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Contractor
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Discussion Starter · #1 ·
I haven't formally introduced myself to contractortalk but I've been fairly involved. To sum up my history I could say I'm a young contractor and I've done well estimating and providing bids that include all overhead and profit etc etc etc. I feel confident charging what a legitimate contractor should charge. Here is my dilemma/question: As a young contractor I still have a lot of WOM clients who are primarily interested in price. The toughest sale I have right now is informing clients that my business is legit and I have to pay significant taxes on all the work I perform. How do you inform/sell a client on the fact that your price isn't just X$ per hour, that your price includes satisfying the insatiable federal government? I'm bidding a bathroom remodel right now which I know could be done under the table for almost nothing...but it a legit contractor does is legally the price almost doubles...how do you deal with that?
 

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" How do you inform/sell a client on the fact that your price isn't just X$ per hour"

Tell them your jobs are not bid on an hourly rate, regardless of how you bid.

There are many factors that go into a bid:
overhead
materials
labor
accessibility
profit margin
markup
size of the job
location of the job... Just to name a few.

And to be honest this should never come up unless they specifically ask you. If you have done work for them in the past at an hourly wage then politely explain to them how your business has changed and you no longer work by the hour but have opted to start giving bids for work from now on. Tell them you have re-structured the business to be able to expand and acquire more work. If at that point they still don't accept it, move on to better clients.
 

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On the flip side I've NEVER known anybody in this business to do a small job with out a contract etc etc etc....:whistling:laughing:
 

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GC/carpenter
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I think you after you raise the price because you went legit they may not want to use you anymore. They probably only used you before that because you WERENT legit and your price reflected that.

So move on find the new type of customer that wants a legitimate contractor. But first at least give the others a chance. You never know they may want you to still do there work.
 

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People who believe a "cash" payment project can be executed substantially less than a check payment project have not a clue about their business costs.

How does cash mysteriously make all the costs go away or reduce them? Everything still costs the same amount regardless of how you are paid.

Sure you can circumvent Uncle Sam to a degree, pocket cash and save on your own end, but why are you willing to be a criminal by intentionally evading your tax obligation to save some stranger money?

You're not in business to save people money, you're in business to make money.

Be a pro, present yourself as a pro, charge like a pro and do a pro job
 

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and tax is an overhead cost, it's buried in your numbers, unless your business is required to collect sales tax, then you show that tax on your invoice.
 

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Contractor
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Discussion Starter · #10 ·
thanks for the responses guys. i guess my real question was if it's legal/feasible to show the burden of business in a quote. we all know the math... if there were no business burden i could do "x" for "$" but I'm finding it tough to sell home owners on the fact that it costs more than my working wage to stay in business. does anyone. break down their their business costs for customers or should i walk away and find better customers?
 

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Hair Splitter
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thanks for the responses guys. i guess my real question was if it's legal/feasible to show the burden of business in a quote.

If you have to go that fair to convince someone that your price is worth it, you need to move on to a legit customer. Any customer that you have to prove that what you are charging is a fair price isn't someone that you want to work for.

we all know the math... if there were no business burden i could do "x" for "$" but I'm finding it tough to sell home owners on the fact that it costs more than my working wage to stay in business.

What you need to focus on is not price but value. Sell yourself and what you bring. Sell what separates you from your competition. If you find that you are always battle price during a sell, you really need to up your price more and weed these customers out of the equation.

does anyone. break down their their business costs for customers or should i walk away and find better customers?
Never. It's none of their business what my costs are and would they really understand my costs just by knowing what they are. It only serves to bring up more questions.

My advise is to not be afraid to walk away from a potential job. It may hurt at first and money might be tight, but after a bit of time has passed you will begin to build a client base that respects your time and efforts and you will never have to worry about explaining why you charge what you charge.
 

