# How far do you break down estimates?



## rpt903 (Mar 24, 2011)

I've been working under a general contractor for the past 5 years and just recently went into business on my own. Admittedly estimating is not my strong suite. I am wondering what is the best way to present the numbers once you have determined them. In this situation I am doing some work in a kitchen and two bathrooms totaling about 10,000. My numbers are broken down to the box of screws and lineal foot of trim, but I am unsure of how much I should relay to the client. I also still need to add my 10-20% for overhead and profit and am unsure whether to build it into the above mentioned categories, or have it as a separate line item. Any suggestions/help would be much appreciated. Thanks!


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## Dan_Watson (Mar 1, 2008)

Depends on the customer but usually a lot of detail with one total price. I don't explain what each part of the job costs but I do explain what I will be doing.


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## Brickie (Jun 15, 2006)

I don't break down estimates.


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## Jaws (Dec 20, 2010)

That's a tough question to answer, my friend. I'm sure you want to justify your costs as much as possible, because you want to sell the work, but you don't want to give them a very detailed breakdown imo, for these reasons. 

If you give them a detailed scope and a detailed cost break down, they can give them to a cheaper contractor, most likely a hack. Or, they might try and GC the job themselves if it is layed out in to clearly, ( in my experience the latter is most likely to happen the cheaper the property your working on). 

Also it takes A LOT of your time to do this detailed a breakdown, and if you do several estimates in a short period of time, it will take up all of your time, and you might not get any of the work. 

I find it best to get a general number, and give that to them before going forward with a detailed estimate. JAW


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## Bonzai (Dec 23, 2009)

Further to the last reply; I learnt the hard way not to give prices for every line item ... did this for one guy who insisted on this. I should have said no & walked if necessary as he proceeded to argue over every cent to the point where I was spending so much time on managing him that the job went on an extra week which I basically did for free ... and to top it off he then bounced the final payment cheque on me. He would turn up one day with a part I was due to supply 'cos he had "got a deal" and saved a couple $ over my price ... however it was never the right part or remotely comparable & it would take him 6hrs to do a 30min shopping trip while I was left waiting. From that point on I give one price (the total) and a detailed breakdown of what this includes so there is no room for doubt & it weeds out this sort of problem client. 

I liken it to going out for a meal and asking the waiter for a breakdown for the cost of each ingredient ... just not going to happen :whistling

I also state what it does not include (or what would be extra) if I think there could be some incorrect assumptions on the HO's part.


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## Jaws (Dec 20, 2010)

Also, I should be clear, I don't give the client a breakdown, unless its a cost plus project. Then they get copies of all the receipts and invoices. JAW


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## rpt903 (Mar 24, 2011)

*Thanks*

Thanks for the feedback, I was leaning in the direction of generalizing it a little more and think I needed a push in that direction.:notworthy


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## rpt903 (Mar 24, 2011)

What type of situation would you use a cost plus job?

Also to clarify, I have been in contact with the client several times since we met, and I basically have the job, my "guesstimate" was 15-16k and im actually in more like 12k, I just want to present it correctly


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## Jaws (Dec 20, 2010)

Also, where are you from. The members here encourage you to list where you are located. JAW


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## rpt903 (Mar 24, 2011)

Minnesota, gotcha, I am in the process of updating my profile now


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## rselectric1 (Sep 20, 2009)

As Jaw said above, an honest contractor has to weigh the need to justify the cost vs: the potential of having the client use each line item against you.

BTDT. I've tried it all sorts of ways. When you break it down too specifically, they tend to get on line and find the "same exact sink" (for example) for half the price and want credit for it.

I've found it's best to spec the materials and give a VERY detailed scope of labor and just give them the number. The only thing I break out now are extras/upgrades.


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## Jaws (Dec 20, 2010)

If its a straight kitchen and/or bath remodel, I'm bidding it because no is going to sign a contract for cost plus 30 percent and I'm not making the sme number of trips, same amount of scheduling/planning and trade supervision for 15 or 18 percent. Its not the price its the mark up that bothers most of my clients. 

