# line in the sand



## Meetre (Nov 2, 2007)

So, let's just say you have given a prospective customer a price for a job. Details are worked out, they want what you are selling. :thumbup: BUT, they don't want to pay your price. :shutup: where do you put the line?


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## Aggie67 (Aug 28, 2008)

We usually tell them "What we can do is whittle down the scope of work, and give you some less expensive options in the materials." 

90% of our clients are repeats, so I always give 2 or 3 alternative scopes (leaving out controls, different material, etc). It builds the basis for conversation, and we find that some people when given more choices than just "go" or "no go", they'll pick anything other than "no go", because they really want the project to happen.

When all else fails, you just have to say "Well, when you decide on what you want to do, give me a call." We'd rather walk away than buckle and come down in price. You do that once, and that's what people will expect.


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## Grumpyplumber (May 6, 2007)

*Look into what your profit is on the current bid, also consider the current market.*

*Are you currently getting steady business?*

*If so, consider what happens when you cut your rates, then calls come in for more work while your busy working at those rates.*


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## Meetre (Nov 2, 2007)

Oh, I know what I'm doing, saying no, over $150 price difference. We already changed materials twice to get this close to his price, and I won't loose money to have work, that includes making what I pay myself and my helper and overhead. I'm mostly wondering what others would do in this spot. Making sure I'm not unreasonable.:whistling


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## Jason Whipple (Dec 22, 2007)

Is it $150 difference on a $800 job or is it a $20,000 job?


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## Meetre (Nov 2, 2007)

I say $1350, he wants it for $1200. I say no.


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## Jason Whipple (Dec 22, 2007)

I don't know how badly you need the work but me, I would say no. They are chiping away at you already. Are these the types of customers you want to work for? I'll bet they promised you all types of projects after this one is over, didn't they.:laughing:


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## Meetre (Nov 2, 2007)

Jason W said:


> I don't know how badly you need the work but me, I would say no. They are chiping away at you already. Are these the types of customers you want to work for? I'll bet they promised you all types of projects after this one is over, didn't they.:laughing:


Its for a friend of my future brother-in-law. So, I'm already leary of the job. Then, after I price the materials he stated he wanted, sticker shock, wants it cheaper. I change materials, still wants it cheaper. I called to tell him that I can't do it for that price today, had to leave a message, haven't heard back yet. Like I said, I already know I won't be doing the job, his pride won't let him pay more than $1200 cause that's his number.:no: I'm just wanting to get some perspective from my bro's here, to make sure I'm not getting to stuborn.


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## Jason Whipple (Dec 22, 2007)

Don't you just love it when a customer gives you the price!:no: I think I'll try that next time I go out to eat.

"I'd like the porter house steak, medium. Bye the way, I see it's $17.99 on the menu. I really want it but I can't pay you more than $14.99 for it.":jester:


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## Cole (Aug 27, 2004)

Meetre said:


> I say $1350, he wants it for $1200. I say no.


They are pulling this stunt over $150? Leave them in the dust!


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## Meetre (Nov 2, 2007)

well, he is a salesman, I should have expected it from the start. :no: Oh well, better get started on the other project I got this week. thanks for the input guys:clap:


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## Grumpyplumber (May 6, 2007)

*"His number"*

*Interesting how layman often think they know what costs and overhead are entailed.*

*"His" number is probably after getting 12 other bids and grabbing a figure thats below the lowest one.*

*I'd let it go if you have other work, 'specially where it's a "friend of a friend"...this will almost guaranteeably come back to haunt you anyway after the work is done.*


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## Mellison (Aug 3, 2008)

I am going to buck the current trend here.
I have never seen a problem with a customer asking if my prices are set in stone. It all depends on how busy I am at the time. I ask my self if I am willing to lose a $6,500.00 job over $500.00 or so? The key is not to look at it as loosing money but paying for advertising. If you do not do the job the customer will never see what you are made of as a contractor. That means no more work for him or her in the future and no references down the road.
That being said, it all depends on how the conversation takes place. if someone says this is what I think the job is worth, they can go screw.
If on the other hand the conversation is more like: Will you be willing to negotiate? I may feel a bit generous. As in life, a persons attitude can speak volumes.
Just my 2 cents.


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## Double-A (Jul 3, 2006)

Mellison said:


> I am going to buck the current trend here.
> I have never seen a problem with a customer asking if my prices are set in stone. It all depends on how busy I am at the time. I ask my self if I am willing to lose a $6,500.00 job over $500.00 or so? The key is not to look at it as loosing money but paying for advertising. If you do not do the job the customer will never see what you are made of as a contractor. That means no more work for him or her in the future and no references down the road.


Do you really think that you can make up a 7% discount by working in volume? Do you honestly think that a job done for less money that you usually would charge will lead to more jobs from the same person that you can "recoup" your losses on?

Ego... they name is contractor.

What do you care if the customer gets to see "what you are made of as a contractor" when he's laughing all the way to the bank at your expense about what a bad business person you are? I mean, discount 7% just to prove a point? 

What's next? Hand driving slot-headed brass screws in a deck just to show how old school you are?

