[enforcer]

how many times have we been asked this question?
"could you do me a favor and itemize the material cost and the labor cost separately,we want the cost of each window and then the cost of the labor broken down"...
other than its not our policy or none of your business,what do most of you guys say?

 

[genecarp]

It depends on the size of the job, and the vibe i get. As a rule, i do not let the client dictate how i submit my proposal. That being said in some cases it has helped to show the client---ROUGHLY, what mat costs, it often changes there perception that we are pocketing all that profit. To answer your question, i will simply say, "I DO NOT SUBMIT MY ESTIMATES THAT WAY", GMOD

 

[buddy110]

If I have to answer that I tell them labor per wibndow is 100.00 all the rest is tied up in products; windows, coil, caulk, nails trim molding etc.

 

[Duck042]

That being said in some cases it has helped to show the client---ROUGHLY, what mat costs, it often changes there perception that we are pocketing all that profit. To answer your question, i will simply say, "I DO NOT SUBMIT MY ESTIMATES THAT WAY", GMOD

In my experience, the more detailed the quote I give, the more likely I am to get the job. In any case, if I were to refuse to give the customer the quote the way he/she asked, I might as well just turn around and head home instead of wasting my time putting the quote together. The customer would just go with one of the other 5 quotes they got that DID do what they asked - Especially in this economy.

That said, there are guys (including some on this site) who make an amazingly good living by not sharing a lot of information like that, and might very well starve if they had to show the true basis for the quote. Most of the guys I know that get away with just giving a number work mainly with residential customers, and the formula is simple: The less informed or sophisiticated the customerparty, the more these guys make.

I saw you had "siding" in your jobs listing and no offense at all, and not that siding sales is even the worst example of that sort of thing, but when I think of siding salesmen, I always think of the movie "Tin Men" (http://www.imdb.com/title/tt0094155/). :laughing:

 

[DavidC]

I quite simply would not break down what goes into the bottom line cost of whatever job we are trying to sell. My experience has been that the more numbers you give them, the more targets they have to shoot. Our clients will get a very detailed proposal that outlines what we intend to do, sometimes some things that we will not do and anything we expect them to do. It is all summed up with it will cost $XXX.xx.

Try going to a restaurant and asking them to break down the cost of your meal before ordering. Why is it that only contractors are asked to do this?

Good Luck
Dave

 

[welterweight]

I always refer to the old car analogy..i simply tell the customer my price is one price based on materials,labor,and time. i thn make somewhat of a joke by telling them that a car dealer is not going to break down the cost of every part of the car,the labor to build the car,the salesman's commission,the overhead for the dealership,and then the service asscosiated witht hat dealership. that kind of puts it into perspective for the homeowner. if it does'nt i then immediately know they are only using my contract to use on other contractors as a bargaining chip. thats when i get a bit more,shall we say assertive.

 

[buddy110]

Most of the guys I know that get away with just giving a number work mainly with residential customers, and the formula is simple: The less informed or sophisiticated the customerparty, the more these guys make.

That's not only a grossly exaggerated generalization, it's absurd. The more informed and educated a customer is the more they understand value and the more they are willing to pay for the better job.

I quite simply would not break down what goes into the bottom line cost of whatever job we are trying to sell. My experience has been that the more numbers you give them, the more targets they have to shoot.

Try going to a restaurant and asking them to break down the cost of your meal before ordering. Why is it that only contractors are asked to do this?

Good Luck
Dave

highlighted for effect
:clap:

 

[HomeElements]

Xactimate (if you can afford the software, it's pricey)but IMO the best in estimateing technology, estimate accurately while figuring jobs down to the nail (including some waste for handeling) I was wondering if anyone else here uses it. You can print out any report you can think of and (of course a materials list, choose to include or exclude prices) or make your own custom reports.

 

[DaVinciRemodel]

We show a complete spreadsheet with the proposal. All detail is there for thier eys to glaze over - and I do mean "their eye's glaze over".

