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Constantly Getting Under Bid...Am I Expecting More That I Should?

 
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Old 12-21-2014, 05:19 PM   #141
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


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I appreciate your comments Jaws. You've pointed out what I would say is probably the crux of our different perspectives. I also grew up as the third generation in a family business and I was extremely confident in our pricing methods because we had over 60 years of history to draw upon.

With a start-up business and as someone that was never involved in bidding for another company, I frequently feel like I'm shooting blind. This site has been enormously helpful for me, even though I found it nine years after I started working for myself. Saying that other people's pricing doesn't matter isn't really that true, you can fumble around and change your pricing often until you find the sweet spot, or you can find out what the competition is charging. I spent years working for not enough money, or losing jobs because I was asking too much and I didn't know what the competition was doing. That was years of lost income. I'll never do that to my family again.

Businesses have standard rates, there may be a lot of variety in them but it's still a standard. You won't find many lawyers charging $50 or painters charging $100. If someone works for $20 an hour for the rest of their life because they can, when their competition is all billing at $60, then they're an idiot. Their employees and their family just had a much harder life than they needed to.

I used to spend 80% of my time doing fairly high end paint finishes but the work almost totally dried up. I lost 90% of my bids and couldn't figure out why until I had a friend, who did need painting, shop some competitors and also have me bid on the job. The competition had SLASHED pricing and were operating at levels I just couldn't survive at. It was the end of that kind of work for me. I could have gone on another 6 months without landing a job if I hadn't done it.

There are two more things to gain. One is that you can learn about your competitors sales pitch, that's a serious advantage. The other is that you might just learn that they are offering a higher quality product. That's a big one. Many of us build things a certain way because we are trying to stay competitive with pricing, we'd rather be doing it nicer but we're afraid that we'll lose the bid. For me, this is one of the biggest. I'm repositioning into decks and outdoor structures. I feel comfortable with my pricing, largely due to stuff I've read here on CT, but it never would have occurred to me that people would spend $20k+ on a deck if I had just gone into it blindly.

As I said earlier. I haven't had to shop my competition around here because I was able to find the info via other methods. I would if it was the only way to get the info I need.

I'm not trying to convert anyone. I just wanted to point out the reasons that some people will do it as I don't think they're shameful or bad business, if practiced responsibly.
Several things come to mind here reading your post. One is that your post about leaving money on the table for years reminds me of my dad when I was a young kid. He didnt price too low intentionally, he just didnt have any experience in pricing different. He didnt have a base other than my grand dads pricing, and he built good homes but cheaply, and didnt make much money. His years of experience was being passed to me at that young age and still is. I got to skip the pricing too low, so I can relate.

The other is im from a small town, so I have a different perception than most who arent probably.

I certainly am looking at it an a different light at this point, but still highly doubt I could be ok with intentionally misleading someone, personally.

I have had the opportunity to look at a competitors bid during a competitive commercial bid and did not hesitate to decline. I certainly could of used the work. I also never trusted that owners rep who offered that again, ever. A little internal reflection probably concludes a lot of that is ego and self perception, but it also has to do with what I consider right and wrong.

Looking at a competitors bid to undercut them and misleading your competition into giving your sister a quote for a deck arent nearly the same, its just the only thing I can compare it to in my experience.

Something Metro said in another thread a few months ago makes me think about this a little differently. If my mortgage was overdue and I didnt have the money to pay my bills and take care of my family, I cant say for sure I wouldnt look at that bid.

The dude who brought all this all up didnt sound like he was struggling though, just trying to take a short cut. But I can't put myself in his shoes because our situations are very different.

I have a lot of respect for you, Ethan, definitely know your a good guy. Just different perceptions on this one, I reckon.
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Old 12-21-2014, 05:44 PM   #142
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


The small town thing may be the issue. In the NY metro area there are thousands of competitors withing a 50 mile radius, where you live probably not. I think there is more of this in this area.

If I priced shopped someone else there is a good chance -
a: I will never see him again even though he is 10 miles away
b: he has done the same to me already
c: someone else has done it to both of us
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Old 12-21-2014, 05:48 PM   #143
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


Ethan, what was your families business for 60 years? Just curious.

Fwiw, im not the third generation in a family business, just the same industry. My grand dad and dad (his fil) split after 4 years. My dad shut his company down after 10 years and was a PM for 7 years, then started this company in 2008. We hooked up in 2009.
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Old 12-21-2014, 05:51 PM   #144
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


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The small town thing may be the issue. In the NY metro area there are thousands of competitors withing a 50 mile radius, where you live probably not. I think there is more of this in this area.

