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The Customer Wants A Breakdown

 
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Old 01-26-2009, 01:35 PM   #101
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Re: The Customer Wants A Breakdown


Cost breakdowns = our proprietary business info. Even though we charge for estimates, there is no cost breakdown except for options the client may be considering....the couple of times I've done any sort of total cost breakdown were just total headaches, always having to re-justify our prices...not worth the hassle...very few clients (or "contractors" it seems sometimes) have any understanding of the true costs of running a legit business.

I'm not saying there aren't people out there that can make this work (total open book contracting), but I'm sure as hell not one of them.

When you go buy your next new truck ask the sales guy how much each tire is, or the cost of the carpeting, or better yet, what their real profit on the vehicle is....be prepared to see this...

In our contracts our payment schedule is broken down like below, and yup, we're always ahead on payments...if a client wanted to go cuckoo on us, we've already been paid for all work performed, before it's begun, including profit.

And the last payment is a very small percentage of job, due upon substantial completion, NOT "completion".

* Contract Deposit Payment: (20%) $ 47,232.00

* Second Payment: At finish of demo work and framing stage,
prior tostart of plumbing rough-in, HVAC rough-in, electrical
service upgrade, electrical rough-in and cabinetry
measurement/order $ 53,826.00

* Third Payment: Prior tostart of sheet rock, trim carpentry
and tile order $ 36,375.00

* Fourth Payment: Prior to start of painting, tile installation,
and carpet order $ 36,375.00

* Fifth Payment: Prior to start of cabinetry delivery /installation,
countertop measurement/order $ 36,375.00

* Sixth Payment: Prior to start of counter top installation,
hardware installation, plumbing/HVAC/electrical/low voltage
trim outs, carpet installation and painting touch-up $ 24,625.00


* Final Payment: Due upon Substantial Completionof all
work under this Agreement: $ 1,355.00
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Old 11-04-2009, 11:39 PM   #102
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Re: The Customer Wants A Breakdown


Profit is what the company make to reinvest etc... it is not what is left over for you to buy groceries!
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Old 11-05-2009, 09:03 AM   #103
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Re: The Customer Wants A Breakdown


great thread

Tagging it, so I can come back to read all of it...
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Old 11-05-2009, 09:53 AM   #104
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Re: The Customer Wants A Breakdown


I come across this often. I am not afraid to show a breakdown. It will show each trades cost, materials, what ever else and then my GC cost. The customers I have done this for appreciate knowing what the costs are. I dont typically mark up my subs because my profit and overhead will be sufficient. As far as materials go, retail price is what I charge the customer. I can make a little extra on that with the discount I get. Give him the breakdown and see what he thinks. Just make sure you spell out all the descriptions of work to be done. Clearly show your GC price. If your good and have some great references, he should be happy to work with you.
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Old 11-05-2009, 11:26 AM   #105
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Re: The Customer Wants A Breakdown


If you have perfect subs, don't need to be told what to do, never screw up, always show on time, clean up after they are done - then the minimum you should add is 10%. You are losing money by not tacking a small surcharge on their fee. You have to do work to get them there and then follow up. You should get paid for that.
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Old 11-05-2009, 11:34 AM   #106
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Re: The Customer Wants A Breakdown


Can someone list out more specifically what problems they've had by giving the customer a breakdown? I am usually fairly specific with my bids and give them a breakdown, I haven't had any problem with it
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Old 11-05-2009, 12:44 PM   #107
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Re: The Customer Wants A Breakdown


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Originally Posted by KennMacMoragh View Post
Can someone list out more specifically what problems they've had by giving the customer a breakdown? I am usually fairly specific with my bids and give them a breakdown, I haven't had any problem with it
Some customers:

  • start wanting to negotiate on different items.
  • want you to justify each line
  • start asking you if you can just do "this part" and they'll get someone else to do "that part"
  • think they have the right to know everything going on in your business and how it runs
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Old 11-05-2009, 12:54 PM   #108
 
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Re: The Customer Wants A Breakdown


Mental breakdown !??
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Old 11-05-2009, 01:19 PM   #109
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Re: The Customer Wants A Breakdown


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Originally Posted by KennMacMoragh View Post
Can someone list out more specifically what problems they've had by giving the customer a breakdown? I am usually fairly specific with my bids and give them a breakdown, I haven't had any problem with it
Just what Winchester said.

As soon as the customer gets a breakdown, they start picking it apart with the sole reason of saving money. And in the customer's mind, saving money means you lowering your price.

"How much for just that!?!?! Geez that seems like a lot!"

and

"You're really marking that stuff up thirty percent! Man, what a rip-off! If I were in business, I'd never do that to my customers!"

"Wow! My cousin Fred can do that for half that."

"I don't really see why you need to do this, so we can take it out of the price."



Next time you go to the grocery store, ask for a breakdown on the cost fo a loaf of bread. Let us know how that goes.
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Old 11-05-2009, 07:38 PM   #110
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Re: The Customer Wants A Breakdown


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Originally Posted by 480sparky View Post
Just what Winchester said.
"Wow! My cousin Fred can do that for half that."
I guess I have had experiences similar to this. I did a bid on fixing up some apartments for lady and gave her a bid which I thought was really low, probably about half of what most large remodelers would charge. I gave her a detailed estimate, she picked it apart and said it was too much, so she had her son in law do it for free. But why would she even want me to give her a bid? How am I supposed to compete with her son in law who does it for free?