I would never allow my ego to take my families future away from my control. And to me, that means I'm not going to discount a job 7% just on the off chance this person is going to give me more of the same.

Thanks, but no thanks. I'm really hard pressed to see the advantage here. 

BTW 7% of gross sales on advertising seems quite low to me, depending on your line of work.


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## DavidC (Feb 16, 2008)

GrumpyPlumber made a comment in another thread that sums it up pretty good. Something about reaping what you sow, cheaper work brings cheaper referrals. 

To answer your question directly, I draw the line at the bottom line of my proposal. If they want less we sell less, but we do not discount the same work for less.

Good Luck
Dave


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## Mellison (Aug 3, 2008)

Double-A said:


> Do you really think that you can make up a 7% discount by working in volume? Do you honestly think that a job done for less money that you usually would charge will lead to more jobs from the same person that you can "recoup" your losses on?
> 
> Ego... they name is contractor.
> 
> ...


It has nothing to do with my ego.
What I meant by Seeing what I am made of simply means that after working with them they will be hard pressed to look for another contractor down the road and will refer me to friends, coworkers etc. Trust that I am speaking from experience here. All of the work I get is in apartment buildings with many owners. I have been known to stay on one block for many months, going from a kitchen remodel to a bath remodel to another job from references alone.
Now as far as the money is concerned. I will be the first to admit that I am by no means inexpensive. Therefore my quotes leave room for for negotiating.
If my original quote for a job that is to take about three to four days is $6,000.00 is it crazy for me to say to myself on Monday, that I will have $5,500.00 more in my corporate account by Thursday if I only negotiate a little? And at the same time make a customer happy that will hopefully use me again and refer me.
Also, Keep in mind that with a crew I can have three to four jobs going at once. One guy taken off one job for a few days in order for me to bank a few thousand dollars is well worth the haggle. Finaly, I will never price a job that 7% is going to make a huge difference. Like I said I have been told I am expensive.


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## AskForTheSale (Apr 3, 2008)

Tell him after running the numbers again, you determined you can give it to him for 1050, and you will, here's the key, let him know when you can get to it being you are so busy. 

You don't ever get to it.

That is how you play hardball with idiots who do not respect you.


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## Mike Finley (Apr 28, 2004)

Mellison said:


> I am going to buck the current trend here.
> I have never seen a problem with a customer asking if my prices are set in stone. It all depends on how busy I am at the time. I ask my self if I am willing to lose a $6,500.00 job over $500.00 or so? The key is not to look at it as loosing money but paying for advertising. If you do not do the job the customer will never see what you are made of as a contractor. That means no more work for him or her in the future and no references down the road.
> That being said, it all depends on how the conversation takes place. if someone says this is what I think the job is worth, they can go screw.
> If on the other hand the conversation is more like: Will you be willing to negotiate? I may feel a bit generous. As in life, a persons attitude can speak volumes.
> Just my 2 cents.


:no: Oh Boy. Do you know somebody with the initials R.B.? He'd be all over you giving you high fives and thumbs up. :laughing:


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## Mike Finley (Apr 28, 2004)

Mellison said:


> All of the work I get is in apartment buildings with many owners. I have been known to stay on one block for many months, going from a kitchen remodel to a bath remodel to another job from references alone.
> Now as far as the money is concerned. I will be the first to admit that I am by no means inexpensive. Therefore my quotes leave room for for negotiating.
> If my original quote for a job that is to take about three to four days is $6,000.00 is it crazy for me to say to myself on Monday, that I will have $5,500.00 more in my corporate account by Thursday if I only negotiate a little? And at the same time make a customer happy that will hopefully use me again and refer me.


If that's the case you obviously have 10 weeks of work as a back log right?

If you keep this work backlog there is a limit to how much you can back log, why would you be interested in backlogging work that is 10-15% less profitable? If you simply say no to them, then you have room to backlog another job that is more profitable.

You see where I am going?


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## rbsremodeling (Nov 12, 2007)

Mike Finley said:


> :no: Oh Boy. Do you know somebody with the initials R.B.? He'd be all over you giving you high fives and thumbs up. :laughing:



That is cold!!!!!!!!!!!!!:whistling Maybe you can consult him on the right thing to do


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## Mike Finley (Apr 28, 2004)

rbsremodeling said:


> That is cold!!!!!!!!!!!!!:whistling Maybe you can consult him on the right thing to do


You do know that even though your initials are close RB is not referring to you right?


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## rbsremodeling (Nov 12, 2007)

Mike Finley said:


> You do know that even though your initials are close RB is not referring to you right?


I do and I am still your BUD:thumbsup:


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## Mike Finley (Apr 28, 2004)

Right-O !


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## Mellison (Aug 3, 2008)

Mike Finley said:


> If that's the case you obviously have 10 weeks of work as a back log right?
> 
> If you keep this work backlog there is a limit to how much you can back log, why would you be interested in backlogging work that is 10-15% less profitable? If you simply say no to them, then you have room to backlog another job that is more profitable.
> 
> You see where I am going?


Yes I see where you are going.

