Why do some people ask for

Dave Yates (GrandPAH)_2

Like they're ever routine(G). We get that too WW & handle it as you did or as ME stated - chust depends on the sit.

We had a different dilemma this past month. Supply house delivered two very large modine heaters to a factory when our crew was up in the bar joists disconnecting one of the old units. It was about ten gazillion degrees below zero & we were under the gun to get-er-done. The factory fork-lift driver assisted the supply house delivery guy & signed for the paperwork. He then gave the paperwork to his boss. His boss had requested we give him a material/labor quote with cost for each modine because he saw ones in the Grainger Cat that had the same BTU rating. So, I checked Graingers & we were able to price our units with a good mark-up and still stay slightly under the cat costs.

Problem? Our wholesale costs were inadvertantly listed on the invoices the fork-lift operator gave to his boss, the owner. That led to a fax from the factory owner indicating he was entitled to a reduction. I stuck to the quoted price & sent out the bill. Not resolved yet.

Wayco Wayne_2

Why

do some people ask for your break down prices for installations. I gave a price the other day for a heating system installation and the guy E-mails me and asks for how much I'm paying for the equipment. I politely told him we just give a flat rate and don't break it down for customers and left it at that. It bugs me. Do I go to buy a suit and ask how much the cloth cost the tailor? Would they be satisfied if I told them my overhead and business expenses too. Would you like to look in my medicine cabinent while you're at it? Like I have time to play little games like this. Do you think my price is high. Go find something you like. Low price doesnt mean you get the same quality. Just don't get in my business. (Ack!!!) WW

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kevin coppinger_4

Wayne...

same thing happened to me a couple of weeks ago...I ignored the question. Yes it irks me too...some customers just want to nickel and dime/ beat you up so they get everything as low as they can...it is almost a game. I choose to walk away from customers like that...nothing but headaches. kpc

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Tony_23

I believe

It's the whole self-worth thing. He wants to make sure you don't make more per hour than he does, and if you do you're "overcharging" him. Been there, done that, didn't divulge info either

I asked one guy how much he made in a week. It was none of my business. Another guy wanted to know if my $100 higher price was for my retirement (25 yrs from now). I said only 1/2, the other 1/2 was to make sure I stayed in business long enough to service his new equipment until he was done with it I did the job. And his daughter's. My back bidder is gone. Didn't make enough...

I usually ask why they want to know. That opens up a whole new line of communication and a chance to make the customer an ally instead of an adversary.

[Deleted User]

ALMOST a game...

NO, it IS a game. It's called the SALES dance, and we ALL play it from one side of the dance floor or the other...

Its human nature. Everyone wants the "BEST" deal. Except me. If I get gut feeling about the person I'm dealing with, and that gut feeling is good, I don't ask for a discount. If I DON'T feel good about the deal, I ask for a discount and if they refuse, I refuse. Most business have at least 5% built into the price for contingency, knowing all well that people are going to want to negotiate a deal.

I agree with the OP. People get salary envy. My salary is bigger than your salary...

When asked for a break down, I will give it in blocks. Material vs labor. If they question how many hours it is going to take me, I tell them that I'm not sure, and give them a range in days. I then assure them that if it takes more time than I'd planned, that I WON'T be coming back and asking for additional monies, and that usually quells the revolt.

I had a minister call me the other day on an orphan system we inherited. His system was frozen up and I had to send my service technician over to figure it out and thaw it out. When he got the bill, he screamed like a mashed cat. When I called him back, he'd calculated the hourly charges at around $150.00 per hour, and said that was outrageous!! I calmly explained to him that that was the same price he'd been paying every since we started working for him 2 years ago, and that if he didn't like the quality of service we offered, that he should go back to the moonlighter who'd ripped him off in the first place and left him hanging with a system that could not deliver the comfort he so richly deserved... Long silence on the other end of the phone... "Oh alright, I'll send you your check."

People are a funny bunch.. ALL of us:-)

Hang tough WW, you're doing the "right" thing.

