# Is there a memo going out to HO's that says...



## Melissa (Feb 23, 2006)

Ask the contractor for a breakdown between labor and materials? GOD! It seems we get asked this question all the time lately! 

You know what I think it is- people living above their means- they want something that they can't really afford. 

My husband gave a price of $1,625.00 to patch a huge window to a woman who just bought a house around the block from us. The house sold for over $700K, and is barely even 2 bedrooms. Anyway, she wants the work done right when the current people move out and just before she moves in. Fine, gave her the price, now she wants it broke up. What's to even break up on this kind of a job??? Michael said he was going to tell her, it's $5 for the materials, and the rest is labor! :laughing:


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## ProWallGuy (Oct 17, 2003)

5% labor
5% materials
90% experience


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## ron schenker (Dec 11, 2005)

Melissa, exactly what does "patch a huge window" entail?:blink:


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## slickshift (Jun 14, 2005)

Melissa said:


> Is there a memo going out to HO's that says...
> Ask the contractor for a breakdown between labor and materials? GOD! It seems we get asked this question all the time lately!


Yes, there was
I forget whether it was Reader's Digest, Consumer Reports, or Parade or whatever, but I did read that within the last....maybe two weeks?

Not that you don't get that anyway from people wanting to say "couldn't you use a cheaper XXX, YYY's are only ZZZ a QQQ at Home Depot..." to get you to say (darn, they are onto us)-"yeah, I was trying to rip you off, how about less money for the whole she-bang"


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## realpurty2 (Aug 18, 2005)

This topic has come up in other threads, even recently, but I kept reading to see if anyone else spouted out that they too didn't see the problem. Unless I missed a post somewhere, I must be the only one confused.

I simply must not understand contracting as well as I thought or something... because I see no major problem in breaking down cost for a customer, in fact, I use it as one of my selling points on those who appear skeptical during the sales process. I even upon final invoice offer a copy of every receipt spent on their project. 

I'm not being sarcastic.. this is an honest question but what is the problem with a customer wanting to see where his money went if everything really is done on the up and up and the contractor has nothing to hide?

We started out years ago with the same feeling as what I'm seeing on here, but met opposition with the customers. They kept asking for breakdowns so I sat down, re-worded our invoice a bit, without changing any profit margins and accomodated the customer's wishes. We are charging the typical mark-ups, they are just worded differently on the breakdowns and to date, no client has ever complained. Some have even complimented us on being so upfront with them, and how it's not something they are used to.

Am I just crazy? I sure feel crazy considering so many on here seem to do the exact opposite and find it an issue when someone asks for it.


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## Glasshousebltr (Feb 9, 2004)

A brake down of costs can lead to a lot of problems. A penny picker for one, a DIY project inversion is another.

I normally stay away from brake down folks, it turns into a PITA. My rates for the best part are in my head so to extrapolate such data I have to drill threw my thick skull.:laughing:


Bob


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## DecksEtc (Oct 27, 2004)

real,

I think some of the oppostion on the contractor side of things is that when a contractor does that it is setting themselves up for the "I'll buy the materials myself customer (MMC)". The problem with dealing with an MMC is that they never get every single item that is required nor are they around when the missing parts are required. This usually leads to you having to take the time to call them, only to have them reply "can you just pick it up and I'll pay you for it when I see you next?". This then leads to the contractor having to have their crew stand around idly waiting for the parts to be picked up and brought back. Also, they only want to pay you the exact amount for the missing parts - not for your time, your crew's time or the fuel it cost you to get the "missing parts"

Now, I'm not saying that is always the case - just something that happened to me on a bathroom job once. Needless to say, it was enough for me to never deal with a MMC ever again. I just won't do it.


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## slickshift (Jun 14, 2005)

It's usually a red flag of one or the other
MMC, PP, DIY invasion, Wheel & Deal Girl, or DeSpec Materials Guy



> problem with dealing with an MMC is that they never get every single item that is required nor are they around when the missing parts are required.


...and pretty much none of these types have any clue how much the "little" parts cost and how important they are


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## DecksEtc (Oct 27, 2004)

slickshift said:


> ...and pretty much none of these types have any clue how much the "little" parts cost and how important they are


Exactly! The time lost is almost always WAY more than the actual cost of the part.

I have an inventory of everything from screws, bolts, joist hangers, nails, and more. I always take more to a job than I know I will need. 

For example, is an MMC going to buy more joist hangers than they need? No. I always have 5-10 more than I need on hand, just in case.


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## Kristina (Apr 21, 2006)

All of the above and not to mention that they don't SEE the hidden costs. I'm not going to break down FICA and taxes for them, or the liability insurance ,or the gas, or the time after "work" hours I spend taking crap to the dumps or driving to get materials.

In their opinion, our job is not worth more than maybe $18/hour. That's NOT what we pay #1 and #2, it doesn't include all that extraneous stuff that isn't tangible to them and that frankly, they don't care about.

Our costs are standard CT markups as well, we have no problems providing receipts and documentation to support our costs, to an attorney, not to a HO.

If we charged the job by T&M, then they would certainly be entitled, otherwise, they agreed on the price, signed the contract and how we came to the price is irrelevant.

That's the thing, some jobs only take 8 man hours if you are efficient, so they think "hmmm, you made $247/hour for this job??? I think not!" and decide after the job is complete that you charged too much. 

It's too hard to explain and per our attorney, we are not obligated to explain or justify our costs. 