Now, not every customer will haggle and all that do will not get the same responce from me. 
Answer me this if you will. 
You have a few jobs going on keeping your crew busy. You recieve a lead and it turns out to be no more than 4 days work for one of your guys. You quote $6,000.00.
The customer seems interested but says $6,000.00 was more than they want to spend. You know from many years experience that you will nail the job at $5,500.00 or so. Do you: 
A) Say no thank you and walk away never to hear from him / her again as well as anyone they may have refered you to. And as a kicker, Being $5,500.00 poorer for it at weeks end.

Or B) Tell her frankly that you would rather not lose a $5,500 plus job over a few hundred dollars. Pull a guy off one of your other jobs, and four days later bank five and a half grand.

I pick B. Bad business man? I think not. I think the alternative makes extremely bad business sense.

Being a good business man means landing as many jobs as you can while still making a hefty profit for each.

Like people and snow flakes, no two jobs will ever be the same. You need to play them as such.
Once again,
Just my two cents


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## rbsremodeling (Nov 12, 2007)

I see this thread leading up to a discussion like the negotiating thread that was locked. I really hope this says on course, I think that thread was a good one, less the B.S. in between.


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## Mellison (Aug 3, 2008)

I do not know of the thread in which you speak.
Must have been before my time.


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## rbsremodeling (Nov 12, 2007)

Mellison said:


> I do not know of the thread in which you speak.
> Must have been before my time.


Check it out

http://www.contractortalk.com/showthread.php?t=45293&highlight=negotiating


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## Remodel Bud (Aug 13, 2008)

..............


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## Jason Whipple (Dec 22, 2007)

Mellison,

I hope you don't mind if I ask but, how long have you been in the trades and how long in business? 

You really need to define you're business model to avoid the pissing match to come.


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## Remodel Bud (Aug 13, 2008)

[.................


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## Mike Finley (Apr 28, 2004)

Mellison said:


> Yes I see where you are going.
> 
> Now, not every customer will haggle and all that do will not get the same responce from me.
> Answer me this if you will.
> ...


I'd choose C which I didn't see you have as an option which is sell them on value.


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## Remodel Bud (Aug 13, 2008)

............


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## Remodel Bud (Aug 13, 2008)

.............


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## orson (Nov 23, 2007)

My net profit margin on the job is 10% ideally. I will probably not realize that, more like 7% to 8%.

So basicaly if I follow RemodelBud and Mellison's advice my company profit is a big fat zero. 

So instead of just working 1 unprofitable job I can get a whole bunch at 0% profit!!!


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## Remodel Bud (Aug 13, 2008)

orson said:


> My net profit margin on the job is 10% ideally. I will probably not realize that, more like 7% to 8%.
> 
> So basicaly if I follow RemodelBud and Mellison's advice my company profit is a big fat zero.
> 
> So instead of just working 1 unprofitable job I can get a whole bunch at 0% profit!!!


What advice? Did I give you advice? Lets re-read this post:blink: Hmmmmmmmmmm


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## Jason Whipple (Dec 22, 2007)

Remodel Bud said:


> Are you guys setting me up?! Who started this thread:laughing:


Don't look under your bed tonight:shifty: That's all they'll let me say!:blink:


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## Remodel Bud (Aug 13, 2008)

.............


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## Mellison (Aug 3, 2008)

Jason W said:


> Mellison,
> 
> I hope you don't mind if I ask but, how long have you been in the trades and how long in business?
> 
> You really need to define you're business model to avoid the pissing match to come.


I don't mind at all.
I have been in the trades for 18 years and in business for 12.

Now I will not be on line for long because I am about to watch the real 
B S @ 8:00. I will be taking a long away weekend so if the post still exists I look foward to talking to you all next week. I may check in during the Veep debate.
Mike


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## orson (Nov 23, 2007)

Double-A said:


> Do you really think that you can make up a 7% discount by working in volume?





Remodel Bud said:


> YES.
> 
> That is how high volume business works. The higher the revenue, generally the higher the profit in a given time frame. I am not engaging in this topic, but to only answer your question.


 
Sure sounds like advice to me.:whistling


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## Remodel Bud (Aug 13, 2008)

............


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## orson (Nov 23, 2007)

Alright, it wasn't technicaly advice, you win. :thumbsup: This time! :laughing:


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## Mellison (Aug 3, 2008)

orson said:


> My net profit margin on the job is 10% ideally. I will probably not realize that, more like 7% to 8%.
> 
> So basicaly if I follow RemodelBud and Mellison's advice my company profit is a big fat zero.
> 
> So instead of just working 1 unprofitable job I can get a whole bunch at 0% profit!!!


I'm Baaaaack 
Orson,
Are you saying that if you sign a contract for $130,000 you expect a profit of $13,000.00 but will be satisfied with $9,100.00?

You are right, you defidently should not negotiate!


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## Remodel Bud (Aug 13, 2008)

...............


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## orson (Nov 23, 2007)

Mellison said:


> I'm Baaaaack
> Orson,
> Are you saying that if you sign a contract for $130,000 you expect a profit of $13,000.00 but will be satisfied with $9,100.00?
> 
> You are right, you defidently should not negotiate!


