# Sometimes, it's best to decline a project. Sometimes, it works in your favor....



## TNTRenovate (Aug 19, 2010)

dom-mas said:


> If you re-read my posts you will see that I never said that I will always haggle. I just don't rule it out on principle. if I feel that someone is trying to take advantage I won't even consider haggling. But if they show me a competitors offer that is below mine and I want to do the job, not out of need to do the job, but because it interests me or it gives me a chance to use a product I haven't used before but wanted to or gets me good exposure then i will deal so long as i still make the money necessary to keep me profitable.


And if you read my posts you will see that I never said that you always haggle, I just said it was on the table. That means you are willing to listen, and by listen I mean give it weight in your pricing.

And you are changing the rules again. If you are experimenting with a new product you should reduce your price. But that's not what we are talking about. We are talking about reducing your price for nothing other than the request of the customer. You aren't reducing your scope, helping little old ladies or experimenting with new products.

Got it?


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## dom-mas (Nov 26, 2011)

TNTSERVICES said:


> And if you read my posts you will see that I never said that you always haggle, I just said it was on the table. That means you are willing to listen, and by listen I mean give it weight in your pricing.
> 
> And you are changing the rules again. If you are experimenting with a new product you should reduce your price. But that's not what we are talking about. We are talking about reducing your price for nothing other than the request of the customer. You aren't reducing your scope, helping little old ladies or experimenting with new products.
> 
> Got it?


How am i changing the rules? The comment that i am responding to and have been responding to is that haggling is insulting to a contractor. I don't feel it is. It has it's place for a variety of reasons. But don't get angry with me because I do on occasion. or get angry if you want it really won't bother me too much.


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## dom-mas (Nov 26, 2011)

TNTSERVICES said:


> . Your mind set is haggling is on the table no matter what. You are willing to actually give haggling a chance on every job. I am not. .


No it's not. But there are jobs that it is. and i don't get insulted if someone tries.


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## TNTRenovate (Aug 19, 2010)

dom-mas said:


> How am i changing the rules? The comment that i am responding to and have been responding to is that haggling is insulting to a contractor. I don't feel it is. It has it's place for a variety of reasons. But don't get angry with me because I do on occasion. or get angry if you want it really won't bother me too much.


You have said that you would haggle and then given examples of rare occurrences to prove your point. Old ladies and new product experimenting are not items that we are discussing. They are the exception, not the rule. You have mentioned coupons and sales ads, again, not haggling. That's called couponing. I should know my wife does it. 

I don't haggle. If you want me, pay my price. I work hard at getting the lowest number I am willing in order to complete the job to my standards and practices.

I am not angry at anything. I am just pointing out that we as contractors don't have to reduce our price just to get the job. Reduce the price, but also reduce the scope or product quality.


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## TNTRenovate (Aug 19, 2010)

dom-mas said:


> No it's not. But there are jobs that it is. and i don't get insulted if someone tries.


Sure it is, you said it yourself. "I just don't rule it out on principle." That means that you will listen to their "counter offer".


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## dom-mas (Nov 26, 2011)

I won't rule it out "on principle" meaning that i won't rule it out just because my principles don't allow me to haggle. But On many/most jobs I have no lee way.


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## Stephen H (Feb 18, 2011)

TNTSERVICES said:


> You have said that you would haggle and then given examples of rare occurrences to prove your point. Old ladies and new product experimenting are not items that we are discussing. They are the exception, not the rule. You have mentioned coupons and sales ads, again, not haggling. That's called couponing. I should know my wife does it.
> 
> I don't haggle. If you want me, pay my price. I work hard at getting the lowest number I am willing in order to complete the job to my standards and practices.
> 
> I am not angry at anything. I am just pointing out that we as contractors don't have to reduce our price just to get the job. Reduce the price, but also reduce the scope or product quality.


Rob,
you mentioned a couple times that you work hard to give your customer your lowest number right up front.

In effect, you have haggled with yourself and ALREADY cut your price before the customer even asks you to!

over the years you have probably left a LOT of money on the table.

