I am a retired contractor of 30+ years, all of this was true 40 years ago too and probably always will be 40 years in the future! lol! Customers are even more demanding now though, and with such high costs for everything these days I can't blame them. But it is really not fair for them to make you break down all of your costs so they can then figure out ways to manipulate you and your business. Only you can ensure your business is successful, not a customer.....I only gave bids or worked time and materials, I never once gave a price breakdown for a customer for a bided job and always had work. Never let a customer in any business dictate anything to you about running YOUR own business! Some contractors have learned to use this idea of breaking down costs to their advantage by actually breaking things down but being dishonest about the real costs of that breakdown! Skewing such in a way they believe might help them to fool the customer and land them the job! Customers then believe they are getting the "honest" guy because he was willing to break the costs down for them, but they are really getting the most dishonest guy.....lol! How many customers have to break down their own jobs for their customers at their place of employment, not many. Do you ask Apple to break down their costs of an I-Phone before you buy one? Or how about that new car or boat? That would be silly right? It's a silly idea and one that can be used to manipulate each other on both ends of the deal. Just agree to a fair price and let the contractor worry about the details! You are free to ask upfront about what materials or anything else that they might be using in the construction of the job, have such written into the contract, ect.....It is not necessary to know how all of those costs break down for one guy over another because each contractor is going to have a different way of bidding his jobs including possibly charging you for every single possible "unforeseen cost overrun" they can dream up along the way where another guy might simply stick to his bid no matter what he encounters along the way, because he is a man of his word! All that matters is the end cost to you the consumer, not every little cost detail because those details can also be manipulated. So, you the customer, end up over complicating what can be a much easier process to begin with.....Many customers can be their own worst enemies when it comes to contracting.
👆🏻 This 👆🏻 So well put. Just because you get a bid "broken down" is no guarantee of actual transparency. People can cook numbers any way they want to. It makes a lot of people feel better though.
Just going to add a few things, when you’re just starting out and haven’t build a decent reputation for yourself as a professional contractor then you have to go the extra mile to breakdown costs. Depending on the customer is good and bad but ultimately it might be better to weed out the problem clients. A good client will see the $1500 for demo and think it’s reasonable because of the amount of work and dust the workers have to deal with, while another might see that charge and think its way too much because it has no skill required, depending on their reaction it might be a flag you might think its not a job worth taking on. If you are having multiple quotes to complete, then trust you already have build a reputation and you can turn down job breakdowns. Also you can say even if i breakdown the job, i cant remove one line without the other lines increasing because they are receiving a group discount. You cant have them remove the supervisor/ construction management line removed because they’ll be at home watching the workers …
Thanks for your input and I hope for your success on future endeavors. With that being said, use the return button sometime and learn how to write a f****ckin paragraph. Jesus Christ. As a HS dropout (been successful now for decades from hard work and real estate) anywho I'm amazed how people cannot put a paragraph together and have such bad grammar. Cheers.
I started giving customers a breakdown a long time ago. Several customers said they chose me in spite of the fact that I was the higher bid because I was more forthcoming so I've been doing it ever since.
@@metricdeep8856 Yes. I completely agree with that. I'm getting pretty good at weeding out the irrational folks from the good customers. Every once in a while one slips through though. I do my best to document everything and be vigilant with the change orders.
I find they take details and play off of other bid….in the commercial field you are given an RFQ. Detailed request with specifics. You can’t compare apples to oranges. You guys with the detailed bids are hysterical for homeowners. No specifics supplied. How the fook can you compare bids. Duh.
@@skiprope536 You seem to have missed the point entirely. I dictate the details and specifics that I am costing out in the Proposal. I include the Estimate which is about 15-22 pages in a spreadsheet, for the customer to refer to. I do the same for my commercial customers as well. The result for me is a lot of repeat business with an educated consumer that prefers to collaborate with someone they trust and rely on instead of just chasing down the lowest bidder. If someone wants to compare my bid with that of some hack, then that's their business. I'm not engaging in any haggling. I thought this was pretty clear in my first statement. Don't think I could have dumbed it down for you any further unless you want me to use crayons.
As a General Contractor I break everything down to show the homeowners exactly what they are getting.I show them my mark up and cost for each item that way they see I’m not hiding anything. This has gotten me more jobs in the end by not hiding anything. We do everything on a cost plus basis so it is fair for both sides if you start doing this you will win a higher percentage of the jobs you bid. Don’t hide anything and you will have more trust from the start.
Budedwards has it figured out. I’ve been building for over 40 years and have found transparency and a cost plus basis to be the best practice and garnered me more sales than previous methods.
OK this guy just exposed the flawed thinking in his practice of fixed price bidding that drives customers to seek transparency. Combine 2 primary areas below with a general distrust of contractors ( you know with ALL the excuses they come up with as to why they’re not there working), and it becomes obvious why people want to see the costs…. 1. Material markup - It’s understandable IF you also pass through your contractor pricing and base the markup from that vs marking up based off of retail pricing. Most contractors (not all but most) lie about this and are unwilling to show their cost basis. 2. THE CONTRACTOR HIMSELF doesn’t believe his craftsmen and laborers are worth the $50 /hr labor rate BECAUSE HE DOES NOT PAY THEM $50/hr. Now if he replies and says all insurance costs, benefits -if any, etc… are built into that then he must recall him saying in “material markup” “that’s where he picks up his fixed costs of doing business”. So is he double dipping with material and labor markup?? Also remember…. You can get a contractor to do anything (including break out a bid) during contracted economic times caused by ( high interest rates, high building material costs, market saturation, etc…). When they’re hungry, they’ll grovel and beg for your job. Always ask for what it costs to have them sit up at a bar when they say “the weather is bad” yet farmers in the exact same area are still out working. If they won’t break a bid down and you like their “bid” negotiate terms like guarantee finish date, with delay penalties. sole focus to finish - meaning no work on other jobs unless you have additional crews to cover that job while continuing to work on mine. Tell them they’re bid is a little more expensive but the other contractor is guaranteeing me he’ll be completed in 4 weeks but you won’t say how long it will take you. If you can do it in 4 weeks I’ll award the bid to you.
Also In today’s world if the customer is borrowing money to do the job most banks require a breakdown of money spent. I’ve had banks recommended me to other people for the way I break a job down honesty is the best policy
If you're giving a quote vs an estimate, then this practice is TOTALLY OK. I am a customer that asks for break downs when I get ESTIMATES, because I want to know when there is an overrun, what I can expect before the request comes....and to assure that I'm not just being asked for more money without clear reason. I have no problem paying more when there are material overages (not due to flagrant waste) or more complex repairs. But I've also witnessed a contractor (one bad apple) that would give an estimate, then ask for more to complete the job once the demo was done and the job half finished. Unfortunately, these bad apples make customers skeptical.
It’s totally understandable to not rely on owners to supply materials , esp critical or more than a few items. Clients don’t grasp the amount of time involved ordering delivering, logistics, esp for a Lary job-for a while house it’s formidable. But it’s laughable to suggest you ever pass unanticipated savings onto client, or even don’t push for more money if disaster strikes😂😂😂. But I general your approach clear and principled clients need to get multiple detailed bids. Clients need to understand the building industry is flush right now, they can get 50$ hour for hourly unskilled labor. In 2008 it was quite different. Good time to be a GC, as his moniker confirms, bad time to be a client. If you think these guys are making too much money, we’ll go into that business. Times have changed white collar Drone jobs are not as attractive as they once were. As for skilled trades, plumbers electricians etc, they ARE worth $150 an hour if you have them do serious work heavy ups etc and not screw in a light bulb. Learn how to unclog your toilet, change a can fixture etc.
you wouldn’t be more than 50% accurate if you had to put together estimates either. The project is your desire and your problem. Contractors aren’t clairvoyant. You may realize that but many people don’t. The harder you push for a “reasonable” price the more you’re asking for trouble.
@@fleetfootedtexan But again as this guy mentioned, That's the difference between a BID and Estimate. IF the cost is an all in cost you shouldn't be paying more than the Bid, the Estimate however will leave you hanging when the contractor decides changes were needed or he didn't estimate the proper number of materials needed.
I'm pretty sure there is a legal limit to how much over the estimate they can charge on completion. That absolutely is something that should be known when looking at an estimate, for those that aren't aware of it. Also, don't go with someone who doesn't point that out when giving that estimate.