ME

Jeff Lawrence_25

Been there, Done that

Had a customer that needed a part the next day, an emergency. Found a supplier and phoned in the order with my CC number to be delivered next day air to their location by 10AM.

Owner got the part, opened it along with the priced out packing list. oops....

Installed the part, presented the bill and the owner handed me a check for my labor and about 20% added to the cost (with shipping added). No mention about the 2 hours I frantically searched for the part, no mention about anything, not even a thank you.

He finally paid off the balance after he couldn't find anyone else that would work on his ancient equipment. Our relationship hasn't been the same since then...

hr

That never goes away

you can address it simply with Mark's suggestion parts and labor defined. Or like Jamie P has shown in the past a complete breakdown of every cost of business that goes into the price.

Just depends on how much effort you want to apply to explain your price.

Either way, don't let it get under your skin

hot rod

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Maine Ken

In this fair State of Maine our Attorney General's Office makes it a requirement that we break down the price to labor and materials. Not an option. I simply don't do it. If the customer demands, they find another company. I don't have time to play around.

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jim lockard

Normal

I think its a normal question to ask the price of the material. You would ask the same when getting your car repaired, or your roof replaced. I like most answer in vague percentages like 50/50 material and labor or whatever, then work on changing the conversation from cost of the product to the value of the product or the customers need for the product. J.Lockard

Unknown

you can thank

You can thank the state attorney and the state plumbing board for this... In Illinois, if the job is over 1500 bucks, you must break down the costs of everything and give copies to customers.... What a pita .....

jim lockard

so you do

a lot of 1400.00 jobs in Ill? or do you price at list/plus and full overhead and labor plus and then discount for cash? The games one must play. Best Wishes J.Lockard

Wayco Wayne_2

How about pricing a category

that lists the years of schooling, researching problems on the net, traveling to seminars, talking to tech support and gaining what amounts to years of experience. (30 years in my case) Or a category that adds up the price of the proper state of mind towards quality. Put a price on the "Gestalt" of your value and of the end product of a first try comfort that comes without trips back and bickering. Pant gasp wheeze!! (Gawd, this is better than therapy!!!) Thanks guys. I knew you'd understand. WW

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Unknown

There are a lot of reasons. But I've said this before and I'll say it again guys... every single time you jack up a price on a job you don't want instead of just saying "no thanks", you make the homeowners realize they cannot just trust your pricing.

If you can say you personally don't do that, kudos, and you should call attention to your policy when bidding! but 9 out of 10 contractors will, rather than tell someone that their project isn't a good match. And frankly I think it's that tendency to try to price yourself out of the bad projects that comes back to all of you in the form of distrusting customers.

It's not the ONLY reason.. but it doesn't help, either.

jim lockard

hate to tell

you Wayne most do not care.
If we could make having your truck parked in thier drive a status symbol, like a boat or a harly or that fancy new car, maybe you could carry your tools in a "Couch bag" then you could rack up the bucks and no one would care about the price. Best Wishes J.Lockard

Boston

Humility...........

Could I make a counter point to try and put things in perspective?

And - by the way - I hate cheap people. A "grinder" is not someone you want to work with, they have no loyalty, want the "cheapest price" etc etc.

But, a lot of p&h guys(at least here in boston) are doing very well. There is simply more demand than supply. It is a regulated service(only licensed people can do the work) so supply is not going to increase dramatically.

But - and I have lived through this - don't take for granted that there will always be more work than bodies. Most people don't have an uninterupted and smooth economic life. People have physical, mental setbacks. Things change in indutries. Beleive it or not, not long ago, trades went through severe boom or bust cylce. My dad was a union electrician and would travel half way accross the country for the chance of getting on a list for a job.

So, my only point is, try and see it from the other perspective. 150/hour is real money for a family that is trying to pay a mortgage and support 3 kids and making 85k a year. 85k a year is $41/hour.....

They don't know about the cost of putting a truck on the road, the fact that diesel is 3 bucks a gallon, tools get lost, insurance costs are through the roof and how murphy works when doing almost any job.

