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Bid Mistakes: How To Deal With Bid Dispute

 
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Old 12-01-2018, 12:50 AM   #1
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Bid Mistakes: How To Deal With Bid Dispute


Without too much of a back story on the project, I’ll front load by saying I really like this customer. She’s a great mom and they’re a great couple and I really want to leave them with a finished product they’re proud of and like. That said, I’ve cut them some significant deals in areas of my bid that are starting to bite me in the ass later in the project. The short is this: as a marketing technique, I like to offer 5%- 10% discounts or supplies at cost or some sort of kick back for scheduling with me the day of the bid, for first time customers or referrals. I generally offset that cost incrementally between rooms, so it usually isn’t much of a loss and turns into a win win. I gave this customer my bid and gave a blanket 10% off the bottom line. Because that number was still high for her (as painting usually is), she asked if we could just do it in “phases”, meaning item by item (i.e let’s just do the fireplace, then we’ll do the basement, then the stairwell, etc). It was odd but I took it as a “let’s go step at a time so we can budget correctly.” How this played out was me doing draws from the bid after each item was finished (pay for work completed) because I didn’t know if we were moving onto the next phase immediately or not. As we paid item for item, the 10% off the bottom line was negated due to looking strictly at the item to item prices and not doing the math on the discount. It was both of our faults and they paid full price, which the customer brought to my attention once we were on the final “phase”. So, we’re looking at doing the ceilings. I said let’s make it easy, ill do the ceilings for the 10% ( roughly $230) and we’ll call that fair. I take 2 days outta my week last week, go do the ceilings. There’s a hallway, stairwell (20 ft+ ceilings), living room, dining room, kitchen ceilings. 2 days and I got LR, kitchen, stairwell, hallway cut and rolled. I tried my hardest to blast that with 1 good solid coat. I know, that’s tough and wishful thinking but with the time it was taking, I had to try to get that coat to matter so I don’t lose more days to a bad offer. Well, there’s 5 spots that speckled. And my touch ups flashed. So it needs a 2nd coat. I tell the customer , listen I wanted to be able to get that space done for you for what that 10% covered — but time spent, materials and overhead have maxed that out and everything past this point has to be discussed on what’s fair (I cannot afford to spend another couple days doing free work essentially). Her response was passive and highlighting texts where I said that I would do that space for the discount; though she was still being nice, she didn’t acknowledge the extra cost this and all the other free work is going over my discount. My only response to that was she was right, that I just figured it was worth a shot to try to renegotiate the bid but because I’m a man of my word, I’ll schedule a time to come out and recoat the ceiling and do everything else. I said “just know that time spent is just shy of the 10% and anything past this is completely out of pocket”. She says “all of that sounds great! Thank you! Talk to you next week!”... My problem is this: I simply cannot afford more than maybe another day to do free work for her. I lost opportunities on triple what that discount is worth and I’m giving her more than that discount is worth the second I start that 2nd coat (in basic overhead and time). Now, she has given me a referral to another customer down the street, which has been great for business. I do feel blessed for her as a customer— but I also don’t have my business in order to where I can afford this. Can anyone give me some advice with how to deal with this?I know this is long and I appreciate anyone who reads all of this and responds. I simply need some professional guidance on how it to not burn this bridge while at the same time, not taking such a huge loss. If that means I just do the work, suck it up and make it back on future jobs then okay. But if there’s an approach that’d be less impactful on my pockets, I’d love to hear it. Thanks in advance. -Tim Minor
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Old 12-01-2018, 12:59 AM   #2
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Re: Bid Mistakes: How To Deal With Bid Dispute


i got a headache reading after the first few lines.

the space bar and paragraphs are your friends.

now to your problem...

why in the hell do you go to such great lengths offering discounts on every dam thing....

give them the price & move on....

the pickle you are in now is of your own doing.

suck it up, do the job right & finish it like it was your mom's living room...

if someone can not afford your price for a job it is not your concern.

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Old 12-01-2018, 01:03 AM   #3
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Re: Bid Mistakes: How To Deal With Bid Dispute


Finish the job. Move on. It happens, hopefully less as you gain more experience.

I have a feeling this will work out for you over time.

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Old 12-01-2018, 01:47 AM   #4
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Re: Bid Mistakes: How To Deal With Bid Dispute


Quote:
Originally Posted by griz View Post
...suck it up, do the job right & finish it like it was your mom's living room...
Quote:
Originally Posted by tjbnwi View Post
Finish the job. Move on. It happens, hopefully less as you gain more experience.

