# Initial Estimate = Lose a Little, Change Order = Make a Lot?



## QualityContract (Jan 30, 2014)

Do you guys find that you're losing money on the initial estimate, but then making it back and then some on work orders?

I've worked for 2 guys in the past that said that they would get desperate after putting in numerous bids with no job, so they would lower the price too much and lose their income (but have barely enough to pay for material and help). But, after all of the change orders (it seems like 75% of the homeowners that I've worked for want at least one change order), they would make a healthy income. It seems like you could persuade a homeowner that almost anything is an extra add-on.


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## TNTRenovate (Aug 19, 2010)

QualityContract said:


> Do you guys find that you're losing money on the initial estimate, but then making it back and then some on work orders?
> 
> I've worked for 2 guys in the past that said that they would get desperate after putting in numerous bids with no job, so they would lower the price too much and lose their income (but have barely enough to pay for material and help). But, after all of the change orders (it seems like 75% of the homeowners that I've worked for want at least one change order), they would make a healthy income. It seems like you could persuade a homeowner that almost anything is an extra add-on.


Charge what you want to make and stop targeting people who can't or won't pay that number.


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## PoleBarnsNY (Jan 18, 2014)

If they are desperate then their lead generation sucks. Their energy should be invested there not on some shady trickster douche nozzle move that misleads trusting customers. 

I explain the existence of this shady concept in my sales presentations and call it change order con artists and explain that I do not do that. 

The result is customers being suspicious of low bids and hire me instead to avoid it.

If your customer base is stupid and you have no integrity then go for it.


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## Metro M & L (Jun 3, 2009)

If you want to live in constant conflict go for it. Thats one of the things I love about my job. I dont have to lie or fight with people all the time to make a living. Its easily been six months since I laid my head on the pillow and I wasnt asleep in seven minutes.


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## hdavis (Feb 14, 2012)

I don't condone it, but there are some that will quote a remodel KNOWING that there are conditions not covered under the original contract, then boost their profits as they come up.


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## SteveinNEPA (Jun 5, 2014)

PoleBarnsNY said:


> If your customer base is stupid and you have no integrity then go for it.


counldnt find the words, but Polebarn did. Agreed 100%


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## Jaws (Dec 20, 2010)

Its a BS way of life, imo. Like Metro said, constant conflict. Also, no referrals.


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## brhokel606 (Mar 7, 2014)

I agree with all the above. When I started this I swore I would never do that and I have not. It's cheesy, low and dirty in my book. 

If you wanna be another one of those guys then go ahead, not saying I live on the high road but I just can't knowingly screw people over.


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## brhokel606 (Mar 7, 2014)

PoleBarnsNY said:


> I explain the existence of this shady concept in my sales presentations and call it change order con artists and explain that I do not do that.


Change order con artists, I had not heard it phrased like that before...I hope you don't mind if I borrow that from time to time. I really like that way of putting it!


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## Stevarino (Sep 28, 2013)

I've been eating the costs on change orders lately. I lose a little money but I make happy customers. Unless there is going to be considerable time or material involved I try to never raise prices after I quote the job. Referrals are the life blood of the business so if I have to eat some cost here and there to build my referral base that's a good trade.


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## PoleBarnsNY (Jan 18, 2014)

Stevarino said:


> I try to never raise prices after I quote the job.


Getting paid for change orders is not raising prices after a quote is given if the work on the change order is not in the original scope of work. Suggesting so is an incorrect use of the term change order. 

Eating cost of additional work sets a bad precedence with your customer and your referrals that you will eat the cost of additional work which incentivizes customers to ask for additional money losing extras because they don't have to pay for them.

The change order process ought to be explained in your presentation. I do that and no customer has ever disagreed or objected to paying for extra work outside the original scope of work. 

Your call but I disagree that it's a good move. Most here get referrals without giving away work. Of course you get referrals for free work, why wouldn't you? But then why would you want to? That's the wrong reason to get referrals.


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## avenge (Sep 25, 2008)

I'm pretty specific in my bids on the scope of work. If I'm bidding against someone my contract is usually used against them. If it's not in my contract then it's an extra, period. 90% of my work involves extras, I don't make over and above on them but I don't do them for free.


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## QualityContract (Jan 30, 2014)

PoleBarnsNY said:


> If they are desperate then their lead generation sucks. Their energy should be invested there not on some shady trickster douche nozzle move that misleads trusting customers.
> 
> I explain the existence of this shady concept in my sales presentations and call it change order con artists and explain that I do not do that.
> 
> ...


