Pricing, Estimating, And Success

wireaudio

Wow awesome post, this is going to my favorites!

DMDesigns

Hey Guys,

Great read - I agree with so much of this.


Dave

Petit Const.

I see alot of good points on this thread and have greatly enjoyed the reading . I have a few thaughts , some maybe repetitive and a few I feel have been left out .I am a one man show . I do hire subs as needed , some things just better left to others . I would say I am one of the upper priced contractors compared to similar size companies in my area . I have no shortage of work and make a very good living for myself . These are some things that I feel have made me stand out and could help .

First off I show up on time , clean cut , well dressed (work cloths but not cut offs and tank tops ect.) . I have a professional business card , letterhead , and estimate sheets . My truck is kept clean and free of damage . I drag around a construction trailer even to my first meeting with the customer . My trailor is laid out inside and directly reflects me . Every tool has a specific spot and they are all in there spot . I call the truck and trailor my mobile showroom . Most of the time I will bring the customer into my trailor to see samples and my picture album (the front of it is set up like a small office). Most customers are very overwhelmed by the inside of the trailor and I have had them say I have their job just by seeing it . It sounds crazy but it has happened on several ocasions . I love bidding against some guy in and old worn out truck with all of his "tools" a belt a circular saw , a sawzaw and some sawhorses thrown in a pile in the bed . I could be double his price and still get that job . He could be every bit as good as me but they'll never know . Image is Everything until you have the chance to prove yourself . People with the money to spend on the good jobs want someone they percieve to be sucsessful to do there work . Once again Image ....

When meeting with the customer I don't ever mention the competition , I don't care about them . I sell my skills and abilities . I like to stay versed on the latest codes , materials , tools , and building trends . I don't always have all of the answers . When i don't I simply say ,"I don't know but I will find out for you " , Never B.S. people it will always bite you in the a$$ . Speak clearly and confidently , no slang , no swearing . I look at every potential customer as if I am on a first date .

Once I get the job I try to do everything I have promised or implied I would do . When things don't go as planned I promptly make adjustments and keep the customer in the loop . I always give 100% to the job I'm on . I will say I truly love what I do so that helps . I really feel good when I leave and I know that no one could have done it any better . I love to see customers out after the job and have them go out of there way to let me know how pleased they are . I know when I'm figuring the job I am worth every dime I charge .

Just to be clear I'm not full of myself , I've had bad jobs , I've had good jobs I dropped the ball on and made bad , there's always somthing to learn . This is just some of the things I have done over the years to get the jobs I want at the price I want . I used to work twice the hours for half the money . It took me 7 or 8 years to figure it out and I still tweak things all of the time . I'm 35 and have been in the business since I was 13 . Obviously part time until I graduated . I have been self employed in the construction industry for about 12 years with one 3 year period in the middle where I tried somthing else but just couldn't make it fly (tried to turn a hobbie into a living and found out it wasn't as much fun as I thought .lol). I have barley advertised and work all year round Hopfully this will help someone new to the industry .



Once again Thanks for a Great site .

Ccarpenter

I think you hit hte nail on the the head with your post about estimating. My biggest problem is not my estimating, but the estimating if these fly by night people that are charging customers what I pay my employees. In this market it is hard to compete with someone charging a customer $10 to $20 per hour. These people are bringing the overall market down. I have seen my percentage of jobs won decrease substantually due to that fact. How can we compete with these people? I inform my customers the risk of using these unlicenced and uninsured people, but when they are 1/2 or even 1/3 the price of my estimate, how can I compete?

antnepi

I feel the same way. I have lost so many jobs to a low bid. I ask the people if they will let me match their price and when I find out what the low # is I can't believe it. Their bids are so low that I couldn't even think about doing it for that.

SC sawdaddy

I love it when some wood butcher from "Jack Legg Nail Benders" gives a lowball quote before I work up my estimate. I can justify my bid to the H/O with several different questions. Such as; If someone gets hurt on the job, is your homeowners ins. going to cover their medical expenses or are you just going to pay them out of pocket? Or, You know, if the code inspector shuts you down on this job, the fine will be your responsibility since Mr Legg isn't licensed. Or my favorite, With all the money you save getting it built, you should have plenty left to get someone in to straighten out the mess if you have to run him off.
Dont get me wrong, I dont bad mouth my competition, licensed or not, but if a potential customer wants me to build or remodel for them and bring up Joe Blow down the road that "says he can do it for half the price" I feel like its my responsibility to point out all of the risks involved with hiring an unlicensed contractor. After all, you wouldn't go to the doctors janitor to save a little money would you? Or take your new car to the moped shop to get it repaired??? Would you.....really?

john elliott

What is your strategy when your competition is actually licensed, insured and of adequate reputation, but is underbidding you by a large amount, simply so that they can keep going rather than make a decent profit?