I have a feeling this will work out for you over time.
Tom
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Old 12-01-2018, 07:33 AM   #5
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Re: Bid Mistakes: How To Deal With Bid Dispute


Are you painting the ceilings for $230 or $2170 (10% off $2300)? If it’s $230 you lost money the minute you bought ceiling paint. You should have known that up front.

As far as 2 coats, you also should have known that and told the customer the $230 was for 1 coat. Either way, You made a deal you have to keep it. Get it done and move on.
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Old 12-01-2018, 08:58 AM   #6
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Re: Bid Mistakes: How To Deal With Bid Dispute


I would have pulled the discount as soon as they wanted to do the project in "phases."

I agree with those above, finish the job.
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Old 12-01-2018, 10:12 AM   #7
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Re: Bid Mistakes: How To Deal With Bid Dispute


Quote:
Originally Posted by tgeb View Post
I would have pulled the discount as soon as they wanted to do the project in "phases."

I agree with those above, finish the job.
Touche!

Phases generally make the total project cost more, not less.
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Old 12-01-2018, 10:25 AM   #8
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Re: Bid Mistakes: How To Deal With Bid Dispute


Eat it. Nobody is perfect. Do the job, don't make the same mistake twice.

I had a large miscalculation once, cost me over $15k. Did the job.
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Old 12-01-2018, 10:36 AM   #9
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Re: Bid Mistakes: How To Deal With Bid Dispute


Quote:
Originally Posted by Major87 View Post
Without too much of a back story on the project, I’ll front load by saying I really like this customer. She’s a great mom and they’re a great couple and I really want to leave them with a finished product they’re proud of and like.

That said, I’ve cut them some significant deals in areas of my bid that are starting to bite me in the ass later in the project. The short is this: as a marketing technique, I like to offer 5%- 10% discounts or supplies at cost or some sort of kick back for scheduling with me the day of the bid, for first time customers or referrals. I generally offset that cost incrementally between rooms, so it usually isn’t much of a loss and turns into a win win.

I gave this customer my bid and gave a blanket 10% off the bottom line. Because that number was still high for her (as painting usually is), she asked if we could just do it in “phases”, meaning item by item (i.e let’s just do the fireplace, then we’ll do the basement, then the stairwell, etc). It was odd but I took it as a “let’s go step at a time so we can budget correctly.”

How this played out was me doing draws from the bid after each item was finished (pay for work completed) because I didn’t know if we were moving onto the next phase immediately or not. As we paid item for item, the 10% off the bottom line was negated due to looking strictly at the item to item prices and not doing the math on the discount.

It was both of our faults and they paid full price, which the customer brought to my attention once we were on the final “phase”. So, we’re looking at doing the ceilings. I said let’s make it easy, ill do the ceilings for the 10% ( roughly $230) and we’ll call that fair.

I take 2 days outta my week last week, go do the ceilings. There’s a hallway, stairwell (20 ft+ ceilings), living room, dining room, kitchen ceilings. 2 days and I got LR, kitchen, stairwell, hallway cut and rolled.

I tried my hardest to blast that with 1 good solid coat. I know, that’s tough and wishful thinking but with the time it was taking, I had to try to get that coat to matter so I don’t lose more days to a bad offer. Well, there’s 5 spots that speckled. And my touch ups flashed. So it needs a 2nd coat.

I tell the customer , listen I wanted to be able to get that space done for you for what that 10% covered — but time spent, materials and overhead have maxed that out and everything past this point has to be discussed on what’s fair (I cannot afford to spend another couple days doing free work essentially).

Her response was passive and highlighting texts where I said that I would do that space for the discount; though she was still being nice, she didn’t acknowledge the extra cost this and all the other free work is going over my discount.

My only response to that was she was right, that I just figured it was worth a shot to try to renegotiate the bid but because I’m a man of my word, I’ll schedule a time to come out and recoat the ceiling and do everything else.

I said “just know that time spent is just shy of the 10% and anything past this is completely out of pocket”. She says “all of that sounds great! Thank you! Talk to you next week!”...

My problem is this: I simply cannot afford more than maybe another day to do free work for her. I lost opportunities on triple what that discount is worth and I’m giving her more than that discount is worth the second I start that 2nd coat (in basic overhead and time).

Now, she has given me a referral to another customer down the street, which has been great for business. I do feel blessed for her as a customer— but I also don’t have my business in order to where I can afford this.

Can anyone give me some advice with how to deal with this?I know this is long and I appreciate anyone who reads all of this and responds. I simply need some professional guidance on how it to not burn this bridge while at the same time, not taking such a huge loss. If that means I just do the work, suck it up and make it back on future jobs then okay.