From John Q homeowner: I THOROUGHLY APRRECIATED YOUR HONESTY AND CANDOR IN THIS VIDEO. This is a well spoken, clear and easy to understand video which explains a lot of things I personally have never understood about projects, estimating and bids. THANK YOU SO MUCH!
As someone that hires contractors, I always get at least 3 bids. The bids need to be broken down in order to compare them and ensure that you are getting the same goods and services. I don't think I have ever gone with the lowest bid, but I have eliminated contractors from the bidding process when they refused to provide a detailed bid. It comes down to not knowing what they are trying to hide.
I got 3 bids for a 1/2 day roof repair... $5K, $10K and $21K. That's how contractors treat Sr. Citizens. All 4 guys on the crew made more than the President that day.
@@kenjordan5750Roof repair, not a replacement? That’s crazy, sounds way too high. I’ve seen the same thing lately though. Most contractors want to charge way too much for what they do. I replaced a hot water tank, like for like and two contractors wanted over $1000 in labor for one hour labor (for one guy). I had the new tank already here. So I said forget it and did it myself. It took me less than an hour and that’s the first time I’ve ever replaced one. That was just one example, another was replacing a cracked sidewalk sq about 3’ by 3’ and they wanted 5k. These guys lately are ìnsane and just want to rip people off.
Youre not following.. A detailed bid and a breakdown are two different things.. The “detailed bid” is the details in the scope of work. Not the “breakdown” of his labor per man hour etc.
@@jhurley12 - Of course it is. For example: I recently had the siding replaced on my house. I got many bids. I specifically stated that I wanted James Hardie Color Plus and wanted everything replaced including fascia, vented soffits, sheathing, etc. Some of the bids came back specifying that they would be installing vinyl siding at the contractor's discretion. Others did not include permits, inspections or replacement of rotted wood. The company that I went with (one of the highest bids, BTW) listed everything down to the last board, nail and roll of seam tape. They would order all the materials up front with an extra maybe 20% for waste , which I would pay for. I am sure they marked up the cost which is perfectly acceptable. They finished the job and then I got a credit for the unused materials. Everything was open, honest and transparent. As a customer, I will pay extra for that. I can be fairly confident that they aren't trying to hide something.
You only got that because that contractor pays for a service where all he does is take pictures and sends them to the supplier and they send him back a detailed list of materials, it wasn’t because he took his time listing out everything. When I was starting out I could not afford this luxury and just gave an estimate with a good description of the work. If you hired me, in my contract it said you can request a material list and I have 7 days to provide it. Which was simple for me I would just goto my supplier and ask for the material list for that project. A breakdown estimate without being hired would take time to price and list every little thing so I would have charge. Just a contractors point of view that you might be missing.
I am a mechanic and used to have my own shop. Had a customer who owned a local restaurant and had me do all his work. One time he dropped off his van for some work and wanted a discount if bought his own tune-up parts. I asked him if I got a discount if I brought in my own steaks for him to cook. He never asked me again
He actually probably could give you a discount bringing in your own steak but the markup on the stake would be significantly smaller than on the car parts. It's really messed up that a company can lie about how much they paid a car part for and lie about how much it's worth. Why not just be honest and say you got it for 25% off the local auto parts store because of your discount and the auto parts store got it on a 250% discount from the dealership using a different brand?
@@JustNo8808In the food service industry a 300% margin for food items is normal. It is probably 1000% for beverages. Half of restaurants still go out of business bc they can't make a profit.
@@JustNo8808 No restaurant owner in their right mind would allow that. They have health department regulations to abide by just like auto mechanics and builders have regulations they must abide by. So by your logic if you bring in a part to a mechanic and he installs it and it fails, you'd probably angry at him when you're the one that supplied the part. I'm a contractor and if a customer supplies items such as plumbing fixtures etc, I do not provide a warranty but will install it because I don't know if it's a used part or a reject or where it came from. You would do the same if you were in someone else's shoes.
As far as "No restaurant owner in their right mind would allow that." is concerned, it happens daily at catch and cooks around just about any island or coastal area. About the faulty parts - how about if the customer proves it's new? A receipt from a reputable store should do the trick. Seems easy to prove, and how many homeowners have 'newish' parts laying around that they don't know how to install by themselves? The no warranty seems just another way to keep another profit center alive. @@brettb614
Thank you for this video. Been doing construction for 50 years and I learned some things from you young stallion!😊 You mentioned the time you have to spend gathering all the materials, more than $100,000 for your tools and equipment; you didn’t even mention the fact that you have to pay insurance, your gasoline, maintenance and repairs on your vehicles and tools, buying new replacement tools when the old ones wear out, all other overhead, whether that’s a small shop at your house, etc. The list of things that it costs you just to stay in business, goes on and on. $50 an hour labor is cheap, especially if you have employees you’re trying to give a little paid vacation or a few paid sick days because you want to bless him for their good work ethics, some bonuses, whatever it may be. $50 per hour is not even half what auto mechanic shops charge. Keep up the great work.
Yes it’s call overhead and can also be billed out as such. It could also be billed as tooling. Knowing replacement rates to spread costs is something a customer could understand. Having a random FFP doesn’t mean you don’t have a basis of estimate. Heck you could even provide that in the bid. If you bid for the US government. There is no discussion about BOE or breakdowns of bids. It’s that or nothing. Yet you can be reasonable with your BOE’s and they as people understand. That the trick when you put costs together. Provide an explanation for costs in your quote and you will find customers agreeing more. Just don’t detail your insider processes and procedures. That is what makes your skill set the money. The knowledge not the materials and labor costs. Breaking down all kinds of requirements should also be detailed and reflected accurately in costs. How do you show that without justifying the material costs and labor hours for said requirements. If your under on labor or explain how certain materials have wastage like lumber. Then what’s the big deal. The fact that you won’t do itemized bids is because you don’t want to do the work for something you haven’t secured a job for. Fair enough but you certainly didn’t get all the jobs you could get simply for that fact. Each their own I guess, it’s your business and your success. Do what works for you in your market.
I learned in the early 80s that handing a broken-down bid to a prospective customer is akin to handing them a shopping list. I found this out when calling the prospect after not hearing from him for two weeks. He had taken my sound system design and equipment list, and given it to someone else, and let them do exactly what I had proposed doing. That was a hard lesson for me.
That's a bad way to think of it. I ask for a breakdown so that I know what type of materials and quality of materials to expect. Too many times I've been burned with vague quotes that end up not including things that would seem obvious or misunderstanding of 'replace in kind' or 'repair and FINISH' means between one person and the next. If I get an estimate to replace my deck I would very much like to know what type of wood will be used, what type of screws, and how the handrails will be secured. This is just proper communication so no one gets misunderstood. Every time that I've failed to ask for a breakdown, I have been cheated on quality of materials or on what level of finish was expected. One time I was quoted for replacing a 10' malibu slider and finish interior. They put the drywall very messily, didn't even mud. Idk what industry standard is, but I expected at least mud and texture match and I would take care of the paint. They though nailing in the drywall and leaving was 'finished'. Had a deck replaced and person replaced deck using cheapo screws and replaced handrails that were secured well with thru-bolts with carriage screws that weren't even long enough to fully secure it. This is why I want a breakdown on how the work will be completed, to what level, and with what materials. They can then charge me whatever they want for materials and labor based on what they need to make a profit, but the communication needs to be there. I'll gladly pay extra for it.
@@DrDingusWell yeah until you start doing it for your livelihood and experience people giving all your pricing and breakdowns to some schmuck to copy. Happens all the time. We still give material breakdowns, but not for every little item just the main things, and a flat rate price at the end. Sounds like you hired some cheap unprofessional contractors. Sorry you experienced that. Get some referrals next time.
@@DrDingus see I discuss those types of things with my customer and I ask them exactly what they want, including specifics they need to have in the project. And since I'm readily listening to them, they do tell me, and I write it down. I then take those notes and list PRECISELY what my job scope is and what it isn't. I then give them one price only upfront, along with a list of specific tasks and requests that they asked me for. Keeps it simple, keeps it to the point. They don't nitpick that one box of screws I bought but it's contracted that they receive exactly what they wanted in the first place.
That's a red flag of a bad customer. It's a two way street. I'm sizing you up at the same time looking for red flags of a difficult customer. If I sense you're going to be difficult I will pad the cost knowing me or my crew is going to have to deal with you.