What if your pricing wasn't cut so close to the bone?- you are a good salesman who presents himself well-so your pricing could likely be easily several % higher than it is currently without impacting your closing rate---and if the occassioanal prospect says" Rob, we would really like you to handle our project-but is there anything you can do about the price/"--------------- you would be able to say, "what did you have in mind"-and hear them out. You might be suprised at how negligible the amount is that they want shaved.

Best wishes,
stephen


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## Stephen H (Feb 18, 2011)

katoman said:


> I've got a question - let's say you won the big lottery. Would you still haggle on your price?
> 
> So in effect, this becomes a question of principle. If you didn't need an income, yet chose to work anyway, would you still haggle?


good question. read last paragraph of post #25


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## Acres (Feb 12, 2011)

> Why would you come down on your price? You have spent the time and effort to come up with a great plan and price to suit. Why isn't your price the lowest you can go? Why would you reduce your price? I am still concerned that so many of you are willing to reduce your price and not scope. I think that you guys are the reason they expect to get a reduced price on contractors


The sum of all is better than the sum of none..


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## KAP (Feb 19, 2011)

I think where alot of confusion comes in for many is the erroneous retail mindset in construction.

Someone mentioned "haggling" with your suppliers. That is retail (not to be confused with wholesale pricing) thinking. The reason they give a better price on 100 versus one, is that it is the amount of product that is pushed out the door that matters. If I sell someone a 2 x 4 for $2.25, and my cost is $1.15, that's the gross profit of what I make on that transaction... or $1.10... However, if I sell them 100 at a reduced cost of $1.95, my gross profit for the transaction is $80.00 for that one transaction for processing the same paperwork. 

That is not how most contractors are set-up to operate. It is the majority of the time, one customer/one sale at a time...

Now, if someone wants to offer me 100 bathrooms versus one for example (rare), of course, the price will be reduced BECAUSE I do not have the ADDED cost of...

1. Marketing costs to get 100 bath's
2. Sales Costs - multiple meetings to get one client (I will save myself OVER 100 estimate meetings, and follow-up meetings, etc.)
3. Fuel 
4. Economy of scale for products (see retail above)
5. Etc...

... and anyone in construction who offers such an opportunity and knows anything about pricing knows this, so they WILL expect better pricing on 100 baths versus one. These type of scenarios, however, are rare for the average construction company.

Anytime you reduce your price, there MUST be something the customer gives up in the process, otherwise all YOU are telling a customer is that your price is padded, and the problem is, they have NO IDEA how much padding that is... and if you reduce your price, they are left to figure out "is that the real price" and push for more. If they push for more at some point you have to say "sorry, no more" which is what your first price SHOULD be unless they give something up in the process. 

We start off every estimate meeting with the customer by telling them IN ADVANCE, that they don't have to worry about the stress and aggravation of wondering whether or not they got a fair price, as we practice pricing integrity, and don't play pricing games raising the price, only to lower it again with a fake "manager" or "first night" discount (or some other variation on the coupon/discount theme) and then leave it up to the customer to GUESS whether it was "real" price or not... the price we provide will either make sense to them or it won't... But that doesn't mean that we can't find more than one way to get their project completed for them by looking at alternate materials, etc...

This way, you have established IN ADVANCE that the way to get better pricing is giving something up on their end... NOT paying you and your company less...

EVERY company has a line they will not cross when it comes to pricing, I encourage you to make that line the point of profitability for your company (because that means YOU and the company are being paid)...

Best of luck... 8^)


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## katoman (Apr 26, 2009)

Great post Kap, thanks :thumbup:


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## dom-mas (Nov 26, 2011)

Ok I'll make my final post on this subject. 

The haggling with suppliers isn't only on volume discount. I was in my local at x-mas, F in Law wanted Dewalt radio/charger as a present. Talked to the manager of the tool dept and said i was interested but $200 was too steep, could he do anything about it. he went to the comp, shuffled about, hemmed and hawed and offered it to me for $165. Then I told him I saw it at Lowes for $138. He said, whoa, no way I can match that, I could do $160 but that's it. I said I'd rather not drive to Lowes, SOLD. 

He (or rather his computer) knew at what point it was still profitable to sell that radio. As the owner/operator of my business I also know that point. 

