# Buyer wants it for free (duh) - advice?



## jc7622 (Aug 21, 2009)

....


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## WarriorWithWood (Jun 30, 2007)

Nice introduction.


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## Tscarborough (Feb 25, 2006)

You are joking, right?


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## jarhead0531 (Mar 5, 2008)

Horrible first thread. First rule of CT, DON'T DISCUSS PRICING, 2nd, 3rd, 4th....... Read the first rule. And hell no, 1700 sqft is a small ranch, until you think of the 15' ceilings. If you don't know what it would cost you to build it, how can we...


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## Double-A (Jul 3, 2006)

I'd recheck my contract and see what it says about change orders.

Next, I'd explain to him that his house is not worth you business if you were to lose it or your reputation because you're doing some plumbing work for this dink on his 3 car garage with lifts, dog wash, 15 feet ceilings...

I think I'd tell him that if he would like to enter into a conspiracy to defraud the plumber and the permitting authorities then he has the wrong guy. 

As for charging him, of course you would charge him, what does he honestly expect? That you would work for free? Does he honestly think the roofers are going to roof that garage for free? How about the materials suppliers? Does he think they are going to just give him a 1700 sq ft garage worth of materials for free?

Like the man said, you have to be joking.


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## jc7622 (Aug 21, 2009)

...


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## cabinet runner (Nov 11, 2008)

This is real simple .I am not a builder but have worked with enough of them to know your 1st mistake was to agree to a flat rate to build a custom house . Unless your flate rate was double the going percentage to build custom . I'm guessing that isn't the case .

Around here it is cost plus a certain percentage . That keeps the homeowner somewhat in line as far as changes and at least compensates you for having to deal with said changes .

But since you went this route I would divide your flat rate into the projected cost of the house and you have your percentage . Then apply it to the garage . Normally I would say deduct some off this percentage since it is a garage BUT it sounds like this future homeowner is going to work you really good on the main house anyway so you might as well try and make a buck off the garage .

Sorry guy but I can see all the changes this guy is going to want to make as you go along and you will be doing them for you flat rate . He already has the upper hand . 

Or keep him happy and build the garage for free . I'm sure his thinking is your going to be on site anyway right ???
Wait until the wife comes in and decides to move walls after your trades have been through .


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## bert0168 (Jan 28, 2008)

jc7622 said:


> ....


DAMN, I missed it


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## ModernStyle (May 7, 2007)

Wtf ???????????


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## HanerEnterprise (Apr 19, 2009)

Hot and muggy day... then this thread.


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## oldfrt (Oct 10, 2007)

WOW,

He picked up his posts and left?

I guess the first three posters scared him off. 


Cm,on bach jc,there's alot to learn here.
You may have to take a little abuse,but it will be worth what you can learn.


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## 480sparky (Feb 1, 2009)

oldfrt said:


> ..............You may have to take a little abuse,but it will be worth what you can learn.


If he can't take it here, he ain't gonna make it out in the real world. :thumbsup:


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## deckman22 (Oct 20, 2007)

He must be new to the business.

Never heard of GC charging flat rate, bet that changes that on the next one.


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## oldfrt (Oct 10, 2007)

Maybe he learned enough after all!


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## kevjob (Aug 14, 2006)

:blink:


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## jc7622 (Aug 21, 2009)

OK, I'll come back. Actually I did leave after the first three responses because I figured I was in a forum full of trolls and flamers who like to post a lot even when they don't really have anything to say. 

And no I'm not new to the business. I'm a second generation builder and have been involved (either solely or in partnerships) in developing about 1000 residential lots, so to whoever said I won't last...I'm still here and have been here for a long time.

The house is cost plus $/SF. My question wasn't should I build the detached garage for free. Why would I do that? My question was to get a second opinion about whether my fee on the detached garage of $5/SF was reasonable. I think it is. I always like to bounce things off of other people before charging off and making a situation worse. 

Oh yeah, someone said something about me being at a disadvantage due to the contract. Not so. I wrote the contract. They signed it. They are using my banker who I have know for 10 years. They are building in MY development and I am the current president of the HOA. I am also the current and only member of the design review committee. Everything has to be approved by me whether I am the builder or not. In the termination section of the contract there are only a few itmes that give them the right to terminate me and even then they have to give me a certain amount of time to remedy. Even then if there is any kind of a dispute it has to go to mediation and arbitration. I think I hold the cards, not them.

