Ethics Vs Bottom Line

Grumpyplumber

A few comments today on another thread in the plumbing forum spurned some thought.
I generally go out of my way to be honest with new customers on the idea that it generates repeat business and keeps ad costs down.
I DO NOT lowball, I simply don't take advantage in situations where I could rake in the loot when I see a bambi in the headlights. (Yes, I let them know it...gotta get the brownie points)
It works, I get alot of repeats and referrals, but I also get burned at times with folks that'll nitpick or try to get extra's out of me while I'm still there after the checks cut.
A good friend of mine from another part of the country tells me that the two largest & most successful plumbing outfits in his area ironically have the two biggest lists of BBB complaints.
I imagine they have vast ad budgets, but apparently the "take the money and run" routine works.

I know quite a few guys in my area will intentionally play the extra game after quoting a low price to make up for it after the fact.
Then there's the opposite extreme, guys who are so anxious about scaring customers with price that they take chances and hack the work just to "giterdun" cheap.
I have built up a handful of loyal customers over time, but honestly I find myself wondering if it's worthwhile to go out of the way when so many more seem to not care about anything but price.

Just wondering what school of thought you guys subscribe to, and how effective your particular tactic has worked.

KillerToiletSpider

I will not hesitate to say we are the most expensive contractor in town, and we have a handful of architects and designers that will specify we are the only acceptable plumbing sub for their jobs, it is not negotiable. There are four large high rise buildings that will only allow our company to work in the building. We got there by doing a complete and thorough job the first time, every time, and by solving problems no one else ever gave the time to figure out. My guys never get told to hurry up and get it done, they do get told to take your time and do it right the first time. I'd rather lose a day on the rough than spend two days and who knows how much ripping stone off of walls to fix it on the trim.

__________________
A flush is better than a full house.

Double-A

Folks in this area have tended to be quite loyal to the plumbers they feel are honest, as a result, its a tough nut to crack to open a new plumbing service company here in Central Arkansas.

Families tend to pass their plumbers down like fine china. If that plumber was daddy's plumber, you can bet he's gonna do the kid's service work as well.

As far as ethics go, I'm 100% with Grumpy; its much better to serve a client honestly than to try to take advantage of them in any way. A fair price for a good job is how I define this. Fair being, fair for everyone involved.

Central Arkansas has a big city feel in many ways, but still has some small-town thinking. If you upset someone, you can bet they are going to tell everyone they know -- and you never know when that is going to catch up with you. My bet is, at the worst time possible.

__________________
"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y.
New York Times, July 20, 2006

masterk

I always tell my customers that I am not the highest or lowest. I then take the extra time to explain quailty in both the parts I use and my craftmenship. Then last, I ask them the differance between a vette and a cavalier, when they tell me I say well there both chevy's. End result car's are very different in price and function, just as plumbers are. I never liked having to explain myself in the past, but by doing this I have increased my volume of work.

Here we are required to give a one year warranty on the job. When it's a job that you know is going to last alot longer than that I'll give a two year. The customer feels that they are getting more for there $. This has also helped increase my volume of work.

Mike Finley

I understand the thought process of "being honest on the idea that it generates repeat business and keeps ad costs down". I don't really subscribe to being honest only for ulterior motives, for me it's much more about being honest whether somebody is looking over your shoulder or not, whether there is a chance of being caught or not. Set the ethical compass and stay on your course for the sake of being ethical, not what it might or might not return to your business.

To me there is a parallel to Christian ideals and being religious. You can be very pious, go to church 3 times a week, know the Bible inside and out, be able to recite verse and still be a huge scum bag. Then there is the other side, where a person lives their life being a good person, honest, fair and forgiving, trying to live a life to be looked back upon without regret.

To me the latter version is more applaud-able, and I would rather be surrounded by people like that who were truly good inside rather than 'religious'.

Double-A

You're not alone in those feelings, Mike. I feel the same way.

__________________
"My clients’ wishes are the center of my attention." -- David Guido, a contractor in Woodstock, N.Y.
New York Times, July 20, 2006

smellslike$tome

Always do the right thing simply because it's the right thing to do.

Never tell someone they "need" something when they don't.