But if there’s an approach that’d be less impactful on my pockets, I’d love to hear it. Thanks in advance. -Tim Minor
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Now to the answer: You made your bed, now lie in it. Consider the loss as tuition in the School of Hard Knocks.


Grow a pair and finish the job. If one mistake like this is going to put you out of business, you have no business being in the business.
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Last edited by 480sparky; 12-01-2018 at 10:39 AM.
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Old 12-01-2018, 11:54 AM   #10
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Re: Bid Mistakes: How To Deal With Bid Dispute


So how much are you actually losing? A couple days of work? Weeks worth of wages? Not really sure from your story.

As for losing money, you haven't even begun to lose money if it is as minor as it sounds. Wait until you do free work for months on end, then get back to me.

I always figure I'll be out a few extra days on any job. It's just part of working by yourself. You can only do what you can do.

The whole discount thing and then phases, was doomed from the start. I knew from the first couple sentences what you were going to say.

As for a solution, just go make some money on the other job and then go back and finish. They should understand. I've given free stuff away as most have, but with the understanding it would be done on a fill in basis. Most folks understand.

We have all given discounts, but not purposefully enough to hurt the bottom line.

And when companies give a 10 percent discount, they have probably raised the price by 20 percent anyway and made more money.

Stick around. You haven't done anything any of us haven't done. A few months on this board and you will be making more money and getting better clients. This place is full of successful contractors. It rubs off.

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Old 12-01-2018, 12:34 PM   #11
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Re: Bid Mistakes: How To Deal With Bid Dispute


You're going to have to do what you agreed to... can't afford it means you're not charging enough... it sounds like you're in the phase of thinking what's left over after everyone else is paid is what you're paid... you've got that backwards... that's the PROFIT from the job that you pay your company that goes towards things like Capital Reserves, Emergency Fund, Equipment purchases, which would be there to cover any issue like this... YOUR PAY should already be incorporated into the numbers...

Going forward, you can make up the income for the two days by incorporating it as a cost in your next few jobs the same way you would if materials went up, or gas went up, or insurance went up... your business would need to recoup these costs to continue to operate... this is no different...

Last edited by KAP; 12-01-2018 at 12:43 PM.
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Old 12-01-2018, 01:13 PM   #12
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Re: Bid Mistakes: How To Deal With Bid Dispute


Hi everyone— I fell asleep and a oke up to some very direct responses that were thoughtful and helpful. Let me address some of the questions and issues:

1) I’m writing this from my phone. The format is a little basic and didn’t realize my line breaks and stanza choices (&#x1f611 would be that problematic for people. As an English major, I apologize. It won’t happen again.

2) The $230 is the 10% off the entire bid (roughly $2300 for entire job). I do realize A) that’s cheap for ceilings, B) that hoping I could land 1 coat was super wishful (I was close and I’ve done it before but I know that’s not typical or something I should have even aimed at) and C) the whole phase thing should have taken the discount off the table completely. Learning curves and trying to be easy to work with. I think I just attempted to talk about adjusting the bid at the wrong time and wasn’t successful so I was trying to be accommodating for a customer that helped me and my family out a lot with work.

3) I just passed my 1-year mark for contracting full time. Before this , I was a college boy aiming at desk jobs but once I saw what kind of money is in this field, and with degree in hand and no better offers, I started my own LLC and decided to give this a go on my own. Now I know, that’s not that long clearly; I’ll be the first to admit I make some rookie mistakes. A lot. However, the discount is something i developed super strategically and it usually pays off with traditional marketing costs (ie give up 10%, offset by scaling labor costs so that 10% is more like 3% = word of mouth marketing which on sites like thumbtack, i’d pay equally for new media marketing strategies anyway. All trial and error. 7 times outta 10, it produces work for weeks to come and leaves a good impression). That’s not me saying it’s not costly, that’s me saying advertising overhead is a thing that I try every route to cut down and see what makes more sense in the long run. This job produced another 5-6k job around the corner, in a 500k-1.5 mil market that i’d love to continue to corner. Even with the 2 days lost and couple more days to come, I’d still say it was worth it— both in lessons learned (ie caveats on 2nd coats on ceilings, keeping track of the discounts, etc) as well as word of mouth and future business in that area.