Not sure I am making my point, but I have been up and down in my life and wish I had been a little more humble at up points - because it all comes back to we are people dealing with people.

And don't get me wrong - and this is the point of this board - paying 125% of going rate for the RIGHT approach, is a much better deal than paying 75% of going rate for the wrong approach. And I don't mean that people on this board charge more than market - the point is quality does not come cheap and its always better to get it right the first time. My old man would always say - "I can't afford to buy second best"(Meaning he did not have money to buy it twice)


One final note - we were doing a complex rehab and I needed a real p&h expert to put a relocated boiler back in a historic building. I began to beleive no one had the ability to get it back right. The system had been hcked up and we were moving the boiler to make room for an under house garage.

I had a new contractor come in that had a great reputation. He made me feel like he understood enough to make it right. As he walked through he noticed a unnico a/c system and asked me why i did not put some coils in that for heat. We did the heat loss calcs, concluded it would work and he got the job without me asking how much it would be - he had a great idea, and the consulting he provided turned out to be very valuable to me. By the way, his system was great.

Wayco Wayne_2

Good point

I dont do that, but I know of those that do. An advantage of being a one man shop is my docket gets filled pretty fast. I usually don't have to worry about having enough work. (Although there are times when I have to work on my own house) If I'm not interested, or don't have time, I refer them to other contractors I know that do quality work.

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jim lockard

frustrated

Why so many customers get frustrated and angry the prices are all over the map rather then simply saying "no thank you" to the work. Instead guys for whatever reason give that "Snowball" price. Then a guy who wants the work shows up with a fair price and the customer assumes he is going to get crap work. So the customer does nothing and no one wins. Best Wishes J.Lockard

Steamhead (in transit)

That's why

we get those shipments delivered to the shop! Then we go to the customer's house with the part and install it.

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pete_22

If contractors have a problem with customer questions they are in the wrong business. What is wrong with breaking down your estimate? When I get my car fixed or have a appliance fixed at my house the bill always states parts and labor in the bill. You should not be afraid of what you charge for labor.
The most successful contractors are the ones who realize they are salesman before they are tech. With out the sale you have no business. Many contractors lack people skills.

Stephen C.

Breakdowns

I do not see the auto manufacturers providing a labour/material breakdown. Why should any contractor ?

Why let any client focus on the labour element. It is the entire package that is relevant to the situation at hand.
The quoted cost of any project is the sum of all material, labour and accumulated knowledge of the contractor.

Stephen C.

Unknown

When you have a completed heating system on display that the client can take home and "test drive" for a few days, then maybe you can compare this to an auto manufacturer.

When asking someone to pay money for a service and a product that doesn't yet exist, the bar is set a little higher, isn't it?

Stephen C.

References and Pictures

References and pictures would hopefully allow a 'test drive'. Therefore the project could certainly exist in some
form already.

The great challenge in the trades is the 'professionals'
see an hourly rate and forget the big picture.

Unknown

I'm just debating for fun here, just to be clear, so please don't take this personally like I'm trying to tell you how to do business.

But, Doctors, Lawyers, Engineers, and countless other highly compensated individuals are paid by the hour for their services. Why does that have to be a bad thing?

Stephen C.

I agree

I agree it is a fun debate, but with a serious side.

I support Waynes original post and feel his angst.

When I stopped letting people know my hourly rate and markups I was able to make more money. It seems to be an envy thing. "You are only a tradesman and want how much an hour? "

Forget it. We are all salesmen hoping to provide our service to our clients and that service has a total cost not an itemized shopping list with attached prices.

We also take on the financial risk of profit/loss that the professionals you designated do not. My jobs are quoted to be complete not time and material as your examples reflect.

RonWHC

We quote many

major repair &/or modification jobs on a "not to exceed" basis. Keeps our butts moving & offers the buyer a lower price, if Murphy stays away. No one has ever asked for a breakdown.

We've had some major jobs, where we did supplemental work in an individual owner's apartment, then were asked for a breakdown after the fact. We gave it to them. Then marked the records. They can call someone else next time.


