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Itemizing My Bid

 
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Old 06-26-2012, 10:09 AM   #1
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Itemizing My Bid


I just got another request to itemize my bid.

"Also, would it be possible to write in the estimate as an itemized list, with the price you'd charge for each of the tasks?"

I hate doing this. some stuff I don't even charge for. I mean I'm there already, working on something else, it'll take me an extra 5 min. Why bother. Then they see $xx for putting in a toilet and say "heck i can do that"

Whats the word with you guys?
Do you give in to these requests?
How do you handle it?

Oh also I'm not even sure this goes here, but it is sales. LOL
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Old 06-26-2012, 10:20 AM   #2
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Re: Itemizing My Bid


I bid the job as a whole. Pricing itemized per task is going to be significantly higher due to the inherent inefficiency of doing each task in isolation.

One given task out of a whole job would be cost-prohibitive for the client if I am going to get the income I need from it--especially if it involves a part-day amount of time.

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Old 06-26-2012, 10:26 AM   #3
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Re: Itemizing My Bid


Itemization is for you to keep accurate tabs on your costs. It is not for a client to use as leverage or negotiation material for hiring another contractor.

I strictly sell a whole number and supply a detailed scope. The rest is for me to keep to myself.

Good luck.
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Old 06-26-2012, 10:35 AM   #4
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Re: Itemizing My Bid


Glad to see we think the same.
now i just have to communicate it to the client.
thanks
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Old 06-26-2012, 11:19 AM   #5
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Re: Itemizing My Bid


There's a flip side.

You can say "This is what I do" all day long but if it doesn't mesh with your potential client's expectations then there is a disconnect and the "potential client" can go across the street and find the contractor that will.

This is one of the reasons why charging for proposals/estimates is such a hot topic issue around here.

It's easy to dismiss what you don't understand. For example, WOMEN are difficult to understand and you will find 3 kinds of men in this world:

-Those who tried to understand women, failed, copped out and pretty much use wide stroke brushes to paint the entire forest (i.e., by creating general rules and guidelines in dealing with them). Use your imagination.

-Those who tried to understand women, failed, but remain open to different approaches and being open minded and not afraid of appeasing by giving in to concessions here and there.

-Those who tried to understand women, failed many many times, persisted and now have deeper insight into their psyche than the vast majority of their competitors (other men). Through this approach, these men have the experience and wisdom that yield a more predictable outcome (It's as good as it gets).

Now let's put that into the perspective of relevance to our business. Women are like potential clients. They are both complicated creatures who sometimes speak a different language. Similarly to women, they also have intentions that may or may not mesh with your intentions. This creates challenges when it comes to COMMUNICATION. The balance of power in this relationship is hinged on establishing ground rules, but you have to be open to realizing that these ground rules will steer the course of the relationship.

So in other words, be mindful of who you attract when TAILORING your approach. Also, be cognizant of the AFFECT of your approach.

It's ok to ask what others are doing, but the success of your business will depend on your ability to UNDERSTAND the market and your ability to craft a SOLUTION that is economically viable. How you deal with bids is part and parcel of your SOLUTION or system that you have developed, it is what makes you different. If you don't think being "different" is important, then I beg you to imagine the number of competitors in your market (Red Ocean).

Now, contrast that with the position of the top 5 - 10 heavy hitters in your industry, in your geographic boundary. I think that you will find that the common trait amongst all of those "heavy hitters" is that they have a very specified approach to the very subject. In other words, they have answered the question and their answer (what they came up with, their solution) is:

A) What is working with their demographic
B) Is being used as a means to filter and select
C) Is economically viable
D) Is practical for where they want to steer the relationship

And to offer you some perspective, my company and nearly all of MY competitors (in my demographic) itemize our bids (at length). But then again, that usually happens after the deposit of a sizable retainer, which means I'm being paid for my time.

However, I could just as easily generate the same annual sale numbers by completely re-crafting my approach and only providing stipulated lump sum bids. It just depends...which women you want to develop a relationship with.
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Old 06-26-2012, 11:38 AM   #6
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Re: Itemizing My Bid


As a rule, we will not break down pricing like that because once we start down that road for a customer they will be relentless in their demands for cost breakdowns------so that they can price shop you.

also-as you know- on any proposal your over all number may be very accurate--- but YOUR personal working budget may be a little high on one operation and a little low on another- but it all works out in the end.- Once you have provided a breakdown- they will hold you to the low number and cherry pick out the high number to shop around

So, we provide a detailed proposal-with one bottom line number.- If asked for a breakdown we simply say" It is not our company policy to provide a breakdown, however if you have a specific question perhaps I can answer it"----- In that case we often find someone simply wants to know how much additional it would be to upgrade to a trilaminate shingle from a 30 year shingle- or how much for copper valleys instead of aluminum

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Old 06-26-2012, 01:14 PM   #7
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Re: Itemizing My Bid


Heritage, thanks for that insightful explanation of why I still don't understand my wife of 40 years. And the unique twist of relating that to our industry. Got a feeling that I'll be back later to reread that one.