The main reason I would ask for a bid breakdown would be to find out what materials are being spec'd for the job so that bids can be accurately compared.
Seems like the main "bid breakdown". He's talking about is costs, not the project overall. Lots of ways to describe scope of work and specificity of materials without going into line item costs..
YES!!! I made the mistake of taking a lower bid then AFTER I had mildew all over my basement I realized the guy had not tamped the soil properly, not sealed the cracks properly AND had cut corners by not using green board (learned as I tore the stuff back out myself). I WISH I had not hired a contractor at all for that job. I lost $60k having to tear everything out and replace it. Contractor was long gone, of course.
@@deline8ed619 Yeah, oddly, he looked & talked a lot like the scumbag in the video. If there is no contractor to build, hire workers & build yourself. Don't settle for a guy like that "successful contractor" guy.
A few years ago when I legitimised my moving company, I thought average worker's comp rates of $20 per $100 was crazy but then I happened to look at what roofers and other construction trades were paying in my state for the insurance. Then I finally figured out why there are so many under-the-radar outfits operating.
thats interesting that people would say you not worth the hourly rate or price ... im pretty sure theres a huge shortage of skilled trades out there in the United States
Do what works for you-I agree with you 100% (I’ve been in business for 23 yrs) not only do I do it the same way , but I’ve also learned that when you deal in quality and not quantity, your clients, don’t nitpick you to death. Nor do they care for all the extra details I would bet that your haters are the cheap guys on the block
I used to do fences in college and charged materials plus labor per day, it was just me. I would have the customer pay me for the materials when I brought them and the receipt to them before I unloaded. That way I never got bad materials and could return them if they freaked out about the cost even though the estimate was really close. Granted it was a real small operation but it paid for my school so I didn’t have any debt. I loved it when the customer wanted to compare my single person labor to the ones with more people working on a per worker basis. That was 35 years ago, it has to be a real pain these days. Great video.
Me too, but I did that in HS hiring a buddy of mine from the football team to help me out. I paid my friend double his daily construction job earnings and still made plenty for myself while ALSO providing a much better fence than my competitor (Sears fences were GARBAGE!).
@@vids595 wrong!!! Fence building is not illegal so long as it's not installed in the wrong place. Sadly, lots of municipalities & pvt orgs ban so many things u wonder who owns the property u are paying for.
if you have a business with employees, car insurances, business insurances, excise taxes for business and cars, etc. In other words; just to be in business you would have lots of overheads, you wouldn't be able to do it that way. Just saying.. you had a much simpler operation system to deal with and that surely workds material+labor. But you ahd to do all of the work. If you wanted to scale and be on the administrative end of your business, then the math changes.
This depends on the job and the customer. People with money don't care, they just want the job done right with no headaches. These are my target customers. Nothing worse than working for people who cannot afford you.
Heavy on description of work, and materials being used along with a firm fixed price. We will not bill more or reduce the billing if we completed the work as specified. If that's not good enough for you then yes we are not a good fit. We don't play games.
that is what I have learned as well. Unfortunately it took me 5 years to get this into my head. Price you pay for not learning with the older contractors
As a former small remodeling contractor, the best people that I ever worked for were professional gamblers. After working for the first one I got many more jobs from their friends. They always paid in cash from a big roll of $100 bills from their pocket. Never a problem from any of them and they rarely ask the price. I always treated them fairly and they did the same to me. They always gave really nice tips.
As a customer (and professionally a commercial project manager), I want a breakdown every time. You don’t need to break it down to commercial level, but if you give me a bulk rate project cost, you’re immediately put in the circular file (trash) and blacklisted from any future projects. I’ll tell you why. In my experience (again as a residential customer and a commercial project manager [E2E full scope]), if a contractor isn’t providing you with a reasonable work breakdown, they’re hiding something or padding the cost in a “less than desirable“ way. I’ve found this to be true 100% of the time in both scenarios (tho bulk pricing in the commercial/industrial world isn’t a thing for that exact reason). You need to create a win/win situation for both you and your customer. When you say “most customers don’t understand”, or “I’m just trying to make it a simple as possible”, you’re telling the customer they’re stupid and don’t have the ability to understand simple pricing. That’s insulting. If that’s how you choose to do business, good luck. Contractors (in all trades) are VERY sketchy and shady business people. I don’t know what it is about them, but even the very best fall into that group. My first experience with a GC was in a water remediation and repair. I finally had to demand a full line item breakdown for everything. One example then I’m done, but ServicePro put over a hundred 1” moisture testing holes in our drywall. The “turnkey” included “everything” (which is NEVER the case) to make us whole again. My Spidey Sense was just bothering me so I halted work until the breakout showed up. He was charging me $10 per hole just to hot mud! If there is a contractor out there than can justify that, I’d love to hear from them. Each hole took less than 15 seconds in labor and maybe 1.2 cents (retail) in consumables. Recall, this cost was just the hot mud filling, finish and paint are totally separate. Are all contractors like this? I don’t know, but I’ve been burned to some degree by every residential contractor I’ve worked with, without exception. And I do this for a living (not residential)! So when you hear “we’re just trying to make things simple”, RUN. You (as the customer) WILL BE scammed somehow, for sure.
We do a lot of insurance work and when all fees are added, the computer program that the insurance companies use pays $15/ hole in my area. That wall also needed painting and their program is low on that. The insurance company is obligated to pay for loss minus your deductible. If the program tells us that the repair will cost $20,000 and you have a $1,000 deductible, the insurance company will give you a check for $19,000. If the contractor does the work for $15,000, then your loss is only $15,000 so they would send you a check for $14,000.
Exactly... this professional fence builder who thinks he has the skills of an auto mechanic is not smart enough to explain the projects to his customers, so instead he insults them by basically saying they are too stupid to understand construction... why does this guy have to ruin America for all of us?
No. You don't buy anything else in your life with a breakdown of every little part. When you book a hotel you pay x per night. When you buy a car you just pay the price, when you bought your home you just paid the price. When you get a haircut you just pay the price.
Respectfully disagree and here is why. The contractor can manipulate the numbers. What I mean is, if my price to demo and build a deck is 10k and the customer wants a detailed price break down, I can say my material is 5k, labor is 3k, P&O is 2k when it can actually be different in reality. You do not know what it costs for someone else's business to be in operation daily, weekly, or monthly. That contractor was charging you $10 a hole. Whether it is high or not is subjective, everything in this world has a cost.
Wow, I am absolutely impressed with your honesty and straightforward distinction between an estimate and a Bid! Thank you for helping me understand the distinction. Now, I will able to better express this to my "Handyman Clients"! Well done, Sir!
Great advice. When a contractor gives a quote, they are taking a risk - every single time. Sometimes things go well and you do better than you had anticipated (you actually make good money), but there are other times when you face challenges that slow down your progress. Every job has its own set of obstacles and oftentimes you can't know exactly what those are until the job is in progress. Therefore you have to bid accordingly. As a contractor, you are free to charge what ever you want to charge, and how you get to that number is completely up to you. The client is also free to accept or reject your bid. When a job takes longer than anticipated, and your costs for doing the job go up, clients don't usually offer to give you more money. They want the job done for the price you quoted, and if you bid too low, that's on you. So it's always best to give yourself room for unexpected costs and time. The average Joe, has no idea how much a contractor invests in time and expense to complete a project. At the end of the day, the best way to run a successful business is to know your numbers, provide great customer service an excellent finished product.
Yes sir. It is the job of the Client to compare Bids, Quotes, Estimates, Etc and find the right fit. If they want to haggle and be deceptive or low ball, that's where I walk.
Years ago , I did a large window replacement job for a customer. They were tear outs and I think I used Pella. The total for the job was about 15k. When I was finished and collected the final payment from here , I mentioned, casually, that I probably should have been about 10% higher on my estimate. I ALWAYS track time and materials. She replied “ I’m sure”. She gave me my final payment and I left. About a week later, I received a nice Thankyou card from her thanking me for a great job. Also included was a check in roughly the 10% amount that I said I under bid ! I was floored ! She was a business owner as well, and said she had had that experience too and wanted to make good. This was really appreciated as it was right before Christmas! I continue to work for her. 😎
@@SuccessfulContractor Then the risk is on the customer , I don't want to be the butter job that was charged for bolder drilling just so you can break even when you do a bolder at butter pricing. HOWEVER around here every contractor has always given us a complete break down on supplies cost, labor cost, supplies estimated and quality eg. green treat, cedar tone, brand name or ordered form china, possible problems that might pop up. That way you can compare apples to apples on the job. And if unforeseen problems arise you can know what to expect. We have had work done that did exceed the bid and we paid the extra, and jobs that came under and were credited. When our contractor went over and only charged at cost for extra work we tipped 30% on the extra, if he went under cost we tipped based on the original bid.