No, I said I strive for a profit of $13,000 but reality is often not based in idealism. Hopefully some day I will have a better handle on costs and I will realize the full 13k.

And you're exactly right, I am priced right where I need to be, and no room for negotiation.


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## Mellison (Aug 3, 2008)

Remodel Bud said:


> Hold on now, that is not fair to Orson. Lets not go down the who can slam who road.:no:
> 
> Everyone has different margins: builders vs. trim carpenters, upscale remodeling vs. Higher volume window companies, etc,etc,
> 
> ...


Not trying to "slam" any one. And I am sorry if it came off that way. But as a contractor I do not understand how you can expect only 10% profits. Where does the rest of the money go?
That is all.


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## rbsremodeling (Nov 12, 2007)

Mellison said:


> Not trying to "slam" any one. And I am sorry if it came off that way. But as a contractor I do not understand how you can expect only 10% profits.
> That is all.


That's *Net* profit and actually that is average. 

*Gross profit* for remodelers is typically *30-40%* but *net profit average 10%.* Of course you know that *averages and typically* are *words *that don't mean squat.


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## Mike Finley (Apr 28, 2004)

Listen - until you all become IBM, Microsoft or Wal-mart... you're all still tradesman working at what you love to do, it's not about that big adding machine on your desk and crunching the numbers and as long as you keep the machine moving, screw little Tiny Tim...

Negotiation is a dirty *****ing word. It's disrespect in it's most insidious form. You aren't presenting to a customer the invoice for a car, sliding it across the table, a carbon copy of one of a million others. You're plying your trade your skills, your expertise, you are offering your services to protect and improve a person's most valuable asset - their home.

What exactly is a customer doing when asking you to negotiate $200? Is that $200 going to keep that customer out of bankruptcy? What exactly is going on? Think about it next time and show some self-respect for what you are. Why has this person summoned you to their home in the first place? Is it because you have spent a long time, maybe a lifetime building the skills that they don't have, that few have in this world? Of is it that you're just a freak'n calculator, a calculation to be weighed plus or minus $200 to decide whether you get the job or not.

Give me a break, stick fu*king negotiation up your ass, I'm sick of it. 

I'll tell you from my heart, 3 days ago I was signing a contract with somebody and we were discussing the granite part of their job, they were under the false impression that the fabrication was not included in the costs they were signing. They had on a sheet of paper a list of additional costs they were going to incur and on it was $500 for the granite fabrication. I informed them that it was already included in the costs, to which they were excited because they now had $500 they had already mentally spent.

A few minutes later we were discussing the ability of them to purchase a remnant piece of granite from our fabricator instead of a costly slab. They wanted to know if our fabricator was negotiable on the prices of his left over pieces.

I flat out told them (keep in mind this is minutes after they just realized a $500 savings they weren't going to have to spend) - I told him:

You can ask him... *if you have the nerve*. 

Ask yourself what was the motivation of this person to ask that question??????????????????

I'm sick of the bull sh*t nickle and diming of trades people for no reason other than "what harm does it to ask" mentality, and even worse people loosely associated with tradesman vomiting, vile, disgusting salesmanship lessons tauting the virtues of negotiation, cutting your prices to make a deal. Enough is enough. Make a stand. Exist for a reason. Be something.

Nobody will ever place a higher value on who or what you are than the price you set yourself. People value you based upon the value you place upon yourself.


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## Mellison (Aug 3, 2008)

Mike Finley said:


> Listen - until you all become IBM, Microsoft or Wal-mart... you're all still tradesman working at what you love to do, it's not about that big adding machine on your desk and crunching the numbers and as long as you keep the machine moving, screw little Tiny Tim...
> 
> Negotiation is a dirty *****ing word. It's disrespect in it's most insidious form. You aren't presenting to a customer the invoice for a car, sliding it across the table, a carbon copy of one of a million others. You're plying your trade your skills, your expertise, you are offering your services to protect and improve a person's most valuable asset - their home.
> 
> ...


I guess you picked A.
I respect your heart felt, forcefull opinion.
However I will continue to run my business in the same manor as I have for many years, as it has proven very sucessfull.


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## orson (Nov 23, 2007)

I consider 10% to be a pretty healthy net profit margin.

I suppose I could shoot for 20% or more just like the health care industry.


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## Mellison (Aug 3, 2008)

No more valuable input here.
I think this thread has run its course.
I'm out


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## Remodel Bud (Aug 13, 2008)

.........


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## Remodel Bud (Aug 13, 2008)

Mellison said:


> No more valuable input here.
> I think this thread has run its course.
> I'm out



ditto


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## BuiltByMAC (Mar 11, 2006)

Think of it another way, the analogy of the title of this thread is one approach to a bid price (subject to being moved by a three-year old throwing a temper tantrum)- 

but some us cut the line with a water-cooled concrete cutter. There is NO moving that line!

My clients know that the bottom line is what it is because I know how to competently price my projects. There is no "wiggle-room" or "fudge-factor" discussed, simply the price I'm willing to receive to build their project.