Seems we're in a business where once we touch it, we own it. All additional work is supposed to be at our expense. The Doctor, Lawyer, Engineer, hourly rate comparison doesn't wash. Live or die, win or lose, stands or falls, they bill it all. Want to try that? And. Unlike Doctors & Lawyers, we've stopped practicing.

No price breakdowns considered. If the competition does - that's their business. Hang tough Wayne.

Jeff Lawrence_25

I wish

it had been that easy...

Commercial job, the walk-in cooler was down. Next day delivery to my office was real spotty at that time, maybe 9AM, maybe 6PM. Delivery company (no names here) didn't care. Attitudes have changed since then, thankfully.

Leo G_99

Just had a client

ask for a breakdown on the last bill for a job that was completed back in Dec. Says that 5% is a fair mark-up, so he wants to see our wholesaler bills for the material. I am thinking about asking him to meet me at Safeway. Take him inside, then see if they will give a "breakdown" on their price for bread,or milk, or steak, or whatever....... LMFAROTFP!!!!!!!

gerry gill

back in december?

and the scum hasn't paid it yet? i'd tell him i won't show him the wholesale invoices..but i will show them to the judge..

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Kevin A Gerrity_2

Price break down

Here is how I look at it. It is a chance for my company to make a better last impression. If they are calling for a price breakdown then they are interested in what you have to say. They may be looking at your estimate and how you presented yourself and wondering why your price is different. Ask why they are looking for a breakdown is there something that you might have missed? When they tell you, that your price was the highest, you inform them that is because "Your Company" dose it right the first time. Let it sink in for a minute. They will probaly ask another question about the difference in the quote. You just explain that you design their project for the needs that they are looking for and your price is based upon those needs if they would like to change something about the project you would be glad to work up another estimate. Now they think that maybe the other company's might have missed something, or they go on their merry way. Either way you come out being the professionnal.

Vermonter_3

Just a homeowner's opinion...

I'm not a HVAC professional, nor am I a plumber etc. I do however make a living providing a service and I can see both sides of the argument. For what it's worth I always provide a breakdown when it is possible.

As a homeowner I almost always ask contractors to provide a labor/materials breakdown.

The result has been varied. On one project we saved $250 by providing 4 2x4's and 2 sheets of plywood and bringing them to the house ourselves.

On another job we were flat out refused a breakdown. We hired the contractor because his price was comparable to the other quotes and it was clear that his work was higher quality. His quote was a fixed price for the whole job so we knew there would be no surprises.

I am willing to pay more for talented people to do good work. I am more willing to do so because some people consider me a talented person who does good work (this may or may not be true, but it's nice to hear).

I am willing to pay people more if I have a good relationship with someone because I know how my relationship is stronger with people who pay me more, and pay me in a timely manner.

I am willing and happy to pay more for materials that I don't have to go and buy and lug to the job site. I know it takes time and effort to get materials on site, even if it didn't then you're in business you should make a profit.

What I avoid by asking for a breakdown is paying $250 for 4 2x4's and 2 sheets of plywood.

Someone else posted to this thread that they worked for someone who asked for a breakdown after the fact, and that the homeowner felt 5% was a fair mark-up. I had a customer who asked to re-negotiate the price after he agreed to my estimate and I had done the work. I simply explained that while we sometimes (but rarely) negotiate price before work begins, once the estimate is accepted the price is fixed. I was furious but didn't show it, maintained my professionalism, and will be extremely cautious if and when I work with him again.

Remember the famous story about the retired engineer who was called in to consult when a factory ground to a halt. The factory was losing money every minute the machines weren't moving. Everyone had tried everything and the old engineer walked around looking at everything. After an hour he took a hammer and hit one of the pipes as hard as he could. Within a minute everything was up and running. The foreman asked for a breakdown of the engineer's $10,001 dollar invoice. $1 for swinging the hammer, $10,000 for knowing exactly where to land the blow.

