won't be referring any more clients. I'd like to know what builder said they'd do the job for $1000.

Tscarborough

I would not itemize it, period, nor would I refund any money, nor would I give them a quote on any more work.

Mike Finley

Are you a GC and "My builder" is the sub-contractor you subbed this job out to?

I'm a little confused by your terminologies so help me out.

You gave them a fixed price quote for $4200 before any work started right? You had them sign a contract before anywork started right?

joasis

Your customer is WAY off base. First point is, you gave them an estimate, and they agreed...fine, work is complete and they owe, PERIOD. If you send them anything, send them a copy of the agreement and the balance owed. You are under NO OBLIGATION to justify your bill and friendly advice the HO recieved about how you overcharged them, will not hold up in court. I would also add to the copy a note stating that you will file a mechanics lien in 30 days or whatever you are allowed in your area. If you don't recieve payment, follow up with the lien and if the homeowner still doesn't catch on, execute the lien.

All the threats he made are baseless and pointless. The BBB will not give you a bad rap until they investigate. I would break my bill down for them, comparing rates with others, but only them. Same for mediation in small claims court. And in closing, I would make sure he understands what a 2 way street is. Problematic customers get a bad rep, and consequently, only fly by nighters deal with them when the locals won't touch their work.

When we install metal roofs or erect steel buildings and the labor breaks out to $225 an hour or more, a few customers gripe until I point out what my insurance costs are, how much the forklift and scissor lift cost to purchase and operate, and my guys are way up there, experienced, and get good pay for being up there. Oh yeah, they usually ask me this when I give them a time line for erection or a roof.

Kristina

Are you a GC and "My builder" is the sub-contractor you subbed this job out to?

"My Builder" aka "My Husband" No subs. Just me running the office, him running the field.

You gave them a fixed price quote for $4200 before any work started right? You had them sign a contract before anywork started right?

Absolutely. And nothing changed. He didn't charge them anymore than the quoted price. If we HAD charged them more (for some odd reason, without their permission) of course we would show them the itemization. (is that a word?) I just can't think of a circumstance when we WOULD have to itemize a statement for a client. Before we did any other work outside the realm of the contract, we'd do a change order.

This is the exact verbiage of the contract (it's a short form, small job) <It states the exact work to be completed.> Price is valid for 10 days, before any further cost is incurred homeowner will be notified and payment will be due before work is completed, Initial payment of X is due prior to start of work. You have 3 days to cancel this contract from date of signing. Acceptance, prices, specifications, and conditions are satifsactory and hereby accepted. You are authorized to do the work as specified. Payment will be made as outlined above.

At this point all bets are off. We covered our tookus' and the money is owed, plain and simple. Let him complain, file against us, whatever.

They can bite.

Kristina

All the threats he made are baseless and pointless. The BBB will not give you a bad rap until they investigate. I would break my bill down for them, comparing rates with others, but only them.

This EXACT thing happened with the last people who did this to us. They filed a claim, we answered and the BBB ruled in our favor and administratively closed the case saying what we were offering was fair and reasonable and the client refused to accept. We are now in a nasty fight with them.

And in closing, I would make sure he understands what a 2 way street is. Problematic customers get a bad rep, and consequently, only fly by nighters deal with them when the locals won't touch their work.

Again, we mentioned this last time and in a small town, word spread. They are trying to say we "slandered" them. Umm we only spoke the truth, you didn't pay and the BBB ruled in our favor. What's slander?

Oh yeah "slander" is what they did when they called a local paper and LIED that we didn't return phone calls and didn't finish the job. This is after the BBB claim was about the $6000 worth of DAMAGE he did to the property which was after she refused to let him clean up the site stating she thought the price was too high and wouldn't pay it. The paper refused to advertise for us. After some very fishy stuff, we were able to advertise again, but who's talking smack about who in town?? I digress, obviously I'm a bit sensitive about this crap.

