HO is trying to negotiate and "Bid Shop"

14133 Views 132 Replies 28 Participants Last post by blacktop, Dec 30, 2013

Adamsmith007

Discussion Starter · Dec 25, 2013

Ok here's another question. I get a call from a guy wanting a bid to finish his basement. I come take a look and figure out what he wants. He says he's on a budget and wants to do it in phases as money allows. Because he wants to do it phases, he wants an itemized bid specifying the cost for framing, plumbing, electrical, HVAC, drywall, trim, and paint. Normally i would have given him a price per square foot number, or one number for the whole project, but he wanted it itemized. Im am just starting out on my own, so I'm trying to be accommodating and get the job.

So i crunch the numbers and come in at $31k which is $26 a sqft and he does all the painting including trim. Its a low bid, but again i need the job so i bid it low. He emails me back a few weeks later and says he got other bids ranging from $20k-35k all for similar scope of work. I laugh because i know that $20k will not be similar scope of work. he then proceeds to email me and tell me some of the price variance he received for drywall, trim, and one other and wants to know what i can do on price. He says he's out of town until the middle of December so he's thinking timeframe will be closer to the first of the year.

I decide to email him back and play dumb. I tell him I'm confused and ask why he wouldn't go with the bid of $20k seeing as its similar scope. He emailes back and asks if he can call to discuss. I tell him I'm available all day and then i don't hear back from him. That was earlier this month.

My understanding of Bid Shopping is when someone compares bids and tries to get the contractor they want to work with to lower his price by telling him he got lower bids for these items. Here is the problem. If i come down on some of my sub pricing, i will be in the neighborhood of $23 a square foot which is way too low. Im doing framing, hanging doors, trim, and bathroom tile. Everything else i' subbing out and am not flexible on price. In the email he said he found a couple guys who do side drywall work for a cookie cutter builder in town. Their drywall price was half mine at .50 a square foot for hang, tape, texture. Now i know they aren't licensed and insured, so there is NO way they will work on my job site.

Sooo…what would you do!? Im going to wait until the first of the year and call him and talk. Im not flexible on my price. There is a reason he is calling me and wanting to talk about numbers. He wants to use me as the GC, but wants to get me to do the job as cheap as possible. So here i am in a predicament where i need the money bad…but also want to put my foot down.

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480sparky

· #2 · Dec 25, 2013 (Edited)

You need work, but not that kind. Politely tell the person you're not the person they're looking for. Move on, making better use of your resources. Don't waste any more time on this penny-pincher.

You're a builder, a business owner. You're not an employee. Don't fall into that age-old trap of "Oh, well, at least I'm working and working means I'm making money....."

Being in business is about learning how to recognize your target market (the profitable segment), close the sale (not succumb to cheapskates with carrots on sticks), not putting in 40 hours a week. Employees make money by the hour. Business owners don't.

Lowering your price only sends one message: "I was overpriced to begin with."

If you do lower your price, it should be accompanied with a commesurate reduction in services offered.

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jlsconstruction

· #3 · Dec 25, 2013

Stand by your number, I have no problem helping people price wise but to do that start taking stuff out of the scope of work, never reduce price

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Adamsmith007

Discussion Starter · #4 · Dec 25, 2013

480sparky said:
You need work, but not that kind. Politely tell the person you're not the person they're looking for. Move on, making better use of your resources. Don't waste any more time on this penny-pincher.

You're a builder, a business owner. You're not an employee. Don't fall into that age-old trap of "Oh, well, at least I'm working and working means I'm making money....."

Being in business is about learning how to recognize your target market (the profitable segment), close the sale (not succumb to cheapskates with carrots on sticks), not putting in 40 hours a week. Employees make money by the hour. Business owners don't.

I agree 100%. but don't i have to start somewhere? My last job was the middle of October, haven't worked a job since. Have called all my friends who own their own companies and have worked for a few days and made $400. My credit cards are getting maxed out and my wife is stressed. Im starting to post guns and god forbid my quad for sale. I understand the principle of what you are saying, and agree, but i gotta eat and support my family.

jlsconstruction said:
Stand by your number, I have no problem helping people price wise but to do that start taking stuff out of the scope of work, never reduce price

This is a good idea. Only thing i can really take out would be bathroom features. Other than that, its pretty much drywall and carpet down there.