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i wouldnt explain anything about my prices to a customer....any info you give him will be used against you. if a customer is questioning your pricing and you give a break down you will find they question every item of that price breakdown....ive been there several times and it only gets worse when you explain and break down expenses.

give your bid...either they choose you or not

some customers are willing to pay full price for a legit contractor....find those customers...
some people want to pay 1/2 price and look for the deal.....these are not your customers...screen them out and move on asap

you choose your customers.....if your customers are questioning your prices heavily i would change the way you operate...your attracting people who ARENT your customers

ive tried to explain why i am better and cost more to homeowners who look only at price...i cant say ive ever turned a price only customer into a quality/service minded customer....either they get it or they dont....ive seen them rolling their eyes at me while i show them parts out of my van and try to explain the differences.....these people think every tradesman is the same....they dont realize bids are never apples to apples
 

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I don't get how you are going to show them your business burdens, are you going to show them what you pay for gas, vehicle cost, tools ect ect on your invoice? Even if you did something tells me the customer isn't going to care.

You just have to factor these cost into your estimate and go with it, if they don't like your cost move on.

As far as not putting Tax on the estimate then trying to put it on the final bill that sounds sleazy to me. I would be questioning why all of a sudden you are charging tax if it wasnt shown on your estimate.
 

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Discussion Starter · #14 ·
this is more of a rhetorical question/thread than anything. it's probably just beating a dead horse also. the question is really a sales question. when you know you're bidding against illegitimate contractors, would it help to try to prove to the customer why my cost is more. i know the answer deep down, just wondering if anyone has found an effective way to deal with a costumer who has the money, is not primarily interested in the lowest price, but is fine with paying a "contractor" under the table in order to save a buck. I've already submitted my bid on this job and have walked away not expecting a call.
 

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I had a tree trimming service do some work for me.

I got an estimated price that listed the work to be done (trees trimmed, trees removed, shrubs removal, stump removal, disposal, etc.) that was totaled and the estimate stated that it was "Subject to applicable taxes). As usual, it ended up being more more work than anticipated since a little extra as approved.

It took almost a month to get billed out. When the bill came, it was just as estimated and they got around to trying to account for the extras, but it was the estimated price plus appropriate taxes. - I paid it immediately.

A few months later, I bumped into the firm owner and mentioned the extras and he said it was the right way to do it, since everything (mostly labor) was close enough after talking to the foreman. He said it went well and the estimate had enough cushion in it so it was the billed price since there are always overs and unders on estimated price. - He did say the guys liked Bud instead of what I put out for them when they were getting along on the work. I never saw the firm owner excet when he stopped by the job for a few minutes and grab a beer on a hot day.

An estimate is not a bid, but it provides a general scope. The tax is what it ends up to be by legislation.
 

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Hair Splitter
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this is more of a rhetorical question/thread than anything. it's probably just beating a dead horse also. the question is really a sales question. when you know you're bidding against illegitimate contractors, would it help to try to prove to the customer why my cost is more. i know the answer deep down, just wondering if anyone has found an effective way to deal with a costumer who has the money, is not primarily interested in the lowest price, but is fine with paying a "contractor" under the table in order to save a buck. I've already submitted my bid on this job and have walked away not expecting a call.
I don't see the difference. If I have to convince them on any level pertaining to price they are not someone I want as a customer.

If they are wrong l willing to pay cash under the table, they are already screwing me. They are assuming that I am willing to take the risk of not paying taxes on the job to make a few extra bucks. A customer who wants me to break the law to save then ac few bucks is not worth the time.
 

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ranteso said:
People who believe a "cash" payment project can be executed substantially less than a check payment project have not a clue about their business costs. How does cash mysteriously make all the costs go away or reduce them? Everything still costs the same amount regardless of how you are paid. Sure you can circumvent Uncle Sam to a degree, pocket cash and save on your own end, but why are you willing to be a criminal by intentionally evading your tax obligation to save some stranger money? You're not in business to save people money, you're in business to make money. Be a pro, present yourself as a pro, charge like a pro and do a pro job
The only time cash is good is when the checks are pouring in! What's the point if you need the money? It goes into the account to pay bills anyway.
 
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