Now that all of that is addressed, I appreciate the constructive criticism and feedback. Its given me some perspective on this sort of thing just being a thing and understanding everyone’s been here, some in way worse months/thousands of dollars of loss. That makes me realize I’m probably pretty fortunate that this is all I’m losing and not a lot more. I’ll be sticking around this forum so I can continue to get more and more feedback and hopefully, figure out some better techniques to avoid these sort of things. The update on the situation is this:

Customer left it at “that all sounds great! Thank you! We’ll talk next week” yesterday afternoon. Woke up this morning to a text from her saying “I talked with my husband and because your so slammed, you don’t need to worry about finishing our ceilings. I’ll leave your supplies and materials by the garage and you can grab them when you go to Leila’s at some point.” I had already read all these comments so I replied by saying I’d really like to finish the job for them and not leave them with unfinished work, so unless this has to do with something else— I’d like to finish the job. She says “no worries it’s not a problem”. I explain that I don’t like to leave things unfinished, and she still says it’s okay. I feel like there’s some sort of miscommunication because I’m offering to finish there place at no cost and now they don’t want that. The ceilings don’t look horrible, it’s just the lighting that shows the touch ups when looking at them at an angle. Is it worth me trying to talk about it in person with her or am I just being too nice about all of this and should take that response as a blessing that I don’t have to do all that work?

I know a lot of this business is integrity and follow through, so it doesn’t rest well with me how this whole thing is playing out. I know I’m probably being way too considerate but I also don’t want people saying “Tim was great and did great work until the very end.” I want to build a good reputation in my community. My girlfriend and dad are saying just finish the work, you guys are saying suck it up and finish it— I want to finish it and leave them with a great looking place. What’s next step? I feel like if this is leaving a negative impact, it could get to my other customer down the street and affect that project too. But I may be over thinking all of this.
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Old 12-01-2018, 01:29 PM   #13
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Re: Bid Mistakes: How To Deal With Bid Dispute


I never worry about the cost to bring a job up to my standards regardless if the client is okay with it as is, that's not acceptable to me. It would concern me as to why they wouldn't allow me to correct the issue. But I don't ask I just do it.
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Old 12-01-2018, 01:31 PM   #14
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Re: Bid Mistakes: How To Deal With Bid Dispute


Well, whenever you tell your personal/business problems to your client, if they are nice, they now feel awkward about you coming in to finish, since you told them you're losing money.

Should've just kept your mouth shut, cowboy'd up, and finished the job. Learned from it, and moved on.

Attempting to renegotiating a contract mid-project, because you bid poorly, is considered extremely bad form by professional contractors and customers alike.
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Old 12-01-2018, 01:52 PM   #15
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Re: Bid Mistakes: How To Deal With Bid Dispute


You’re right— it didn’t feel good having to bring all of this up, the same way it didn’t feel good noticing my discount was honored until everything was paid for. That said, I tried my best to communicate through my mistake. Maybe a little too transparent, but I was being honest. I wasn’t pushy and I agreed she was right; that I said what I said and that I should honor it. It’s a little off putting she doesn’t want me to finish the work but then again, they’ve been rehabbing this house for a year now, they have a new born and the holidays are coming. I’m sure they want some peace and quiet back. If there was a way for me to finish it, I would and if I could go back a few weeks and do a few things differently and not try to cut them discounts left and right, I might. I’m new to all of this so I’m really just trying to get off the ground and start making less mistakes with my price points. In retrospect, maybe I shouldn’t have approached her about the 2nd coat. And maybe I shouldn’t have stretched myself this thin. The hope is I learn from this.
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Old 12-01-2018, 02:23 PM   #16
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Re: Bid Mistakes: How To Deal With Bid Dispute


There comes a time when you as the "professional" has to make a judgement...such as complete transparency vs business acumen.

When my calculations went wrong on my 15K mistake, I had to think long and hard about approaching this. I talked to another contractor friend of mine about it. He's not the best guy for this type of discussion, but it put things in their place. He recommended going back to the client to discuss it....that only furthered my decision to keep it to myself and swallow the loss.

If you want to be seen as a pro, don't go around (except here on CT, but be prepared to take heat here too) wearing your problems on your sleeve. If you go to a doctor, lawyer, police, fireman, clerk at the grocery....so you really want to hear their list of issues....not really....you just want them to do or fix whatever it is that you want them to do.

Be like a good bartender, sure, you can listen and commiserate when they bring stuff up, but you are there to do your job....ever hear a professional bartender bring up all of his problems to clients....No.
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Old 12-01-2018, 03:13 PM   #17
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Re: Bid Mistakes: How To Deal With Bid Dispute


Quote:
Originally Posted by griz View Post
i got a headache reading after the first few lines.

The space bar and paragraphs are your friends.

Now to your problem...

Why in the hell do you go to such great lengths offering discounts on every dam thing....

Give them the price & move on....

The pickle you are in now is of your own doing.

Suck it up, do the job right & finish it like it was your mom's living room...