__________________
Ed the Roofer said "John too, in his crass and blunt demeanor.............."

Jaga

This is some great info, really appreciate it! I fully understand the labor,material,overhead,and profit part you were talking about, what I don't get is how to apply them I have heard of all different ways to come up with an estimate and trying to create the best way.I heard that you add a10 to 30%markup to material ,that I understand because you are doing the legwork.Then you have overhead add that number to the material.labor is then added.Is there a markup on everything like the material and that is where your profit comes in?

master of none

that was very nice... you made it real easy to understand ... i will add that knowledge to my tool bag

gene2

Hopefully they soon will be bankrupt and six more don't pop up in their place.

We are hearing too much of "since the economy is bad the prices should be less" I don't know how, the taxes, insurance & other overhead is the same. If I can't make a decent living, & my standards are significantly less BTW, along with a decent ROI then I will go fishing. When I get hungry, maybe I can get a job at Walmart as a greeter.

gene2

Additionally, we need to get our paid for government to enforce the laws that they pass & we try to follow. In Va. the contractor's license test requires knowledge of basic accounting & business. The loopholes, grandfathering & looking the other way allows Jack Legg to keep screwing us all.

Pardon the rant

macbuz

Just highlighting a couple of my thoughts Petit has already mentioned.

Beyond that, after 30 yrs in the business I refuse to bid - just won't. If a customer asks for a bid, I will explain the difference between a bid and an estimate and that I am more than happy to supply an estimate. I have yet to meet JoeHomeowner who has compiled a detailed spec sheet complete with plans and details. I cannot bid based on a concept. Matter of fact, estimating based on a concept is nearly impossible. Once I bid on a very small commercial job (local Nike outlet) that I didn't want, in the end was paid $1000 for two hours work .... my point is that (to me) bidding is a lose/win or win/lose process. Cost plus = win/win so long as my rates are fair and I know what I am doing.

My experience enables me to throw a dart at a concept. Whether it's a 4 digit dart or a 5 digit dart, sometimes 6 digit .... the potential customer's reaction to the dart tells me how much more energy I want to put in on their 'project'. I call this 'checking their heart' ... heart attack = walk away.

I'm a remodeler .... do a lot of (what I call) rehab, no structural changes, just make an old house new, but also do the major remodels which include additions, other structural changes, etc, etc. Part of my pitch to a potential customer is that their home is unique .... not another like it anywhere and consequently will have aspects that are not foreseeable. Sometimes I'll offer an analogy of an unlabeled can of food and ask them to tell me what's inside and what it's worth. I have customers who continue to call me after more than 20 yrs with still more work.

Another very important aspect to my business is my subs. I have used the same subs for as long as I have been in business. Once in a while I'll price chk them to make sure they aren't too comfortable ... other than that, we require very little discussion .... here's the job, you know what to do. Gives me reliability and repeatability. I'll add here that as Petit mentioned about himself, my subs must also 'present' well .... clean and professional.

coveinspiration

Something I have learned about pricing work is this.

Don't worry about what other people are charging so much, it will drive you nuts. Decide what you think you're work is worth and market yourself to the people who you think you would like to work for. If you sense that you are the 4th or 5th contractor the person has had come in to price the job forget about it, these people are better served on Craigslist. They are cheap, and want someone to work for next nothing. I do well for myself and when I do an estimate I simply figure out how long the job will take, multiply it by an hourly rate and tell the customer it will be plus or minus x amount of dollars as long as there's no surprizes. If they don't like it, I don't worry too much about it. If your work is good, the references will come. Those are the people you want as customers. No BS with the price. They just want the good work you are known to do. I'm a smalll contractor, this is only my take. I know the big jobs get a lot more complicated, but I can't stress how important it is to find your ideal clients. I read a book called Book Yourself Solid a while ago and it has changed my whole attitude about rates, and customers. I dumped a few people chincers and now only work with people I like. I don't rip them off. I make sure they are happy, and in return a few of them tell their friends.