You aren't crazy, just different. :w00t:


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## realpurty2 (Aug 18, 2005)

DecksEtc said:


> real,
> 
> is setting themselves up for .



Now I am out of the dark... those words right there made me see the difference. I am referring to AFTER the job is complete, in which there is no way for them to turn into MMC's. 

I made the MMC mistake when still wet behind the ears and never again..lol 

But back to the subject, it makes 100% more sense now that I realize your talking about during the bid process and not invoicing. During the bid process, we do not break them down either, only offer a complete breakdown upon completion.


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## Melissa (Feb 23, 2006)

I agree, it's a waste of time, and esepcially in this example- to seperate the materials for this kind of job. 

Ron, He's removing the old window and hauling it off, framing the opening for drywall and plaster, patching the interior to match existing texture on wall, lathe and plaster the exterior to match existing stucco. Making them paint ready.


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## rino1494 (Jan 31, 2006)

Kristina said:


> All of the above and not to mention that they don't SEE the hidden costs. I'm not going to break down FICA and taxes for them, or the liability insurance ,or the gas, or the time after "work" hours I spend taking crap to the dumps or driving to get materials.
> 
> In their opinion, our job is not worth more than maybe $18/hour. That's NOT what we pay #1 and #2, it doesn't include all that extraneous stuff that isn't tangible to them and that frankly, they don't care about.
> 
> ...



I agree 110%

A HO doesn't need to see how much money I make. I also throw in travel time and headache costs. When the HO buys their own materials, I still figure in my markup.

When a HO shows me a copy of their weekly paycheck and W2, then maybe i'll show them a breakdown of the job.


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## ron schenker (Dec 11, 2005)

Melissa...ok I get it now:blink:


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## Melissa (Feb 23, 2006)

Okay, what's up with this face :blink: Does the price sound high to you??? :blink: :whistling:


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## Kristina (Apr 21, 2006)

*When a HO shows me a copy of their weekly paycheck and W2, then maybe i'll show them a breakdown of the job.*

Don't forget a job description too. I want to know what exactly they are overpaid to do.:jester:


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## DecksEtc (Oct 27, 2004)

real,

I made the assumption you were talking about during the bid/quotation phase since I have never been asked for anything close to a breakdown after the fact.

Do you get asked by Homeowners, Commercial Clients or both? It just never occurred to me that a HO would ask for the material costs after the project is done. But again, I've never been asked.


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## Glasshousebltr (Feb 9, 2004)

And if they get stupid all ya have to say is _"If your going to take my profits....Take my losses as well."

_Bob


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## Kristina (Apr 21, 2006)

I'm just amusing myself here. I was just thinking how great it would be to sit in front of, say, an attorney and simply state,

"you know, you don't really look like you work hard enough to earn $200/hour. I mean, you just sit there scribbling on paper. How hard is that? How many hours exactly have you put into my case? I think you should be putting in more hours on my case but I don't want to pay you for them. It just doesn't make sense that you get $5000 for 5 hours total work and not breaking a sweat at that. $1000/hour?? That's preposterous!"

Of course, *I* know and *you* know that different filings cost more than just man hours spent on them and that figures into the price as well, but come on, why does it only seem that CONTRACTORS are required to deal with this kind of BS?!?


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## Melissa (Feb 23, 2006)

I think Ron must have got the memo too! :laughing:


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## Kristina (Apr 21, 2006)

DecksEtc said:


> real,
> 
> I made the assumption you were talking about during the bid/quotation phase since I have never been asked for anything close to a breakdown after the fact.
> 
> Do you get asked by Homeowners, Commercial Clients or both? It just never occurred to me that a HO would ask for the material costs after the project is done. But again, I've never been asked.


Oh yes! It happens ALL the time! When a homeowner sees you with their own eyeballs only putting in 14 hours of work, suddenly the price they were quoted seems awfully high when they "cost out" the materials they *believe* you used from Home Depot. 

So they do the math and your cost minus the material cost THEY came up with, minus oh say $18/hour..."say WHAT?!?! You charged me WHAT?!?!"

Yeah. It happens. Got a dude smearing us all over the place, BBB, DCP, small claims court up to including a sign in his front yard because he feels like he was overcharged.


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## DecksEtc (Oct 27, 2004)

Glasshousebltr said:


> And if they get stupid all ya have to say is _"If your going to take my profits....Take my losses as well."
> 
> _Bob


They can have my ex-wife's debts that I'm still paying off while they're at it! While I think of it, they could help out with my mortgage payments too! :cheesygri


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## DecksEtc (Oct 27, 2004)

Kristina said:


> Oh yes! It happens ALL the time! When a homeowner sees you with their own eyeballs only putting in 14 hours of work, suddenly the price they were quoted seems awfully high when they "cost out" the materials they *believe* you used from Home Depot.


True enough. It's pretty universal that people only think your working when they see a tool in your hand. Not everyone understands or realizes that a lot of us put in many more hours when we're not in their sight. Unfortunately, that comes with the territory. 



Kristina said:


> Yeah. It happens. Got a dude smearing us all over the place, BBB, DCP, small claims court up to including a sign in his front yard because he feels like he was overcharged.


You should just put a sign on his neighbour's lawn with an arrow pointing to his yard that says "This guy stiffs contractors" and see how much trouble he has hiring someone again! :cheesygri


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## Glasshousebltr (Feb 9, 2004)

Kristina, did he put your company name on the sign, if so get a pic of it, I think that's slander without a judge. 