To further illustrate the point. Another time I was reshingling my roof. Can you do anything for me? Nope. Really? Yup. OK They still made the sale, I didn't want to go for a 20 min drive there and back to save $75. My local building supply knows when they can haggle and when they can't. So do I


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## KAP (Feb 19, 2011)

dom-mas said:


> Ok I'll make my final post on this subject.
> 
> The haggling with suppliers isn't only on volume discount. I was in my local at x-mas, F in Law wanted Dewalt radio/charger as a present. Talked to the manager of the tool dept and said i was interested but $200 was too steep, could he do anything about it. he went to the comp, shuffled about, hemmed and hawed and offered it to me for $165. Then I told him I saw it at Lowes for $138. He said, whoa, no way I can match that, I could do $160 but that's it. I said I'd rather not drive to Lowes, SOLD.
> 
> ...


Retail mindset on display...


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## GRB (Feb 23, 2009)

TNTSERVICES said:


> If I go to India, I will expect that I need to haggle. If they come here, we are a haggle free zone.


"A haggle free zone". :clap:

Well said! :thumbsup:


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## GRB (Feb 23, 2009)

KAP said:


> Retail mindset on display...


Yep - commodity items. 

I'll say it again: *No one* knows my price better than I do. The day a customer has a better understanding of the O&P my company needs to survive is the day I'll let them dictate my prices. Until then, they can go find someone else to haggle with.


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## dom-mas (Nov 26, 2011)

KAP said:


> Anytime you reduce your price, there MUST be something the customer gives up in the process, otherwise all YOU are telling a customer is that your price is padded, and the problem is, they have NO IDEA how much padding that is... and if you reduce your price, they are left to figure out "is that the real price" and push for more. If they push for more at some point you have to say "sorry, no more" which is what your first price SHOULD be unless they give something up in the process.


I'm breaking my last post claim.

I agree with just about everything you've said. "otherwise you're telling your customer the price is padded". 

Your price is padded and I think that you agree with that. the padding is called profit. It's above labour burden, above overhead above your own salary or wages, it's something non-tangible. And i will go back to a question i asked earlier. Does your business make the same profit day after day year after year? Some days/weeks/months/jobs you make more or less. Your crew doesn't always perform the way you hoped or weather causes delays or a dozen other possibilities. As TNT said some jobs require more expertise so you charge more for them. If you don't make the same profit day after day week after week etc.. then you realise that there is a limit to where your profitability is and more importantly is NOT. That is the point where "there is no more", but to start at the bottom is not everyones standpoint. 

As contractors we are free people to walk away from any job before a contract is signed. No one owns you, no one has taken control of a project because you have made a concession. 

And lastly, i will bet that most of the guys who are saying they won't budge, work on either a T&M model or on Cost Plus where there is no apples for apples because they are hiring YOU at your cost plus, plus plus whatever. The OP was told by the client that his price was beat by $1500, that is comparison shopping, that is bringing in a flyer to another store, the clients were buying a finished product and decided that they liked (or would most probably like) his finished product more than the "handymans" (I really don't want to start this debate again), but they weren't hiring him as a PM, they were buying a finished product at a fixed price. When i work on T&M, that's it, that's my rate, but fixed price is a different story where many variables can make the job hugely to marginally profitable.

Whew


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## BamBamm5144 (Jul 12, 2008)

I don't change my prices unless it's removing something. As said, if you give up something, I will give up something.


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## GRB (Feb 23, 2009)

dom-mas said:


> And lastly, i will bet that most of the guys who are saying they won't budge, work on either a T&M model or on Cost Plus where there is no apples for apples because they are hiring YOU at your cost plus, plus plus whatever.


Not here. 100% fixed price contract work. :thumbsup:

They hire us because they understand that what we're selling is not a commodity item, or items bundled together that they can get from anyone else, but rather a _process & an experience._ 

Go ahead & laugh - I did for years when I heard that from other guys that had figured out how not to compete in the haggling arena. 

I wish I had listened to them sooner. :blink:


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## jamestrd (Oct 26, 2008)

After reading many posts, I can say many good points were raised on both fronts..

I can also say I hate when asked if t's the best i can do or similar.