If I priced shopped someone else there is a good chance -
a: I will never see him again even though he is 10 miles away
b: he has done the same to me already
c: someone else has done it to both of us
There is about 50 legit GCs in a three county area of 40k people, so there is competition, but at all different levels and we all know each other primarily. There is another 200 or so who come and go and think they are contractors
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Old 12-21-2014, 06:41 PM   #145
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


50 GC'S In a county of 40K. I have about 25k in my 2 mile town and about 100 GC'S in myto wn alone. It'sa ve ry different world.
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Old 12-21-2014, 06:55 PM   #146
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


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50 GC'S In a county of 40K. I have about 25k in my 2 mile town and about 100 GC'S in myto wn alone. It'sa ve ry different world.
3 countys equal 40k. 6 towns, 5 lakes.

I was misleading in my post I guess, I mean 250 GCs or round about. I just pulled last years permits from all municipalities and talked to the main two lumberyards about how many accounts they have active. I am looking into it because I am the new membership chairman for the HBA, im recruiting GCs.

I dont consider most of them GCs, that was why I said 200 think they are contractors. Most are paper boys in the worst way.

When Texas required registration in 08, there were 367 registered GCs in these three countys. When I say GC I mean someone with the capability and credit to build a new home or addition , or a major remodel. Not necessarily someone who should be doing those things. Lol
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Old 12-21-2014, 06:57 PM   #147
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


50??? In my town of 5k there are more than 50. 4 within 2 blocks of my house
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Old 12-21-2014, 07:05 PM   #148
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


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50??? In my town of 5k there are more than 50. 4 within 2 blocks of my house
50 GCs in a town of 5000??

Assuming most are traveling for work?
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Old 12-21-2014, 08:34 PM   #149
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


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50 GCs in a town of 5000??

Assuming most are traveling for work?
80-90% travel 1/2 hr or more, and remember it's not like Texas, there are no spaces between the towns. We are all full up. And there are still contractors showing up from NY and PA

I travel 1 hr each way, some go up to 2 hrs into the city.
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Old 12-21-2014, 10:12 PM   #150
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


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Ethan, what was your families business for 60 years? Just curious.

Fwiw, im not the third generation in a family business, just the same industry. My grand dad and dad (his fil) split after 4 years. My dad shut his company down after 10 years and was a PM for 7 years, then started this company in 2008. We hooked up in 2009.
My family had a retail furniture store in Vermont. I think it totaled out to about 75 years when my stepfather sold the store a few years ago. I tried to get into it about a decade ago when my knees started giving me grief but, although I enjoyed many parts of it, I just couldn't see living there for the rest of my life.

I'm amazed at some of the numbers you guys are posting. There are probably a lot more GC's here than I think but it seems like a lot less. I'm definitely more a remodeler than a GC. Last year I think there were less than 30 home starts here in a town of 30k. Things have definitely been slow and we've had a lot of builders moving into remodeling since the recession.
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Old 12-21-2014, 10:57 PM   #151
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


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My family had a retail furniture store in Vermont. I think it totaled out to about 75 years when my stepfather sold the store a few years ago. I tried to get into it about a decade ago when my knees started giving me grief but, although I enjoyed many parts of it, I just couldn't see living there for the rest of my life.

I'm amazed at some of the numbers you guys are posting. There are probably a lot more GC's here than I think but it seems like a lot less. I'm definitely more a remodeler than a GC. Last year I think there were less than 30 home starts here in a town of 30k. Things have definitely been slow and we've had a lot of builders moving into remodeling since the recession.
Our focus is remodeling now. New construction seems to much like a commodity here now. We do a lot of whole house remodels and additions, some commercial stuff. Other than a 1400 sq ft casita we didn't build any new houses this year. Havent since 2011.

Bathrooms and kitchens are where the best margins are for us, just cant get enough of them to make the nut.

Furniture sounds like a profitable gig, but would get old quick id imagine. Thats a hell of a long time to be in business.
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Old 12-21-2014, 11:09 PM   #152
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


I enjoyed reading this thread.

I don't mind shopping other guys because there's a decent chance I'll use them for something in the future if I liked what they were about. I know it's been done to me and I didn't have a problem doing it. Life is long. If I make a friend by giving away some time/info I'm cool with that. It'll come back.

Real life example. I wasted a countertop guy's time no less than three times in a year. Two of those times were jobs I was 99% sure I wasn't going to end up doing. However, after those first three I knew their pricing, lead time, and professionalism, and I was able to hook them up with a job right before the holidays last year. So yeah, I got you for about 6 hours last year, but then handed you a few grand for being a dude about it. That's fair, right?
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Old 12-21-2014, 11:28 PM   #153
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


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I enjoyed reading this thread.

I don't mind shopping other guys because there's a decent chance I'll use them for something in the future if I liked what they were about. I know it's been done to me and I didn't have a problem doing it. Life is long. If I make a friend by giving away some time/info I'm cool with that. It'll come back.

Real life example. I wasted a countertop guy's time no less than three times in a year. Two of those times were jobs I was 99% sure I wasn't going to end up doing. However, after those first three I knew their pricing, lead time, and professionalism, and I was able to hook them up with a job right before the holidays last year. So yeah, I got you for about 6 hours last year, but then handed you a few grand for being a dude about it. That's fair, right?
Getting a sub to bid work is different, but ill bite.

