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Discussion Starter · #1 · (Edited)
Somebody did this:

Gave out 7 quotes 3 weeks ago, took big gulp and handed out quotes that were normal prices + 20% more! Example normal quote on a job would have been $1100 but instead quoted $1320.00.

Results
Week 1 - Customer A going back and fourth with changes and questions on project, Customers B,C,D,E,F,G no contact.

Week 2 - Customer A still finalizing issues. Customers B,C,D,E,F,G no contact.

Week 3 - Contact customers B,C,D,E,F,G left message telling them about annual April "beat the tax man savings advertisement" that is coming out in a few day where I advertise up to 15% discount on all new customers projects booked by April 15 and scheduled to start before May 15th. Wanted to let you know about it since it is only fair that you should be able to take advantage of this advertisement just like anybody else.

During Week 3 -
Customers A finalizes issues and signs contract at full price + the 20% extra profit.
Customer B has already booked another contractor and work almost done.
Customer C,D haven't heard back from yet.
Customer E wants to take advantage of the opportunity but is going out of town and says will call back in about a week.
Customers F,G, pull trigger on projects, jump on the savings opportunity and enthusiastically thankful for telling them about it. Sign contracts taking advantage of 10% discount which nets to full normal full price plus additional 10% more profit.


Is this crazy, is it unethical, is it anything at all even to be talking about?
 

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Painting Contractor
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Unethical? Yes. Unusual? No

Seems about par with how most people operate their business's today.

I always feel pretty good about myself and my company when I can give a customer a real discount and tell them with confidence that the job wasn't padded to account for the promotion.

I also hesitate to even offer discounts knowing that the average shrewd consumer thinks that when you are offering a discount you are padding to make up for it... I still offer discounts.
 

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Mike Finley said:
Is this crazy, is it unethical, is it anything at all even to be talking about?
I think it shows savvy. What's even remotely unethical about it?

BTW, what the hell is a 'normal' price?
 

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Painting Contractor
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PipeGuy said:
I think it shows savvy. What's even remotely unethical about it?

How is decieving your potential customers savvy? Doesn't seem like a good way to start a working relationship.
 

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This tactic is common as dirt, most of the big stores do it. Say that they normally sell at a 25% discount. When they have that BIG 50% OFF SALE do you think that it is off of their normal prices? No, It's 50% off of MSRP. Read the fine print.
 

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Humble Abode said:
How is decieving your potential customers savvy? Doesn't seem like a good way to start a working relationship.
I'm sorry, I missed the deception. What part of those scenarios is deceptive?
 

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Discussion Starter · #7 ·
PipeGuy said:
BTW, what the hell is a 'normal' price?
Normal price would be exactly what you would quote a job for right now today if you were asked. Based the way you would price a job. However it is you normally come up with it, cost + 15% profit? Whatever you would do.

Example $5000.00

Normal + 20% = $6000.00 Tacking on additional 20% pure profit on top of what you would normally quote.
 

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Discussion Starter · #8 ·
Humble Abode said:
How is decieving your potential customers savvy? Doesn't seem like a good way to start a working relationship.
Do you consider the decievement to be the part about jacking up your initial quote by tacking on additional 20% profit above and beyond what you normally would, or the part about calling them back to tell them about an advertisement that really will never be coming out?
 

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Mike Finley said:
Do you consider the decievement to be the part about jacking up your initial quote by tacking on additional 20% profit above and beyond what you normally would, or the part about calling them back to tell them about an advertisement that really will never be coming out?
The way I read it is the additional 20% markup was above and beyond what the contractor would normally markup for profit.

The job is bid at $1500, the contractor has already added in all their materials, labor, profit, overhead, etc. to that $1500 bid, now they add another 20% to the bid then call back later about some fake 10% off sale to entice the customer to have another look at their bid. Leaving them with what amounts to a 10% padding. At least thats how I read it. This interpretation sounds like gouging to me. If I have jumped to conclusions please correct me.
 

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Remodeler
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Who is to say Mike's scenario price isn't 30% lower than the so-called going rate to begin with? What is wrong with making more money? If the customer is happy, the jobs done right and on-time. That is what matters. If Mike can make the customer feel like they got a good deal they actually did!
 

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o.k. let's iron this out a bit.

If you normaly sell materials all year round for a specific price, and then jack it up to discount...then good luck on the Karma issue.
but this is acceptable :
No, It's 50% off of MSRP
Now let's remember one thing.....we live in America...and people are welcome to get many many bids to choose from no matter who has a "sale" or not.

What it comes down to in your contract is:
"I will do _________ with these materials ________ for this price________"
And they have a CHOICE to go with it or not.
If someone is alot higher than other bids, then they will not get the work. And if they do, then charge whatever you want in the future if you think you are worth it and will get the work.
It doesn't matter if someone is having a big sale or not....I still shop around.....
If I don't, than what is protecting me?

Ethical......why not?
 

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Repair/Remodeling Tech.
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If the price was raised 20% SOLELY to lower that to only 10% and call it a "discount", then thats unethical and dishonest. Give an honest bid, including whatever profit you want to make, be it 5% or 500%, and that's your bid. Period.

HOWEVER...If the price was raised 20% due to higher overhead (which is happening, fuel alone could raise you 20%) AND if everyone's(all customer's) prices are going up 20%, then that is inflation, plain and simple. It sux, but it happens.

Now as far as a false claim on an "upcomng offer" just to get work, I don't do it, but I suppose it's not illegal (that I know of) so more power to anyone who feels good about doing this.

BTW Mike I was glad to see this wasn't you. You had me worried for a little bit.
 

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My vote is slimy.

I think alot of people will recognize it for what it is-- a cheap sales tactic. I couldn't do it. Showing MSRP and a sales price is one thing, but artificially inflating the price with the idea of coming back later with a "special" is too far out there imo.

Sad thing is, the technique works. People love their perceived discount. I always tell people the number is the number, it's where I have to be, nothing more/nothing less.
 

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Is there anything wrong with an honest days wage for an honest days work?
I think that I will stay with the old way, without all of the shenanigans.
Most of my customers are older, wealthier and tend to be businessmen. They see through this foolishness in a heartbeat.
Labor is pretty consistant, product quality is in the hands of the consumer. IOW, a $99.00 toilet cost as much to install as one for $2,000.00.
 

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Painting Contractor
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Mike Finley said:
No, I think you have a good grasp of the circumstances. I'm suprised you have a problem with the pricing and not the fake advertisement though.

Mike,
I have a problem with the pricing AND the fake advertisement.

After I posted I wanted to edit and put in both at the begining.
Thats kind of what I was getting to with this
Humble Abode said:
then call back later about some fake 10% off sale to entice the customer to have another look at their bid.

The pricing is gougeing IMHO and the fake advertisement is just that.
 

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Back from the dead...
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R Kaller would be salivating over this thread. :eek:

I once worked for a guy who had me estimating jobs. He (unknown to me) had sent out tons of fliers advertising 'up to 50% off'. I would do the take-off, and submit the bid. The client would ask me, how do I get the 50% off? I looked like a deer in headlights, and excused myself to the truck. Called the boss, he said essentially, from now on, figure the price, and tack on a huge percent, so when they ask you, just deduct it and there you go. Holy $hit, you got to be kidding me. How do you think this works I ask? He said well I've seen other lfiers like that, it has to work somehow. Geez...... I didn't last long there.
P.S. Above mentioned boss is now in jail for mail fraud, tax evasion, and money laundering.
 

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Right where he should be!
 
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