While I agree with DavidC's analogy: I'm not selling a $100 steak (high end), I'm selling a $100,000 kitchen. Many people can afford a bad (even expensive) meal. They can not afford a bad $100,000 kitchen.

David, I use the restaurant analogy a lot also - "No you can't bring your own steak in for me to cook..." "... there is a difference between a cook at Pizza Hut and a chef at Morton's...", "the service at a fast food joint is different than The Chop House..."

In the case of materials and subs we like to show - line by line - you can't make a phone call and get a comparision - and if you do read them the entire description line.

I also like to show them how little of that total project is really mine!

We show it to them and emphasize:
1. The time we put in.
2. The detail we consider.
3. The cost saving items we consider.
4. How we spent their money - we don't do free proposals! :thumbsup:

 

[Duck042]

That's not only a grossly exaggerated generalization, it's absurd. The more informed and educated a customer is the more they understand value and the more they are willing to pay for the better job.

...and how would they know the "value" you're providing if you're just handing them a number pray tell? :whistling

 

[Duck042]

We show a complete spreadsheet with the proposal. All detail is there for thier eys to glaze over - and I do mean "their eye's glaze over".

While I agree with DavidC's analogy: I'm not selling a $100 steak (high end), I'm selling a $100,000 kitchen. Many people can afford a bad (even expensive) meal. They can not afford a bad $100,000 kitchen.

David, I use the restaurant analogy a lot also - "No you can't bring your own steak in for me to cook..." "... there is a difference between a cook at Pizza Hut and a chef at Morton's...", "the service at a fast food joint is different than The Chop House..."

In the case of materials and subs we like to show - line by line - you can't make a phone call and get a comparision - and if you do read them the entire description line.

I also like to show them how little of that total project is really mine!

We show it to them and emphasize:
1. The time we put in.
2. The detail we consider.
3. The cost saving items we consider.
4. How we spent their money - we don't do free proposals! :thumbsup:

I agree 100% (how about that?)

Detail = transparency = confidence that you're not hiding the ball.

 

[buddy110]

...and how would they know the "value" you're providing if you're just handing them a number pray tell? :whistling

We don't just hand them a number. :whistlingWe do a professional, no pressure, masterful demonstration which explains in detail what they can expect from us and the product in question. At the end of our demo they are left with two choices:
Allow us to perform the work requested or do nothing.

To be fair this is achievable with siding and windows, not with a full service remodeler

 

[DavidC]

...and how would they know the "value" you're providing if you're just handing them a number pray tell? :whistling

One might try selling on something other than a number.

I suspect that if anyone is fielding questions like this more than occasionally there might be a problem in the qualifying process. I cannot compete with guys that are willing to bypass insurance, permits, working for beer money, etc. I prefer not to work for people who's main concern in a project is how little can I pay. Those two groups belong together.

DavinciRemodel seems to have a workable plan for showing the numbers for him. But is that a requested step or something you just normally do? My point is that someone spending $100K on a kitchen is more likely concerned with best value rather than lowest cost.

Good Luck
Dave

 

[welterweight]

One might try selling on something other than a number.

"I suspect that if anyone is fielding questions like this more than occasionally there might be a problem in the qualifying process. I cannot compete with guys that are willing to bypass insurance, permits, working for beer money, etc. I prefer not to work for people who's main concern in a project is how little can I pay. "

those are some great idea's David..i am going to use the "beer money" line.

 

[BamBamm5144]

The reason they want you to break it down is so they can say the to the next guy " Hey XYZ company got the windows for this price and the labor for that window is this price, can you beat it"

When I go to buy a piece of furniture (as I just bought two living room sets last week) I didnt ask the salesman what the cost of materials were and the cost of labor, I just know it comes as one package. Of course I will break down each window serperatly if I bunched a few of them together in one price but I dont need people knowing my costs. There is a point where a homeowner becomes too informed and that point is when that homeowner knows your percentages on a job.

