Quote And Estimate Breakdowns....what's Wrong With Honesty?

mahlere

if you can break down your pricing to labor, material and OH..and your customers don't flinch or fall....you aren't charging enough for your labor or OH...

Celtic

What happens when all your are customers are given a chauffeured ride?

DISPATCH: CALLING ALL CARS>>> Mahlere is out giving estimates...AGAIN.

EMT #1: Let's ROLL !!!!!!!


EMT #2: I hope we make it in time
EMT #1: Me too
EMT#2 : Good thing we have these cool patches...

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Mike Finley

If you 're going to break down everything for the customer, why don't you just save the hassle and work all your jobs for Time & Materials? Seems that's just what you are really doing anyways aren't you?

I've seen one common trait amongst jacklegs, illegals, part-time contractors and non-professionals. They all work the same way, T&M or a complete break down, or even better - you buy the materials and I'll (paint it, install it, cut it... etc...) or even better again, those are the guys I see in Home Depot pushing around a cart full of materials with the customer in tow and going up to the check out counter and the customer uses his milage card.

I don't know what that means, draw your own conclusions. But I always tend to err on not doing things in business the way those people do.

As Tom said, how much does the steering wheel cost when you buy a new car?

Celtic

I think the steering wheel on the right-hand side costs more.

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Chris G

I don't know about the steering wheel, but I do know they break down a lot of the options on a car. Even the steering wheel probably.

Anyhow, the comparison is better made between us and auto mechanics isn't it? And they always break down their estimates.

I have tried it on the last five jobs. Here's why I started:

This repeat client wanted a closet for a dryer and venting. My bid was $3000. Normally he likes to haggle. "can you sharpen your pencil on that?" Or throw in extras to sweeten the deal for himself. I have in the past raised my quote by 20% just so he would be happy when gave him 20% off. That worked, but c'mon he's going to catch on sooner or later. So this estimate I broke down. Like this:

His reaction: "wow, there's really nowhere to cut" It drove him kind of nuts. He wanted to see ONLY the bottom line, because it was easier to negotiate. And ya, I have markups on materials buried into costs, so it's not a complete breakdown.

But I did this so I COULD get my price, you shouldn't assume just because someone breaks down an estimate, or charges T & M, that they're leaving money on the table. There are places for both types of estimating.

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mahlere

funny you should bring this up...

Tom R

An auto mechanic's work is much more predictable and their estimate comes directly out of a book, - - unless their original 'diagnosis' is wrong, - - in which case 'you' get to (also) pay for their next guess, - - so I fail to see the comparison . . .

Flikka

With my painters hat on I don't see why how I quote and how a mechanic quotes would be any different other than I don't have a magic book to look into. My labour quote includes my overhead and then it's plus materials. I've been pretty good at judging how long a job should take me and if something unforseen comes up then a change order takes care of further costs.

Celtic

Using the auto mechanic(AM) as an example...
You bring you car because there is a problem. They (sometimes) hook the car's computer up to their computer and read the codes to fix the problem and then give you a price.

But wait a second....YOU brought the car to THEM. They use a computer to diagnose the problem (for a fee).

It's an apples and oranges comparison right from the start.

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Mike Finley

We don't fix cars. I'd stop playing games.

pstorey

Because in my book they're two different things. A customer who hires someone on a T& M basis has no certainty of the final price, a client with a set price does!
My contracts determine a set price for a clearly defined scope of work: just because I break down the work involved into line items for the customer doesn't mean the price would change any if i didnt include the breakdown.

POOLMANinCT

148 . 2" 9/16" bolts
148 9/16"
20yrds v16 cement
5 tons stone
6 packs #3 steel
12 8ft panels
24 a frames
24 drive stakes
28/28 zliner
3 steel 8ft treads
3 steel risers
4 1.5" bulkheads
2 1085 skims
2 md pots
pump
48ft filter
2 wet niches
2 lamps
2 jboxes
4 steel 6" radius fillers
cps extrusion .
2 palletes cement
9 faceplates......

or would you like a pool?????

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......Less with the jaw & More with the paw.....

daArch

We paperhangers have had similar discussions on many different forums.

First, Flikka, let me say that whatever works for you, WORKS for you. But just be aware of the pitfalls that many of us have encountered.

Next, before I start, excuse me if I am repeating other points, there were a lot of posts and I just read them quickly to get the gist of the conversation.

When you itemize a bid, there are many customers (not all, but TOO many) who will treat it like an a la carte menu. "If I do the sanding and priming, I can knock off $***.xx, right?" and we all know that many HO's will not do an adequate job. And then who is responsible for unsatisfactory results ???

Another concern: sales tax. We all need to bump up our materials costs to cover the cost of obtaining them. Once we add any profit to our materials cost, we are liable for sales tax, in those states that have sales taxes. The only legal way to line item material costs is to list ONLY what you pay for them. And then what do you do, line item miscellaneous time spent on going to the store? Well, then Suzie and Harry Homeowner will "offer" to buy the materials. That's not a place I want to visit.