Why would I change from cost + $/SF if it is working for me deckman? I get paid after every phase (blueprint, permit, pad site, foundation, slab, frame, roof, etc, etc). I think it's a lot simpler than cost + %. To each his own.


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## JumboJack (Aug 14, 2007)

5.00 a sq.ft.?


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## oldfrt (Oct 10, 2007)

There are a lot of forums with the usual # of flamers and trolls.If you are new here and ask specifically about pricing you'll get jumped on.
There have been a lot of"what do I charge" ?'s lately and they generally don't sit well.Assumptions are made and it becomes a free for all.

I didn't get to read your original post,but your second explains your position and experience.

Anyhow,
You know what worked for you in the past,and I would assume know the costs involved in framing in your area ,which would be good to know to make a regional estimate .

Five dollars a sq/ft for labor on framing here would probably be a bit underpriced.


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## jc7622 (Aug 21, 2009)

No, I'm not a framer. I'm the builder, the GC. The $5 per square foot was my proposed fee on the 1670 SF detached garage only - not on the house - the house is much more per square foot and is a separate issue. We are already buiding the house. It's not a problem.

Basically for this $5 per SF I would contract (on the detached garage) the dirt work, foundation, slab, frame, brick/stone, roof, paint, electrical, doors/windows, garage door openers, etc, etc and probably some plumbing. This detached garage will have to have its own permit and inspections. 

I know what it will cost to build. My question was whether my fee of $5/SF seemed reasonable. We have just started the house and the buyer thinks that since we're already there working it will kind of just almost build itself. Obviously its more work for me and I want to get paid for it. He knows now he is going to have to pay me something for my time and effort, we just haven't agreed on that amount yet. I think $5/SF is fair and he thinks its too high.


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## BreyerConstruct (May 22, 2006)

So the 5 a foot is just your fee- not the actual charge to build?

If I understand correctly, a 500 sq. ft. garage would have a fee of $2,500 that you tack on for managing the project... but that project actually will cost much more (I'm guessing 10k-50, depending on style, etc.)??

~Matt


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## naptown CR (Feb 20, 2009)

oldfrt said:


> That was my initial feeling,but his question was should he build the detached garage for free.
> 
> Absolutly friggin not
> 
> ...


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## JumboJack (Aug 14, 2007)

I don't think he would have caught nearly as much flack as he did if one,he didn't delete his first post like a kid taking his ball and going home.And two,when people tried to help by asking him to figure his costs out and that would help him get his number.He then goes from saying he has no overhead but then in other posts lists a bunch of things that are overhead.....

To those that are defending his question what would you have like someone to say?..."Yes 5.00 is perfect go for it"..."No it's too much,try 4.19."
How can someone answer a how much question from some one when we don't know ANYTHING about his numbers?Or where he lives/works?
I say it again..WHAT WOULD THE PROPER ANSWER HAVE BEEN?
The proper answer was a question that many asked and the OP got all pissy about.


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## WNYcarpenter (Mar 2, 2007)

How can any new member understand what should, or shouldn't be specified in their first post. Sure, in hind sight we all can offer suggestions.

I think the folks with the higher post counts should be the folks that have more patience. Chasing foks out the door isn't a great welcoming commitee.

CT members have always stuck together keeping HOers out, but it's starting to get ridiculous.

If some of our more established members would have posed the same question, I guarentee there'd be 12 immediate posts kissing his/her ass!

So a newbie didn't ask a question as specifically as we are accustomed to.....IMHO I think JC did a particularly good job holding his case....I hope he stays and contributes if not to the specific trades, but to the business section.


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## jc7622 (Aug 21, 2009)

WNYcarpenter said:


> IMHO I think JC did a particularly good job holding his case....I hope he stays and contributes if not to the specific trades, but to the business section.