How you decide to handle the question in the future is up to you. If you don't give a labor/materials break down I think you may be surprised how remaining professional and explaining why your price "is what it is" will earn you the trust and respect of your clients. If you do give a L/M estimate I think you'll find the same result if you explain why your skills are worth more than the other guy's.

Excellent workmanship is expensive, why be afraid to say so?

Personally I've found that by charging fair prices for excellent work and always giving a little more than I'm paid for has earned me clients I enjoy working with.

Ted_9

good in principle

But we add into every job a safety factor. Every job can have a problem. You need to be able to deal with it and not eat the company profits to do so. We can build it into our mark up, but we will look higher than the other company. So how do you sell this safety factor?

As far as charging more because we use quality parts, I just show them pictures or jobs. The problem here is what if the customer doesn't look at anyone else's work. They have nothing to compare to.


Massachusetts

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Perry_3

Some of you guys just don't get it...

Excuse me....

Ah, one of the reasons that homeowners ask for brice breakdowns is to give a relative comparison between bids in the decision process. Only a few homeowners are really looking for the cheapest bottom dollar regardless of quality.

Many homeowners are looking for a quality job - and understand that the cheapest bid does not always do that.

What does a price breakdown give me:

Contractor 1 is 40% materials and 60% labor.

Contractor 2 is 50% materials and 50% labor.

Contractor 3 is 60% materials and 40% labor.

It gives me the reason to ask "Why..." of the contractors; and the answers can be most reavealing. If you don't think that is important... If you arn't willing to participate... If you can't professionally explain why... then I have to ask what is it that you are hiding?

Some of us homeowners do know what it cost to put a crew with a truck and tools out for a day. Some us of know what a business can cost to run. Many of us are not cheapskates. We are just trying to find an honest contractor to do an decent job. While it would be nice if we could save some money - it is more important to have the job done right. Just looking at several bids without breakdowns does not give us as good of chances to ask Why...

Oh, and I almost never hire the low bid - in fact I tend to hire people at or near the top of the bids. I just need to understand "Why."

What are many of you guys afraid to explain? I suggest that you are limiting your business and your profit by not being able to explain WHY...

Perry

Wayco Wayne_2

Thanks for

an interesting thread. I like the idea of giving a not to exceed price and have done it on occaision. I wonder why I don't do it more often. On some large jobs I offer to work at a set labor and material mark up rate. Especially on jobs where the customer wants to contribute sweat equity or has alternative labor available for menial tasks where you don't really need a high tech person like me doing it. That way the customer and I can work together and I don't have to figure in a "Murphy" cushion. On small change outs I have figured the prices ahead of time and have price sheets in my ticket book so I can give a price fast and on the run. They get updated whenever there is a change in equipment or labor prices. Maybe once or twice a year. That's part of why I don't know price break downs off the top of my head. I may have figured up the pricing months ago. It's challenging being a small shop and being on top of so many business issues and spending the day out in the field too. I seem to like it that way though. WW

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hr

Being a numbers cruncher, Perry

and not in the contracting business on your own, I'd be curious to see your cost breakdown if you owned a small HVAC business.

Actually just an hourly labor rate (range) you think would be "in the ballpark"

It's rarely the price of the materials, or the sales tax that homeowners question, as these are avaliable online these days, but the hourly labor charge needed to "float the boat" in a small, residential service and install company.

The days of adding "overhead dollars" to the parts markup are long gone with below wholesale prices readily available to any and all buyers, online.

Many homeowners that have never been self employeed have no idea the costs involved in being a licensed, insured contractor today. Regardless of the trade.

If it takes tools, a truck, insurance, licenses, and a reasonable wage for the owner the number gets up there.

If a business owner wanted to take home 60K a year, and could bill out 1500 hours in a year that's close to 50 bucks an hour before ANY expenses are covered.

Custom radiant jobs can easily burn 40, 50 even a 100 man hours on typical residential jobs.

e-mail me you numbers if you don't want nto talk dollars in this post, thanks.

hot rod

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Mad Dog_2

We get that occasionally

and they are usually the tire kicker, lookie loos. That being said it is a legit question and if you try to dance around it or avoid it, they can think you are "hiding" something. At this point, WW, YES!!!! you break it ALL down for them until they are either bored or change the subject> Mad Dog

Vermonter

Not to exceed...