Wow. I can't believe no one has ever heard of unforseen circumstances. It's a legal definition under contract law. Sounds like we have a bunch of rookies here making $20,000 per year cause they're not charging anything for add-ons. I'll give you an example. I had to charge extra to put T1-11 today on a porch ceiling because I didn't know the half assed original builder used twisted studs that bowed the walls to hell. I didn't give them a discount for this, so I finally broke even on this job. This is one extra that I had on this job. The homeowners are so satisfied with the quality of the craftsmenship and customer service that we provided that I'm charging a full premium price on the 4 other projects that they want done.

You guys charge what you want, but I went into business to earn a living, not to do community service.


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## Ninjaframer (May 28, 2011)

QualityContract said:


> Wow. I can't believe no one has ever heard of unforseen circumstances. It's a legal definition under contract law. Sounds like we have a bunch of rookies here making $20,000 per year cause they're not charging anything for add-ons. I'll give you an example. I had to charge extra to put T1-11 today on a porch ceiling because I didn't know the half assed original builder used twisted studs that bowed the walls to hell. I didn't give them a discount for this, so I finally broke even on this job. This is one extra that I had on this job. The homeowners are so satisfied with the quality of the craftsmenship and customer service that we provided that I'm charging a full premium price on the 4 other projects that they want done. You guys charge what you want, but I went into business to earn a living, not to do community service.


So your one of those guys that makes it hard for the rest of us to not get labeled "shady contractors". 

I don't think that tuning up the framing before I put up soffit is an "unforeseen condition". Let alone something to be used to stick it to some schmuck HO that I low balled by selling him hopes and dreams.. If you walk into a job knowing there are going to be problems and you didn't include them in your scope there not "unforeseen conditions"- there bad shiz you saw/ didn't mention and plan on using to black mail the customer out of more $


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## avenge (Sep 25, 2008)

QualityContract said:


> Wow. I can't believe no one has ever heard of unforseen circumstances. It's a legal definition under contract law. Sounds like we have a bunch of rookies here making $20,000 per year cause they're not charging anything for add-ons. I'll give you an example. I had to charge extra to put T1-11 today on a porch ceiling because I didn't know the half assed original builder used twisted studs that bowed the walls to hell. I didn't give them a discount for this, so I finally broke even on this job. This is one extra that I had on this job. The homeowners are so satisfied with the quality of the craftsmenship and customer service that we provided that I'm charging a full premium price on the 4 other projects that they want done.
> 
> You guys charge what you want, but I went into business to earn a living, not to do community service.


That's not exactly an unforeseen issue if the ceiling was bowed before. You had an extra but still didn't make any money? Now you're overcharging on other projects, what happens if you have unforeseen issues on those?

There's a difference between unforeseen issues and not knowing beforehand there will or may be issues.


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## PoleBarnsNY (Jan 18, 2014)

QualityContract said:


> Sounds like we have a bunch of rookies here.


It's very clear who the rookie is.


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## EthanB (Sep 28, 2011)

I charge the same labor, overhead and profit on a change order as I do on the initial contract. That means I won't make more, or less, money on a change order as I would on any other day. I prefer NOT to have change orders so I can keep to my schedule and move on to the next job. 

Most change orders I charge for, some are zero'd out but serve as a record of a change and some I actually credit the HO if they change will save me money. If I miss a fairly obvious thing, then I'll eat the cost if it's reasonable. For example, I should have seen that moving a breaker panel on my current job would make much more sense than working around it. I got paid to lay the basement out, so I ate the $600. I then gave the HO a change order for moving the panel with a cost of $0. They had a load bearing beam that was WAY under spec. I upgraded that and charged them the appropriate price.


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## brhokel606 (Mar 7, 2014)

I always take care of the little things with out a change order, rotten wood around doors/windows and minor stuff. I have usually figured a bit of slop on the bid because I always seem to find problems. I can not in good concious half ass it, my OCD just will not allow it. 

I have also just had the customer pay for the materials on a needed item because it needed to be done but did not charge labor. If I missed it on the bid, it's always on me, I take a bit longer with getting my bids done. Because if I missed it, I eat it. I really don't care that I might not have made enough because I had found something that needed fixed and it sometimes is just easier to fix it, explain what you fixed and tell them that is on the house. 

I have not had anyone take advantage of me on it because I screen my clients. And most of the time it gets me a ton of referals...I have had a customer wait a year for me to do their large garage build because I had done work for them before and they only wanted me. It's a good feeling, darn near as good as the final payment upon job completed.:thumbsup:


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## Fouthgeneration (Jan 7, 2014)

Bait and switch is a Tort(a civil offense for the as yet unindicted)in all fifty states, and criminal in most of them.....