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Adamsmith007

Discussion Starter · #5 · Dec 25, 2013

480sparky said:

Haha! Somehow i missed this the first time. So true.

griz

· #6 · Dec 25, 2013

Is this the same guy that owns the gym?...:whistling

You are being punked. Somewhere in your presentation you are coming across as weak and hungry.

Give the guy a price with a time line that you need to work with.

DO NOT BREAK THE JOB DOWN BY LINE ITEM.....

except allowances....

When you walk on a job site, inside of about 3 minutes everyone for three counties around should know you are da man....:thumbsup:

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Shellbuilder

· #7 · Dec 25, 2013

Give him the price to frame , demo and cleanup and tell him you'll price the rest after its all framed to see f the numbers come in cheaper. They won't , but what the hell, you got the easy part and make a .5 profit on it without finishing hassles.

Adamsmith007

Discussion Starter · #8 · Dec 25, 2013

griz said:
Is this the same guy that owns the gym?...:whistling

You are being punked. Somewhere in your presentation you are coming across as weak and hungry.

Give the guy a price with a time line that you need to work with.

DO NOT BREAK THE JOB DOWN BY LINE ITEM.....

except allowances....

When you walk on a job site, inside of about 3 minutes everyone for three counties around should know you are da man....:thumbsup:

HAHA non different job. I don't think I'm coming across weak. These are the only two issues I've had with people. Every other job I've bid i've had no issues. I can tell when I'm working with someone who is trying to save a dime, and that's when stuff like this happens.

How else would i break the job down when he wants to do it in phases? I gave him allowances for carpet, and bathroom flooring, vanity, etc, but not sure how i would do that on framing, drywall, trim, etc.

blacktop

· #9 · Dec 25, 2013

griz said:
When you walk on a job site, inside of about 3 minutes everyone for three counties around should know you are da man....:thumbsup:

:laughing::thumbsup::thumbup:

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blacktop

· #10 · Dec 25, 2013

Every time Iv'e seen a job done in stages like that .
In the end it always ends up costing them triple .

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griz

· #11 · Dec 25, 2013

Adamsmith007 said:
...
How else would i break the job down when he wants to do it in phases? I gave him allowances for carpet, and bathroom flooring, vanity, etc, but not sure how i would do that on framing, drywall, trim, etc....

You can't break out your individual costs like that. If you do that is when the shopping starts.

How are you getting people to call you? Seems like you are trying to feed off the bottom of the tank.

Read my tag line, it is the truth...:thumbsup:

Greg has a great one also: I never lost a cent on a job I didn't get...

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Adamsmith007

Discussion Starter · #12 · Dec 25, 2013

griz said:
You can't break out your individual costs like that. If you do that is when the shopping starts.

How are you getting people to call you? Seems like you are trying to feed off the bottom of the tank.

Read my tag line, it is the truth...:thumbsup:

Greg has a great one also: I never lost a cent on a job I didn't get...

So if someone says can you break down the price for each trade or sub, just tell them I don't do that and give them one number? Then if they want to move forward in phases, then charge them for each phase after completion?

Live_oak

· #13 · Dec 25, 2013

Work is work. It's not a Miss Congeniality contest. You don't have to be "nice" to get jobs, just professional and courteous. Appear to be knowledgeable, explain why you are the best choice for the job, and be firm and set the rules. You gave in and started playing by the HO's rules, and he's using it to his advantage.

"I'm sorry, I don't break down quotes as I find that gives homeowners a false view of what it would cost were you to do the jobs separately. You're getting the "project discount" now. If I have to bid the jobs as separate projects, then I will have more overhead for coming to the job site so many times and you'll see that reflected in higher quotes to separate the jobs out."

If you haven't had a GC job since October, perhaps you ought to take a look at some of the marketing posts. Or just do some old fashioned cold calling of your past customers.That's where your future jobs will lie, not with these doofuses that you're fooling around with. You did send them Christmas cards with a couple of your business cards enclosed, right? Or give them a call thanking them for their business this year? Offer to give them a small referral for connecting you with family or friends that have projects coming up? If you're not getting referrals from past customers, it's time to find out why. NOW.

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griz

· #14 · Dec 25, 2013

Adamsmith007 said:
So if someone says can you break down the price for each trade or sub, just tell them I don't do that and give them one number? Then if they want to move forward in phases, then charge them for each phase after completion?