Every state I've ever lived in, eyeshot is public domain.

Bob


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## Kristina (Apr 21, 2006)

We never confirmed he put it up. He *said* he was going to, he also said he would complain to DCP,BBB and file small claims court, all of which he *did* do.  

Yes, he threatened to put our name on it in order to keep other "women from being victimized" by my husband's practices. 

We should do a drive by.........to see if there is a sign. :thumbsup:


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## Kristina (Apr 21, 2006)

*You should just put a sign on his neighbour's lawn with an arrow pointing to his yard that says "This guy stiffs contractors" and see how much trouble he has hiring someone again! *

Seriously, people talk about this all the time. Why is it that consumers can complain about US but we have no where to file claims against THEM??

That's messed up. :furious:


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## Glasshousebltr (Feb 9, 2004)

Yea, nothing like a Drive By. Us crackers can play too.:w00t:

Bob


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## realpurty2 (Aug 18, 2005)

DecksEtc said:


> real,
> 
> I made the assumption you were talking about during the bid/quotation phase since I have never been asked for anything close to a breakdown after the fact.
> 
> Do you get asked by Homeowners, Commercial Clients or both? It just never occurred to me that a HO would ask for the material costs after the project is done. But again, I've never been asked.



Never had any commercial client argue on price. In this area, it just doesn't happen because there are too few qualified contractors so commercial clients are just happy to find someone to do the work. 

I've actually only had one or two homeowners who directly asked for a breakdown of cost during the bidding phase, that's when I switch gears and start selling them on value not price and offer up that an estimate is exactly that, an estimate, but that we will gladly breakdown the exact cost upon completion when I can offer them factual numbers not estimates. It might be the area we live in but it's working, we are staying absolutely slammed busy, and I just did our profit margins for the first quarter..and let's put it this way, everyone in the company gets a huge bonus on Friday since we offer profit sharing.


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## Mike Finley (Apr 28, 2004)

realpurty2 said:


> is an honest question but what is the problem with a customer wanting to see where his money went if everything really is done on the up and up and the contractor has nothing to hide?


The easy answer to your question is you tell me the answer to this question - "Why does a customer want to know the break down between labor and materials?"

After you come up with your answer - then consider this - is the customer buying the job one item at a time or an hour at a time or is he buying a completed project?

Of course the answer is a completed project - so what difference then would it make if the project is $10,000 what the individual parts are? Of course there is no difference.

There is only one reason why a customer wants a break down.

To this day I can't think of a single customer who has asked for a break down. I have turned down many appointments with potential customers when it became clear they were looking for an installer only so maybe that has something to do with it.

However, I have had customers try to play the what if game - where so what if we get rid of the granite counter top, change it to Corian - how much is the granite costing me? I usually help them out with the first instance of this, but if it keeps going down the road of... how much is this, how much is this and this... 

I realize a lot of people here aren't in the same situation as me, but I want price to be about 10% of the reason someone is hiring me.


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## Tscarborough (Feb 25, 2006)

I can't think of any reason, outside of a deposition, that that information would be relevant to a project. They may want it, but they do not need it and are not entitled to it, especially after the fact.


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## realpurty2 (Aug 18, 2005)

Mike Finley said:


> The easy answer to your question is you tell me the answer to this question - "Why does a customer want to know the break down between labor and materials?"
> 
> After you come up with your answer - then consider this - is the customer buying the job one item at a time or an hour at a time or is he buying a completed project?
> 
> Of course the answer is a completed project - so what difference then would it make if the project is $10,000 what the individual parts are? Of course there is no difference.


Mike, 

I'm not justifying or explaining my position on this, just answering your questions for conversation purposes.  

It all comes back to area/location. So to answer your questions FROM THIS AREA ONLY's perspective...

1. Because the entire eastern corner of this state, especially the small town I live and work in, is absolutely saturated with jacklegs, unskilled, and unscrupulous individuals who prey on homeowners. I wish I was kidding or exagerating, but here, it's actually considered a problem the local government is trying to figure out how to deal with. The state does not require a license for any work under $25k, so when factories closed up, many of the unemployed went to work as handymen on their own without skills, insurance, license or overhead. Their tools come from flea markets or dollar store. Any reputable licensed contractor is automatically at a disadvantage trying to prove their legitimacy and justify why they are more due to insurance cost and overhead vs the jackleg who is just looking to earn enough for beer money. 

Not every time, but there are times when simply making the offer to back up with proof that they are getting their money's worth is enough to get a gun-shy individual and previous victim of the jacklegs to sign their name on a contract that often is more than they make in 6 months of work here. 

2. Again, I think it is just the location but even though the numbers all total out the same, and we're charging all the typical markups, I feel giving them the option to see what they were charged helps make them feel they got what they paid for and maybe it reflects well on our integrity for referals and word of mouth. Again, they only get it if they ask, and most don't, but I like to have a tried and tested plan in place before something arises too. I started out showing material markup % on the breakdown but people didn't seem to care for that word... so I simply left the amount the same and changed the wording to Material Procurement Fee and it has not been a source of question by a single customer after that.

If I moved 70 miles east, into a metropolitan area, none of this would ever come into play but it's like a different planet in this 100 mile radius of the state.


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## Mike Finley (Apr 28, 2004)

I don't understand what #1 has to do with the subject. I think you are saying that because there are so many A-holes running around that customers are scared out of their wits and their only defense is to see a break down?

I don't understand that as a justification, but you know... whatever works...