On the other hand, always offer options. How do you know Mrs. Jones might not want that new, brushed nickel, spout spray, kitchen sink faucet rather than repairing her old faucet. I have sold many fixtures/faucets simply by bringing them in and opening the box. I'll say something like "I can repair your faucet for $***.XX with X warranty or we can install this for $***.XX and X warranty. Just give them the option and shut up.

__________________
Looking For A Birmingham Plumber The Best Plumbing in Alabama

Grumpyplumber

Great answers.
I get underbid often, I also get comments on what customers were quoted from competitors...sometimes I have to pause with some of those prices to wonder why & how they charge so much.
The ethics goes both ways on this...
The obvious being those who take advantage of customers lack of knowledge, the other side being when you're constantly lowballing and getting work solely based on price, you're taking away from other shops in your area - driving your trade down.

I'm happy to say to my fellow tradesmen that I don't play price games.
I'm also happy that most of my customers know they can trust me.

The ones that still complain regardless how hard you work, or what price you give them make things hard to keep in perspective sometimes.

skyhook

It seems to be working for the oil companies.

__________________

Milhaus

I believe the same on the religious junk Finley.

I've been questioning myself lately on pricing too. I've had a couple of decent paying jobs that ended up well. Then I start questioning whether or not price was too high, if I am ripping them off. It's a bear to stay in the frame of mind that I offered a service with minimal straying from the original contract, no hassles, and good service. That costs money. I'm not for ripping people off, but making good money balancing a project with 50 potential problems is not a bad thing.

I'll take the honesty route. But, it still boils down to what you think you're worth and what the customer thinks your worth. Seems like they no matter what you do, they still think your trying to rip them off.

mark

Putty Truck

On the west coast, people tend to move around a bit. Within a few square miles, I'll bet there are 10 homes for sale and they will be sold soon. The people will be gone and new ones will be here. I bet 25% of the current residents are native to the area and the rest are newbies or passing through. How loyal should I be to that demographic?

In my immediate neighborhood, the average length of stay is 30 years (its killer here), but I haven't said more than a few words to my neighbors in years---do I know or care who does their crafts? Nope and they probably do it themselves.

Am I honest? You bet. Am I expensive? That depends if you're poor, I suppose. Will I bend over backwards for a ho? No way. Do I bid up the price on a job? Only if I'm blind sided by something..

What the hell was the question again? Was it "Does Grumpyplumber know how to bid to a ho?"

CPlumb

Ha Ha !! Good one Putty ,,, I wander off at times too !!

Ethics vs bottom line ? Seems to me that we are all giving the same answer . I make plenty of money when charging my norm . Yes my prices are too low especially in the area I work . Got a big surgery coming up and will be down for 4+ weeks . Planning on re-working my price book at this time . So IF there is a next time I won't have to stress SO MUCH !

Now -- How does this tie into the question ? If I come back from surgery WITH A VENGEANCE against all homeowners and their wallets because i'm bitter that I wasn't smart enough to save more $, that would make me NO BETTER then the "Grab & Run " big boys . Spiritually , I refuse to do that .

Now, If I raise my prices , say $ 25-$60 per job (as feasible) and continue to offer my customers great service / quality /commitment . I am now looking at $ 18,000 --$45,000 MORE a year ( that's $25-$60 x 15jobs x 50 weeks ) .

Anybody NOT want that money ?? I don't have to force sell , I don't have to lie to ho's , I don't have to sacrifice my ethics . We just have to have confidence in charging what we are worth .

Sorry to wander off ,,,, it sounded good in my head .
CP

DavidC

Here's an explanation of a fair price that I read about years ago.

A fair price is when both parties feel they have gotten a good deal.

As a tradesman, you need to make sure you are paid a reasonable amount to sustain a decent standard of living. Your customer needs to perceive value for their money. As a businessman you should be watching both sides of the line.

It's tough sometimes to notice how some of the others can rake in the cash while taking advantage of the clients. There is a roofing contractor in my area that has been at it for years. He makes a killing, has very few repeat customers and you can forget about him ever coming back if there is a problem. I've fixed a few of his screw ups and shake my head wondering how he gets away with it. He must have the gift of persuasion. I'd rather be out of business than make my money like that.