Yes & Yes.

Blacktop got it right...:thumbsup:

Trying to complete a job using this method can get very expensive.

This is a tough time of year to bid work. People know that.

Don't jump too fast on future phone calls.

Can you go to work for someone until work starts rolling?

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Adamsmith007

Discussion Starter · #15 · Dec 25, 2013

griz said:
Yes & Yes.

Blacktop got it right...:thumbsup:

Trying to complete a job using this method can get very expensive.

This is a tough time of year to bid work. People know that.

Don't jump too fast on future phone calls.

Can you go to work for someone until work starts rolling?

It is a very difficult time to try and start a company. I live in an area where the economy is still slow. I started my company last spring and it has kept me busy, but winters are slow around here even if you are well established. Everything just slows down.

I have a buddy who does pebble stone flooring, concrete staining, and some other specialty type flooring that i just started to work for. Doesn't pay great, but some money is better than no money.

BThomas

· #16 · Dec 26, 2013

Adam
If you are legit than you have carrying costs that don't stop just because work does.
Sitting home gets you deeper in debt.
That said - I do agree with what the others are saying - But
I would line item every part of the job. The total will be much more than the original quote as the original quote was a package deal that you had control of and a line item deal you have no control of.
Line one - plans and permits
Line two - any demo or prep
Line three - Supply framing material and install of same
Line four - Plumbing rough
Line five - Electric rough
Line six - Drywall
Ect ......
Make sure you can make a profit or decent wage on each line item and let him choose what lines he would like you to do and which ones he will take care of.
Make him the GC and yourself a sub.
Let him know that he will need to make sure any and all those working are insured and carry workers comp. Make him aware that it takes time and effort to schedule and co ordinate the project and that if you do it you need to be compensated for you time.
Been there done that
Bill T

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ArtisanRemod

· #17 · Dec 26, 2013

Stop chasing work you don't want. Even if you get this job it has nightmare written all over it.

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ArtisanRemod

· #18 · Dec 26, 2013

BThomas said:
Adam
If you are legit than you have carrying costs that don't stop just because work does.
Sitting home gets you deeper in debt.
That said - I do agree with what the others are saying - But
I would line item every part of the job. The total will be much more than the original quote as the original quote was a package deal that you had control of and a line item deal you have no control of.
Line one - plans and permits
Line two - any demo or prep
Line three - Supply framing material and install of same
Line four - Plumbing rough
Line five - Electric rough
Line six - Drywall
Ect ......
Make sure you can make a profit or decent wage on each line item and let him choose what lines he would like you to do and which ones he will take care of.
Make him the GC and yourself a sub.
Let him know that he will need to make sure any and all those working are insured and carry workers comp. Make him aware that it takes time and effort to schedule and co ordinate the project and that if you do it you need to be compensated for you time.
Been there done that
Bill T

No offense, but imo that is lousy advice. Let the homeowner pick and choose what lines he wants you for? And then you schedule around his other subs? Good luck working behind and in front of a bunch of hacks. You know as well as I do, when subs underbid a job they always are robbing peter to pay paul and are never on schedule.

Jaws

· #19 · Dec 26, 2013

Adamsmith007 said:
I agree 100%. but don't i have to start somewhere? My last job was the middle of October, haven't worked a job since. Have called all my friends who own their own companies and have worked for a few days and made $400. My credit cards are getting maxed out and my wife is stressed. Im starting to post guns and god forbid my quad for sale. I understand the principle of what you are saying, and agree, but i gotta eat and support my family.

This is a good idea. Only thing i can really take out would be bathroom features. Other than that, its pretty much drywall and carpet down there.

We all start somewhere. I did pricework as a sub quite a bit when we got started to get make ends meet. We only get one shot at a rep for being serious business people.

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BThomas

· #20 · Dec 26, 2013

Sometimes you need to take nightmare jobs. It is not like he has any other leads now and he needs the work. I have taken work I did not like when bills needed to be paid. When you start to get behind it takes longer and longer to catch up if you don't do anything.
I remember trimming a house for half what the price should have been because the builder knew there was no work around and if I didn't do it someone else would. And I did a great job even being way underpaid. I knew what I was getting into.
I think Adam is aware of the possible problems. It will be his decision.
Bill T

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