As far as #2. It sounds like your company policy is not to give a break down.


> Again, they only get it if they ask, and most don't,


So... once again I don't see why you change your company policy for the exception to the rule? If only a few people ask for it why do they get it instead of a simple that's not how we do things and move on?



> Not every time, but there are times when simply making the offer to back up with proof that they are getting their money's worth is enough to get a gun-shy individual and previous victim of the jacklegs to sign their name on a contract that often is more than they make in 6 months of work here.


I can understand that, and I won't say that under the right circumstances I wouldn't do the same thing, but they would have to be pretty unique circumstances. Just asking for it wouldn't be cause enough to roll over for somebody. Like I said I know my circumstances aren't the same as everybody elses but I strive to minimize price and concentrate on everything else. I can't tell you the number of people who are getting 3 or more estimates and never follow through with those other 2 after we meet, or the number of people that say something in regard to "You weren't the lowest of the other estimates we got, but my "husban/wife" thought you certainly would be the best choice."

Your circumstances must be much different them mine, cause I can't think of any situations where I would run into a customer who would want a break out unless they were price shoppers first and foremost. At this point I don't want those customers. Of course as I grow and need to feed the machine those things all start to change.


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## realpurty2 (Aug 18, 2005)

*If only a few people ask for it why do they get it instead of a simple that's not how we do things and move on?*

Because in my small itty bitty humble opinion, If it means that much to them that they directly ask for it and I know I have nothing to hide from them, I'm doing nothing more than donating maybe five minutes of my time and a few clicks on a keyboard to accomodate their request, I see no harm in going that extra mile. "That's not how we do things" and moving on just might be the reason they move on to another contractor the next time they want work done. I'm not trying to sway your opinion at all.. but in my logic, if I've gone to the effort of doing an estimate, getting a materials list, scheduling the crew, invoicing, and such, then if it keeps the customer happy after everything is said and done to see how their money was utilized.. it's a matter of copy and paste for me to accomodate them. 

*"I strive to minimize price"* It didn't cost me anything except the few minutes of time that I'd be on here bs'ing with all you guys. :laughing: 


"*because there are so many A-holes running around that customers are scared out of their wits and their only defense is to see a break down?"*

Yes, they are truly scared out of their wits... but no it isn't a defense. It's a reassurance that by choosing to do business with K&R they didn't get ripped off yet again.


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## ApgarNJ (Apr 16, 2006)

I haven't gotten too many lately. but i never break down my labor and material. like others have said, it just leads to people picking apart things or then they try and figure out how many hours you are at their house working so they can say that you figured too high or something like that. they don't understand that driving to get material and other things for the job, is part of getting paid. they just think that the time at their house is what they should be paying for. i'd rather have a customer that just wants the work done and doesn't want anything broken down.


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## George Z (Dec 23, 2004)

Do people ask their car dealership/repair shop how much they pay
for an alternator and how much they mark it up?
Ask them to produce their receipts or purchase orders from the parts place
and see how far that will take you.


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## Tscarborough (Feb 25, 2006)

It also leads to situations like this:

I did a small segmental retaining wall around a tennis court. As usual, I had delivered more material than it would require, just to save myself time in the event of a miscalculation. When complete, the HO asked why I was loading up the excess block since they "had paid for it". Rather than explain how it works (i.e. breakdown the T&M), I gave them to them. 2 days later, the HO called and asked me to come pickup the units, as her husband had tried to use some on a little project they had thunk up and was laid up on the couch with a slipped disk. I laughed all the way to thier house and charged them 75 bucks to haul them off.


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## George Z (Dec 23, 2004)

Kristina said:


> I'm just amusing myself here. I was just thinking how great it would be to sit in front of, say, an attorney and simply state,
> 
> "you know, you don't really look like you work hard enough to earn $200/hour. I mean, you just sit there scribbling on paper. How hard is that? How many hours exactly have you put into my case? I think you should be putting in more hours on my case but I don't want to pay you for them. It just doesn't make sense that you get $5000 for 5 hours total work and not breaking a sweat at that. $1000/hour?? That's preposterous!"
> 
> Of course, *I* know and *you* know that different filings cost more than just man hours spent on them and that figures into the price as well, but come on, why does it only seem that CONTRACTORS are required to deal with this kind of BS?!?


Because some of us are too happy to comply and indirectly make it hard on all of us.


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## ricpacer69 (Mar 4, 2006)

I have never been asked to breakdown my prices. Even if I was asked I wouldn't. As far as HO buying there own supplies, I was burned to many times before. Now, I just refer them to the clause in the contract:
ANY MATERIALS SUPPLIED BY CUSTOMER AND INSTALLED BY US OR OUR SUB-CONTRACTORS ARE NOT COVERED UNDER OUR WARRANTY. 
WE ARE NOT RESPONSIBLE FOR WORK DELAYS OR WORK STOPPAGES CAUSED BY MATERIALS SUPPLIED BY CUSTOMER. 
WE CANNOT ANTICIPATE ADDITIONAL COSTS DUE TO MIS-MATCHED, WRONG OR ADDITIONAL WORK CAUSED BY CUSTOMER SUPPLIED MATERIALS, ADDITIONAL FEES OF $100.00 PER HR MAY BE APPLIED FOR WORK STOPPAGES CAUSED BY CUSTOMER SUPPLIED MATERIALS. 
THERE MAY BE ADDITIONAL COSTS ADDED TO CORRECT OR ADDRESS UNKNOWN PROBLEMS CAUSED BY CUSTOMER SUPPLIED MATERIALS.