Now everybody knows that you plumber guys make more money than doctors. Imagine my glee when I discovered that our hourly rate was higher than my favorite plumbers. But it's a fair price.

Good Luck
Dave

AtlanticWBConst

We believe in ethics at all times for business, and life.

We always send back overpayments immediately (over $15K last year).
We try and always give cost breaks to the single mother raising their children.
We give discounts to certain senior citizens on fixed incomes.
We allow cash strapped folks to pay us "next month" or in payments, if their repair work has gone over their budget.
The extras on residential work are always calculated, based on the actual hours used and materials +20% markup. Not by inflated numbers.
If the client is paying for materials, we always refund them for any materials returned.
Several times, suppliers have let us out the door, and forgotten to charge us for material. We notify them.
If we break, dent, or damage something, even minor, on a client's property, we tell them, and don't wait to be asked.
If it's not installed right and the payments have all been made, we will go back and fix it, without being asked.
If it's not up to code, we refuse to cover it up.
If we see that there is something "fishy" going on somewhere, on the job, we will bring it to the client's attention, in some tactul way.
etc, etc, etc.

Do we think we are better than anyone else? Do we think doign any of these things is something incredible?
Absoltutely not. These are things we feel, are our duty and responsibility to do. We SHOULD be doing that.
To not make an attempt to do so, is despicable.

Sometimes, it has alot to do with how you are raised. Ethics are morals.
My mother brow beat us with the responsibilties of doing what is right at all times...There were no other options. My business partner was raised the same.

__________________
- Build Well -

AtlanticWBConst

Ethics - The discipline dealing with what is good and bad and with moral duty and obligation...the principles of conduct governing an individual or a group... -http://www.merriam-webster.com/dictionary/ethics

Ethics can define who we are as a person.
They can define who we are as a company.
They can define the quality of the work we do.
They can define the way we make a profit.

If we are solely focused on profit, and not concerned about doing what is conscionably right, then we are in company with some of the most notorious names that have come down through the annuls of history. Enron, is such a name.

The "desire" to be ethical and the "ability" to be ethical, go hand-in-hand.
One, cannot exist without the other.

Either you are, or you are not.

__________________
- Build Well -

Mike Finley

Sometimes I feel it's our duty (the good guys) to even out the karma in the world. There are so many scum bags (watch that to catch a predator show just once!). We are doing a job for a 65 year old widow woman. When we signed the contract 8 weeks ago the last thing she said to me was - "Let me know if you are going to need more money.", I kind of looked at her funny trying to figure out what she meant. She said "I have to transfer money from my accounts so just let me know if things cost more so that I can transfer money so you won't have to wait for it."

I reasurred her that the price on the contract was a fixed price and I didn't see anything in this job that would end up having to cost more (hidden defects), and that the price shouldn't change unless she decided she wanted to add something.

She again says just let me know if I need more money, I know how these things can go, I just want to make sure you are making some money on this.

When I left there I was really glad she had signed up with us, all I could think was that she is the perfect target for some scum bag to take advantage of. You know the scenario where the little single old woman ends up paying $120,000 for some siding, new windows.

A lot of times I feel it's our duty to watch out for those who are easy targets in this world. That's the way I feel. I'm sure some people would laugh at that or call me naive.

kevjob

character is defined by what you do when no one is looking!

__________________
Kevin
Basement Finishing Highlands Ranch Colorado
Littleton Colorado, Basement Remodeling
Kitchen Remodeling Denver

Tom M

Is there any doubt that cost , ecomony and competition all go together. It has never cost more to run and operate business nor has there been more contractors bidding on the same thing. I get irritated and walk away from a job that is not a fair request or realistic task quote. Everyone does it different.