I'll check it out. Thanks for the tip. :thumbsup:


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## JumboJack (Aug 14, 2007)

WNYcarpenter said:


> How can any new member understand what should, or shouldn't be specified in their first post. Sure, in hind sight we all can offer suggestions.
> 
> I think the folks with the higher post counts should be the folks that have more patience. Chasing foks out the door isn't a great welcoming commitee.
> 
> ...


They would have been asked the same questions the OP was asked.
Do you not understand how ludicrous it is to ask a how much question and expect it to be answered without knowing a few things?

I am serious.What should the "more established members" have said to him?They asked some important questions to try to help get an idea and he got defensive.And when he started to insinuate he did not have any overhead that made a lot of people think he was a HO.
:wallbash:


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## KevinA (Feb 16, 2008)

JumboJack said:


> "The problem with socialism is that eventually you run out of other people's money." :wallbash:


Awesome quote, btw.


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## WNYcarpenter (Mar 2, 2007)

JumboJack said:


> They would have been asked the same questions the OP was asked.
> Do you not understand how ludicrous it is to ask a how much question and expect it to be answered without knowing a few things?
> 
> 
> ...


I regretfully missed the first few post that were deleted, but I followed the thread...Who wouldn't get defensive? He doesn't know anything about CT. Apparently, JC realized after a couple posts he was in the wrong place and deleted his comments...there were insuations made and he came back to stand his ground. 

I think we all understand now and JC offers a pretty damn good debate and may have a lot to offer. Put down your guns and give him a chance.


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## JumboJack (Aug 14, 2007)

WNYcarpenter said:


> I regretfully missed the first few post that were deleted, but I followed the thread...Who wouldn't get defensive? He doesn't know anything about CT. Apparently, JC realized after a couple posts he was in the wrong place and deleted his comments...there were insuations made and he came back to stand his ground.
> 
> I think we all understand now and JC offers a pretty damn good debate and may have a lot to offer. Put down your guns and give him a chance.


Can you answer my question about how we should have answered his question?
Which was basically "Is 5.00 a sq.ft. too much or not enough to build a garage?"
How do you answer that question without asking a bunch of questions first?

Double A said this...
"As for charging him, of course you would charge him, what does he honestly expect? That you would work for free? Does he honestly think the roofers are going to roof that garage for free? How about the materials suppliers? Does he think they are going to just give him a 1700 sq ft garage worth of materials for free?"

Cabinet runner said this...
Around here it is cost plus a certain percentage . That keeps the homeowner somewhat in line as far as changes and at least compensates you for having to deal with said changes .

But since you went this route I would divide your flat rate into the projected cost of the house and you have your percentage . Then apply it to the garage . Normally I would say deduct some off this percentage since it is a garage BUT it sounds like this future homeowner is going to work you really good on the main house anyway so you might as well try and make a buck off the garage .

Sorry guy but I can see all the changes this guy is going to want to make as you go along and you will be doing them for you flat rate . He already has the upper hand . "

Oldfrt said this...

Anyhow,
You know what worked for you in the past,and I would assume know the costs involved in framing in your area ,which would be good to know to make a regional estimate .

Five dollars a sq/ft for labor on framing here would probably be a bit underpriced."

..and this...
"General rule of thump contracting here is 15% of total costs.If you can incorporate your subs that are on the job already, and schedule them to do the work while your there overseeing later subs on the house ,than your time there will overlap.They won't have to move equipment and could give you a good price?
Less time on the job could result in savings but you still have your overhead costs.Only you know these costs so no one can give you anything better than a guess."


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## curiouscanuck (Dec 7, 2008)

WNYcarpenter said:


> So a newbie didn't ask a question as specifically as we are accustomed to.....IMHO I think JC did a particularly good job holding his case....I hope he stays and contributes if not to the specific trades, but to the business section.


I gotta say I'm glad JC stuck it through the thread.

When I think of overhead it's much the same way most of the critical posters have expressed.

What I gather from JC's posts is his business model as a primarily paperwork GC has been simplified to the point that those overhead costs do not make up a significant enough amount based on his volume for him to worry about (or even consider) exactly defining them. His needs for profit to grow his business and to sustain him in the hard times are going to be way less without employee and equipment expenses. I imagine his advertising budget is not significant as well since he works in major subdivisions that he is likely very well connected in. His wage is also it seems wrapped in tightly to his GC fee. While not the why I'd define profit... If it works for him and his accountant then what's the problem other than argueing definitions?