PipeGuy

The only thing I'd send that nutbag is a bill. If he doesn't pay I'd have my attorney resend it under their cover page.
It's not in any way shape or form his buisiness what your costs are. He signed a Contract voluntarily and was afforded the statutory grace period during which he could have rescinded his acceptance of your proposal.

joasis

I feel for you Kristina, and I again say, you need to file a lien, and do it soon. It is there for your protection, and that is the way it is. In Oklahoma, we have 90 days to file, and then execute a lien. I have never seen one go the distance since the HO usually has a mortgage lender that has an interest in the property and they will see that it is paid, since a lien will get service before the lender does...kinda funny in a way, that a $500 dollar lien can force the sale of property.

If your newpaper reported FALSELY about a BBB action, and it damaged your business, I would be talking with a lawyer. You can FORCE them to do a retraction. If the newspaper refused my business, It would be a COLD DAY IN H#LL before they would see a penny of my money. Word of mouth is still the best value media for the money.

Your customer wanting an itemized list reminds me a job a did a few years back. A lady wanted a new storm cellar placed where an existing cellar was. I was reluctant to give a firm bid due to not knowing for sure how the demo would go, or how large over the hole would be, and if I would have to do custom forms, ect. I offered her time and materials, or a whole bid of $7000. We completed the job, she was happyu until she too, asked her friends and family, and they thought we were high. She wanted copies of my receipts and time and I refused, my reason being time and materials was not the option she chose, and since we actually didn't make more then the time anyway, I wasn't wasting another minute to go back and break out receipts just for her to compare. I also refused another chance to work for her and as far as I know, no one else has tied into the job she wants done now.

Kristina

In Oklahoma, we have 90 days to file, and then execute a lien. I have never seen one go the distance since the HO usually has a mortgage lender that has an interest in the property and they will see that it is paid, since a lien will get service before the lender does...kinda funny in a way, that a $500 dollar lien can force the sale of property.

We've done this for the other people who owe us the 6k. Nice too, they are NEIGHBORS. Whatever. The good thing is that they own the house outright so we can force the sale and get our money back because no one else has rights. Mortgage companies come first here I believe.

I don't think it will be an issue. We are going to deposit the check he sent us and tell him to sue us for the money. He actually threatened my husband too. He said unless you want me to sue you, you'll send me half that money back. Umm how about no? We have no problem putting a lien against him if it comes to that.

If your newpaper reported FALSELY about a BBB action, and it damaged your business, I would be talking with a lawyer. You can FORCE them to do a retraction.

It's a local crier newspaper, all want-ads. They refused to advertise for us saying they got a complaint that we didn't answer their calls and didn't finish the job. The manager apparently didn't bother to investigate the claims before blacklisting us and "claims" she has no record of the complaint. After a bunch of back-pedaling, she said she would run our ads again. Not the next day we got a letter from the clients. After claiming all along they had an attorney, we never heard anything until we informed this manager we were sueing for defamation of character. This is a SMALL ass town and we suspect the manager is pals with the people. Because we were only unable to advertise for a 2 week period, the attorney didn't want to bother with the defamation claim. He did move forward with the foreclosure though. Now the couple is trying to sue US for $7500 and desperately trying to find loop holes in our contract like the 3 day cancellation they say they never got, but she initialed in the contract that she received it. They are also saying we shouldn't be pursuing her husband because he isn't in the contract, well as soon as your wifey bags on her bills you become responsible buddy. Sorry. We've got our ass covered all over this one too.

She wanted copies of my receipts and time and I refused, my reason being time and materials was not the option she chose,

This lady wanted them too and we refused so she said SHE priced out the materials and determined he was charging too much. Umm lady, going to Home Depot and pricing sheetrock and closet doors doesn't make you a builder. She didn't figure anything else in like mark-up, and all those "hidden" costs for us like insurance and crap. I wonder where she got her building training that she could determine his work wasn't worth it. Not to mention he never charged her for microlams he installed. He installed 4 and only charged for 1. He did extra work without an addendum (one of those live and learn things) but she made all the payments on that work. She refused to pay the last CONTRACTED payment. She admits that she let him do the work without the addendum and keeps asking for "change orders" lady, we never CHANGED any ORDERS. What is on the contract is what was done and we never charged her a dime more than we said. We don't need "change orders" on a contract she claims never existed. She's one of those hysterical types who likes to rile people up and when she can't it pisses her off even more and she gets careless. She went OFF in the BBB complaint. Her thoughts were disjointed, her grammar and spelling horrible and it was all in caps. Yeah, you present like a reliable person. We responded and she got a hand-slap from her attorney because she never countered our response just said "on the advice of my atty I will no longer be pursuing this matter". SHE filed the claim and then bailed on it.