smellslike$tome

Here is the difficulty. Contractor/service provider A and contractor/service provider B, for a given job and all parameters and materials being equal should have roughly similar material and overhead costs. A however is content to use the cheapest labor he can find and B wants his people to make a decent living with the best benefits they can afford. A figures he's rolling in it with a 5% profit and B feels like 30% is perfectly reasonable. All of a sudden A is all noble and B is a scum bag rip off artist because he ended up charging 2x what A did. I know there is abuse and I know this is a simplistic example but when Blowe's will send a so called "installer" to put in a new 40 gal gas Whirlpool water heater for $550.00 (this includes the wh) and I want twice that to put in a quality product that they won't be calling me about in 3 months because it's not working, does this make me a rip off artist? I'm not talking about slick talking people into buying things that they don't need or want or lying about the condition of equipment but if someone presents a price for a job and the customer agrees and authorizes the work and is happy with the result my question then is, has anybody been ripped off simply because someone else would have done it for less, possibly much less? I went on a drain call this afternoon and while I was there the ho was telling me about other plumbing companies that had been there in the past. He, at one point had been quoted $1400 to run about 25' of soft copper gas line to supply a gas grill on a deck. I'm slow to criticize other plumbers so although I thought that was pretty high I didn't say so. The ho then proceeds to begin to tell me what he had it done for but I stop him and say "let me figure what I would have done it for". Now I didn't make anything up, I calculated it right out of my price guide which lists prices, so much per yard of pipe, so much per fitting, etc. I knew I wouldn't be at $1400 but I wanted to see where I would have fallen. So my price came to $539 which was $200 more, it turns out, than what he paid to have it done. Now if the $1400 company had never been called and it had just been the company that actually did the work and me I would have been right at 60% higher than them. Does this make me a rip off artist? Now add the $1400 company back in the mix, now all of a sudden I don't look unreasonable anymore but the $1400 company are the bad guys. If I sell my company to the customer and can satisfy them that what I am offering is what they want/need and they agree on the price and then I deliver exactly what I promised, is it even possible that the price was wrong. I'm not talking about making a game of it as I know some do. I'm not suggesting just "going for it" to see just how much you can squeeze out of someone, but if you set up a pricing system and it's the same system you use with everyone then won't the market determine whether your system is right or not? If I sell residential 40-50 gallon water heater installs for $10,000, guess how many I will actually sell? If I sell the same wh installs for $550 of course I will sell a lot more I just won't make any money but if I have a standard install for $1100 and a deluxe with more features, better warranty etc. for $1600 I will sell some and make some money but am I a crook because someone else will give them hot water for $550?

__________________
Looking For A Birmingham Plumber The Best Plumbing in Alabama

Grumpyplumber

Dave, I know you well enough to know you were kidding, of course.
However, thats a real steriotype that often causes homeowners to beleive the price is too high...regardless what we quote.
Which is part of the reason for the thread...sometimes I feel like just throwing out rediculously high prices and taking fewer jobs for more money, enabling me to use better stock and take more time.
I suspect that would increase my ad budget though...I wonder if there isn't some equation there.

Smellslike...you got it nailed.
I have been underbid by HD subs who go in and do a water heater for 150-200 less than I do.
What burns me up is the subs only get a fraction of what HD charges...the subs have no choice but to upsell on "necessary" extra's to homeowners to make a living, leaving me out of a job and the unsuspecting homeowner out more money.
I've gotten to the point where I rush bargain hunters off the phone with a price and state thats final just to save my time and trouble.

Putty Truck..I know how to price.
I think it was a post of yours that got me thinking about ethics vs pricing.
I'm not stupid enough to think I'll get more than one, maybe two jobs a year per customer.
I have an example for you in particular.
A simple lav faucet replacement I did last year in early winter, the guy told me when I was done that he'd gotten one other bid at $150 over my price for the same faucet (almost double for labor, maybe with a higher mat'l markup).
I got it done in less than an hour, made decent money for my time.
He called me back in the spring, I wound up doing a $9,000 boiler upgrade for him over the summer.
He didn't bat an eye on the proposal, he trusted me.
That was a nice score, all for not doing the "hit and run".

Then there are the far more frequent opposite extremes, the "I'll be doing some work in six months...maybe we can talk about that also" routines...the folks that dangle a carrot thinking you'll work cheap to get the extra work.
I don't bite, my price is my price.

Cplumb, smart man to have the cash reserve, knowing things happen.
You're right in thinking it would be wrong to financially torture customers over something you hadn't been smart enough to prepare for...good man.

I wanted some insight, and man did I get some.

Thanks guys.