I owned a construction company for almost 40 years in the beginning i would break down cost but i quickly learned it made more work for me to list everything and customers then questioned everything so i changed to a fixed numbers. I retired at 59 pretty well off iam 64 and still get calls asking me to do there jobs , i was proud of our work quality and was constantly booked 5-7 months out , there is allot of work that goes on behind the scenes that people don’t see.
Yep, 60 year old contractor here. In my younger years I would sit at my desk ( after working 8 hours doing construction ) and itemize a new house bid. It took roughly 40 hours to complete one. Then later you find out there were 6 others bidding and some of them are shady builders that you would never win a bid against. I'm curious if the common person would be willing to work a week for free at their job? True profit is way less than people think.
@@phillipharris8159 Its very easy to not realize the overhead of taxes, workmans comp, insurance, equipment maintenance or purchasing. One of my bosses told me that customers would complain about how much it cost to have their tree removed, he'd tell them that he has 250,000 of equipment showing up to ensure the job got done well in a timely fashion.
@@Sith_dude lol! have you ever worked a construction job a day in your life? If you have you will know even the so called "lazy" ones still work far harder than most other people ever do.....Construction work is hard enough without customers making it even more difficult..
Hey Man! Just stumbled upon your channel. I’m not a GC , but am a specialized contractor. I polish natural stone and concrete and install concrete coatings. Recently I had a potential customer ask for information on the stain and sealer we were going to use on their floor . I reluctantly sent product pdfs knowing he was probably just trying to figure out product costs and haven’t heard anything back , so it’s most likely for the best !
As someone who has to write RFP’s and award contracts, I have to get 3 proposals and I only look at itemized proposals so that I can compare apples-to-apples and to make sure that each proposal is capturing everything required in the RRP scope.
It’s very common to produce an itemized bid while performing commercial work or any project where state / federal funds are used . Ultimately , it enables a customer to review the scope . And ultimately determine if someone is cheaper because they missed something on a bid .
How does providing a cost breakdown allow you to determine if something was missed on a bid? Something being on the cost breakdown doesn't mean you get it and something not being on the cost breakdown doesn't mean you don't get it. What you get is what's in the scope of work.
We have worked with several GC firms and if they can't provide rough breakdowns we move onto the next. We gut renovated two adjacent buildings in 2019 and our architect and the contractor were very resistant to upfront costs and transparency. Now we are onto a larger commercial renovation and we did not call them to bid on the project because of this lack of transparency. However, if this system works for you that is good but I think most GC firms are comfortable providing cost breakdowns.
I feel we are talking about two different things. We are heavy on description of work, and materials being used along with a firm fixed price. We will not bill more or reduce the billing if we completed the work as specified per the detailed scope. If that's not good enough for you then yes we are not a good fit.
if you always hire contractors, seems like you do that as part of your living, as you've mentioned several buildings, than this is your job and would be smart to know each price so you won't be overpaying. However, we are talking about Homeowners who hire a contractor a few times. In the commercial scenario, they tell the contractor what they are going to pay. Most of the time, they are not building their dream kitchen, their dream garage or master suit. Price is somewhat important in a commercial scenario. I get that, hence I don't do commercial. I want the customer who is excited about the work and not the price so I can do the best quality work I can and not have to worry about making a profit cause it is going to be there.
One thing people never take into account is your equipment cost. People used to come into my shop and explain that what they wanted me to do for them was simple and quick. Sure, I'll just go do that using these four machines that cost me x amount of dollars. It takes me whatever amount of time because I spent money on expensive equipment.
Agreed, people that ascertain information feel empowered, so if you give them a breakdown of information they would not of known otherwise, some feel they now know the extent of the situation and surmise that they have the appropriate insight to determine the value of the scope, but as you mention, there is so much more to it than just "their" job, there is all of the overhead, equipment, subject matter expertise, experience, and wisdom of the trade, and so much more.
@@SuccessfulContractor I appreciate you putting out information like this, it doesn’t get the response it deserves, keep up the effort and know that most of what you do is rewarded and appreciated. Some topics are just too much for folks especially if it triggers grief they have had. Your transparency is admirable, all the video and documentary of what you do is a privilege to see. May you be blessed in you ventures.
@@SuccessfulContractormany roofers bid labor at 300-400 dollars per man hour. Not joking. Of course people don't trust you. Don't pretend your industry is not loaded with crooks. You may be honest, but not telling them a ballpark labor rate is stupid and I would never use you. If you expect $100 an hour for labor, tell them that. If you expect $130, tell them. But a lot of people float out high rip off bids hoping they snag one job with a dumb customer and it pays all their bills.
I appreciate your perspective and that explains why I got ghosted. I wish it was more like a mechanic. I remember paying a dealer $60 after they tried to charge me a few hundred dollars to toggle a setting on my car’s computer. As a customer when I see the parts needed for a job is 4-600 dollars and the estimate is $1800 dollars it makes me question things for a 1-2 hour install. It’s not that I don’t have the knowledge and experience. Just not the time or desire.
You make some good points. I had an hvac tech try and charge me $1000 to replace my capacitor. Not knowing anything about it, i asked him to break down the cost. He hem'd and haw'd for a bit, not really explaining the process. I told him i would think about it and sent him in his way. Come to find out, it's a $30 part that took me 10 minutes to swap out. So if you ask me, yes, there is a problem with not breaking down the price.
I agree with not breaking it down in that way however I always ask if everything is included in that price and I make sure that's in writing. Every single solitary thing that is involved in whatever project you're asking about. Far too many contractors will give you a bid and then at some point during the project they'll say oh I have this other thing I need to do to get your job done and they need more money. Then I'd ask for a failure clause. Is there anything about this project in your professional opinion that would stop you from completing the project? Then I would be sure to get some sort of a timeline on it. If the contractor says it's going to take 2 weeks, what happens if it takes 3 weeks? Do I get money back? (See failure clause) There are way too many shady contractors out there and if you're working with one for the first time you should be aware of these items.
Is a retired landscape architect I've always broken down bids. As in the case of his example of the fence. I want to know how many posts there are going to be distance off center depth under the ground is it going to be concrete is it going to be rammed Earth how tall is the fence going to be how many linear feet of fencing is there going to be I want to know about the gates the hinges and the lock I also want to know about how the fence May impede drainage were future access for equipment. In short always break down the bids show the customer is aware of all costs for all things it's just the right thing to do that's honest and it's informative. This guy's successful I'm sure. Customers appreciate being educated and informed and after 30 years of my career I would not do it any other way
We are talking two different things. We are heavy on description of work (post spacing), and materials being used (level of quality) along with a firm fixed price. We will not bill more or reduce the billing if we completed the work as specified per the detailed scope. If that's not good enough for you then yes we are not a good fit.
@@65ramblerman yeah it depends on the demand, if contractors have too much work they can afford to be picky or make decisions like saying, "nah I'm not giving you a price breakdown of raw materials and labor here's the price!". For those people I say good for you! In the house painting business there's always stiff competition so I was never able to do something like that. And when I started in construction and roofing I don't remember my boss being able to do that either.
in my 25 years in flooring you are 100 percent right about everything you said. I thought no one would understand these things like you explained. Ive had customers get angry w me for not breaking down price. I look them in their faces and tell them they can get someone else. funny thing 9 times outta 10 they come back i do the job and their happy telling me how they hated me at first but afterwards saw how awesome of company i have. I dont let anyone push me or my employees around. I am extremely honest and upfront. We are not slaves. we are skilled workers and will be treated as such. You dont like it kick rocks. I also tell them when they go get jose from home depot parking lot to not call me to fix it. Places doubt in their minds and considers your companies contractor license and insurance ect is there for a reason.
Starting a small business, not in contracting. The difference between bid and estimate is something I never really considered. Very helpful. Thank You!