I have had only 1 customer since I put the clause in, supply his own material and by the end of the project he paid an additional $2,000.00.
We were also called by the HO later. He wanted us to come out and replace the windows that he supplied and we installed. They were literally falling apart after 2 years. 
He went with our supplied windows.:clap: 

I also have a similar clause for customer supplied sub-contractors.


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## River Rat Dad (Feb 18, 2006)

This has been very enlightening. An hour ago I went to my local supermarket and asked the manager for a breakdown on the 29 cents a pound for bananas. I wasn't gonna take any mumbo gumbo crapola from him either. :boxing: 

Seems I'v been banned for 6 months...:sad:


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## Mike Finley (Apr 28, 2004)

realpurty2 said:


> Yes, they are truly scared out of their wits... but no it isn't a defense. It's a reassurance that by choosing to do business with K&R they didn't get ripped off yet again.


I'm just confused at how it is reasurring to a customer to see how much materials cost and how much labor is? Seriously, I'm not pulling your leg, but how does that even enter the realm of reasurring a customer they are not getting ripped off?

If the customer gets 3 quotes. The scope of work is:

*Install 66 light bulbs, install 30 dog houses, install 6 wheel chair ramps.*

Everybody's contract contains a detailed scope of work. Everybody has a good reputation, everybody shows up in a company uniform, clean shaven and not dirty, in a signed company truck, everybody shows they are in good standing with the BBB, everybody shows proof of insurance and license, everybody gives the customer a bunch of references and shows a picture book or previous work completed, nobody requires a large deposit...

Your quote shows: $7000 in labor, $3000 in material = $10,000.

Billy's quote shows : $6000 in labor, $4000 in material = $10,000.

And my quote shows: Labor and materials = $10,000.

How is my quote less assuring to a customer in these circumstances? 

If you feel badgered you don't have to reply, I'm not trying to call you out on the carpet, simply trying to understand how customers seeing break outs serve the purpose of being a device for reassurance and not a device to price shop you.


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## Melissa (Feb 23, 2006)

I hope you're joking RiverRatDad!! :laughing: 

That's a good one Tscarborough! We did something similar before too- just threw the blocks over the block wall- this was a job we did for a neighbor behind us due to his damn tree ruining the wall between us, he got such a good deal, and we paid for half, didn't even have to, and he had the audacity to ask for 1/2 of the un used blocks. 

I still want to know why Schenker is making blinky smiley faces at me...... :whistling


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## Tscarborough (Feb 25, 2006)

In that example, Mr. Finley, I would throw yours and Billy's quotes out, and beat on the first, knowing that labor is negotiable, while materials are not. And chances are that I could get at least a 10% reduction from the contractor on that basis.


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## Mike Finley (Apr 28, 2004)

Tscarborough said:


> In that example, Mr. Finley, I would throw yours and Billy's quotes out, and beat on the first, knowing that labor is negotiable, while materials are not. And chances are that I could get at least a 10% reduction from the contractor on that basis.


DOH!  Now that's not play'in fair!


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## ron schenker (Dec 11, 2005)

Sorry Melissa, got something in my eye:blink:
BTW...why are you whistling at me?


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## Melissa (Feb 23, 2006)

OH COME ON! Got something in your eye.... Puleese! gimme a brake! Tell the truth. You've got a problem with our price don't ya! :whistling Just say it!


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## Kristina (Apr 21, 2006)

Mike Finley said:


> I'm just confused at how it is reasurring to a customer to see how much materials cost and how much labor is? Seriously, I'm not pulling your leg, but how does that even enter the realm of reasurring a customer they are not getting ripped off?
> 
> If the customer gets 3 quotes. The scope of work is:
> 
> ...


Oh no, it's not that easy. They want to know WHAT is included in your materials cost. Itemized list. Cost per item. They want to see how much you mark up. If you have a high mark up, you're a rip-off artist. 

Usually it's not a matter of everything being the same. If you say, "I might be more expensive, but my reputation is better." or whatever, they'd want to know what exactly you were charging that was making you more expensive than the competition. You can't quantify experience. 

In your example, it makes perfect sense, but that's rarely how it breaks down. 

It's more like..

*Install 66 light bulbs, install 30 dog houses, install 6 wheel chair ramps.[/*

Builder A- $2000 materials, $3000 labor
Builder B- $2000 materials, $4250 labor
Builder C- materials and labor $7500

They want to know how you came to figure out your $7500 figure. Perhaps your material and labor mark up is higher than the others because you've been in business longer, or have more experience, or want to buy a Porsche. Whatever your reasons for charging what you do.

It's hard to explain to a customer, "well, I went into business for myself so I could make as much money as I wanted as long as I was willing to work. You might think I'm only worth $18/hour, but I place my value more at $75/hour. Add into that all my overhead expenses and I'm $111/hour." They just won't be buying it at all and they'll go with the lowest price. 

Like Purty said though, people get a bit spooked when you resist telling them how it all breaks down.

We told the woman across the street when she asked for receipts and accounting for hours, that we were not obligated to provide that information for her. That's when she went out and priced it herself. In her complaint she said we "refused" to show her documentation of expenses. While *I* know the receipts were irrelevant, THEY think that's all there is to it. 

They figure "materials + $18/hour x X hours = total cost" Anything above that is price gouging. 

Well yeah, if you look at it that way, we WAY overcharge, but that's not how ANY business operates.