Since what he charges is not able to be quantified on an hourly bases this HO does not understand why JC needs to charge a GC fee at 5/sqft.

So I'd say JC that you should defend your charge by stating that that's what you would have charged to quote this garage in the first place, and that you need to do this because your profit (by any definition) is based on overall volume over a year and not hourly expenses, as your work is all behind the scenes and they are not only paying for the garage, but for the fact that they even have a project that exists to make the garage a possibility.

(I'll qualify these opinions by saying I'm still at the business plan stage of my business and not an operating contractor.)

Matt


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## nEighter (Nov 24, 2008)

I hate when OP is gone.. so hard to figure out what is being said or about what.


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## oldfrt (Oct 10, 2007)

JC,
Read this and you may get an idea of why the overhead ?'s were asked:

*Pricing, Estimating, and Success* 
One of the most challenging aspects of running a contracting business is estimating jobs. For someone with little experience, estimating can be a rather scary endeavor (it can also be scary for someone with tons of experience). After all, the accuracy of the estimate will have a huge impact on the contractor’s success.

This, I believe, is the primary reason we see so many questions asking what to charge for a job. But such questions are misdirected, because what I (or anyone else) would charge is completely irrelevant and doesn’t address the real issues.

The price of a job is comprised of 4 basic components: labor costs, material costs, *overhead*, and profit. Estimating is the process of identifying the labor and material costs. We add our *overhead* and profit to those costs to obtain our price.

Overhead—advertising, rent, insurance, utilities, phone, owner’s salary, etc.— is completely unique to each company. Without knowing these numbers, it is impossible to properly price a job.

Profit goals are also unique to each company. Again, without knowing the specific profit goals for a company, it is impossible to properly price a job.

Consequently, any attempt to answer a pricing question in the absence of these two key numbers is essentially meaningless. More to the point, pricing questions ignore the fact that a large percentage (often more than 50%) of the job’s price should be comprised of *overhead* and profit. (My suspicion is that those who pose such questions don’t know their *overhead*, and mistake gross profit for net profit. But that’s a different issue.)

As I said, estimating is the process of identifying the labor and material costs for the job. Labor costs are determined by the type of work being performed, the production rates of the company’s workers (the time required to perform each task), and pay rates. As with *overhead* and profit, these numbers will be unique to each company. Material costs are determined by the type of materials required, the quantity required, and their purchase price.

For example, let us say that a painting contractor knows that his painters can prepare and paint a certain style of door in 30 minutes. He looks at a job that has 10 of these doors. He knows that his painters can prep and paint these doors in 5 hours. He can also calculate the materials required by the spread rate of the product he will use. The contractor can now determine what his costs will be for the job. By adding his *overhead* and profit to these costs he will have his price for this job.

While the above example is simple and uses a painting project, the same principle applies to every contracting job—large or small, simple or complex—regardless of trade. 

What should I charge for X? really means: what is the total of my labor costs, material costs, *overhead*, and profit? And the answer to that question requires a substantial amount of additional information. Providing an answer without that information is simply a guess.

Accurately pricing a job is not rocket science, but it shouldn’t be based on conjecture, blind guesses, or another company’s numbers either. Certainly accurate estimating takes effort, but owning a successful business isn’t easy. Asking what to charge for a job is asking for a short cut, but there are no short cuts to success.

Such questions about prices for a job are inappropriate, because they ignore the many factors that determine the price. Providing a price in response to such questions is also inappropriate, for the same reasons.

It is a documented fact that 90% of small businesses fail within 5 years. Of those that make it 5 years, another 90% will fail within the next five years. Which means, 99% of small businesses fail within 10 years. One of the primary reasons for failure is not charging enough. Contractors are as guilty of this as anyone.

There seems to be no shortage of hacks willing to work for dirt cheap prices. Nor does there seem to be a shortage of replacements when they inevitably fail. One of the most effective means for avoiding failure is to know your numbers. Asking what to charge for a job is simply an admission that you don’t know your numbers.