You sure are preaching the truth. The very reason I'm here watching your video now is because I had a bad experience yesterday. I ripped an entire 500ft row of trees out for a guy and I made the mistake of saying I would do it for so much per hour. The job would have been about 5,000 bucks if anybody else would have done it but because I was very quick with my excavator and he went and got his truck and driver to haul 8 of the 20 loads I ended up loading out and hauling to the dump so fast, I only got a mere 1700 bucks and then he still bitched about my bill because 'he was helping'
Glad it works for you. Both my brothers are contractors and there's no justification for markup on materials beyond the time spent getting them. If you need to add costs to material to cover your overhead, then you simply need to increase your labor rates. I would never accept a bid that doesn't include a material breakdown. I have a lot of connections to get discounts on lots of materials. Example, I can get 60% off on a wide variety of decking materials, windows and doors. There's lots of people that have random connections like this who still rely on contractors for work. Now maybe you would work with a reasonable customer that explains that they have access to massive discounts like that. Maybe not. I'm just glad I have two brothers to do this kind of work with/for me at a simple and fair labor rate. (we don't do family discounts for work that we do professionally)
I only do cost plus… prices are all over the place these days. With the exception of lumber starting to go down, what. cost 10.00 last week is 20.00 this week. If I were to do a fixed bid today I would include a 100%. Markup on all materials, plus labor, plus overhead, plus profit Today I quote cost plus 20%, that 20% is on top of all permits, connection fees etc.etc If people say that’s too high, I thank them and move on. It just takes too much time to watch every last item and to supervise every last installation. In other words to do it right
Liability insurance is based on gross receipts. If you buy $200,000 worth of material and did not charge any increase your insurance liability just charged you 8% that you lost. That a $16,000 loss. Not even remotely smart. Duh. Low balling wins nothing.
You are out of touch with contracting or business for that matter. Labor and overhead are two different things. Labor has its own markups for workers compensation insurance, payroll taxes and contributions, vacation or holiday pay, etc. To take your overhead and add it into your labor is business suicide. Mortal overhead is liability insurance, truck and equipment insurance, along with maintenance expenses, office expense either rent or mortgage, office staff and supplies, computer hardware and software, etc. Labor costs can cleanly be applied to a bid, but overhead needs to be spread out across all jobs to be completed during the year. A simple way is to add a markup to materials. If a customer saw a line item on their bid for computers or some other overhead expense, they would laugh you out the door!
I was thinking the same thing, also I guarantee this guy’s labor costs aren’t exactly discounted to begin with. So he’s just double dipping and trying to hide profit as material costs. It’s shady but a lot of guys do it.
I have an hvac business. I always give an itemized list of everything we will be providing and doing. I tell them when we will start and when we will finish. I give them a price 5000$ for example. If they have a question “how much is the disconnect “ or whatever…I tell them. I have never had an issue or problem because I work primarily on referrals and I do good work. I have found that customers don’t care if you do what you promise but they start counting and keeping track if they don’t think you are doing what you promised.
yes, you work in a very small, referal based field. you have no overhead outside of your truck and tools, and marketing costs are not a concern. but if you were dealing with having salesmen that respond to the calls you get from your advertisement and youre pumping out a dozen estimates a day (or evena week) you have to streamline the process and weedout the people that are going to be a hassle. I utilize down payments in this fashion (primarily on jobs that arent from referal or that are lengthy) you are securing time on the schedule, just like you do with a hotel. Its just 20%, so you arent taking an unreasonable risk (it should be higher to be honest, especially with longer projects) as a customer. but from experience, the people who have an issue or struggle with this -you dont want to work for. Wait until they get the invoice and have to pay 100% of the bill... its better to leave these people to it fromt he start. I think, to an extent, and again, depends on how the customer came to you and size/type of job. But with HVAC, your average customer cant do the work. With building contractors, they think they can and have no clue what they need. this is why you avoid foreigners too (yeah, this is mainly aimed at the orient and those from areas that have an abundance of sand, they treat business like "if you allow yourself to be taken advantage of, that is on you" and feel no moral obligation to act honorably or value their word to someone not of their own ilk. that is an unsavory statement of fact and not a statement against any individual, ive learned this the hard way and remained friends with some, friend-wise, great people, business-wise, eh, not for me haha)
Make sure you read what's in the bid documents, lots of larger scale projects 1mill + require full breakout pricing; if you don't provide breakout pricing you could lose the job. If it's for $1000-$5000 job a lump sum isn't generally an issue unless there are multiple scope(s) in your bid.
Greater transparency & itemization almost always translates to a higher bid/win rate, regardless of pricing. When you're super transparent up front with how you operate people don't have an issue. And if they're the type of customer who does have an issue, it's probably best to just pass on the job. There's plenty of work, no reason to take the jobs that scrunch your margins and make you miserable in the process.
@@SuccessfulContractor That makes complete sense. We analyzed around 2 million estimates to understand the correlation between level of detail/itemization and the bid approval rate. We found that jobs with less than 3 line items have a ~20% bid approval rate. We charted this also, as we increased the number of line items, the big approval rate continued to increase as well. Estimates with over 20 line items have a 80%ish approval rate. To your point though, you really don't have to add a price on every line item and you're doing yourself a disservice if you do. You can just treat them as informational to explain the scope of work and just put a single price at the bottom. Really enjoying your content Mark!
Great explanation, and you have confirmed why I will not work with someone who will not break down a bid. As a good businessman, you will always build in some padding for contingencies. And in a normal job with no or few problems, which should be more common, you will make a larger profit than anticipated. I bet you rarely if ever eat extra costs on a job. If you do, you did a poor job on calculating your bid and you would likely be out of business soon. But you make a good point. Some customers want a fixed price and are unwilling share in the risk that the contractor has. You are the man for them.
I don’t give an exact detailed description of every aspect of the proposal, but I do breakout certain elements of the worked being performed. I have a labor price and materials price line for each area I’m performing work in as well as an item repair line. This allows the prospective customer see how their money is being broken down and applied to their job. I personally feel that a large number scare potential customers into the arms of the cheapest bidder. So allowing them to see the smaller numbers makes a large proposal more palatable. This is by no means a slight to your company, but if fence and gate erecting is the bulk of your business, then it’s much easier for you to give a lump sum proposal. Being a home improvement contractor, there are a lot more moving parts to finalizing a job. On that note I do agree with some of your thoughts.
As a painter, I separate my materials cost because the difference in cost from a premium paint vs. the cheap paint can be huge - $90 vs. $35 a gallon. Imagine needing 10 gallons for a job and that difference can be $500 or more. I prefer to use the premium but will use mid-grade if I - and the client - decide on that.
As a painter,too, I NEVER use cheap paint. It usually ends up doing multiple coats to look right. Not worth it. Also, on a painting project,the paint cost is typically than 20% of the total.
You can do a painting project and specify product without giving the price of a can of paint! Example: paint 3 bedrooms - ceilings, walls, wood trim and doors (2 coats), Sherwin Williams [Emerald]. Total cost labor & materials: $2,800
@@PilotOlms If you are asking me, I bill between 65 and 80 depending on the client. I charge 650 a day and that's what I try and base my estimate on. I'm near DC, where a lot of people have money.
I'm in a situation now where we used a bypass door that the customer provided. It's a mirrored door that rides on tracks on wheels that are just rubber o-rings. One of the O-rings was missing. Well, it's got two tracks, one on the head jam, one on the floor. The floor is tile so I wasn't going to drill holes through the tile and install the bottom track before we knew we were going to actually use the door. Nobody local had these O-rings, of course, so that meant two weeks waiting on the customer to find the part, and get it here. Since it's a by pass door that meant we have to case that opening out, and if the customer provided door wasn't going to work out he mentioned going with a standard 60" double door, which means we can't case it out, or put any base down on any of those walls. Not using customer provided materials is definitely a good tip.
when a customers says they want to help, tell them the price doubles for that, you don't have time to babysit and train them how to use your methods and skills, they will slow things down either from their pace or story telling and screw things up where work needs to be removed and redone and materials need to be removed and replaced, (two separate things even tho they are worded similar labor -n- materials) ...there is a reason why they aren't doing it themselves even if they used to be a professional in your business.it's not your job to cipher why, that's added costs in brain power.