Side note, for those of you not familiar w/ my bus. model, I do mostly high-end custom projects (< than 30/year). I am not a Wal-Mart.

Mac

ETA: Apparently, I showed up to the playground late - everyone left...


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## Remodel Bud (Aug 13, 2008)

.............


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## Mike Finley (Apr 28, 2004)

My apologies. I over stepped my place.

I will just enjoy the irony as the economy worsens and the posts keep increasing of contractors complaining of low-ballers, ridiculous customer posts on craigslist, complaints of the ineffectiveness of online lead companies, and crys for help as contractors cut their prices to react to other contractors cutting their prices in their over-saturated markets and then ask if it's a good idea to cut another $500 from a bid that is already lower than it should be and then the posts of contractors giving their sign offs here on contractor talk as they announce they are leaving the trades.

As that all goes on, keep on selling your services based on price.

I'm done being the dissenting voice, there are plenty of 'experts' to wax poetically the virtues of working for less money.

Those posts about drywallers working for the same prices as they did back in 1980 that were posted not long ago have no validity to any of this either.


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## Remodel Bud (Aug 13, 2008)

...........


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## Double-A (Jul 3, 2006)

Remodel Bud said:


> YES.
> 
> That is how high volume business works. The higher the revenue, generally the higher the profit in a given time frame. I am not engaging in this topic, but to only answer your question.
> 
> ...


OK, I had to read this several times over and I'm still confused. How can sales be a fixed item when its practically a job expense? Your commissions don't go up as your folks sell more?

I can't figure this out... You didn't define your sales expense or your General and Admin costs, you just lumped them together and said we sold 300K and 150K was Overhead (and sales costs) and 150K was materials and labor. 

Now suddenly we're making more money because our G&A and sales costs didn't go up, even though we sold 200K more. 

Did we sell the same number of jobs for more money? If so, how did this make your point? Seems to do the opposite.

Did we average more sales for the same average price? If so, why didn't our sales costs go up? Lead costs... I can write that off to closing a higher percentage of the same number of leads that would normally generate 300K, but my sales folks would quit in a flash if they sold more and didn't get compensated for it.

Hep me.. I'm confuzzeled.


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## Mike Finley (Apr 28, 2004)

That didn't take long. I looked at 4 threads this morning and found this already:



> I guess I am living in the wrong state.I just got under bid on my sq.ft price by a guy who looks like he lives in a van and said he would do the stone and throw in the lap siding as a 2 for 1 deal on the next home being built in the sub division(roughly 2500 sqft.) ,both for $800.00 .how in the world are we supposed to compete in a market where there are so many low ballers out there.I had another job lined up for 1500 sqft tile.18"x18" ceramic on the floors and 3 showers with mud pans.I wanted/needed the job so I told them I would do it labor only for $5 a sqft. pretty damn low for anyone and I lost it to a guy who said he would do it for 3.00 labor only!!! is that nuts or what?


Not nuts at all, you've simply run into a 'great business' man' who has followed the advice of sales professionals to compete on price and taken it to another level of genius.

Atta boy guys, fight your way to the bottom with your prices, but don't complain when some of you find others who are stellar at it and you can't even break even trying to beat those prices to get the job! That's life, you've just run into a sales guru is all.


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## Jason Whipple (Dec 22, 2007)

Yeah but, if you cut your price in half you could get three times as much work and actually increase your income by 50%:laughing::wacko:

I just read something on another forum that was on this topic. The poster made a simple statement, "Business is about Margin's not Volume". I take this to be true with any kind of business. Why should your value decrease just because you're attempting to do more volume? It makes no sense!


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## Grumpyplumber (May 6, 2007)

Mike Finley said:


> That didn't take long. I looked at 4 threads this morning and found this already:
> 
> 
> 
> ...


*Maybe, after saying this, you can understand the defensive nature over DIY requests in the plumbing forum.*
*You guys are unhappy getting beat on price, imagine getting beat out of the work altogether.*


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## BuiltByMAC (Mar 11, 2006)

Again w/ the plumbers? This argument is like a cancer, spreading throughout this site.

What can we do to keep from offending your trade again? Seriously. 'Cause I'd dearly love to move beyond this bullsh*t...

(And some of us are NOT getting beat on price.)

Mac


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## Fence & Deck (Jan 23, 2006)

I upped all my prices this year. I am averaging an extra $700 or more per deck. On fences I went up about 8%. I am no longer doing anything below $4000.00.
My markup on decks is up 6%. IF I discount, it's usually only for 1 or 2 hundred dollars, and I am still getting more than last year. 
Although we have lost a lot of jobs on price, I currently am booked out 6 weeks, whereas last year it was, at this time of year maybe a week. And I'm making better money on every job.
The point is, if you are any good, you don't have to discount, or at least not much.
Personally, to drop $150 from a $1350 job, no, not so much. Offer to do it for $1300.00 maybe.


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## Remodel Bud (Aug 13, 2008)

[.............


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## Remodel Bud (Aug 13, 2008)

..........