While differing skill levels of Conmen do business with each other, I don't care as much as when an "innocent" party is defrauded, It is harder to cheat an honest person.


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## PoleBarnsNY (Jan 18, 2014)

I think you took the wrong approach here twice and seriously ought to rethink some things for the sake of your future and the things you ought to invest your energy into.

1. Your thread started inquiring about the appropriateness of dishonest business practices in a forum for professional contractors sick and tired of the unprofessional contractors giving the industry a bad name. 

2. Invoking the excuse of "unforeseen circumstances" that should have been foreseen and then calling experienced professional peers offering you their opinion "rookies", is obnoxious when they would have foreseen that which you did not foresee. That clearly makes YOU not them look like the "rookie"



QualityContract said:


> WOW Sounds like we have a bunch of rookies here


3. No, unfortunately what it sounds like is you are embarrassed and attempting to save face that you can't make a sale honestly nor generate appropriate leads for your company that make money unless you intentionally and dishonestly rip people off by tricking them with low ball offers and then ripping them off for change orders to make a profit pretending they are unforeseen circumstances. 



QualityContract said:


> I had to charge extra, so I finally broke even


4. You need an unforeseen circumstance to come up to BREAK EVEN? I thought change orders based on unforeseen circumstances = "make a lot"? Apparently not. 

That is a VERY DANGEROUS way to conduct a profitable business. It is another of your thoughts that makes the rookie and the $20,000 income comment look foolish. 



QualityContract said:


> This is one extra that I had on this job.


5. And so far you have only broken even. WOW. I remind you of your use of the word WOW when you were transparently trying to act too cool for school above dissing professionals calling bull**** on dishonest business practices. 



QualityContract said:


> I'm charging a full premium price on the 4 other projects that they want done


6. And you HAVE to charge premium right because so far you have made ZERO money even with a change order based on so-called questionable "unforeseen" circumstances?

The "rookies" you speak of quote "full premium prices" on all work from the first phone call. They don't work for free HOPING they can fnd a place to phuck their customer over. They spare their customers all the bull**** and just run and honest business. 



QualityContract said:


> You guys charge what you want, but I went into business to earn a living, not to do community service.


Awesome! :thumbsup:


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## PoleBarnsNY (Jan 18, 2014)

OP is the same member that lost a client that was responsible for an entire years income in two months because (his words) ...

"I had a guy on the job throwing beer bottles behind one of the job sites. On another job site, I had a guy who left his heroin pack in the bathroom. On another job site, the guy who was throwing beer bottles behind one of the site was staring at one of the owner’s 17-year-old daughters. There were mistakes left and right. It was like a circus." 

Here is the link http://www.contractortalk.com/f12/how-do-i-restore-my-nostalgic-accomplishment-148462/#post2018065 

:laughing:

Here is another GEM from that same thread 

Originally Posted by gastek 
:How are you going to feel when one of these drug users hurts someone on the site? You'll be done for sure then if that happens. "

Response from QC
That is what contract clauses are for. Are you new to contracting? 

:no:

OP is also the same member that's said SEO doesn't work in his "best advertising for 2014" thread where he was annoyed over a suggestion to use the search function.


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## Ninjaframer (May 28, 2011)

I gotta check in here more often- that's some funny shiz 

I hope the general public sees this and realizes there really are contractors out there that care about doing a good job at a fair price and that we do our best to discourage shady con men in the guise of being a "contractor"


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## PoleBarnsNY (Jan 18, 2014)

QualityContract said:


> I never once said that this was my strategy.


You did not have to. Your examples describe what you did and it is exactly what you describe in the thread title. 



QualityContract said:


> All I was saying is that I see this often.


That is incorrect. Your examples are admissions of the practice you described. 



QualityContract said:


> You guys obviously are not general contractors


You are doing $600 jobs and are questioning if members here are GCs. Do you see how goofy that is? 



QualityContract said:


> I run into unforseen conditions on a daily basis


Isn't that a contradiction? If you run into to them every day, wouldn't you learn what to expect? 



QualityContract said:


> most of the time were a cause of conditions that I did not know about


Most of the time? Unforeseen means you did not know about it ALL of the times. Did you pretend you did not see or know about a few so you could make a profit?



QualityContract said:


> I tell the homeowner everything that I think could go wrong.


It is difficult to believe given the admissions and ideas you have presented in this thread but if that is true then I commend you for it.



QualityContract said:


> When we were leaving, a $500 job just turned into a possible $20,000 job. Now, Im making money.