It's like talking to a brick wall with people. 

Our policy is that we don't provide itemized invoices. You get a price for the job done to completion. Period.

If they ask, we still don't tell. If they sue us, fine, I'll show my attorney the breakdown and explain how we came up with our pricing. Otherwise, it's none of anyone's business.

Wouldn't it go over like a lead balloon if, like someone suggested, we requested pay stubs and W-2s before doing work for a client. "Just so we know we aren't going to get ripped off"? Yeah, uh huh. :jester:

This has to be the toughest business for this reason alone. It's unfreakingbelievable what people think they can get away with asking of a business owner. I'd like to see them ask any other person they "consume" a product from this kind of stuff.


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## Tscarborough (Feb 25, 2006)

You can only be abused if you allow yourself to be abused.

(In a business sense)


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## Kristina (Apr 21, 2006)

Tscarborough said:


> You can only be abused if you allow yourself to be abused.
> 
> (In a business sense)



We are definately working on that. I think as a small, new business, it's hard to know what's reasonable.

We kinda freaked out at the beginning trying not to get people "mad" at us because we THOUGHT they actually might be able to hurt us.

Being on this site and having a good attorney have shown us that as long as our contract is tight and we provide what we agree to provide, that's all people need to know. If they sign that Acknowledgement of Completion form at the end of the job, they've got no leg to stand on and we owe them nothing. We don't owe any explaination or justification.

Knowing that helps you be more confident and less likely to be abused.


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## Kristina (Apr 21, 2006)

Oh, I have also taken from this site another tid bit.

We don't give free quotes. If people want to shop around, that's fine, but they won't be including us in that.

You go with our company over someone else's because you like the work we do and the quality of that work, not because of how we price.

If you are looking to get the most for the least, we don't want to work with you anyway. If you don't care about the quality of the products or work put into it but simply how it looks and what's cheapest, no thanks. It's not what we are about. We don't do half-assed work and we won't get paid half-assed either.

The old adage, "you get what you pay for" would apply here. Does a Hyndai cost as much as Lexus? Of course not, and why is that? Which would you rather drive? The 4 cylinder or the 6 or the 8? All of them get you from point A to point B so why pay more? People don't question how much they pay for what they drive (to a point), but "nobody would know the difference between an Anderson window and a Home Depot crap ass window by appearance. So why go with the more expensive window? I dunno, you tell me when it monsoons, or when your heating bill doesn't reflect the "energy efficiency" of the new windows you bought for cheap.

These are just broad examples and likely not accurate, but you guys get my point right???? :sad:


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## Melissa (Feb 23, 2006)

George Z said:


> Do people ask their car dealership/repair shop how much they pay
> for an alternator and how much they mark it up?
> Ask them to produce their receipts or purchase orders from the parts place
> and see how far that will take you.


Here's another one, like this woman for example, bought our neighbors house for, $720,000K. This house is 1,400 sq ft, barely 2 tiny bedrooms, 2 tiny baths, hardly any backyard, but she thinks it's worth it. However, our price of $1,600 for her window patch, now that's skeptical!! Not to mention the realator got what 3%??? so about $20,000..... Oh yeah, totally worth it too dontcha think? Just doesn't make sense why we get so skrutinized. 

Maybe Ron can enlighten me! :laughing: He seems to know something I don't! :laughing:


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## Melissa (Feb 23, 2006)

Oh that's right, he just has something in his eye..... :no:


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## Tscarborough (Feb 25, 2006)

I am in a unique situation, in that I contract for beer money while maintaining a "real" job as a supplier. I only offer bids on jobs that my normal customers (real contractors) are too busy to do or are too small to bother with. That said, I pass on at least 6 out of 10 jobs that I am offered. I would do the same if I contracted full time, as I have in the past. I don't need experience, OJT, or aggravation; I work for profit.


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## ron schenker (Dec 11, 2005)

> Maybe Ron can enlighten me! He seems to know something I don't!


Mel. In the idelible words of Colonel Klink..."I know nussink!":no:


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## Melissa (Feb 23, 2006)

Alright, I'll let you off the hook and quit badgering you I guess! :laughing:


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## ron schenker (Dec 11, 2005)

Thanks Mel, I was starting to sweat....I'm on your side:notworthy


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## Melissa (Feb 23, 2006)

I still think you're pulling my leg Ron, but that's okay. :thumbsup: 

Actually, we know the price is high, but don't really care. We don't need the work for one, and two, we're just tired of not making any money, so there. Hubby needs some time off for a change. Done with the chicken sh*t jobs. She can go through the trouble of price shopping all she wants, but we're not going to take the time to break down the mat price or anyone else for that matter, well not until we run out of work, which hasn't happened yet.


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## realpurty2 (Aug 18, 2005)

*Late reply*

*If you feel badgered you don't have to reply, I'm not trying to call you out on the carpet,
*

Sorry for the late reply, I actually went to sleep at a reasonable hour for a change last night and had to do payroll this morning. 

*How is my quote less assuring to a customer in these circumstances? *

Your still looking at it from the bid/quote side. Remember dear, I said in an earlier post that the part I was originally talking about is a part of the final invoicing process, not part of the quote. Upon completion , punch list and when delivering the final invoice, I go out with the entire job folder, receipts and all, every time card etc. and sit down with the customer and ask if they are satisfied with their job. I give them the evaluation questionnaire to complete and offer the opportunity to discuss any questions or concerns they have about their project. IF price comes into the conversation, I’m armed and ready to show them proof that we did not do anything other than ethical business. I have only had to do that once or twice, but at the end of the conversation, when they see real numbers in front of them, I’ve gotten nothing but good response instead of someone going away feeling like they were ripped off. But I stand my ground, I'd do it in a quote if requested. I chose to just recently.