It's just ridiculous what people will try and get away with. She knows we have her and so now she's looking for a contract error to void the contract. Isn't going to happen. I can't WAIT until we win this claim. Our other neighbor is her sister and we were once good friends with them until this. It will turn this town upside down because they think they are the **** around here and she makes her life out of intimidating people. She stiffed another kid out of $1500 for landscaping he did. We should've known better than to get involved with her but we had to pay the bills, and who screws their neighbor anyway??? I guess she does.

Thanks for your input.

Grumpy

I thought I had it bad. I did a job about a month or two ago. This is for a first time GC who is remodeling a home. He knows nothing about nothing, except how to borrow money obviously. ANyways he had some guys digging out his basement while we were doing the roof. After some discussion we agreed to share one large 30 yard dumpster and I would credit him the cost for my 20 yard dumpster.

Well the job was done and invoice paid. I completely forgot to credit him the $340, my cost for dumpster AND permit. Yesterday he e-mails me with an invoice for $500 for a dumpster? To which I responded "I will credit you for the ammount of $340, which would have been my cost for the dumpster. We did not use the entire dumpster, your other contractor was using it as well. In addition we would have preferred to use our own dumpster supplier however you refused."

Anyways he sent me back another email about this and that and the other blah blah blah. Insisting I send him a check for $500 immediately. I replied to his second email with one line. "I shall send you a check in today's mail for $340, my cost for the cumpster." On the check memo I put "FINAL refund for dumpster useage."

NEVER would I have requested a 30 yard dumpster if I knew I would have had to pay for it. NEVER would I have let the other contractor on site use my dumpster if I were paying for it all, assuming there was no extra room. This is not my responsiblity and he has nothing in writing. I am doing the right thing honoring my word but I am nobody's fool and will not pay his $500.

Like I said, I thought I had it bad... now I see my problems are piddly. Good luck with your screw ball customers. I have found I usually get one each year, and I am hoping this is my one.

joasis

Hope the check clears Kristina....of course, a stop payment on an obligation can cost someone a court case easy here.

Kristina

Yeah, I don't care if they stop payment on the check. Like you said, it just looks better for us if he does.

N.E.Bldg&Rest.LLC

Why would they be talking to other builders about a job that was already done?

If they wanted the cheapest price why didn't they shop around before signing a contract?

Are those "other" so called "Builders" legitimate contractors or fly-by-night hacks looking for beer money?

Do you have language in your contract to work out problems before going to court, some sort of Dispute resolution?

I agree with the others here, No refund and No price breakdown.

I personally would like to talk with the home owner and the other "builders"...

As contractors we should be qualifying the customers the same way they qualify us.

__________________
"Man is a tool-using animal. Without tools he is nothing, with tools he is all."

Thomas Carlyle (1795-1881)

Kristina

Why would they be talking to other builders about a job that was already done?

Exactly. Apparently, he felt he paid too much.

If they wanted the cheapest price why didn't they shop around before signing a contract?

We were referred to him by their cabinet makers.

Are those "other" so called "Builders" legitimate contractors or fly-by-night hacks looking for beer money?

Inquiring minds want to know.

Do you have language in your contract to work out problems before going to court, some sort of Dispute resolution?

Nope. This was our "short form" contract.


I personally would like to talk with the home owner and the other "builders"...

If it comes to that, we will ask for names.

denick

Kristina,

I'm from CT also. I've gone through a scenario similar.

No refund, No explanation. Go to his bank and cash the check.

Get a lawyer to review your contract. If you did what you contracted to do and have a valid contract, that's it. He can report you to anyone he wants the BBB isn't their to protect homeowners that think they paid too much. The state only wants the I's dotted, T's crossed. It's not anyone's business what you charged.

If you need a lawyer let me know I have a firm that the boss is a shark with a briefcase and they can't stand people who try to renege on agreements with the working guy.

Nick