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## Remodel Bud (Aug 13, 2008)

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## AskForTheSale (Apr 3, 2008)

*Just an Observation*



Remodel Bud said:


> YES.
> 
> That is how high volume business works. The higher the revenue, generally the higher the profit in a given time frame. I am not engaging in this topic, but to only answer your question.
> 
> ...


 If a small business jumps from 300K to 500K in sales, it is not just their sales commission cost that rises.

I guarantee you their office staff would have to increase to support the additional scheduling and other back office needs.

200K / 350K = 57% increase in volume on an office staff staffed for about 350K volume / 10% NET.

You can not sit here and tell me sales costs are the only costs that increase.

You’d have to add atleast one 30K office employee to handle a 57% uptick in volume at that level. With FICA and bennies, it’s 39K.

You’d have additional supervisory job costs, truck gas, and on, and on. Plus you’d have to increase your advertising to get additional leads to close because just dropping your sales price a little would not magically jump your close rates that drastically.

You left a lot out of the picture: additional salesman and bennies, office staff and bennies and additional job / production costs, etc.


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## Mike Finley (Apr 28, 2004)

Grumpyplumber said:


> *Maybe, after saying this, you can understand the defensive nature over DIY requests in the plumbing forum.*
> *You guys are unhappy getting beat on price, imagine getting beat out of the work altogether.*


Oh I get it, I've always 'gotten' it. As I said before I can't fault your guys for your reasoning only your method.

Also I said and have said before that plumbing and electrical work is some of the highest paid trades in our industry, mostly belonging to the fact of state wide licensing, experience requirements and testing. The lower the bar is to enter into a field the more it is filled with low ballers. 

Like I said, I understand exactly your why, just not your way.


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## Mike Finley (Apr 28, 2004)

AskForTheSale said:


> If a small business jumps from 300K to 500K in sales, it is not just their sales commission cost that rises.
> 
> I guarantee you their office staff would have to increase to support the additional scheduling and other back office needs.
> 
> ...


You're right, in any business model there are truths that do not change.

As business grow in size profit margins get smaller and quality is reduced.

These are not changeable they are givens.


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## Remodel Bud (Aug 13, 2008)

.........


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## Jason Whipple (Dec 22, 2007)

Here we "F"ing go again!


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## rbsremodeling (Nov 12, 2007)

How bout them Redskins


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## Remodel Bud (Aug 13, 2008)

................


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## AskForTheSale (Apr 3, 2008)

Remodel Bud said:


> I know you want be to pretend you know what you are talking about. I was referring to MY BUSINESS in a month as an example, We would already have the office staff in place and in JAn per se' we would do 300k and in Feb 500K. I was answering the question about high volume. BUT in your RUSH to criticize, you missed my answer to a question. Imagine that, you causing conflict. NO WAY
> 
> I should know I ran a high volume business, thats a fact.
> 
> ...


 You essentially stated sales could increase 66% and it would all be pure profit. Can’t happen. 

I WAS NOT THE ONLY PERSON THAT PICKED UP ON THAT “WRONG” INFO.

Unbeknownst to you, accessing misleading information IS NOT criticizing. It IS NOT causing conflict. It IS NOT arguing. 

Get over yourself. Gees.


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## AskForTheSale (Apr 3, 2008)

Remodel Bud said:


> thats hilarious. :laughing: isn't that cost of goods...uh...YES really, don't criticize if you don't have ANY idea what you are guessing at


When did supervisory and over site of a job BECOME treated as material job costs. I believe that is under Administration overhead last I heard. :laughing:


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## Jason Whipple (Dec 22, 2007)

rbsremodeling said:


> How bout them Redskins


I'm hoping to see the Dolphins pick up steam again. Long time fan of Miami.:thumbsup:


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## rbsremodeling (Nov 12, 2007)

I am not picking a fight here. My Supers are listed as overhead cost which are fixed. If they work 10 or 100 jobs the cost is still the same or did I miss something.

If you reply to me make it civil its just a discussion and we all have different opinions lets just hug it out bitches and have an intelligent thread


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## AskForTheSale (Apr 3, 2008)

All I am saying, is if you increase your volume over 50%, you will have additional fixed costs added onto the books to support that volume.

If you are staffed for 500K in volume, then you are OVER STAFFED for 350K in volume and this means you have to make HIGH profits to “carry” the staff when sales volume is low.

How do you make high profits to carry a staff during low volume sales times when you are cutting profits to obtain sales? This question WILL NOT BE ANSWERED.

I want anyone to not just run their mouth.

I want them to PROVE it with a “defined” and detailed set of numbers. If they can not, then the facts speak for themselves.


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## rbsremodeling (Nov 12, 2007)

AskForTheSale said:


> All I am saying, is if you increase your volume over 50%, you will have additional fixed costs added onto the books to support that volume.
> 
> If you are staffed for 500K in volume, then you are OVER STAFFED for 350K in volume and this means you have to make HIGH profits to “carry” the staff when sales volume is low.
> 
> ...


I can state honestly that I went from 350k to 1mil+ with basically the same overhead and minimal cost. I can explain if there is something specific you want to know. I just planned better and utilized a few subs, it was not hard for me at all. 