I often give my customers a "not-to-exceed" quote. Sometimes (rarely) something happens and I may lose a few dollars. I let the customer know in a way that they don't feel guilty and invariably they bring work to me the next time they need it.

I also sometimes will say "the job was less difficult than we expected, therefore it costs $100 less than we quoted." I do that when that's the truth, when I still make money even though I charge less, and I look like Superman when I'm done. I've found that to be a very strong and inexpensive way to build strong relationships.

Tony_23

\"getting it\"

I get it, from a different perspective than yours. I believe you are the exception, rather than the rule.

In my small town/area there are 5-6 one and two man shops and a seeming multitude of "handymen" who do heating work at varying levels of skill. The "pros" prices all are fairly close for the same type of work. I've quoted FA changeouts against 3 others and everybody was in a $100 range. When the customer asks for a M&L breakdown, and there are 4 guys quoting the same brand and model and one says 60/40 and another 40/60, etc. how do you explain that ? Funny thing is, you never know what's going to tip the scale.

I now sell equipment that I have "imported" and am the only dealer here for.

And, I rarely break it down, for anybody. I'm installing a system, not a bunch of parts and some time.

Vermonter

You add a lot more than a safety factor...

I'd hope you also add your profit, gas, lunch, clothes, kid's tuition etc etc etc... so why is the "whoops" charge something to worry about or something you feel you should hide?

I had a contractor install central air in my 80 year old home. Unmolested plaster walls and ceilings were one of the reasons I bought the house and a concern during the installation. The contractor made it clear that they were more expensive than everyone else in the area. They also said that worst case scenario, if the ceiling disintegrated they would replace the whole ceiling if need be at no extra charge. Thankfully this didn't happen but it was nice that I didn't have to worry about it.

Be proud of your safety factor, make it clear that you include it to cover unexpected surprises that lurk in every old house. I my customers appreciate it when make that clear to them, and I appreciate it when I hear a contractor honest enough with me that he admits it.

Ken_40

You're singing my song

I was never "embarrassed" to provide the labor rate. Now that I do consulting only, I have few options. The hourly rate is the only viable way to do this sort of business...

My position on contract work vs. FR vs. T&M are well known.

Should you however need to know it, here it is:

http://www.masterplumbers.com/plumbviews/2002/flatrate_revised1.asp

heatboy

This is rather silly.

The only question is, do you trust your contractor? If you do, hire him. If you don't, don't hire him. It's that simple.

Peace of mind......Priceless.

hb

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Don \"Grumpy\" Walsh

Computer print out

I use an estimating program that has a labor equivalent for each item of material. So every item has a labor and a material cost associated with it that can be printed out as a line item. I do this for every customer quote, and I have yet to have a customer question my breakdown. One of the benefits of this type of estimating is that the final price is usually a good bit higher (about 6%) than is realistically required . I can then say to the customer that we are going to do the job for a lesser amount of money for any of several reasons; e.g. “You have come recommended as a very responsible client that pays your bills promptly.” or “I feel that because your home is so well kept, that we will not have to work in a cluttered environment, we can perform our work more quickly” ergo, a lower price than what is on the breakdown sheet.

If a client asks for a better price, I first of all ask them; “What would you like to eliminate from the job?” After that is dismissed as unwanted, and if they still are asking for a lower price, I look them straight in the eye, and ask; “If I suddenly came up with a lower price, would you not then feel I was trying to cheat you initially?” I explain that MY company has a certain cost of doing business factor that may be higher or lower than my competitors. I make no apology for my pricing, and if it is not within the client’s financial expectation, then I take my $150.00 estimation fee and leave.

I do have line items for “delivery to site, removal of debris, site restoration, air purging/skimming –both tools and labor hours, etc. In short, there is so much information on the breakdown, that the client usually has no further desire to pursue the question any further. That sheet incidentally is proprietary and does not remain with the customer.