If it is a difficult repair, like the whole side of a house is rotted, lots of leaks/patches, no way to see what its going to be until we open everything up, we go cost plus or have a high bid. 

People who know they are going to make a lot of changes, and don't want change orders, like on a big whole house/addition remodel, may like the cost plus route. The bad thing about cost plus, is there is not a lot of incentive to finish on time or save money. Most of our work is from referrals, so they usually know our reputation and that were honest. 

For a straight forward addition, boat dock, or custom home Id like to bid it, because we would make more money, probably.JAW


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## 480sparky (Feb 1, 2009)

I don't break down anything. I may have a 50-page list of items the customer wants, but I supply only one price.... the total.

If they demand a breakdown, I demand a reasonable reason why. "I want one" is not reasonable to me. They just want me to give them the information they desire so they can start chiseling away at my price.


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## angus242 (Oct 20, 2007)

First of all, I don't call them estimates. They are called proposals. I'm not estimating anything. I'm giving them 1 price for the exact work I describe. Anything extra is a change order.

I think when you present it that way, you're less open for a break down request. I propose _this _work for _this _price.


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## MikeGC (Dec 6, 2008)

It depends.

There are two conflicting interests. Its a balance between

1 Getting the sale with the right amount of detail
2 Creating a monster with too much

I qualify the customer and then do what must be done to get the sale and keep the customer in a manageable state. Some complain about lack of detail from other contractors. With those I go with more detail and get the sale.

When I do detailed proposals I do not add overhead and markup at the end. Its included in the line items.

If I was doing cost plus which I dont do, it seems to me like I would have to


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## Randy Bush (Mar 7, 2011)

I don't do brakedowns I give a detail of what I am going to do for the price I give them. One thing if you start giving a brakedown then the next thing you know is they are running to the yards to see how much it cost and then figure out how much you are making. Then they come back and tell you that you are making to much. People forget when you are in business you need more then just you labor to stay in business, therefore a profit on material.


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## zenn68 (Jun 17, 2010)

I keep two separate estimate/invoice sheets. One I give to the customer with a general price of materials, labor, extras totals. Another i keep for my records with a detailed breakdown of actual costs of goods, markups, how much I spent on gas picking up materials, driving to work site etc.


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## tedanderson (May 19, 2010)

If I run into a scrutinizing client who wants a very detailed breakdown, I'll finagle the numbers a little bit where I'll add more into the labor and reduce the price of the materials which will make it impossible for them to find a better price anywhere. 

Or I might create my own item numbers and descriptions that they can't possibly find on the internet. e.g. if I am furnishing lag bolts, I might list them as, "G47 Grade 6 Fasteners" or if I am mounting a TV on a wall, I'll probably make up a brand name for it and then take it out of the box before I arrive on the jobsite. But all in all, the bottom line ends up being a wash. A $4000 job is still a $4000 job and the client still gets good work for a fair price. 

You have to look at it this way- They are not obligated to tell you how much money they have or how they earn it and likewise, you as the contractor are not obligated to tell them exactly what you pay for supplies or what you are charging to be in business. 
Also, when you share this information, you are really doing it as a courtesy but it's not your obligation.


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## jimmys (May 1, 2009)

*spec?*

Most of our work is not spec'd by a designer or architect. If you don't tell the customer what he's getting, why should he hire you? An estimate for a fixed-price job is really a promise, to do the named work for the stated fee.
The kinds of meetings I hate are when the customer says "I'm sure we said that we wanted windows with integral blinds, but you didn't give us that - what's up?" I feel I have to break down the work to show what I'm giving for the price. 
With some prospects, I don't include the line item cost. With allowance or undecided items, I don't see how I can avoid saying "shower surround tile will be ~70 sq. ft., tile allowance of $700 tile only..." so I need a form to say that.
Do you guys bid on spec'd work? If not, do you write the spec without pricing it? If you don't specify what you'll provide, how do you avoid arguments later? 
Not trying to steal the thread, I hope, but fill in detail for the OP.
Jim


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## monticellohomes (Mar 19, 2008)

I do break my down to a certain extent, my estimates for a new home are about 30 pages...and it has gotten me jobs over others given some customers really like to see the breakdown of costs. I will say my breakdown is not like some have mentioned above and I call out individual items on everything, mine is set up with a page for each category (foundation, framing, etc with a portion of the page being calculators for my estimating). I also then add a estimate summary that has a sentence or paragraph describing what is included in that pages price and what is not, again to add detail some like and it helps a lot during the process by laying out exactly what is included and what is not (I have them sign it and attach a copy to the contract).