Stillstoked, we provide only lump sum quotes for a given project. Our proposal is however loaded with detail in an effort to outline exactly what we intend to do and expect of the client. Certain items that the client is to select are listed in an allowance schedule with an amount for that item that is included in the bottom line. Adjustments are made after the fact.

The exception I will make is to offer separately priced options for undecided selections or to make suggestions I think are pertinent but not requested by the client. These items are listed with a price for just that item and an option to accept or decline. Accepted items are added to the original bottom line number.

Should the prospect insist I explain that it does require much more time on my part and would gladly comply for an additional, non-refundable fee. To date there have been no takers. Usually once we sit together to review the proposal they no longer see the need.

Another strategy I've read about is to make the list as requested and mark up the individual items so the grand total is 20% higher than your lump sum. You would explain that you price the job as a whole normally but to perform each task as a separate bid cost more.

I haven't done that, but if you really feel pressured.....................

Good Luck
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Old 06-26-2012, 03:17 PM   #8
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Re: Itemizing My Bid


Heritage: I love your analogy of the man-woman relationship with the contractor-client relationship. Very well put. Until one side can figure out what the other side wants and why they want it, then one can't truly understand why they behave the way they do. And ultimately, one doesn't know how to successfully interact with that person.

Maybe I am not understanding the situation fully, but who is the client? Are they a homeowner who thinks they are a DIY guru? If so, then I understand the assumption that they are likely trying to nit-pick dollar figures item by item because they want to squeeze the cheapest deal possible.

Or perhaps they are a project manager or other commercial construction professional who may be anticipating change orders and wants to be able to have math calculations clearly defined in advance re budget purposes. Otherwise if a minor part of the project now gets expanded, who knows what will be charged.

I saw someone post in another thread that they know of a contractor who purposefully underbids the original project if they expect there will be change orders. Once they have the job and are on-site, then they make a profit by over-charging on the changes/extras. Maybe something like that happened to your client in the past and they've learned from it.

If appropriate for your situation, perhaps you can ask them something like: "I want to give you the proper info you need to make an informed decision. In order to do that, I need to understand the purpose of your request so that the extra detail I give you will be exactly what you are looking for." If you are able to figure out the WHY, then you will know HOW to respond.
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Old 07-01-2012, 06:44 AM   #9
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Re: Itemizing My Bid


Quote:
Originally Posted by ROVACON View Post
Itemization is for you to keep accurate tabs on your costs. It is not for a client to use as leverage or negotiation material for hiring another contractor.

I strictly sell a whole number and supply a detailed scope. The rest is for me to keep to myself.

Good luck.
I do exactly what Brian does. Fullstop.
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Old 07-01-2012, 06:50 PM   #10
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Re: Itemizing My Bid


Great post. I would be interested in seeing how it all works out.

We provide one "free" estimate but they are pretty detailed - maybe to much so. I feel that I'm very price competitive. Yet, here is what happened to me (Note - I posted this someplace else also).

Met with a customer - she needed work completed in her entire house - to include updating 3 bathrooms - kitchen refreshing - painting - carpet - door repair / replace - inspect the roof - water damage - mold - exterior rot - exterior paint - windows, etc. We took notes and measurements but she had not given any thought to finished products.

We called with a budgetary price to see if it was within her price and to schedule a meeting to provide samples for a firm price. She wanted the appointment the next day. Then 2 hours before the meeting she called to say she had to reschedule.

I found out from the person who gave us the referral she had received a "bid" for $3K less then our "bid". Which I don't understand as we gave her a budget number - and had not provided anything to her in writing.

How do you handle clients who want numerous jobs completed in their house?
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Old 07-02-2012, 12:24 PM   #11
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Re: Itemizing My Bid


Tell them this... I will give you an estimate.. If they want itemized estimate, tell them that it will cost them $300.. Thenand only then when contract is signed, a reimbursement with the whole scope cost is deducted.. You'll see how fast the honest ones stick around or split.. Weather out the chump clients..
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Old 07-02-2012, 02:02 PM   #12
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Re: Itemizing My Bid


Estimate.

Kitchen. 12K-22K depending.

Bid

$18,350 specific. w/details

Itemized.

this plus that plus another and so on and so forth for same kitchen...

total.....$23,500...why? Because now you don't have the whole job which is much easier to complete because "you are already there" and that saves a lot of time. Plus if they plan on doing this in different times, materials costs change, dramatically sometimes.
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Old 07-02-2012, 04:00 PM   #13
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Re: Itemizing My Bid


Quote:
Originally Posted by EAM View Post
How do you handle clients who want numerous jobs completed in their house?
Pick one and sell that before moving on to the next. Or...

My preference, lump them together and sell it has one job.

Good Luck
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Old 07-13-2012, 08:10 AM   #14
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Re: Itemizing My Bid


The bid dance is always a tricky one! One old timer carpenter I worked for insisted that the first dollar amount out of your mouth will be the only number the customer remembers, no matter how many changes they make after that number. Another high end successful carpenter was quite good at knowing when to put a number out here and there during the walk through job interview phase. This helped him weed out the chumps and started the contract and job scope definition. Of course he was doing that with more novice, less savvy customers so the misalignment of expectations did not balloon out of all proportion.
Then we had a customer who put a large ad in the local paper(during another real slow time in remodelling in the 80's) and proceeded to cherry pick the contractor and the subs based upon low bids! Would have loved to have been a referee/fly on the wall during that project!