I hasten to add that there is nothing wrong or inappropriate with asking *how* to price a job. But *how* to price is different from *what* price to give. Learning the process is a good thing. Looking for an easy way out isn’t.

Putting paint on the wall is a trade skill. Pricing a job is a business skill. A skilled craftsman does not necessarily make a good businessman, because different skills are required. The owner of a contracting company does not necessarily need to have trade skills, but it is imperative that he have business skills if he is to succeed. The longer you wait to obtain those skills, the closer you move to joining those 99%.

Brian Phillips


__________________
Houston Painters
Houston Radiant Barriers 







 
*The Following 26 Users Say Thank You to Brian For This Useful Post:* algernon (05-05-2009), Aussiebuilder (07-08-2009), bonz (03-23-2009), CapeCodder (02-21-2009), ClosetPro (05-15-2009), coty1313 (05-16-2009), dromike15 (04-08-2009), English Roofer (02-27-2009), flip (01-30-2009), fourseasonswa (06-28-2009), framerman (06-08-2009), gregorylduncan (04-07-2009), Handymanservice (03-15-2009), Houston's (02-02-2009), Jaga (04-28-2009), jrl (01-31-2009), ladypainter (03-09-2009), lilcleanups (02-19-2009), MYKhan (07-29-2009), Osito (04-28-2009), Peter Schultz (08-18-2009), Ronovations (03-29-2009), Royal LLC (03-06-2009), ScottThePainter (08-18-2009), Vision Custom (07-22-2009), wireaudio (03-04-2009)


My opinion was that any project you undertake should meet the criteria of covering your overhead.
That's all I was really trying to get across,it's just a matter of being consistant with your pricing so you don't leave too much on the table.

Sorry for the flaming,but some facts were unclear in your posts and some folks here were confused as to your reasons for asking if the price seemed fair.
Some of your remarks became condescending and the door was open.
As I said,before things got out of hand:

*General rule of thump contracting here is 15% of total costs.If you can incorporate your subs that are on the job already, and schedule them to do the work while your there overseeing later subs on the house ,than your time there will overlap.They won't have to move equipment and could give you a good price?
Less time on the job could result in savings but you still have your overhead costs.Only you know these costs so no one can give you anything better than a guess*


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## Double-A (Jul 3, 2006)

I seem to recall that this home owner asked you to not only do this for free, as you were on the job anyway, but he asked you to do it on the down low.

You haven't addressed that part of it, and several of your initial responses were not the wrath of folks mad at you, but rather mad at the kind of contractor and home owner that would enter into this type of arrangement.

So JC (I love that, its so ironic), you can get mad and upset because you got waxed, but don't get on your high horse and start speaking to only parts of your original post. This nutter of a client asked you to build a luxury addition on his property (or yours) for him, and do it for 5 bucks a square foot, and to put some plumbing in that the plumber knew nothing about, nor the permitting authorities, etc. and you have the audacity to ask if you're charging enough or too much?

I can't recover your original post, but if I could, I would be sorely tempted because you sure seem to have a revisionist's sense of history.

As for that 5 bucks per being your profit, I don't buy it. I'm sorry, but I can't. You're telling me that you will have absolutly no addition time or effort to put into this that this 5 bucks per is supposed to cover? No time? No prints? No meetings? No safety concerns? No additional revenue to claim on your worker's comp insurance audit? 

It ain't so. It ain't so, It ain't so. 

No chicken for joo!


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## oldfrt (Oct 10, 2007)

Thanks for adding that Double-A,

I read your first post,and was wondering what the refefence to plumbing was about.
I didn't see the the original post by JC,but knew something was lacking in nis second one.

Seems he came in with a big chip on his shoulder,with his remarks to a few posters.


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## Celtic (May 23, 2007)

Us regulars should get in the habit of quoting some folks first posts....edited or not, the quoted version will remain.


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## Michaeljp86 (Apr 10, 2007)

Celtic said:


> Us regulars should get in the habit of quoting some folks first posts....edited or not, the quoted version will remain.


Did anyone quote it? Looks like I missed another bash. :sad:


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## build4y (Aug 18, 2009)

*No way!!!*

Try to charge them something for that


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## JumboJack (Aug 14, 2007)

build4y said:


> Try to charge them something for that


:blink:


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