For Cost plus projects the way I have found to give me the motivation to finish on time and to save money is by adding a minimum and max to my fee. In my contract it states that my fee is X% and that is the lowest it will go, if we save $10k my fee is still the percent total off the estimate (allows me to find ways to save the customer money without taking money out of my pocket) and I also cap it for the customer on items listed in the estimate, this way it shows the customer that I am giving them a real estimate of the price of the project, I am not giving them a low price that will just be way over budget because I have no motivation to that, it would take money out of my pocket. Change orders are different, they do get extra fees for me attached to them. So far all of its worked real well.


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## carpsteve (Mar 19, 2011)

Double edge sword. Unlike most replying to this thread I believe in a complete breakdown ( upon request) but most of our work is commercial. An honest contractor should not have anything to hide. I do agree with a previous post that you run the risk of someone using your detail to give to another contractor but in the professional world that is unethical for a HO or a G.C. and in some cases illegal ,do you really want to work with someone like that. Working for a GC I insist on a complete breakdown but I contract as a lump sum so I have agreed to a scope and price and have no intention to negotiate after I have contracted with a subcontractor or a HO which everyone needs to understand up front.. One reason to have a complete breakdown is that if we need to delete any part of the scope I can expect a fair credit which you have to admit rarely happens.
As for being concerned that a HO will see you have 30% OH&P then you have not provided enough detail since part of overhead may be insurance, admin cost as well as general conditions such a supervision. permits, dumpsters. 
I would rather have these discussions prior to contact then have the fight during the project. A complete understanding between you and you client is essential to help avoid some of the pitfalls even when you have to spend your time educating them.


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## angus242 (Oct 20, 2007)

carpsteve said:


> As for being concerned that a HO will see you have 30% OH&P then you have not provided enough detail since part of overhead may be insurance, admin cost as well as general conditions such a supervision. permits, dumpsters


OH&P is none of the customer's business. McDonald's, Home Depot or Sears don't break down their OH&P for me when I purchase so why should I? If I am comfortable with the price displayed, I purchase. 

As an honest contractor, I reflect that in the honest price I propose. I don't need to justify anything more than that. (IMO)


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## Wood Worx (Nov 4, 2009)

rpt903 said:


> Minnesota, gotcha, I am in the process of updating my profile now


Where about? I office out of Excelsior.


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## Dierte (Dec 18, 2010)

My estimates simply say total price including x amount for labor and x amount for material. They don't need to know what I pay for material and what I'm selling it to them for.


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## Wood Worx (Nov 4, 2009)

Depending on the client, I have been successful giving "full disclosure" I even have a supervision line. However, when I have used this method for the wrong type of client, it bites me in the a$$ They will dispute every cost that they think is too high. My advise, sell the job as a package deal.


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## DaVinciRemodel (Oct 7, 2009)

Rpt903, this subject has been debated many times on this forum. There is no right answer!

Because you’re just starting out, one of the things you should do is consider a vision of what you what your business to be. Few are the same. There is no magic formula.

Before you worry about what “numbers” to present to the customer, you should consider what “business” you should present to the customer. What do you do? Who are your customers? What do the customers – you want to work for – want? Can you deliver what those customers want?

Once you figure out how to present the answers to those questions, presenting numbers is easy. 

Many of the guys who posted “No Detail” run very successful businesses. Many of us who would advocate “Show the Detail” run very successful businesses. 

We could argue the merits all night and into next week and the end result is – there is no right or wrong – do what’s best for your business. But you need to know your business to do that.

Many years ago I was told, “If your customers don’t want to pay you what your worth, get new customers”. If you go this route – you better know what your worth! Know the answers to the questions above.

Good luck my friend.