@@aprilgeneric8027 story telling... I'm a story teller. I will shut up and go upstairs from now on, except to see what kind of pizza the crew wants for lunch.
@@davidfisher5140 this was some door he bought off Facebook that was opened when he bought it. I'm not mad at him, but it wouldn't have happened if he'd just gone with a standard door.
@@rickyborden3287 I hear ya man, BUT, I've bought new sh!t w electronic shorts that required repair before installation (tankless water heater), and w missing hardware tgat had to be replaced or gerry-rigged. Defects coverage is often why the term "southern engineering" gets used. My point us tgat, as frustrating as it is, it DOES happen. Oh yeah tghe shower! Imagine opening a luxury shower NIB, but then u find one of the panels for a specific $8k special order shower was cracked in shipping ... 4-6wks to get a replacement they said!
You are absolutely right sir. I know nothing about the contractor business but I did work as a successful business to business sales rep and trainer many years ago. If you give them a bid, you have one objection to overcome. If you break out the job charges, you’ve now got a dozen or more objections to overcome. You’ve just made closing the sale an order of magnitude harder when you didn’t have to. I could sell a job and close a sale with a flat guaranteed rate 100x easier and more successfully than having every little thing broken out. “We guarantee our quality and guarantee our price. If we run into any unforeseen issues and have to do more work than we anticipated, which sometimes happens on jobs, we guarantee not to charge you one single penny more than we promised. Is that peace of mind something you’d like to have on all work that’s done for you? It is?, great, would you like us to start on Monday the 13th or Tuesday the 21st?” Then get the agreement signed along with the deposit and let them know you’re eager to see them bright and early Monday morning. (They’ll pick the earlier day of the two days you give them).
I completely agree with this approach, and it has worked for me in bench projects, contract projects to supply finished goods on demand and projects within people's homes. You're correct to say there are many reasons you might be asked for a breakdown, but I have generally found a customer that reacts badly to a "No, here's why...." answer was never going to be your ideal customer. I make only one exception, which is that I will break out the cost of carrying waste in quotes where it is only possible to 'estimate' the volume of material to be taken away. This will be very clear to the customer when we're discussing their requirements and obvious to them on-site. In my experience it is the quality of the statement of work you provide in response to the customer's requirements which is often the deciding point for the customer.
My bids are slightly broke down. I show the total dollar amount of labor. Not hours. And then different elements of the job by cost not quantity. This has served me well, as I have been burnt on both extremes of this argument.
Do you charge for your time preparing a proposal. In the HVAC industry it can take 4-5 hours to put together a proposal, Job site visit, getting pricing from suppliers, heat loss/heat gain calculations, airflow calculation, actually meeting with the customer to present the proposal. Lots of time goes into our proposals. I’ve heard many contractors ask for a bid deposit and will include it in the cost of the job. Where I do business it’s not uncommon for potential customers to get 5-6 proposals before agreeing on a contractor. I generally ask if they have had any other quotes before I head out to review the job. I was called out to give a proposal a while back and asked the customer if they had any other quotes and he said I was the 6th contractor out to look at the job and he had one more lined up after me….I smiled and kindly said we are too busy and wouldn’t be able to accommodate his time schedule and left. I don’t want to get caught up in the race to the cheapest price, bid peddling is not ethical. Get 3 prices and pick one you can afford.
Yeah, good luck getting work that way, I’m a GC for commercial contractor, right now I’m working on an $11 million dollar project, most of our work is open book with repeat customers. The company has been growing for 50 years and cannot hire fast enough. Being open and honest with the customer and developing a relationship of trust is very important. And if you make a blunder and miss something, good luck proving it to the customer if you never broke down the bid. Breaking down the bid shows how complex and important your role is and demonstrates whether or not you know what it actually takes to do the job. Be sure to include all the overhead, mileage, tools, dumpsters, insurance, labor, permits, taxes, profits, etc…. When the job is 2 months long and you compare your profits to their income, they most likely will realize they are getting a good deal. Odds are they are getting multiple bids, and if the other bidders refuse to break theirs down and you will, it demonstrates an ability to communicate clearly and concisely, something very important to people who probably don’t understand construction very much.
Hi, Mike. I hope that you can assist me. I want to purchase software that compares bids side by side and identifies pricing and scope discrepancies, etc.. All suggestions would be appreciated. I only work with contractors who break down their bids,. It is overwhelming to analyze bids from 4-5 contractors with 200+ line items in each bid. I am not a construction professional; although, I have hired several contractors in the past few years for both small projects and major residential renovations. So, I am not a newbie and I am very capable using software with a steep learning curve. Thank you.
@@victoriapearson5321 If a large language model _can't_ yet do the sort of comparative analysis you're talking about, they soon will be able to. From the point-of-view of what's intellectually demanding work, to an AI, that job should be about as tough as providing more than one cake recipe. We're all being replaced.
What customers are paying you $11 million for two months of work? If they are I would certainly break down my costs for such costumers! Can I have their numbers please? lol! This above is probably extremely unrealistic for most contractors reading these posts.....I was a General Contractor for over 30 years and never once broke down my costs for a customer and always had far more work than I could possibly do because I was very good at what I did and all that mattered in the end for me to land jobs was my reputation.....
You seem to be comparing very large scale projects (General Engineering Contractor) to typical general contracting (General Building Contractor). These are entirely different worlds.
Thank you for your presentation. I’d like to add to the discussion. Your opinion is very difference from the opinion offered by Mike Holmes, of TV fame. I’ll try to echo his views. Mike likes detailed bids. The more detailed the better. He cites two reasons. You mentioned one - further discussion with the customer over the scope of the work - but that’s secondary to his main reason. Think of your quote as a sales tool, as well as a detailed contract.The quote is your chance to detail exactly what you include, what materials will be used, and how things will be done. This sets your bid apart from the rest. The other guy quoted a different price? Was he quoting the same job? Or, was he using lesser materials, providing less service, etc.? This also allows the customer to press the other guy. In a way, you’re using the quote to educate the customer. Let the quote highlight your advantages. Money an issue? Well, educate the customer on how he can get you to lower your price. Perhaps the customer can make changes that will reduce the contractor’s burden. Can the customer adjust scheduling, improve access, provide the dumpster, etc.? There is a role for estimates, as opposed to bids. The customer needs to plan according to their budget.
HAHAHA! You are doing it to keep it simple. How nice of you. Before I get an estimate, I break everything down myself to estimate what it would cost. The lump sum estimates are usually based on quoting based on location. I live in a nice neighborhood and thus people like to quote high. For people like me, not breaking things out and coming in with a super high estimate just makes me think you are trying to scam me.
This is the perfect solution. You break it down for yourself and decide if the value is worth it. You don't need me to do it. Everyone is overlooking the fact that many contractors will lie when they "break down" a bid to make themselves look good. What you're doing here is the only real solution. That and getting competing offers.
I've done lots of small handyman kinds of jobs, and I only bid a lump sum for the reasons you give. It saves so much headache! And often I find I bid too low (I'm usually working by myself) and kick myself. But that's my problem, and I just try to bid better next time. And then once in awhile you get that sweet job that goes smoother and faster than expected. Yippee!
like when the rusted sink trap breaks off in your hand or you find the wires on an electrical install have the insulation rotted off. Suddenly you're looking at 3 times the original estimate.
In Commercial Contracting itemized breakdowns are expected specially to protect the sub and to protect the GC. It also gives you a good idea if all things are covered or if things need to be added for coverage. Residential can tricky hats off to you. I learned early in my career there was 2 types of construction, 1 for making memories and 1 for making money. I like that the money guys aren't looking for deductive change orders on that half box of screws 😁
Yep. When we do a project with a GMP, all change orders include itemized pricing for labor, which includes their costs for everything including insurance and retirement. Additionally the actual invoice or proposal from third party material providers are included as well. Everything is completely transparent.
I worked for a Fortune 500 company that had this policy. It is FANTASTIC!! One caveat: you need a reputation to back it up. I would drop my number on a manager's desk, promise the manager it is the highest price, and still win enough jobs to vacation in the Bahamas. This practice is easy to sell, IF AND ONLY IF you do the hard part of being the best option your customer has.