I actually rarely experience A direct "haggling" where offer re made or countered..Just the simple is that your best price or can you do any better?

Those I do not entertain..

However I am guilty of the "can we do anything for cash" deal.
and this is simply //job is 2500....will do for 2250 cash type deal..


but as I said earlier...I will only consider an offer like that if they are ready to sign the deal then..if not..it isnt even a discussion..

There is no use talking about discount,reduction etc if they are not ready to sign right then...
otherwise its just another price point to take to the next guy..


thats a no brainer for me...

Everyone has their way of competing, doing business and keeping food on their table...
There isn't wrong or right...just opinions and beliefs..

I will leave 250 on the table anyday for 2250 right now...foolish to think otherwise..

and i think the people who are in the camp of taking away from the job are missing the point..and the general populous way of thinking...
no one is "giving up" anything..they want what you are offering for a better price..
and in some instances, it may just be meeting the people s budget for the work..many people don't have extra cash these days to fling around..but they still want a quality job and product for a good price..

I'm in that camp too.


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## KAP (Feb 19, 2011)

dom-mas said:


> Your price is padded and I think that you agree with that. the padding is called profit.


Anything above your expenses is GROSS profit. The padding is above what you would normally charge. If you have a price structure, it already takes into account your percentage of profit that you have determined you will pay your company (not you, BTW)... putting aside that most small companies equate "profit" with what they pay themselves with (it is not) what's left over on the job, the "padding" is falsely inflating the price above what your company needs to profit, only to lower it again as a gimmick. 



dom-mas said:


> Does your business make the same profit day after day year after year? Some days/weeks/months/jobs you make more or less. Your crew doesn't always perform the way you hoped or weather causes delays or a dozen other possibilities.


There is a difference between what you "make" in profit as part of executing a project, and what you "charge" as part of a pricing structure. What you CHARGE is a defined profit, what you MAKE is affected by all the factors you listed, and can be more or less depending on how the project is run. 




dom-mas said:


> As TNT said some jobs require more expertise so you charge more for them. If you don't make the same profit day after day week after week etc.. then you realise that there is a limit to where your profitability is and more importantly is NOT. That is the point where "there is no more", but to start at the bottom is not everyones standpoint.


What I am encouraging you to do is to get out of the mindset of *"there is no more"* in essence to give to a customer, and instead, realize that you don't need to give up ANY of the profit you are charging when you have the customer give up something in the process to offset the reduction... 



dom-mas said:


> The OP was told by the client that his price was beat by $1500, that is comparison shopping, that is bringing in a flyer to another store, the clients were buying a finished product and decided that they liked (or would most probably like) his finished product more than the "handymans" (I really don't want to start this debate again), but they weren't hiring him as a PM, they were buying a finished product at a fixed price.


He was $1500 more than the Handyman but still got the job... using your pricing philosophy, he should have dropped the price... He didn't... and it goes once again to reinforce the concept that customers buy based on Company, Product, Service and Price... put enough emphasis on the first three and the last will either make sense for the customer or it won't... the fact that the customer tried to get him to come down by telling him the Handyman's cheaper price, and still went with him, when he placed the emphasis AWAY from price and on value, yielded the result. Does it always happen? No, but when it does, HE gets paid AND the company gets paid, putting him on much better footing than price-dropping. He went after the business that supports his companies business model. 



dom-mas said:


> When i work on T&M, that's it, that's my rate, but fixed price is a different story where many variables can make the job hugely to marginally profitable.


Don't you realize you are already saying what I am saying? *"T&M rate, that's it, that's my rate"*, and the only way the pricing will change is by the customer changing the materials they are using. Sound familiar? The only difference is, based on what you are posting, you are not paying your company when doing T&M, and only yourself. With fix-price, you ARE paying your company. But with BOTH, the only reason the number should change should be the client giving up something in the process.

Paying your company is GOOD... it is where capital reserves, equipment purchases, retirement funds, etc. come from... It is also where you ABSORB over-runs, mistakes, etc. and if you don't, it comes only from one place... YOUR POCKET...



dom-mas said:


> Whew


Indeed... Best of luck... 8^)


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