What you did was not deceptive.

As I have said before, I keep back up subs in mind always. I vet them before I put them on the list.

If I schedule my plumber to do a small bathroom remodel and he cant get to it when he said he would, and I use the back up, the back up gets the next good gig if he does a good job on the little job. Im not going to waste their time on a small project and then say screw you on a good paying one. Ive only done it twice, my HVAC sub (long time sub and a client actually) didn't show for a small TI. He said he needed 3 more days. It was a time sensitive project and I scheduled weeks out.

I used my back up. Because of that little job, I used him for an addition to make up for it and sent him a few refferals. I appreciated him stepping up, but for several reasons I liked my old HVAC guy better. The HVAC man knew then I wasnt kidding when I said dont mess around with my schedule. I go out of my way big time to make things go smooth for you, show when you say you will.

The back up got more than a fair shake, imo.

I did the same thing with my plumber a year ago, and switched to the new guy permanently.

My point is, I dont waste people's time. I want it to be clear to everyone I deal with.

I dont show one sub another subs numbers.

I dont show one supplier another suppliers numbers.

If I am seeking competitive bids for supply or sub contracts I make that clear, and I dont ask anyone to lower their numbers.

I am not perfect and dont pretend to be. But I dont waste anyones time or efforts intentionally.

I expect the same. If a prospective client chooses another contractor, thats cool. I would be pissed if they used my scope of work and bid to give to a competitor. Thats why we charge for that, at least while things are good.
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Old 12-22-2014, 12:24 AM   #154
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


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Getting a sub to bid work is different, but ill bite.

What you did was not deceptive.

As I have said before, I keep back up subs in mind always. I vet them before I put them on the list.

If I schedule my plumber to do a small bathroom remodel and he cant get to it when he said he would, and I use the back up, the back up gets the next good gig if he does a good job on the little job. Im not going to waste their time on a small project and then say screw you on a good paying one. Ive only done it twice, my HVAC sub (long time sub and a client actually) didn't show for a small TI. He said he needed 3 more days. It was a time sensitive project and I scheduled weeks out.

I used my back up. Because of that little job, I used him for an addition to make up for it and sent him a few refferals. I appreciated him stepping up, but for several reasons I liked my old HVAC guy better. The HVAC man knew then I wasnt kidding when I said dont mess around with my schedule. I go out of my way big time to make things go smooth for you, show when you say you will.

The back up got more than a fair shake, imo.

I did the same thing with my plumber a year ago, and switched to the new guy permanently.

My point is, I dont waste people's time. I want it to be clear to everyone I deal with.

I dont show one sub another subs numbers.

I dont show one supplier another suppliers numbers.

If I am seeking competitive bids for supply or sub contracts I make that clear, and I dont ask anyone to lower their numbers.

I am not perfect and dont pretend to be. But I dont waste anyones time or efforts intentionally.

I expect the same. If a prospective client chooses another contractor, thats cool. I would be pissed if they used my scope of work and bid to give to a competitor. Thats why we charge for that, at least while things are good.
It's illegal for me to show one sub another subs numbers here in Cali.
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Old 12-24-2014, 12:50 PM   #155
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


Out by me there are few permits required and only recently adopted building codes. Everyone and their brother is trying to do/ bid roof related work and for the most part the area isnt that affluent. I complain all the time about unlicensed/ underinsured/ contractors.

All you can do is market yourself to those who do not shop only price and put your best foot forward during the presentation. ( presentation and meet is a must for apx. $10,000 or so ) I found often times sitting down with the prospect and explain your proposal helps a lot. ( now I need to just do it more often myself)

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Old 01-30-2015, 08:15 AM   #156
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


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You have been a tradesman for 12 and in business for 1 1/2.

Work on sales skills or hire a salesman.

No guarantees from anything in this business, but sales and trade are two different skills.

The customer has to want to buy what you are selling. If they are buying cheap, that's not what you offer so of course you lose. They need to want to buy something other than cheap.

There's good and there's cheap. Rarely do the two exist together.

Most people don't really want cheap, they want inexpensive. They still believe they are getting good. Are they?

The customer who becomes your customer needs to think this way.
I did door to door sales for almost two years long ago. I'm glad not everyone takes that rigorous training or else I probably wouldn't sell 99% of my jobs.
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Old 03-01-2015, 02:48 AM   #157
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Re: Constantly Getting Under Bid...Am I Expecting More That I Should?


Maybe lower your prices a little but you can't compete with prices less than half. In the roofing industry we run into random low prices like that when someone that knows how to put on a few shingles wants to work for themselves or get some weekend work. They usually have no licenses or insurance so they can make a decent profit. There is one HUGE problem with painting though. Anyone with a paint brush and some motivation can pull it off, it may come out absolutely terrible but the homeowners will not know that until the job is done. Just something you will have to deal with in that business. Good Luck getting more jobs.

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