So if this possible basement doesn't happen you didn't make money from this customer? Were there no money gushing "change orders" in your $500 GC project?



QualityContract said:


> You will find out what I'm talking about if you decide to expand your artisan shop and get bigger..


Bigger than $500 jobs that you are doing?



QualityContract said:


> people won't be asking questions if the only response that they get is an attack.


You are all mixed up here. You are defining attack as any response that disagrees with shady business practices and discourages you from harming your business and reputation and the industry and your customers and encourages you to run an honest business.

Attacks are things like calling professional peers 

1. Rookies
2. Obviously not GCs
3. Clowns

Asking questions here has been extremely valuable for me and countless others because of the depth of knowledge here and the sincere interest in helping each other out. The trouble is your abrasive reaction when you disagree and your obvious stubborn failure to consider other rather unanimous points of view. 

Any reasonable person looking at the sheer volume of disagreement with you would seriously question if what they are doing is really that bad, yet you remain defiant and have attempted to disparage the qualifications of the posters trying to point you in the right direction. 

We are not as dumb as your customers. Perhaps that is why you are struggling so much with the feedback you are getting. 



QualityContract said:


> And this is my last response to this thread. I have more important things to do than go back and forth with a bunch of clowns.


Yes and hopefully that includes some soul searching, a self check and careful consideration of what you have received for feedback on your question. 

I would also recommend taking in the suggestion that you could be more cordial and courteous when seeking valuable opinions based on decades of experience from those that have the answers but owe you nothing whatsoever.


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## NYgutterguy (Mar 3, 2014)

One tosses around insults one comes back with class, common sense, knowledge, and still tries to give the OP great advise..Im still very new here but this site is a better site because of guys like pole barn and numerous others on this site.


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## Agility (Nov 29, 2013)

I hate it when my estimate and my final invoice aren't at least close. It makes me look like I didn't know what I was getting into in the first place. 

I don't mind change-order-selling customers on upgrades to decisions they've already made, though.


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## brhokel606 (Mar 7, 2014)

Agility said:


> I hate it when my estimate and my final invoice aren't at least close. It makes me look like I didn't know what I was getting into in the first place.
> 
> I don't mind change-order-selling customers on upgrades to decisions they've already made, though.


I can agree with you as if the customer wants it, go for it, it is something they request. But when you count on making the money on the change order because your bid was to low is the big problem here. (Not saying you do this)

QC, I used to put in alot of doors and windows, ALOT! I found on nearly all of them rotten boards, trim and bad flashing. All my bids now include extra for this, because it is no longer unknown. Yeah could their house be the 1 out of 100 that has no issues? Maybe, but My final bill will reflect the discount and I explain it to the customer why THEY got to save some money.

$500 - $600 dollar jobs? I have a feeling that you are rather new and I truly hope you take the advice, because when you start pulling big jobs it will pay off. I just found the money part funny on your post, I haven't done a $600 job in years and I am a General Contractor but I don't think that should matter anyways.


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## Mr Knucklehead (May 31, 2014)

Originally Posted by *QualityContract*  
_I run into unforseen conditions on a daily basis

_
Isn't that a contradiction? If you run into to them every day, wouldn't you learn what to expect? 

Just got home after a wonderful day and maybe I have a weird sense of humor, but that there is some funny stuff and reminded me of Yogi Berra.


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## PoleBarnsNY (Jan 18, 2014)

brhokel606 said:


> I found on nearly all of them rotten boards, trim and bad flashing. All my bids now include extra for this, because it is no longer unknown


:thumbsup: Exactly




brhokel606 said:


> I truly hope you take the advice, because when you start pulling big jobs it will pay off


Me too. 

Conducting business like the OP does currently, "when selling big jobs" would put him out of business. 

It has to stop if he grows his average sale or he is doomed. 

Absorbing dinky losses on a $500 jobs and finding a change order for another $500 to turn a small profit is one thing especially when working on older homes. The honey do list tends to be a long. 

That $20,000 basement job bid at a loss hoping to find another $20,000is a huge risk that will eventually not happen and then it's game over. 

I struggle to find much to agree on with the OP but I can on the following point. 

Clearly it is a viable strategy to satisfy customers with quality work on small projects (without any under handed B.S.) knowing that eventually they will lead to bigger, more substantial projects. 

That is how I got started a long time ago. So long as it is done with integrity, it is an honorable and viable way to build a business.


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## PoleBarnsNY (Jan 18, 2014)

Mr Knucklehead said:


> Just got home after a wonderful day and maybe I have a weird sense of humor, but that there is some funny stuff and reminded me of Yogi Berra.