@@SuccessfulContractor the point is, i learned. Changed. And now things are so straight forward. I used to pick jobs. Now I pick customers. I only work for cool as a fan people. Fun fact. and its a good marker I swear. If they have cats they are tough customers, if they have dogs almost always true they will be cool. Im an ass, and wouldn’t want to work for me. I have cats. F. But its true and I use it to vet them or charge more If they dont have pets I ask what they would rather have cats or dogs. Seems like something someone with cats would do doesn’t it? Im embarrassed, but Im telling you its true. Think of all the rough jobs. They smelled like a dang cat box . Sure appreciate the time you make for your channel. Keep it coming.
If every contractor was honest and did quality work, I would agree with this take. Price gouging is real though and this is how people get away with it. A breakdown shows organization, transparency, and ensures the contractor is efficient. That’s added value to a customer. If you’re good enough at what you do, people will pay.
This approach is correct for a fence builder or anyone that is pricing one specific job with exact specs and customer expectations. Not for a builder, remodeler, or general contractor. Love your videos!
In your scenario, the customer couldn't possibly have any legitimate questons and good intentions --- and contractor couldn't possibly be anything but a salt of the earth shining example of an honest tradesman? I have no problem admitting that there are lots of lousy, nit picky, indecisive, borderline abusive customers out there. But... Why can't contractors also acknowledge that a lot of their problems --- and the customer demands for more transparency --- are self created because there are so many terrible, lazy, borderline criminal contractors out there? Contractors always play victim and do this pearl clutching routine like their customers just don't value them and at the same time play dumb like they have no idea where in the world these concerns are coming from. Spoiler alert --- it's because your industry has an often well deserved reputation for being shady as hell.
Every industry has bad actors. Luckily google has a way to rank contractors (reviews). Do you research and avoid said bad actors. We have no problem working T&M but don’t ask for a “bid” because while you may save you also open yourself up to the risk of overruns. Providing a bid for a specific scope that is well defined is not shady.
I completely agree with you, well said! Unironically, you’re getting pushback from contractors for your comment. There are far more than just a “few bad apples” as one of your rebuttals stated. Certain industries have more of this issue than others.
@@SuccessfulContractor um, Google rankings are garbage! And often loaded with paid reviewers... but, unfortunately, Contractors have run the gamut of skill and honesty and there is VERY VERY little protection to the consumer... my experience is that Contractors are like Lawyers.... not a lot of honest ones out there. The good ones are hard to find and even harder to secure as they are BUSY. If you find one they are worth their weight in gold! I am in awe of the work that it takes to do a GOOD job. It is a profession that requires true craftsman/artist and GOOD business skill. The problem with fixed bids is when the cost runs over due to things not anticipated by the contractor they cut corners and use questionable methods to keep the cost down- thus screwing the customer. Been there! Discovered such things as the wrong mil vapor barrier under foundation, one coat instead of 3 of paint and the list goes on-Contractor looks me in the eye and lies and says so sue me! I would have much rather have paid more and gotten a job that would last!
What estimating software do you use for the estimate? We send our broken out prices on projects all of the time. It dosen't bother me at all to send out backups. That way they can see where their money is being spent. If you are worriied about your price being shopped out then don't wrok for those type of people.
A lot of this absolutely has to do with deception. 2 years ago I had a roof replaced, in the bid I payed for 11 sheets of plywood, the contractor showed up with 11 sheets of plywood that I payed for….the contractor didn’t use any plywood. Him being a completely honest contractor gave me the option of knocking the price of the plywood off or leaving it for me.
Control your business and how it operates. Never allow a client to change your processes or policies. They've come to you as the professional. If they try to control how you do it they are thinking of you as an employee.
I’m a Hardwood floor contractor and what I’ve found with people when I do break down estimates which I don’t anymore, but I used to on request is that they will cherry Pick the hard work have you do that and then try to save money either do it themselves on some of the stuff or get another Contractr it will be cheaper for that And it usually happens after you’re already in the job and you’ve cost average everything out to where you’re gonna make what you need to make when you do the whole entire job, but then they’ll come back and say hey I don’t want you to do one of the most expensive things in the bed now where all your profit pretty much was tied in And then you lose sometimes it’s just out of their control. They just wanna change their mind or it just doesn’t work out where you can do that work now it’s in your best interest because you have the negotiating power and you can set the price to give them a credit on instead of them setting the price. Another thing I can say is when you write down for time material and labor if there’s any material left over that you had delivered which most smart contractors always order extra material because it cost time and gas to go pick up a couple extra pieces of wood or whatever you might need. The customer will try to keep the extra material. you have to state that in your contract that all material delivered. The job is for doing the job and at the end of the job once it’s complete. Any leftover material is the contractors not the homeownersfor some reason the homeowners always want to try to keep the material. I don’t understand why.
I have a remodeling company in Winnsboro TX and I am pleased to know that we manage our bidding process identically. But why share this with the competition? LOL
I also stopped breaking down my bids. This has also saved me time when creating our bids. The customer has the option to except or decline. This has also prevented them from asking me to take something off of the bid.
@@SuccessfulContractor With drywall, paint, and trim jobs I can give them a bid within a few minutes, or spend several hours breaking it down... You want to PAY me extra to break it down for you, if so that's $500 today, and it doesn't come off the final price. I found we were getting MORE jobs once I stopped breaking them down.. here's the price, take it or leave it.
Great video, keep up the good work! I've been a contractor for over 30 years. The first bid I ever gave (being young and dumb) was to a customer who wanted me to build him a new garage. I foolishly paid an architect to do the plans, gave a complete material list as well as listed my markup. Never heard back from the customer and a few months later saw the same building being built from my plans. Last time I provided details for an estimate and did plans before a contract was signed. I also found that when I submitted an itemized bid, I never got any work because the customer would immediately cherry pick various parts of the job and hire it out to friends and family which left me the most difficult work where I couldn't make any money. Almost had to close my doors but figured out no more itemizations. Now if they require itemizations I tell them they'll have to call someone else. I have a family to feed just like they do.
I too stopped giving breakdowns! Glad to see this video support my intuition. My reason was just because I didn't think the customer had a right to know my income any more than I should know theirs. I also stopped using customer materials because of the overhead I was losing and the problems that the customers created by not getting the materials right. I sure would love to hear your thoughts on charging for estimates/bids. Especially for a guy starting a new business and does not have the same income flow to override lost wages due to free bids.
I'm struggling with a property manager that wants materials and labor separated. I'm in a bit of a rural area so having a large firm as a client is nice, but I'm afraid breaking that down will handcuff me...
The more important breakout would be reducing the scope or having a pick list of interrelated scope items. In this case maybe we replace one run of fence at a time. While this would increase the mobilization & administrative costs once all the work is completed, it would allow the customer to do some work, pay it off, and come back later to the next piece. This is typically the way I ask for bids. (Whole fence, just the back, just the west side, etc.) Then I pick what I can spend on that property at that time. In this time of contractor scarcity, I think we should expect to pay high prices because they have more than enough work to do. I try to pick a small set of contractors that I work with all the time and that appreciated the income in the busy and lean times. After a while you know what their costs are from all the bids you've seen. This everyone wins a little philosophy is less risk that the transactional relationship he is describing.
Some of the comments here are bizarre. Do you get a breakdown on your haircut? Your cheeseburger? Your gasoline? A description of the work and the scope seems appropriate. But a breakdown seems impractical.
I love the comment I heard from a seasoned General Contractor when I was worried about project bidding, his words, and maybe he stole them from someone else: "you never lose money on the jobs you don't get". Don't sell yourself short, if you do good work, you'll have plenty of business.
This video is rather significant. I'm just getting started and doing a little side hustle for myself here and there with concrete work, I have terrible self esteem. This is not going to come naturally but everything you say makes a lot of sense.
Ive been in business over 40 years. I give a “ package price “ in specific detail. I tell people to compare my “ package price” with other like bids. I NEVER break down bids ! ALWAYS leads to trouble.
I had a contractor call a concrete pump truck to my residence and he charged 200 dollars for making the phone call. I had a mechanic call the auto parts store to have a part delivered and he didn’t charge anything for the call.
You could have called the parts store yourself, you’re just lazy. The concrete company probably would have laughed you off the phone had you called on your own, nobody is going to risk ruining a half million dollar concrete truck because some idiot homeowner thought they could pour 15 yards by themselves in a day because “how hard could it be”.
That $200 was the nonrefundable deposit for reserving the pump charged to the contractors account. You could have made the call and they would have required you to pay the total for the pump for the entire day upfront. Also nonrefundable.