BTW – Less Filling or Tastes Great! Same argument! But then you might be too young to know that one.

Paul


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## angus242 (Oct 20, 2007)




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## Mike Finley (Apr 28, 2004)

Maybe the question should be, who makes more profit?

Those who break down their bids or those who don't?

I think the answers pretty cut and dry and the incentive to do one or the other if you have the ability.


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## PrestigeR&D (Jan 6, 2010)

.......










B,


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## carpsteve (Mar 19, 2011)

angus242 said:


> OH&P is none of the customer's business. McDonald's, Home Depot or Sears don't break down their OH&P for me when I purchase so why should I? If I am comfortable with the price displayed, I purchase.
> 
> As an honest contractor, I reflect that in the honest price I propose. I don't need to justify anything more than that. (IMO)



True but these stores are not selling services


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## 480sparky (Feb 1, 2009)

carpsteve said:


> True but these stores are not selling services


So?


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## PrestigeR&D (Jan 6, 2010)

........









B,


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## angus242 (Oct 20, 2007)

carpsteve said:


> True but these stores are not selling services



Car wash?
Dry cleaners?
Hotels?


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## griz (Nov 26, 2009)

angus242 said:


> ...Hotels?...


Every now and then you find one by the hour.:whistling:laughing:


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## angus242 (Oct 20, 2007)

griz said:


> Every now and then you find one by the hour.:whistling:laughing:


Oh, you mean the classy kind


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## carpsteve (Mar 19, 2011)

angus242 said:


> Car wash?
> Dry cleaners?
> Hotels?



Of which the highest cost would be the hotel at what maybe $100. As for car wash and cleaners most are looking for convenience ( who is going to drive 30 miles to either one and both are services you would use on a regular basis, apples and oranges. 
We obviously disagree at least to a point. If a client wants to beat me up on cost I would rather have the discussion prior to contracting. I am not saying I spill my guts to anyone but the fact that someone wants a detailed breakdown can mean that they want to try and stick you and If I fell real uncomfortable I will walk. A lot of our business can be on referrals, I would rather lose a job than get a than have a customer who would not refer me to another. A lot of the people I talk with are looking for someone they can trust and if it takes a detailed estimate then so be it. One thing I want to avoid is creating a adversarial relationship by having an use vs them attitude, the client should fell we are in this together as part of a team.


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## Mike Finley (Apr 28, 2004)

Where is the focus on the relationship you have with the customer between a break down bid or a lump sum bid? What are the talking points?

Presenting a broken down bid puts the focus on the break down, the individual parts and the costs associated with each (classic "little picture") (comoditizing yourself)

Presenting a lump sum bid puts the focus on the total project (classic "big picture") (differentiating yourself)

If the customer has yours for $40,000 and another for $37,000 with the break down its a search line by line to discover what the difference is and then the ensuing mis-communications, desperate attempts to explain and justify. (little picture again)

If it's a lump sum the discussion of the difference is about what it takes to deliver the complete project, your companies reputation, work methods, delivery of quality, warranty etc... (big picture)


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## MikeGC (Dec 6, 2008)

Mike Finley said:


> Presenting a broken down bid puts the focus on the break down, the individual parts and the costs associated with each (classic "little picture") (comoditizing yourself)
> 
> Presenting a lump sum bid puts the focus on the total project (classic "big picture") (differentiating yourself)
> 
> ...


Well said and agreed. When I grow up I want to be like Mike Finley. I enjoy your posts Mike. Thank you for your many contributions. I especially like this one. :thumbsup:


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## carpsteve (Mar 19, 2011)

Mike Finley said:


> Where is the focus on the relationship you have with the customer between a break down bid or a lump sum bid? What are the talking points?
> 
> Presenting a broken down bid puts the focus on the break down, the individual parts and the costs associated with each (classic "little picture") (comoditizing yourself)
> 
> ...