I think alot of guys think themselves out of growth as much as alot are unprepared for it.

I worked a bit harder but not excessively. I just realized it was not for me anymore


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## AskForTheSale (Apr 3, 2008)

rbsremodeling said:


> I can state honestly that I went from 350k to 1mil+ with basically the same overhead and minimal cost. I can explain if there is something specific you want to know. I just planned better and utilized a few subs, it was not hard for me at all.
> 
> I think alot of guys think themselves out of growth as much as alot are unprepared for it.
> 
> I worked a bit harder but not excessively. I just realized it was not for me anymore


By lowering your margins to create sales? That is what this is about, lowering margins to create more sales with no consequences.


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## Grumpyplumber (May 6, 2007)

rbsremodeling said:


> I am not picking a fight here. My Supers are listed as overhead cost which are fixed. If they work 10 or 100 jobs the cost is still the same or did I miss something.
> 
> *If you reply to me make it civil its just a discussion and we all have different opinions lets just hug it out bitches and have an intelligent thread*


*SMARTEST advice I've seen the whole thread.*

*There's obviously a good reason opinions are so varied here, which means there's obviously a lot to be gleaned from all sides.*

*Be kinda nice to see it continue without anger...or a padllock.*


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## rbsremodeling (Nov 12, 2007)

AskForTheSale said:


> By lowering your margins to create sales? That is what this is about, lowering margins to create more sales with no consequences.


Yes slightly. I wanted to break the 1mil gross to establish buying power with my subs and vendors. So I sucked it up for a year and did more volume at a lower mark up price to increase my buying power over the year.

There are 3 rules in my book

1.Volumes sales usually equals better buying power

2. Higher mark ups and lower volume leads if done right lead to better net profit and less work for most small to mid contractors

3. Knowing your numbers makes for better sales and purchasing decisions.

You just have to decide where you fall Volume sales or Mark up/Profit driven sales


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## AskForTheSale (Apr 3, 2008)

I will also add it even becomes more critical with a 5-10+ MIL sales business and carrying a large staff in slow times.


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## rbsremodeling (Nov 12, 2007)

AskForTheSale said:


> I will also add it even becomes more critical with a 5-10+ MIL sales business and carrying a large staff in slow times.



I have also found that once you pass the say maybe the 3mil mark your volume can increase with less overhead, than at lower volume sales. I think this is where Remodel Bud was making his point.

The work being produced and the personnel does not increase much between the 3-10 mil mark on most replacement remodeling sales. Especially on windows, siding and roofing companies. You may sub more but it does not cost a whole lot more because of the volume sales set up.

AFTS... I am glad we are having this discussion without any arguements I know the last similar thread went way off base. But I really do enjoy discussions like this


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## Meetre (Nov 2, 2007)

wow, some very interesting ideas bouncing around. It's just hard reminding myself that some times having work isn't a good thing! :w00t:


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## AskForTheSale (Apr 3, 2008)

rbsremodeling said:


> I have also found that once you pass the say maybe the 3mil mark your volume can increase with less overhead than at lower volume sales. I think this is where Remodel Bud was making his point.
> 
> The work being produce and the personnel does not increase much between the 3-10 mil mark on most remodeling sales. Especially on windows, siding and roofing companies. You may sub more but it does not cost a whole lot more because of the volume sales set up.


 There are walls in all types of business where you have to push through a “grey” area whether it is number of jobs sold or number of trucks on the road before you get to the next level of volume. Sometimes while pushing through that “grey” area, you actually make less profit and gain more headaches.

Companies strive to obtain those higher levels of gross sales to achieve market awareness of potential clients, branding, volume discounts on supplies and discounts on bennies for employees.

I can not see most small businesses, which is the majority of contractors, being able to play the low margin game without the benefit of high volume discount on all their expenses. So the big question is how to get to the high level “without” cutting margins. You don’t. You sell value and get your price and then when you get to the top, you can play the low margin game to break into new areas, Cites / States, to establish yourself etc. with your buying clout etc. 




> AFTS... I am glad we are having this discussion without any arguements I know the last similar thread went way off base. But I really do enjoy discussions like this


Some can not "respect" others opinions here just like on several forums across the internet. I can be civil like anyone else.


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## Mike Finley (Apr 28, 2004)

rbsremodeling said:


> The work being produced and the personnel does not increase much between the 3-10 mil mark on most replacement remodeling sales. Especially on windows, siding and roofing companies. You may sub more but it does not cost a whole lot more because of the volume sales set up.


I think you're a smart guy, but I think you're making some gross over estimations.

Advertising just to name one thing is going to go dramatically up to triple your gross sales.


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## rbsremodeling (Nov 12, 2007)

If High volume sales is the route you want to go, You have to plan for it.

*Most small to mid size contractors don't have the systems or personnel in place to go to that level. * *That is the Problem*!!!!!!

I did because of prior work and company ownership. So I came to this city with a plan to reach that goal in 10 years, I did it in 5 because of the boom.

I think most remodelers will not and should not do volume sales. But stick to profit driven remodeling sales. Increase your value and increase your mark up and build reputation.