And how do you charge for depreciation on your tools? How do you charge for gas and mileage? How do you list all the support materials like thinners, conditioners, and sand paper? How do you itemize "cost of doing business"

Itemizing a bid is a slippery slope, IMO. And eventually you WILL fall flat on your A$$.

I spell out what I will do. When I was painting I would also specify the products I would use: "Ben Moore Satin Impervo Linen White on all interior trim". But with wallcovering I say, "Sand walls, apply wallpaper prep coat, and install supplied wallcoverings" If the paper requires a liner, I say: "Install blankstock liner (cost of liner included)...$***.xx"

I've only been in the paint/wallpaper business since 1972 (yah, I'm a newbie ) and I find this works best for ALL my customers.

I am serving and they are buying a complete dinner, not a la carte

Flikka, take this as friendly advice from someone who has tread many paths, not as an edict as to how to run your business or criticism of the way you are doing it now.

And, GOOD LUCK !!!

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Wallcovering Installations by Bill Archibald|paperhanger|Eastern Mass|Greater Boston Area|Dover|Wellesley|Franklin|Sharon|MA

Flikka

Many assumptions made here. I'll have to go back to my original post to see it I've lead you all astray.

I don't itemize my whole quote and break it down price wize per item. I state the room, what will be done and then list the price which includes, my time and my overhead which include all the things you mentioned daArch...well....some of them. I don't ever charge a mark up for materials, mostly that is driven by what every other painter in my area does and it's how the rest of my business is run. I do, however, add the cost of obtaining my materials to my time/overhead price. When I shop for a client I chose to charge by the hour unless it's a furniture purchase and then I pass on a portion of my rather large discount to the client and keep a portion of it as my fee.

In my four years of painting I haven't had anyone want to 'al a carte' and do some of the work themselves from the quote....lucky?.....maybe.....I don't know. Though.......I did have retired taper have a room baby bottom perfect for me......that was cool.

Thanks for your input......

daArch

You are correct Flikka. I said to excuse the fact I read the whole conversation quickly to get the gist.

I jumped on the bandwagon that I thought was rolling by.

In fact you said: What works for me is pricing out each room with a cost of labour and overhead in one column and an estimate of paint in another with a grand total at the bottom of the page for each. I then add that the paint is only an estimate and is subject to change and that the price does not include the cost of supplies

That's a lot less than the conclusion I jumped to, but it is still a little more than I would do.

Sorry for overstating what you did. But I do still stand behind the advice I gave and the statement that what works for you WORKS for you.

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Wallcovering Installations by Bill Archibald|paperhanger|Eastern Mass|Greater Boston Area|Dover|Wellesley|Franklin|Sharon|MA

Mike Finley

I think part of the problem was the way you phrased it right from the beginning, making the assumption that not breaking out everything is somehow dishonest.

Flikka

Mike, what made me ask the question was birddogs thread about his customer asking for a breakdown of his quote. The gist of the thread was the customer was the enemy....someone referred to clients being the 'enemy' early on in this thread as well. That I just don't get and never will. I work hard for my money as do my clients.....I want to know where all my hard earned money is going and how and give my clients the oppourtunity to know without having to ask.

mahlere

the problem with breakdowns is 2 fold...

1) with HD and Lowe's people think that they know the cost of everything...too many people think that they shouldn't pay above cost for items that you provide.

2) hourly rates - people don't equate your billable rate with their companies billable rate. They equate your billable (including OH and profit) with the hourly rate that their company pays them. They make $25/hr and you are charging $100, they can't make the connection to their boss charging $100+ in order to pay them $25.

Now, if you are simply giving a room by room breakdown...ie- bedroom 1- $375, bedroom 2 - $450, that is a different story.

But most customers, those who will ask for a breakdown, want something like this:

Bedroom 1 - labor 5 hrs @ $50/hr =$250, 4 gals paint $75, etc....then they can chisel down
the material (but the paint is only $10/gal at HD, why are you charging me $18?) or labor (you only spent 4 hrs on Bedroom 1, so labor should only be $200)

there are various level of "break down" and I think that makes a huge difference.

But in general, the only way to make actual money (and not just a paycheck) for a small (1-5 man) operation, is to give fixed prices (without breakdowns) and hustle. Hourly rates and breakdowns simply won't allow you to ever hit a homerun. You will put food on the table (maybe) and pay your expenses, but you will always be living pretty much job to job.

Mike Finley

Yes, I agree that some people do think of their customers as the enemy. A win/win situation always benefits everyone. However while customers shouldn't be treated like the enemy for any reason, they shouldn't be treated to the intimate knowledge you would reserve for a business partner either.

thom

And every once in a while we do hit a home run.

I always figured my cost as a base then bid what I thought I could get. The point was to offer something better/different than my competitors. The customer had to pay more for what I would offer. Generally you can charge 50% more (sometimes 200% more) for something that costs 20% more.

Picasso didn't work by the hour.