It is hard not to chuckle when you see someone being there own worst enemy, full of contradictions, in over their head, back peddling back over their own epic bull****, especially when they refuse to consider anything anyone recommends and knowing they cant edit after a half hour on the forum any more to delete their most royal phuck ups but ...

you have not seen the funniest posts available unless you read this zhit. :laughing: You want a laugh, read about the crack heads, boozers and perverts hired to abuse his best customer that were chucking beer bottles, phucking chit up and perving on the customers daughter. :no:

http://www.contractortalk.com/f12/how-do-i-restore-my-nostalgic-accomplishment-148462/#post2018065


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## Ninjaframer (May 28, 2011)

That shiz is funny- almost as funny as saying the builders here aren't contractors and that when we start landing the big jobs (the $500 to $600 dollar ones) then well understand real contracting


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## Metro M & L (Jun 3, 2009)

Ninjaframer said:


> That shiz is funny- almost as funny as saying the builders here aren't contractors and that when we start landing the big jobs (the $500 to $600 dollar ones) then well understand real contracting


To be fair, it must of been a pretty big lawn he mowed.


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## flashheatingand (May 3, 2008)

QualityContract said:


> I never once said that this was my strategy. All I was saying is that I see this often. You guys obviously are not general contractors. *You might be carpenters, electricians, plumbers, etc. But, I run into unforseen conditions on a daily basis and most of the time were a cause of conditions that I did not know about and are the result of shoddy work or an old dwelling.* When I get to the estimate, I tell the homeowner everything that I think could go wrong.


As a sub, I have to say, we run into the situations mentioned on a daily basis as well. Thing is, the pros know how to deal with the situation accordingly. Sure, if the unforseen is a big issue, it needs to be financially dealt with. But, at least try to figure out a simple solution.


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## Stu04 (Dec 30, 2013)

PoleBarnsNY said:


> It is hard not to chuckle when you see someone being there own worst enemy, full of contradictions, in over their head, back peddling back over their own epic bull****, especially when they refuse to consider anything anyone recommends and knowing they cant edit after a half hour on the forum any more to delete their most royal phuck ups but ... you have not seen the funniest posts available unless you read this zhit. :laughing: You want a laugh, read about the crack heads, boozers and perverts hired to abuse his best customer that were chucking beer bottles, phucking chit up and perving on the customers daughter. :no: http://www.contractortalk.com/f12/how-do-i-restore-my-nostalgic-accomplishment-148462/#post2018065


Just read the thread this loser was in back in January..absolutely hysterical..any time a contractor needs to change there company name so people don't recognize who they really are is never a good thing!!


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## cwatbay (Mar 16, 2010)

There is a company in my area - a fairly large one - that has a history of low bids, getting the job, then change ordering things up to make their profit. Their owners have actually stated this on several occasions, i.e. "we make our profits on change orders". 

The thing is, people don't seem to mind. They have a lock on certain lines of products, so you have no one else to either install it or service it. 

In my case, I really don't like to change order anything, unless there is no other choice. We have a budget and a timeline. Change orders extend the timeline, which then means the project starts to run into other projects, which then delays everything. 

But, I am not into losing money. So if the client wants things changed, then more time and money is needed. Small adjustments I can absorb into my initial bid, but if other contractors, the client or anyone else starts changing things, or, does (or doesn't do) things that causes me added time and expense, then I have to let the client know how much more it's going to cost.


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## fast fred (Sep 26, 2008)

the Change Order Artist is an invasive species that exists everywhere in the trades they give contractors a bad name

let me help you out moron, I rarely do change orders, but when I do they are written and backed up with reason, mostly a customer changes their mind, the other has to do with my "hidden defects" clause. But I rarely use that unless it's a major defect

the change order artists are a dime a dozen, you can't compete with them nor do you want too, their a low life

my favorite line is "I didn't know you wanted flooring on the kitchen floor, that's extra"

the same guy is "you tubing how to install a cabinet"


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## Fouthgeneration (Jan 7, 2014)

Fast Fred, U install your Cabinet after the election, but before your inauguration... Mr President. didn't they teach you anything in school?


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## blueskyglass (May 8, 2014)

No need for us to be pencil heads on this forum. I think the input for QC should be that although he may get business by the low ball / add on approach, it is not going to win loyal customers and is not going to grow the business through referrals and happy customers. That means you will spend your life in this rut and always be low balling to get a foot hold. For me I'd rather build the business and have happy customers that are willing to refer.

Rod
www.blueskyglass.net


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