If you are not low and the customer is discussing anything with you that is a good sign and means that price is not the driving factor which is your opportunity to discuss as you stated, complete project, reputation ect. Don't you think you should be able to justify your bid? It may be that your competitor missed something which leaves the customer exposed and is a plus for you. If you have a complete bid why would an explanation be desperate? You can not avoid mis-communication by by having no or less communication.
I am also talking about a lump sum not piece work. With a breakdown the client has been shown exactly what you are providing and exactly what it will cost leading to less mis-communication. Once an agreement has been reached the negotiations are over.
I am not saying a complete breakdown is appropriate in every situation or works for everyone. In some cases just the fact that you are willing to provide a beak down may gain trust with a prospective client. Clients that value trust and workmanship are typically better clients than those who are concerned only with price.
Car dealers use several tactics to get customers like: 0% financing, rebates, extended warranties, free oil changes, the bottom line is the same they are just looking for that button to push to get a customer to fell they received a better deal.
There is no right or wrong here it is a matter of what works to get the job, which may be different for each contractor and each potention customer.


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## Bearded Wonder (Jan 21, 2011)

I feel I've lost a couple jobs by breaking down the costs in my bid. The customer loses sight of the whole cost and freaks out over one line item. They say things like "shoot, my buddy knows a guy who is way cheaper on tile, your price is ridiculous". Funny thing is, same people would have been happy with the total price for the job if that's all I gave them. So now it's a detailed job description, with one price for a turnkey job. If they ask how much for something specific I gracefully decline going into that. Sometimes it's a tap dance around specifics but usually I can figure out a way to sound professional and steer the conversation to something else. 
This is generally on smaller jobs, or with people for whom cost is the biggest issue. I've been fortunate enough to work a few people for whom cost is their second or third issue and are more concerned with quality. I find I can be much more up front with this type of customer on costs. As long as they trust me as a builder, and I provide high quality construction and service, they tend to accept the higher cost of items as the cost of quality and have no problems with it. My favorite customers to build for are these people. But, if you screw with these people, or don't take care of their job, it will be a dark day.


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## Jaws (Dec 20, 2010)

13? Man I should move to Wisconsin. There is 42000 people in the county I live in, and 64000 I our tri county area. In 2008 there were 330+ general contractors registered here. There is 53 GCs in the local builders association. Think there are some hacks down here? JAW


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## HawaiiBuilder (Jan 15, 2009)

I can't see any real reason that you should break down your pricing into any detail for a lump sum project of that amount unless you're maybe trying to oversell the job by showing the owner how reasonable or accurate your pricing is.

I've done estimate cost sheets for Owners/Architects before and it sometimes serves it's purposes, especially for value engineering and to have them understand that there are also indirect costs and how their material selections impact the total and it's not all profit.

If your going down to the box of nails, l.f. of trim and if you caught every item...you'll probably lose money on the materials. Try to mark up something for waste or add a % contingency for waste and and unexpected costs, also consider the time and gas spent down at the local Home Depot. Your profit markup should not be considered as a contingency account, otherwise you're just losing profit.


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## Dan_Watson (Mar 1, 2008)

HawaiiBuilder said:


> I can't see any real reason that you should break down your pricing into any detail for a lump sum project of that amount unless you're maybe trying to oversell the job by showing the owner how reasonable or accurate your pricing is.
> 
> I've done estimate cost sheets for Owners/Architects before and it sometimes serves it's purposes, especially for value engineering and to have them understand that there are also indirect costs and how their material selections impact the total and it's not all profit.
> 
> If your going down to the box of nails, l.f. of trim and if you caught every item...you'll probably lose money on the materials. Try to mark up something for waste or add a % contingency for waste and and unexpected costs, also consider the time and gas spent down at the local Home Depot. *Your profit markup should not be considered as a contingency account, otherwise you're just losing profit.*


Probably the best way this has been put yet. So many people do not understand. It doesn't matter how you do it, everyone has there own system. My estimating process would not work for most, but is great for me.


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## CarrPainting (Jun 29, 2010)

I have tried it both ways. Tho detailed I break it down to scope of work to be performed, and I get as detailed as possible... and then a price for that, then well since I am in painting I give the paint price... then an 'other material' price. Now...

I have found that when I give just a price + tax = total I dont get much response. Though when I break it down like above, I seem to get more bites... HOWEVER being as its my second year in business, I am still testing the waters on this.