More likely than not, a homeowner asking for a complete price break down will not sign a contract with you no matter how great of a job you do. They want to know if they can get it cheaper somewhere.

DaVinci is in an entirely different area. People that want a 100000 kitchen want the best possible. That is why his approach is perfect for what he does. Why? Because that kitchen needs to last, they see and use it every day and they want some money out of it when they sell the house. They spent a $100,000 on a kitchen so you better believe it is an ego thing. They want people to come over and say oh my lord, your kitchen is amazing. On the other hand, a homeowner buying windows doesnt stare at and admire the craftsmanship on their windows all day and how many times a year do they get opened and closed? They arent going to have people over and say WOW CHECK OUT MY NEW WINDOWS!! ARENT THEY GREAT!!!! Majority of people are looking at trying to get the best value. To a majority of homeowners, a crestline window from HD or Menards is the same value to them as a Kolbe and Kolbe.

Buddy has got it right on. What we need to remember is that we are all in different trades, meaning there are many different approaches and what works in one trade might not work in the other. I am not sure if I could walk into a house and sell a person a 100000 dollar kitchen using the same approach I do when selling roofing siding or windows.

 

[Duck042]

"They arent going to have people over and say WOW CHECK OUT MY NEW WINDOWS!! ARENT THEY GREAT!!!!"

... Now that's comedy!!! :thumbsup:

Bam, I totally agree with you that the reason someone wants a breakdown is at least partially for negotiation purposes. The other reason is so they understand what's going into the job. I don't think there's anything wrong with either of those reasons.

Maybe the thing you could help me understand is why breaking down a bid for siding would automatically leads to losing the job!?!? :blink: If your total bid is 5k higher than someone else's I would think it would be HARDER to justify that without being able to show why they're getting better value for that price (e.g., you're using better materials, etc.)

For a remodel (even a smaller one), and probably for siding and windows, you're using the same materials from the same suppliers at (ballpark) the same price as everyone else. Is this not true for you?

If someone wants the kitchen to have new granite countertops and stainless appliances, and wants a detailed bid to see what those different pieces are costing, that does NOT mean you're going to lose the job. If you know your bottom line, you should never lose money in a negotiation, and I actually welcome that - a HO always feels better about a job where they were engaged in determining the final price.

 

[BamBamm5144]

Duck042 - I am more than willing to explain the different types of materials if I see the other bids. I cant just go on a guys word that he got a cheaper bid without actually seeing it and knowing its the same materials. Your example for the kitchen, you can let them know all they want what the granite is going to cost them but I would not let them know what it is going to cost me. I always explain to them if I am 5k higher and they show me the other bid that I can use those same products and be around the same price.

On a siding estimate I put down the number of squares of siding along with the cost of just doing the siding. Then I group together the j channel and other various things. On a proposal I inform them of the exact amount of siding to be used, exact feet of J-channel, starter strip and so fouth. I let them know what all that is going to cost THEM - not what it costs me.

On estimates I am much more vague in order for them not to shop my exact price around for to other guys. I dont really need competition knowing what I am comming in at if I can avoid it. On proposals, I am much much more detailed listing things down to the foot. However, they see no distinction between material and labor prices.

Example on a roof estimate it will say

Remove existing roofing material (1-layer), prepare roof deck, install underlayment,install starter strips, install 30-year dimensional shingle (with StainGuard)/sq then a price of 10 grand of whatever it may be.

On the actual proposal which the sign it will say Remove existing roofing material (1-layer), prepare roof deck, install underlayment,install starter strips, install 30-year dimensional shingle (with​

StainGuard)/sq - Then the next column will list the number of squares. 30 square. Then the next column the price. 10 grand.

Now they can take 10 grand and divide it by 30 which would be around 330 a square but they dont know how much the shingles cost, the felt costs or the starters cost. They also dont know what the percentage of labor is.

See what im kind of saying?