*Everybody's contract contains a detailed scope of work. Everybody has a good reputation, everybody shows up in a company uniform, clean shaven and not dirty, in a signed company truck, everybody shows they are in good standing with the BBB, everybody shows proof of insurance and license, everybody gives the customer a bunch of references and shows a picture book or previous work completed, nobody requires a large deposit...*

IF they even managed to find three bidders with the above specs in this area.. it would be a shock to most. Again, that's where I think we are comparing apples to oranges and some of the facts of the situations have gotten lost. In your example, you used three equal quotes from three reputable contractors. I was referring to a situation dealing with a reputable contractor vs jacklegs and lowballers in which justifying why it is a better value for the customer to do business with the contractor even though he might be more expensive. The entire conversation sort of mutated. Lol

Here is a factual example from a job we did recently. An unlicensed jackleg had previously been used to install 4 windows in a sunroom. He got paid cash and had no contract or warranty. According to the H.O., he asked for more money several times during the job over his quote saying he needed this or that to complete the job. It took him over a year to do them, and he left before they were finished. We got the call to come fix the problems.

The H.O was leery of having to call anyone at all because of her past experience but her windows were not finished and they were leaking on her new floor. It turns out that the jackleg didn’t insulate anything, didn’t caulk, left big holes and gaps, nothing is level, siding ripped off house…. I could go on and on with all the problems we’ve found and had to fix. Her repair bill from us was as more than what she’d paid him. She showed concern, understandably so in my book. So rather than just give her the quote and the take it or leave it attitude, I walked beside her and showed her the defects, quoted the materials and approximate prices that it would require to correct the problem, told her the number of men that would be on her job daily start to finish since the last guy didn’t show up for weeks at a time, showed her the damage to her floor and wall that was already occurring and would definitely worsen if she didn’t correct the window problems. 
I explained the warranty of our work, the fact we are licensed and insured and accountable if our work was ever substandard. I went over the contract with her word for word, highlighting the areas that also protect the H.O. as well as our company. That was the point, making a judgment call that we were more likely to get the job if I helped her understand the cost involved in her project, so I verbally broke down the estimate. Once she understood the amount of materials, labor, and the cost of business, she felt more confident in our company and justified the expense in her mind obviously because she signed the contract. The work was done, and she gave us three other projects after that and also referred her daughter to us to build a 3 room addition to their home. I might have had to give up time I don’t really have to spare in order to get that first contract signed and show the client a breakdown, but those few minutes of conversation brought us in over $75k in work from one client. Justified or not in everyone else’s mind, it works for me in this area.


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## Kristina (Apr 21, 2006)

*I went over the contract with her word for word, highlighting the areas that also protect the H.O. as well as our company*

We are doing/going to be doing the same thing. We have no problem walking someone through a project and telling them what is involved.

On our proposals he writes a detailed summary of the work to be done and at the end puts the price.

The *problem* occurs when you say, "that will be $2000 for labor." and they say "what? how did you come up with that price? You just said it would take about 2-3 days?!?!" 

They don't want it broken down JUST to materials and labor, they want to know EXACTLY what you paid for what and how you determined your labor costs.

I won't get into that with them. It's not their business. We told them what would be done and how much it would be, how we came to that price is not a concern of theirs. If they want it done, fine. If they are shopping around and get a better deal, you go with that then. Just like in your case, they inevitably will call back 2 months later when the hack finally vacates the site with the work unfinished and what is done a joke. Then they kick themselves for not going with you in the first place.

I especially won't sit there and justify why my labor and mark ups are more than joe schmoe down the road who choses not to be insured, buys crappy materials and crappy tools to get the job done. Like you said, it's not apples to apples. The consumer doesn't see that though. 

Sure, it's better to get bananas from Grocer A who has them as loss leaders this week and so price them at 29 cents a pound as opposed to Grocer B who is loss leading toilet paper this week and so his bananas are 99 cents a pound.

But when it comes to stuff like work on your home, cheapest is NOT always best and you likely will not be getting the same bananas. :thumbsup:


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## realpurty2 (Aug 18, 2005)

Kristina said:


> It's hard to explain to a customer, "well, I went into business for myself so I could make as much money as I wanted as long as I was willing to work. You might think I'm only worth $18/hour, but I place my value more at $75/hour. Add into that all my overhead expenses and I'm $111/hour." They just won't be buying it at all and they'll go with the lowest price.
> 
> We told the woman across the street when she asked for receipts and accounting for hours, that we were not obligated to provide that information for her. That's when she went out and priced it herself. In her complaint she said we "refused" to show her documentation of expenses. While *I* know the receipts were irrelevant, THEY think that's all there is to it.


For the sake of conversation and discussion, here is how I would have handled those situations. 

We rarely work single man jobs, so I dont know this for sure but I'd say it's a bit more difficult for a one man business to justify expenses than those with crews. I may be just spreading a bunch of bovine matter and my approach may not work for everyone but it works here, and that's my main concern of course. 