But take the garage for example, maybe the homeowner wants a breakdown of each item such as frame, concrete, siding, roof, garage doors and openers. Maybe they have some time and want to put on the roof themselves. I wouldn't have a problem with them having me do most of it while they do some of the easy stuff themselves, as long as they were reasonable and could work things out.

But I do see what you mean, some people are just stupid and think they know more than we do about how to price out our work, and they'll pick it apart however they can.
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Old 11-06-2009, 09:41 PM   #111
 
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Re: The Customer Wants A Breakdown


I can't remember a home owner ever asking me for a cost breakdown, but almost every general contractor on the planet does. They either want complete and accurate parts and labor breakdown or they want you to fax them your "price list", ie: what I charge for each switch, dimmer switch, decora switch, occupancy switch, vacancy switch, receptacle, GFI receptacle, TV outlet, Phone outlet, smoke detector, fart fan, ceiling fan, dishwasher, disposal...

This really F'ing irks me, I just say "my estimating software arrives at a grand total, I don't know what the cost would be for each item".
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Last edited by Zinsco; 11-06-2009 at 09:43 PM. Reason: Removed a smudge from the screen my dirty hand made, I just got home and haven't washed up yet, sorry.
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Old 11-06-2009, 09:47 PM   #112
 
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Re: The Customer Wants A Breakdown


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Mental breakdown !??
Nervous break down! I love it! I'm gonna say "I only do nervous breakdowns, sorry".
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Old 11-06-2009, 10:11 PM   #113
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Re: The Customer Wants A Breakdown


I think it depends on the customer. When a customer basically tells me at the initial consultation for the project that the job is mine, or mentions things like after your done with this job I want this and this done, etc. I will give them a break down of costs when I bring over a contracto to be signed.

If the customer seems like a pain and wants to know how much, how long, and if I get a discount at HD or Lowes, their price is a grand total, and it get's marked up because I already plan on them trying to negotiate, and being a pain the entire job.
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Old 11-10-2009, 10:39 PM   #114
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Re: The Customer Wants A Breakdown


I think that if you want to be completely honest with your client and give a break down than go for it. If a customer wants a break down to see what my margins are I would do it on one condition.
Ho- Ashcon we need to see a break down so I can see where my money is going
Ashcon- No problem Mr. Ho I just need to see your checking account to see where my money will be coming from!
If they don't want to show me the money for the project is in order than I don't need to share any more details for the project, because it probably is not going to happen.
An excavator and I were talking about chasing people for money and he said it best..."If I go into sears or walmart and I want to take something out of their store In need to pay for it before I leave. These companies are wealthy beyond belief but me a pion I gotta give everyone I do business with credit"
Why are we second class citizens just because we choose to get dirty for a living? Sorry for the rant these are my thoughts not yours!
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Old 02-17-2012, 10:39 PM   #115
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Re: The Customer Wants A Breakdown


You posted this in the wrong spot here but I am really glad you did. I just read a great post by JF, right in the midst of putting together an estimate to finish a basement.

The example of asking a car salesman to give you a price on the carpet really made sense to me. I have been breaking down my estimates by line item for years now and I now realize that it is not necessary.
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Old 02-17-2012, 10:40 PM   #116
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Re: The Customer Wants A Breakdown


Now the previous post is gone...
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Old 02-17-2012, 10:51 PM   #117
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Re: The Customer Wants A Breakdown


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You posted this in the wrong spot here but I am really glad you did. I just read a great post by JF, right in the midst of putting together an estimate to finish a basement.

The example of asking a car salesman to give you a price on the carpet really made sense to me. I have been breaking down my estimates by line item for years now and I now realize that it is not necessary.
I break most of my basements down by line item and labor and material so the ho can see how we got to the number we did. I wish I didnt, but I have been told several times that we won the project because we were the only ones who did. I like jfs explanation but my goal number 1 is to sell the job. One day Ill be the pimp jf is, maybe, probably not.
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Old 02-18-2012, 11:47 AM   #118
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I break most of my basements down by line item and labor and material so the ho can see how we got to the number we did. I wish I didnt, but I have been told several times that we won the project because we were the only ones who did. I like jfs explanation but my goal number 1 is to sell the job. One day Ill be the pimp jf is, maybe, probably not.

I'm not going to do it anymore. I have bean beat up too many times by my own contract... If that makes any sense.
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Old 02-18-2012, 12:11 PM   #119
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Re: The Customer Wants A Breakdown


I give allowances for fixtures, carpet etc... That is the only breakdown they need to see. They dont ever see labor or what I pay for sheetrock or tile backer. The people who want breakdowns in my experience are looking for ways to eliminate your markup and profit.

I will never give a line item to anyone other than my accountant.
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Old 02-18-2012, 02:02 PM   #120
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Re: The Customer Wants A Breakdown


They can't have one!

Fortune cookie says; "Giving breakdown may cause breakdown"

"Breakdown" prospects are looking for ways to save money (which is fine) as long as they are willing to take a chance that the breakdown agreeable contractor who will likely have to start cutting profits will do the same work as a pro contractor who knows how to price their work so they can stay profitable and stay in business for the long term.

NO breakdowns, get outta here, nada, uh-uh, nope

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