 

[Duck042]

Thanks, that's a very detailed explanation of the process you're going through.

I guess the thing that's still puzzling me is why a breakdown of labor and materials would hurt you. Is it because you've got a hefty markup on the materials compared to what you're paying? Is your labor rate high compared to others? If your final number is competitive in the end, and the final price of the materials is at or less than what the HO could get himself, I guess I don't see how it hurts to show the breakdown of labor + materials.

I actually go out of my way to show the HO if I can get an appliance for 15% less than they can. They seem to focus more joy on getting a screaming deal on a new stove than they do the labor portion of the quote.

 

[DavidC]

For a remodel (even a smaller one), and probably for siding and windows, you're using the same materials from the same suppliers at (ballpark) the same price as everyone else. Is this not true for you?

This might be true if your shopping at a big box store, who's lowest guaranteed prices are more advertising than fact. But if you get your materials at a contractors supply house you are most likely in a tiered pricing system where your prices are based on volume and your relationship with the supplier. You and your competition could very likely be paying different prices for the same product.

If someone wants the kitchen to have new granite countertops and stainless appliances, and wants a detailed bid to see what those different pieces are costing, that does NOT mean you're going to lose the job. If you know your bottom line, you should never lose money in a negotiation, and I actually welcome that - a HO always feels better about a job where they were engaged in determining the final price.

Sure Mrs. HO, when we figured the total cost of your new kitchen we assumed using a custom, built in place Formica counter top. We will gladly change that out to a unique custom crafted concrete counter top with all of the built in amenities we discussed. The added cost will be $XXX.xx.

The added cost will be a sum total and not broken done into components.

"detailed bid" (Ducks phrasing) The details are in the prose of your proposal which is not to be confused with a bid. Bidding is done at auction houses.

The numbers you are proposing to supply to a prospective customer have no real meaning to most of them most of the time. I had a recent exchange with a client on FaceBook. We have worked on her house several times and I expect we will again in the future. In the course of our exchange she learned what is added to the wages paid our workmen, what we refer to as labor burden. Her response was "I had no idea!"

If you are dealing with a price shopping prospect and they want a breakdown, chances are they are looking for ammunition to use against you or your unsuspecting competition. The gun is aimed at your foot, you are holding the pistol and giving them the remote to fire it at will.

The deal is sell on value and not price.

Good Luck
Dave

 

[genecarp]

Thanks, that's a very detailed explanation of the process you're going through.

I guess the thing that's still puzzling me is why a breakdown of labor and materials would hurt you. Is it because you've got a hefty markup on the materials compared to what you're paying? Is your labor rate high compared to others? If your final number is competitive in the end, and the final price of the materials is at or less than what the HO could get himself, I guess I don't see how it hurts to show the breakdown of labor + materials.

I actually go out of my way to show the HO if I can get an appliance for 15% less than they can. They seem to focus more joy on getting a screaming deal on a new stove than they do the labor portion of the quote.

First off, every customer is different, i do not think that one answer applies to every client. There are a # of reasons that breaking down pricing in terms of L and M would not be helpful with certain customers

#1, I want to discourage a HO from suppling mat on a job, they are more likely to consider that option if they see i am charging X, but they saw a special at HD for Y
#2, They calculate the time we spent on the job at the end, and foolishly assume that we made 150 per hr per man, and after this revelation, they want to renegotiate
#3 Explaining our markup, if you paid 250, why are you charging me 315? I dont feel like explaining damaged items, drive time, research etc....

I dont consider this approach unethical, or taking advantage of an uninformed client in any way, it' s just business, and it is the way business is done everyday, when you go out to dinner this weekend, ask the waiter for a breakdown on food costs, or ask the dentist "how much was that crown costing you". Sometimes you have to bend and provide the customer with a breakdown that they want, but my exp has shown me that it less likely to create difficulties, if they are willing to accept a job total, with a progresive payment schedule, GMOD