If someone can not afford your price for a job it is not your concern.
x 2
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Old 12-01-2018, 03:44 PM   #18
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Re: Bid Mistakes: How To Deal With Bid Dispute


I like that comparison. You’re right— there’s a time and place for full transparency. And there’s a time and place to keep your mouth shut. I generally carry myself professionally as that bartender, unless I’m crossing a road where I need to do risk management.

From my perspective, I’ve kept my head down and worked quietly for them until this point. Maybe I’ve given off a different impression with how I’ve portrayed the last 24 hours, but the last 3 weeks on this job have been pleasant, productive and as black and white as possible. However, there was 5+ items I didn’t bid that were late additions, that I gave great prices if not minimal prices to complete because they were late additions and I was already working on the space (ie the entire fireplace, heat register, two stained doors to white, stained trim to white, basement bathroom ceiling, basement bathroom trim, touch ups on bathroom walls, triple coating basement ceiling and the up stairs hallway). All of these things were a “oh and can you possibly get this done too?” And id say sure let’s just call ____ $50 on top of the item I’m doing or oh that’s no issue I’ll just touch that up quickly or I’ll be over after I’m done at this other site to recoat that. So I see most of this as a snowball that, when approached at the end of a bid and we both see nope— I didn’t give them the discount, in my head I’ve kept track of these late additions and the oh I’ll just do that real quick’s and the spotty work from the drywallers who didn’t sand, or contoured trim with mud because their cuts were off... frankly, the discount has been compensated for already. So that’s when I decided to talk to her.

I didn’t give a sob story, I didn’t ask for a deposit up front, all materials have been at cost with receipts—I’ve been more than reasonable. And that’s what I was going at with talking about the 2nd coat— let’s be reasonable. I said let’s meet somewhere in between my costs and expenses and what’s fair, but that didn’t land. So I sucked it up and said I’ll do it regardless, then this morning they said they’re fine.

I think maybe we’re both being too considerate and you’re right, maybe that made them feel guilty or uncomfortable putting me in that position. But it wasn’t like I told her I’m not going to eat next week if I don’t get paid more or that I’m gonna lose my house or my kids won’t be clothed; I didn’t put a whole bunch of personal things into the context. I put the business matter at hand on the table and when the discount is $230 and I’m looking at $600-$800 in costs to do this, it would be nice if we could discuss that difference rationally. It was a 2 text exchange, it didn’t stick. It is what it is...

I really need to get better at putting enough cushion in my bids to compensate for a discount or for miscalculations on wall time, room time, etc. I thought I did, but I didn’t on this one. I did okay on the other bid but this one I screwed the pooch... How do you guys make sure that cushion is in there appropriately? What’s the best percentage to use for margins? Do you guys adjust bids based off assessed value or is there some blanket ft2 formula most people use? I generally check the value of the property and depending on how long I have for the walkthrough, I’ll measure the ft2 and bid the square footage accordingly m or if I’m short on time— I’ll eye ball it. After all is said n done, I tack on 20% -25% p.m. In certain cases, I give the discount (ie if I’d like to get into that market, if they found me on thumbtack and the discount is for a good review, if I really need the work and want to land the bid, etc). My bids include itemized prices ( ceilings=, trim=, walls=, room cost 😃, supplies aren’t included in those costs and I generally margin supplies unless they provide them. So where or how can I add some cushioning in my bids to stop having these issues?
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Old 12-01-2018, 05:07 PM   #19
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Re: Bid Mistakes: How To Deal With Bid Dispute


Did you say 3 weeks and the total job price was 2,300 dollars?

With 800 in expenses, that's nuts.

You will never make money at that rate. Ask me how I know.

Even though pricing varies and we dont talk pricing, I can reliable guess most guys here would think that was nuts.

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Old 12-01-2018, 05:09 PM   #20
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Re: Bid Mistakes: How To Deal With Bid Dispute


Quote:
Originally Posted by Major87 View Post



I simply cannot afford more than maybe another day to do free work for her.


I really need to get better at putting enough cushion in my bids to compensate for a discount or for miscalculations on wall time, room time, etc. I thought I did, but I didn’t on this one.
Sheer VOLUME of TEXT .... usually a good indication of the 'Victim' mentality lurking under the surface.

You can't afford not to finish the job. The fancy salesman discounts, as incentives, don't mean chit if you can't finish. You are not doing it for free. This is an accounting trick in your mind for sympathy. You are however doing it for less per hour or sqft compared to the typical job.

Boo phunking Hoo, you didn't make as much as you bid it for. Your options there are all on you. You could have cut corners, moved faster aka rushed through the job, hit the owner up with higher than normal extra prices (which is not necessarily unfair if you can't produce the quality at the bid price) or as most have suggested man up eat the losses. Learn from your mistake and move on.

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