Another time(80's again) I was the second carpenter on a job where the first one had stiffed the customer for the $800 downpayment...now let me tell you that was fun! real fun...I later did a porch addition for him. I documented a $25 additional amount to the $3000 project: he said he agreed but he wasn't going to pay it..period. Lost that battle of wills...
My last project started at $9000, finished at $15000 without any change orders, etc. Customer happily paid.
Point is that they are all different. One thing I did learn tho: cheapening a project never pays. I never ever had a problem with doing a costlier, better job...meaning getting it complete and right, than trying to do a cheaper job to save the customer money: that has always bit me in the butt.
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Old 07-13-2012, 09:48 AM   #15
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Re: Itemizing My Bid


The way we approach this is... we tell the customer the project pricing is all based off formula's that are input into the computer and are a combination of multiple different pricing factors like SF, LF etc.

The pricing also takes into account that the project is basically made up of a bunch of small projects that we don't have to sell individually. If each project were separate, the price necessarily would be more...

To put it a different way... Think of a buffet... you pay one price for all that's included, which is what we are talking about here - project pricing. Breaking each line item down a la carte like at a restaurant, not a buffet, you would obviously end up paying more for each item because each line item has to be considered as the only item that will be potentially ordered from the menu.

What really matters is the final price wouldn't you agree? Separating that price into individual components would take alot of time, but we are all about excellent service at a fair price, and if you really feel it's necessary I can do it at a cost of $***.XX. If you choose to use us, we will apply 50% of that itemized estimate cost towards the project. This way it is fair to both of us.

So how would you like me to proceed?
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Old 07-13-2012, 10:54 AM   #16
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Re: Itemizing My Bid


I did not itemize the bid. They did however ask me to bid it again without the demo involved. I even told them I would get him started with the demo and let him use some of my tools. Never heard from them again. Spent at least 5 hours on this, meeting them twice, figuring out and writing up 2 estimates, emails and phone calls. All part of the game I guess.
Thanks everyone.
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Old 07-13-2012, 02:04 PM   #17
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Re: Itemizing My Bid


I'm sure they gave it to the next guy and said "can you beat this?"
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Old 07-13-2012, 06:06 PM   #18
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Re: Itemizing My Bid


Quote:
Originally Posted by DavidC View Post
Should the prospect insist I explain that it does require much more time on my part and would gladly comply for an additional, non-refundable fee. To date there have been no takers. Usually once we sit together to review the proposal they no longer see the need.

Another strategy I've read about is to make the list as requested and mark up the individual items so the grand total is 20% higher than your lump sum. You would explain that you price the job as a whole normally but to perform each task as a separate bid cost more.
I've done both of these. My first tack is to explain that I have a single spreadsheet and that it doesn't break things down by project segment so it's time consuming to break it down. If they do want me to(only a couple have) then I tell them it will be $100-$200 depending on the amount of work I think it will take. Both people actually paid me to do it.

I do explain that my price for individual items is more than the combined total and have had no problems with the customer grasping that project. In both cases, the customer was really on the fence about how much of the project they could tackle at one time and wanted to do xyz and postpone the rest until they could afford it.

My last experience ended up with me only getting about 25% of the project but with the $150 estimate fee and the higher price I had quoted I made about double what I would have on that piece so I was a happy camper.
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Old 07-13-2012, 11:21 PM   #19
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Re: Itemizing My Bid


I'm new to the residential game, but in the commercial arena very detailed bids and scope reviews are the norm. Open book policies with the owner are also very common. There are still many ways to hide a "slush" fund from the owner.

I'm trying to understand the reasoning behind withholding more of your pricing information in the residential arena. Is it because you are primarily dealing with uneducated home owners who don't understand the unethical aspect of price shopping or don't care? I see no problem with obtaining multiple bids, but shopping a bid is definitely a no-no in my book.

Also, what if a client is a GC? Are you more likely to share information with a GC than a homeowner? I would expect costs to be broken out in the following format.

Excavation
Foundations
Rough Carpentry
Roofing
Siding
Doors/Windows
Site Utilities
HVAC
Elec
Plumb
Drywall
Paint
Finish Carpentry
Accessories
Flatwork
Landscaping

Is that asking for too much. I would expect to see a lump sum price and a detailed description of what that price includes. I also would want to know licensed or not, insured or not, ability to meet schedule. I think these are all reasonable things to request in a quote.
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Old 07-13-2012, 11:31 PM   #20
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Re: Itemizing My Bid


Mostly because they don't understand. They think that they part list an such just appear magically from a computer in seconds. They don't realize sometimes it takes hours if not days to come up with a complete bid.

And then they want it broken down even further only so they can cherry pick out the parts and give your list out to another contractor so he can say "ya, I can do that for less"

Of course he can do it for less. He didn't have to do any of the footwork getting all those lists together.

In commercial work you get paid to do it a lot more than you do in residential

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