It would save me a heck of alot of time tho to just break it down to (labor and material)+tax= price than to do it the way I have been doing it lol

And its an interesting idea to do it that way I think I may try it out a little more and see where it goes.

My target market has been squarely upperclass. And I make sure that I put on a good 'show' for the customer... However at times, even to me, seems a bit rediculous at the amount of time I have invested in these proposals, being detailed, and then they wont even return my phone call.


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## BradingCon (Dec 17, 2010)

480sparky said:


> I don't break down anything. I may have a 50-page list of items the customer wants, but I supply only one price.... the total.
> 
> If they demand a breakdown, I demand a reasonable reason why. "I want one" is not reasonable to me. They just want me to give them the information they desire so they can start chiseling away at my price.


Completely agree with this. A very detailed estimate does not benefit anyone in my opinion. The owner gets online and finds the materials cheaper and they demand that price. But, some (maybe most) contractors have a markup on materials. Therefore, the materials price on receipts is irrelevant.

I think the only number that should matter to the homeowner is the final cost. If the ask for a completed project and a cost, and you give them that completed project for the cost you said, there should be no need to tell them how you arrived at that cost. 

My latest bathroom remodel bid consisted of two line items: Labor and materials. The lady wanted to have copies of the receipts after the job (she told me this before hand) so I included my markup for OH and profit in my labor costs. No biggie to me.


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## sbcontracting (Apr 22, 2010)

I've been in business now almost a year. I've generally been breaking down jobs on 10k+ jobs. Line items, frame walls, flooring, plastering, etc.

I've been finding recently that I / customers get lost in the details on estimates. They don't squabble over the price, but I tend to drill down on little things that don't really interest the HO. This happens, largely because I feel I have to justify my prices on the estimate multiple times for each number I call out.

After reading this thread (and Mike 'n Mike's posts :thumbup I'm going to shift to a single price. I'll still be detailed on the scope of work, but just not go into specific line items.

Not having to justify my price 12x for an estimate will (I think) make things go better.

Thanks.

Mike


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## artiospainting (Mar 16, 2011)

the more you talk the more you lose. the more you promise the more you have to do. details are promises. the last person to talk looses give them your contract and leave. let them do there on thinking what little you say should be with confidence.only say the bear minimum. leave confident in you self. the city will have a standard you have to pass [ building code] tell them you will meat that


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## gizmo21187 (Apr 18, 2011)

I break it all down how ever in my quote i put that any thing bought ftom us is installed at a discount rate. So HO buys item A from us we intsall for 100. If HO buys A FROM some one els we install for 200. Not a fomula but i hope u get the picture.


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## Seven-Delta-FortyOne (Mar 5, 2011)

I've been following this thread for a while and I hope it's O.K. to comment.
First off, I don't break down estimates, never have and never will. There is always someone who can do the job cheaper than me and someone who will do it cheaper than that person. My truck cost me $40,000. There is probably someone with a $5,000 minivan who doesn't have that overhead. It's none of the customers business what my overhead is. I sell myself and my work, and if you don't like my price, you don't have to hire me.
Secondly, lining out scope of work and line item pricing are two entirely different things. I provide a detailed scope of work and one total price. They are not mutually exclusive.
Thirdly, markup. A customer says, "I want new windows in my office building. Almond." It is now my job to find and order a code compliant window for a commercial building. Educate the customer about low-e glass, tempered glass, vinyl vs. aluminum, etc., etc. And I have to be knowledgeable about all the brands out there. That right there is why I deserve mark-up. If the customer wants to take time at the end of his day to do all that, I garauntee that he will do a worse job of it than me (after all, it's not his trade), and in the end, most probably still order the wrong part. That right there is going to cost him more than my mark-up, so they actually _save_ money. Part of what we sell is our knowledge and there is no line item for that. Then there is my contractor discount that never gets passed on. I don't think any of that is cheating my customers.


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## overanalyze (Dec 28, 2010)

We break down our estimates by phases and each phase has its markup and overhead figured. If the customer decides to do his own painting, for example, no worries. It just is not a part of my scope anymore. I won't let them pick us apart or get different subs than I use though, that is not worth the headache.