Cove Inspirations Renovation and Design Service
Vancouver, BC
Colin Wharton
604 723 24025
www.coveinspirations.com

BrianNNOLA

Hello Everyone,
I'd like to say I found the original post very interesting and a lot of truth. What was said did apply to me, being I started out from the bottom and built my business from the ground up, not from the top down. I'm still around in the construction businees now after 20 years, so I must have been doing something right. Yes, after working to making big corporate bosses rich for 10 years as a union carpenter, always getting the short end of the stick and first layed off when thing got slow since I refused to brown nose, couldn't find a job, so I had to create one. It took me awhile to get on my feet, fortunately, I always had low overhead and did the work myself. I built a reputation through my clients, and found success. It was from being competitive and providing quality service, not greed and the "take my price or leave it mentality". Thats fine for those sitting on a big fat savings account and not really needing to work for a living, but in today's construction market, you either find creative ways to compete or sit at home while the immigrant take all your work. They certainly don't have the overhead and living expenses.
I'm new here, and thought this might be a good place to get a "going rate" on something I've never worked with before, but I must be mistaken. I could adjust that "going rate" to suit my own demographics, which is what I've always done in the past, and I haven't "gone broke".
So I see this is a place to make small talk, perhaps I am wrong, but I would like to find some help.

scottwolves

yep spot on and agreed!

john elliott

If you use the quote feature we will all know just what it is on this thread that you are agreeing with

__________________
Ed the Roofer said "John too, in his crass and blunt demeanor.............."

J F

It will be interesting to hear your take on this after you've had a few employees yourself for awhile.

BrianNNOLA

I guess you missed the part in my post where I stated I had been in business now for over 20 years. Of course I've had several people work for me, and they didn't make me rich. It wasn't my objective. Call me a fool, but I value the people around me more than money, and they took care of my expectations and watched my back. I took good care of those who worked for me, and often times split a percentage of the profits when they hustled and worked hard to get a project completed ahead of schedule. It was only right for me to always earn more for my estimating and paperwork plus the leg work and overhead, but I've always taken better care of those working for me than I ever was treated when I worked as an employee. Thats just my take, and I sleep very well at night. When employers only bleed all they can out of workers and dump on them, eventually the workers find a way to make up the difference or get even. Its usually missing tools or deliberate sabotage done in an innocent fashion, if not just "laying on your leg". Its often a revolving door of misfits once people get a grip on how you operate, and you won't keep good workers.

I've had some deadbeats along the way too, where if I wasn't right there practically holding their hand, nothing got done. Its one reason why now I only operate with a skeleton crew, and don't take on more projects than I can devote my attention to personally. I only have one person now working with me on a regular basis, and mostly take on small to medium sized jobs, nothing on a grand scale like years before. I was never one to sit behind a desk all day anyway. It keeps me in shape, and I am able to truly put my signature on the job, and promotes my reputation.

BrianNNOLA

I will give you credit for making a valid point, as a majority of contractors both existing and the ones that have folded didn't have trade skills, only enough money sitting in their back pocket to start up a contracting business. They wanted to sit in the comfort of their home while their workers labored to make them money. I really wonder how many of that 99% were ones who basically hired the cheapest workers they could find or gathered them up from a Home Depot store front. The trouble is, your workers make or break your reputation, and once word spreads around that you produce shabby work, incomplete projects, or get on the nerves of the client from certain behaviors on a job site, that business is doomed to fail eventually. So really, the success of a contracting business is not only about charging the right amounts to stay afloat, but more importantly providing a quality service and satisfying a client's opinions of those who work on those projects. Word of mouth will take a contracting business much farther and less farther than any amount of paid advertising.

On another note regarding estimating and pricing, I am starting to find many people calling me pretending to be home owners inquiring for a price for a given project, when in fact is just another contractor looking to have me do his estimating work or see if I bid the job cheap enough where they could make money through having me perform the work. Most of the time they never call back though, as my quotes don't compensate for third parties in comparison to national averages. I just hate solicitors like this though, and its difficult to determine a real client from a competitive lazy contractor who don't know his numbers, and wants to attempt to take on a project he probably shouldn't.

You're right, there is no shortage of wannabes or replacment wannabes. Probably a bunch of corporate geeks tired of the cube farm.

dave3717

Great article. Something some contractors may look at to help them estimate accurately is Hometech I used this software while I was remodeling and it was really helpful and pretty easy to use.

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