When discussing labor cost with a client, I explain that often there are hours of work involved that are not directly visible to the client such as design and planning, material procurement etc. It's work for them but not something visible on the job site. Without telling them the pay rates of anyone on the site, I explain that the labor cost includes pay, state and federal tax obligations(labor burden) and a portion of the cost to insure each worker they are getting. If I sense resistance, I explain that the nomimal charge to cover the insurance(w/c) is nothing compared to what a lawsuit would cost if they were injured without coverage. I justify the material expense by quality and value in the sense that better materials are typically more durable and that since we are one of the few here who offer a year warranty, we found it a better value for clients to utilize quality materials in the beginning than to be forced to charge them for an entire repair project when a lesser quality material fails after a period of time. If they still resist, I offer to use lower cost products but to do so, they must sign a release waiver of any and all warranty beyond workmanship. That alone has gotten over hurdles with this area than anything else. Every client I've had to use this approach so far has said "Oh no, use the good ones, It's fine!"
When all that is done, I very lightly touch on the overhead expenses involved with being a real company not a jackleg type. Without telling them how much I am putting into the company as profit, ( I won't do that..but I can creatively word my way around it...lol) I get their thoughts geared into thinking that the majority of expenses did in fact go to their project and not into our pockets. Without a bit of arrogance intended, my closing rate is awesome so it must be working. I may be overworking to get a job, where as some of you prefer the picking and choosing of what to take, but me, every job out there is a potential to make profit and grow the business. The only ones I am not willing to go that extra mile for is ones that I can tell the client is the type that God himself couldn't please or if their wants simply can not be done within their stated project budget.

If it's after the fact, as in Kristina's neighbor example, then I do the same basic process of offering a rough verbal breakdown. It isn't fun, it isn't something I wish to do, but in my totally irrelevent opinion, it beats sending them away angry and assuming we pocketed a large sum off of them. Whether they agree with the price or not, by hearing plausible expenses associated with their project, the ones who are truly clueless get educated and back down. If someone still is bitching, I simply say "I'm sorry you feel that way Mr/Mrs. So-and-So, but we agreed upon a stated price before your work was completed and we were fair in the estimate, you received XXX free of charge while we were here as our way of saying thank you for choosing K&R ( or insert some positive thing you provided for them such as "we went above and beyond to complete this ahead of schedule") I would hope after you begin enjoying your "whatever" that you will consider us again in the future should you have further work. Get my check and leave. If they are that much of a pita, when they call the next time, we are too booked to accomodate them at this time.


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## Kristina (Apr 21, 2006)

*We rarely work single man jobs, so I dont know this for sure but I'd say it's a bit more difficult for a one man business to justify expenses than those with crews.* 

We have "crews" just subcontracted ones, not staff. So we do still have to pay their rates. I dunno how ANYBODY could be a one man show with some jobs. There's no way one man can do a whole addition. Unless it's ok with the client to take 6 months to do it!

*I justify the material expense by quality and value in the sense that better materials are typically more durable and that since we are one of the few here who offer a year warranty, we found it a better value for clients to utilize quality materials in the beginning than to be forced to charge them for an entire repair project when a lesser quality material fails after a period of time. If they still resist, I offer to use lower cost products but to do so, they must sign a release waiver of any and all warranty beyond workmanship. *

We do the same thing, but good idea about the waiver. I'll have to get one into our packet! :thumbsup: 

* I may be overworking to get a job, where as some of you prefer the picking and choosing of what to take, but me, every job out there is a potential to make profit and grow the business. The only ones I am not willing to go that extra mile for is ones that I can tell the client is the type that God himself couldn't please or if their wants simply can not be done within their stated project budget.*

I agree with this, we don't mind working to get a job, but I won't break down our price into anything more than materials and labor. Unfortunately, in this market, MOST of our potential clients could not be pleased by God Himself and intend to get the work done within their stated (unrealistic I might add) budgets. :no: This is why we would usually get passed over for the cheaper guy.

*If someone still is bitching, I simply say "I'm sorry you feel that way Mr/Mrs. So-and-So, but we agreed upon a stated price before your work was completed and we were fair in the estimate, you received XXX free of charge while we were here as our way of saying thank you for choosing K&R ( or insert some positive thing you provided for them such as "we went above and beyond to complete this ahead of schedule") I would hope after you begin enjoying your "whatever" that you will consider us again in the future should you have further work. Get my check and leave. *

Said that and did that and she refused to give our final payment of 6k. We did give her a ton of free stuff too, microlams etc, but she wasn't hearing any of it. I'd have loved to just gotten paid and never spoke to the woman again, instead we have to continue this dysfunction with her. How annoying.

What I want to capitalize on for us, is that our pricing, while perhaps high, is the price of the contract. Period. Unless they add to it, which would involve a change order anyway. We don't do the "well, now I need this, and now I need to add that".

Most of the guys we know will low-ball a bid to get the job and then spend the rest of their time going back and forth to the HO for more money for various things they didn't "see" "know" "expect" when they did the inspection. In the end, they end up at the same price as we quoted, but more headaches going back and forth. Our price is our price.


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## cthom10388 (Aug 1, 2008)

I work strictly for banks and in my contracts I am reqiured to break down my bids all the way down to the last item, I work on foreclosed homes, If I fail to list something I am obligated to eat that part of the bid, Breaking down the bid isn't all bad because you can visually see beore you send to ensure you didn't miss anything however I spend approx 5 to 7 hours a day preparing these estimates, I could be on another job site with my truck during that time, instead I pay everyone else to do the work when I could make a higher profit margin with me in the field.


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