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## Shark49 (Apr 7, 2008)

I am mostly a lurker on this site but I have lately had a few problems with customers and my contracts. I have always done a detailed cost estimate with individual scope of wrk listed and its associtated cost. Since I have been doing so many remodels i typically list the scope of work as an allowance. I do this not only as a way to mitigate risk but also because we all know that customers very rarely know exactly what they want in the beginning of a project. Then at the end I typically do a 10% OH and 10% Profit markup. I do it this way because this is how my father has done it for years as well as how I was taught in the commercial side of construction before I went solo in residential.
Recently I had clients that got my final bills and freaked out and then started nit-picking line items that they never cared about before. Like asking me whats included in overhead, what should be in general conditions, etc. etc. So i am now wondering if i should not include prices for each line item at all but go with a final number at the bottom but still keep the scopes of work detailed. Also if i should even list the OH&P numbers at all. Part of me feels that the one advantage i push over other contractors is that i have nothing to hide, Im very detailed, but i do think that i lose work because they take my bid to someone else to beat. I am also thinking that i need to be more detailed in change orders so was wondering if yall could post examples of what you use.


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## overanalyze (Dec 28, 2010)

Shark49 said:


> I am mostly a lurker on this site but I have lately had a few problems with customers and my contracts. I have always done a detailed cost estimate with individual scope of wrk listed and its associtated cost. Since I have been doing so many remodels i typically list the scope of work as an allowance. I do this not only as a way to mitigate risk but also because we all know that customers very rarely know exactly what they want in the beginning of a project. Then at the end I typically do a 10% OH and 10% Profit markup. I do it this way because this is how my father has done it for years as well as how I was taught in the commercial side of construction before I went solo in residential.
> Recently I had clients that got my final bills and freaked out and then started nit-picking line items that they never cared about before. Like asking me whats included in overhead, what should be in general conditions, etc. etc. So i am now wondering if i should not include prices for each line item at all but go with a final number at the bottom but still keep the scopes of work detailed. Also if i should even list the OH&P numbers at all. Part of me feels that the one advantage i push over other contractors is that i have nothing to hide, Im very detailed, but i do think that i lose work because they take my bid to someone else to beat. I am also thinking that i need to be more detailed in change orders so was wondering if yall could post examples of what you use.


We too have line item estimates and invoices. We don't breakdown every little item but more like phases...like plumbing, concrete, framing..etc. We put our markup and overhead in each phase. If there is a specific item in plumbing that has an allowance, it is listed in the description along with the amount budgeted. When they make a final selection on that item then a change order is given stating the change for that selection. The markup and overhead was already figured with the allowance amount so we don't worry about marking up the difference. This seems to work well for us because it let's us show some detail without the client knowing what is none of their business. As far as change orders, usually it is an email stating the price and description and requiring them to reply to said email approving the change. Then a payment is required for that change order or if a draw is coming up soon it will be added to that draw. I like email because it is traceable and almost impossible to deny. Plus most of our clients are not always available right away so email gets a decision made quicker.


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## scraigc (Aug 2, 2010)

I don't break down my prices, just make sure to describe everything completely. Do not have a separate line item for overhead or profit - they don't understand it and think it's just extra money.

When the HO wants too much of a break down, I assume they are going to try to nickle and dime everything, and a either let them accept of decline. Not worth the extra work.


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## bconley (Mar 8, 2009)

If you have allowances, you have to show the O&P or an agreed upon number in order to reconcile the change orders. Or you can take a bath on scope creep.
So its fixed price or a set markup or margin.