*It is easy. How do you make 1million dollars??*

1000 x 1k jobs or 5 x 200k jobs?? Which do you want. 

*With the right profit margins of course*:thumbsup:

The one man show usually can't do it all, hence the additional *help/Overhead*.

That additional help/overhead takes a lot of gross sales to cover before that *overhead/help is worth the cost.*


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## Double-A (Jul 3, 2006)

This thread is doing dandy, but some of us are not playing nicely. 

Keep it professional and friendly.

Thanks


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## rbsremodeling (Nov 12, 2007)

Mike Finley said:


> I think you're a smart guy, but I think you're making some gross over estimations.
> 
> Advertising just to name one thing is going to go dramatically up to triple your gross sales.



Not necessarily Mike your referal base grows and you farm it. You jobsite, signage grows and you get more calls. You network a bit more and try to get more work.. Your reputation and brand grows so you may even have to spend less on advertising.

You think windows you think Pella
You think paint you think Benjamin Moore
You think truck you think Ford

Etc of course but you get the point


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## Jason Whipple (Dec 22, 2007)

rbsremodeling said:


> That additional help/overhead takes a lot of gross sales to cover before that *overhead/help is worth the cost.*


You're not kidding! 

Thanks for getting this topic back on track guys:thumbsup:


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## SethHoldren (Feb 13, 2008)

Grumpyplumber said:


> *SMARTEST advice I've seen the whole thread.*
> 
> *There's obviously a good reason opinions are so varied here, which means there's obviously a lot to be gleaned from all sides.*
> 
> *Be kinda nice to see it continue without anger...or a padllock.*


You da man, grumps.

_Seriously_ guys. I love reading about all your different experiences and wisdom. But you have to keep your cool! A difference in opinion is no cause for harsh criticism or a hissy fit. On all sides.

Also, if someone does criticize you beyond the range where you can take it in stride, take a deep breath and think about it for a while before you blow your stack. 

Or just ignore it.

There is a beautiful "ignore" button you can push. Just go to the offending user's profile and hit ignore. You'll get through the threads faster not having to screen through all the huffing and puffing.


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## rbsremodeling (Nov 12, 2007)

My additional cost for going from 350k to 1mil plus

1. answering service to field missed, after hours, weekend calls 150 bucks a month 

2. Additional advertising 5k for the year

3. Clothing for subs to wear to the jobs 3k for the year (optional for subs)

4. Office/showroom 300 bucks more a month additional from old office cost

5. additional work for me 10 hours a week more 

6. New signs and logos for my trucks 4K for the year

That is all I can think of but I am sure there is more. Next year my vendors will probably cover half if not more of those cost


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## Jason Whipple (Dec 22, 2007)

rbsremodeling said:


> 3. Clothing for subs to wear to the jobs 3k for the year (optional for subs)


Say what?!


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## rbsremodeling (Nov 12, 2007)

Jason W said:


> Say what?!


Yep my subs are given free t shirts as gifts for doing good work for me through out the year. If you choose to wear the shirts to work that is your call, I don't have a problem with it:whistling


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## Remodel Bud (Aug 13, 2008)

............


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## Jason Whipple (Dec 22, 2007)

Remodel Bud said:


> Here is what I said.
> *First 300k is to break even, after that each job is 50% profit.*
> 
> 
> ...


Geezus remodel bud, move on would you. Everyone else is, why can't you? I for one am getting tiered of reading your self promoting posts and your extreme guard to your credentials!


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## rbsremodeling (Nov 12, 2007)

Bud what you got to realize is that ME, YOU, AFTS, and Mike, have strong personalities and opinions of the way we think businesses should run. 

That's it. I am a Aries the worst sign in the universe stubborn and pig headed. But age has turned that to stubborn and understanding.

It doesn't make either of us right or wrong. Having passion for our job and career choices we made in this industry, are who we are. 

I don't care if some tells me he can install crown moulding with a spoon. 

If he really believes that and thinks he is doing the best job possible I respect them for that.


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## Mike Finley (Apr 28, 2004)

rbsremodeling said:


> Not necessarily Mike your referal base grows and you farm it. You jobsite, signage grows and you get more calls. You network a bit more and try to get more work.. Your reputation and brand grows so you may even have to spend less on advertising.
> 
> You think windows you think Pella
> You think paint you think Benjamin Moore
> ...


You're a better man then me. There is no way I could triple the sales of a mature company without a ton of money to spend to do it. I say mature because being brand new you can go from 10,000 in sales a year to $20,000 pretty easy, then 40K etc... but once you're at the mature level gains become much harder, you're no longer competing against joe smoe you should be competing against other mature companies with large ad budgets and I couldn't do it any other way other than start spending money close to the same figures if not more. Gaining market share is much more expensive then keeping it. Mature companies in mature markets throw huge amounts of money at their marketing just for 5% market share gains.

You've hit it on the head - it takes branding and branding is the most expensive form of marketing their is. I'm not sure if you said you had done this before, but if you have, my hat is off to you my man!


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## Remodel Bud (Aug 13, 2008)

............................


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## Remodel Bud (Aug 13, 2008)

[......................


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