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## KennMacMoragh (Sep 16, 2008)

Shark49 said:


> I am mostly a lurker on this site but I have lately had a few problems with customers and my contracts. I have always done a detailed cost estimate with individual scope of wrk listed and its associtated cost. Since I have been doing so many remodels i typically list the scope of work as an allowance. I do this not only as a way to mitigate risk but also because we all know that customers very rarely know exactly what they want in the beginning of a project. Then at the end I typically do a 10% OH and 10% Profit markup. I do it this way because this is how my father has done it for years as well as how I was taught in the commercial side of construction before I went solo in residential.
> Recently I had clients that got my final bills and freaked out and then started nit-picking line items that they never cared about before. Like asking me whats included in overhead, what should be in general conditions, etc. etc. So i am now wondering if i should not include prices for each line item at all but go with a final number at the bottom but still keep the scopes of work detailed. Also if i should even list the OH&P numbers at all. Part of me feels that the one advantage i push over other contractors is that i have nothing to hide, Im very detailed, but i do think that i lose work because they take my bid to someone else to beat. I am also thinking that i need to be more detailed in change orders so was wondering if yall could post examples of what you use.


To keep this easy, you should just use estimating software. I am using ELMS right now, but may switch due to the recent lack of technical support. They've got it down to a science though as far as where to draw the line between too much detail and not enough. Also, you can present your allowances in a fairly clear way so that they know the price and won't freak out in the end. If you want, you can send me a pm and I will show you a few samples of what the reports look like.


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## artiospainting (Mar 16, 2011)

It all sounds like to much work tell him to buy materal. deliver them on time and give him a laber cost plus eny time your lift waiting extra


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## Shark49 (Apr 7, 2008)

scraigc said:


> I don't break down my prices, just make sure to describe everything completely. Do not have a separate line item for overhead or profit - they don't understand it and think it's just extra money.
> 
> When the HO wants too much of a break down, I assume they are going to try to nickle and dime everything, and a either let them accept of decline. Not worth the extra work.


This is happening now with two different homeowners who got their final bill and sticker shock. Now they are nit picking stuff and its pissing me off. I am about to tell one HO owner they had their chance to discuss this stuff before the contract was signed not after the work is complete.


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## Shark49 (Apr 7, 2008)

Another home owner is also questioning what items i have under general conditions versus what should be included in Overhead. I basically told him the AIA manual and CSI manuals both define this and basically general conditions are JOB SPECIFIC items and Overhead is cost of doing business and therefore none of yours.

I think what I have done wrong is not doing a change order for every change that comes up. 8 out of 10 clients dont mind because they have the money and understand the process and the others I think just want to be pains in the ass. Its like did you actually think the price wasnt going to change when you added the 15 can lights?


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## Shark49 (Apr 7, 2008)

KennMacMoragh said:


> To keep this easy, you should just use estimating software. I am using ELMS right now, but may switch due to the recent lack of technical support. They've got it down to a science though as far as where to draw the line between too much detail and not enough. Also, you can present your allowances in a fairly clear way so that they know the price and won't freak out in the end. If you want, you can send me a pm and I will show you a few samples of what the reports look like.



Since college i have used many estimating programs from off the shelf to custom and none of them are that good for residential IMHO. Too many variables. You would spend ages inputting the different scenarios and items to get it accurate. I simply use an excel spreedsheet that I then transfer the amounts over to Quickbooks for me to track.


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## Shark49 (Apr 7, 2008)

I am still curious to see examples of peoples proposals and change orders.


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## KennMacMoragh (Sep 16, 2008)

Shark49 said:


> Since college i have used many estimating programs from off the shelf to custom and none of them are that good for residential IMHO. Too many variables. You would spend ages inputting the different scenarios and items to get it accurate. I simply use an excel spreedsheet that I then transfer the amounts over to Quickbooks for me to track.


Which ones have you used? I've used and looked at many different estimating programs too and have sorted through lots of bad useless ones. But it's 2011 and they've finally got it down to where you can do it fairly quick and accurate, no way you can do better with spreadsheet.


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## Shark49 (Apr 7, 2008)

Timberline was a big one......


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## KennMacMoragh (Sep 16, 2008)

Shark49 said:


> Timberline was a big one......


I tried that one in college, pretty useless for what I am doing. Don't write everything off because you've found a few bad ones. Check out a sample of ELMS


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## BamBamm5144 (Jul 12, 2008)

One price - how much it will cost you to have a complete worry and stress free job done.


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## tileman2000 (Feb 14, 2011)

One price for me also, unless otherwise requested. However, I still don't list every item for the job.


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