Back in the day I started a gutter cleaning business. On one of my first jobs I broke down the bid for cleaning the gutters by the foot, I listed each gutter uppers and lowers. When I came to do the work, the homeowner said that his son cleaned all of the lower gutters and left the upper gutters that were all ladder work and very time-consuming to the point that I really lost money on the job. After that I never itemized again and just bid the job. I also had instances where the homeowner had the son clean the lower gutters when I arrived to do the job I would tell them that the price quoted was a minimum charge and that I appreciated his son helping out. I also ran into people who were working on a house, would call me and ask for an itemized estimate with the goal of finding my pricing structure so that they could do the work themselves. Then there are the ones that call for a free estimate with the goal of picking your brain on how an installation or repair would be done.
This is why I just don't bother with hiring anyone any more if I can avoid it. I don't want to offend them with not replying to a bid. I paid to have an arborist give me a rundown consultation on the trees for about an hour, that was his visitation fee we agreed on. All good, and he offered a quote for pruning them afterwards, I really didn't expect that, but thought.. why not, I'll take a quote. The quote was $2K if I wanted to do the pruning. I thought nah, bought a pole saw for $100 and spent about a half day's work on it. The problem is home ownership isn't for penny pinchers. It's for people who are willing to spend lots of money on various things they have no idea about.. OR it's for DIY people who are great at all kinds of various handy things and tools, and enjoy working on their home and doing the work properly. I've come to the conclusion I'm too much of a penny pincher. I'd be broke if I had to hire everyone to do the work I wanted to be done, so I just learn how to do the work properly and get it done.. Home Depot style, where doers get things done.
I used to install custom cabinets. A customer called and complained one day after my partner and I finished an install. It was about a 20 minute drive back to the shop and he called right as we were leaving his house. His complaint was that we did it too fast, because the shop broke down the bid. Never break down your bids!
One thing that needs clarity, the contractor does not need to break down costs associated with the job, but at the same time can be very detailed in the work to be completed and materials used for bid comparison purposes.
correct and that is what I do. I have a very detailed estimate showing what I am going to use for materials, links to it, units for HVAC, water heater, tiles, etc. I just don't put the prices in there. They can go online and see the cost price for it, but not my price with mark up. Why? Because they are even surprise that I mark it up at all, let along to know I did by 10,20 sometimes 30%. They don't seem to understand the work involve in getting these materials and units and being responsible for it.
I just submitted a roofing bid/ estimate, I broke out all the materials and dumpster costs separate from the labor costs, I try to list all the materials I can and also state what’s not included, I figure if someone is expected to pay a lot of money, I better lay it it all out so they get a better understanding of all that’s involved. Maybe I’m not the lowest but your going to get a descriptive estimate and a quality job with a warranty to back it. If they want the lowest price they should expect quality to be compromised because maybe the other contractor is using low quality materials or rushing the job to get to the next one to make money elsewhere. It happens more than people know, I have been there myself as well where you underbid a job and just want to finish so you make money on the next job. Not all jobs are money makers. That’s why it’s important to price the work accordingly. Good luck.
You can write a bid with a detailed materials list so they know what they're getting. But that's entirely different than listing out the prices for materials and man hours. You tell them what materials will be used and provide a total cost. They either accept the bid or they don't. Good contractors are booked out for a year and don't need to deal with nit picky customers.
@@thomasquall8476 Knowing what you're paying for isn't "nit picky". You don't want to list it out because you don't want us to know your mark up. That's the real reason. You don't want us to know you're charging hundreds of dollars more than we could buy for ourselves.
@@Steven-wm9vu But you're not buying it or doing it yourself. That's why you're getting asking for a bid/estimate. Did you ask your barber to list the price of all the products they use? No you didn't.
As a 20 year diesel mechanic… The ONLY reason one does this is to hide things. Let me ask you this… How would you feel if you brought your truck to me with a bad transmission and I said. That’ll be $15,000. You simply ask “why”? And I say. You take your shitty truck and get the fuck out of my shop…?
Scenario 1: Alright, sir. Your truck's transmission is shot. Replacing it will cost you $15,000. -Fifteen grand? That's a bit steep, don't you think? Can you break that down for me? Sure. Labor is $3,000. The new transmission is $10,000. Miscellaneous parts and fluids are $2,000. There you go. -Wait, wait, wait. $3,000 for labor? How many hours is that? About 30 hours at $100 an hour. -Can we speed it up? Maybe you can skip a coffee break or two? Trust me, you don't want me skipping coffee. It'll just take longer. -Fine. What about the transmission itself? $10,000 seems awfully high. It's a top-of-the-line transmission. You want cheap, you get cheap, and then you'll be back here in a month. -Okay, what if we go for a used transmission? That'll save some money, right? You want to gamble with a used one? You might save now, but when it breaks down, you'll be paying double in the long run. -Ugh. Alright. But $2,000 for parts and fluids? That seems excessive. You want your truck running smoothly, right? Can't skimp on quality fluids and parts. -Do we really need all those fluids? Can't we recycle some of the old stuff? Sure, if you want your truck running like a salad dressing. Oil and water don't mix, and neither do old and new fluids. -What about the parts? Are there any we can skip? Sure, we can skip the bolts and just duct tape it all together. How does that sound? -Alright, alright, I get it. But seriously, any way to cut the costs? Well, you could do it yourself and just pay for the parts. Of course, you'll need to rent my garage and tools for $1,000 a day. -And how many days would that take? For you? I'd say about 30. Maybe 40. -Your a thief man. Nobody should be taking advantage of people like this. Here's another boat payment for you. Scenario 2: -Fifteen grand for a new transmission? Can you break down the cost for me? I'm sorry, but we don't typically break down the bid. It's a flat rate based on the parts, labor, and our shop's overhead. I understand it might seem high, so I encourage you to shop around and compare prices. -Really? You don't break down the costs at all? That's correct. We find it simpler for both our customers and our shop to provide a comprehensive price. But please, check out other shops. Get a feel for their prices and services. -But what if I can save some money by understanding the breakdown? I understand your concern, but our price reflects the quality of our parts, the expertise of our mechanics, and the reliability of our service. You're welcome to get quotes from other places and see how we compare. -Alright, I guess I'll do that. (later) Well, prices are all over the place, but nobody has as good a reputation as you guys. We do pride ourselves on our work and customer satisfaction. I'm glad you did your research. -Ok, I'll go with you. I'm not saying this would work for you, but this is closer to my reality.
@@SuccessfulContractor Well… I gotta give you credit for the well thought out response. Yes. I did read the entire response and I have to genuinely thank you for such a well thought out response. You don’t normally see that on TH-cam much anymore. Especially to a comment that’s arguably fairly negative towards your point. So thank you for taking the time! With all that said… Buckle up because it’s gonna be a bumpy ride, but as you did. I will be as respectful as possible. I can tell you’ve had a lot of practice with trying to justify your stance on this subject…And when you explain it that way. I can kind of see where you’re coming from. It still wouldn’t sell me, my wife or anyone we know a damn thing. I kind of get it though. But can we be honest with each other for a second and acknowledge that in reality… Some customers are just a pain in the ass. Regardless of how much bending over backwards you try to do? That’s part of life as a business owner and It is what it is. The fact is that at least in the mechanic industry. Once the job is done. You’re required (in most states) to give an itemized breakdown of parts, labor and shop supplies. So you can either have that conversation before you put all the labor and resources into it. Or you can have it after and risk them not paying and either abandoning the vehicle, trying to steal it back or possibly even suing you. Now… Obviously the nature of your work is quite a bit different as I would assume you’re not usually working on something so mobile in nature. But that makes things worse in my opinion. Because for you. You don’t have anything you can hold on to if they don’t pay after the job is done. However, bid vs estimate does play a roll in that risk as well. More on that later… Having said all that… I do understand your point that it’s frustrating when people don’t understand why the price is what it is. But in most cases everybody has a budget and in most cases people in America are living check to check. So they just want to know what and where their money is going to…While I get the frustration. I do not get the entitlement attitude of “pay me what I tell you and don’t you dare question me”. And I mean that in the most respectful way possible. Have you ever been truly broke? As in am I getting deodorant or soap broke? Because if you haven’t… Let me tell you. Whether you pick soap or deodorant… You’re gonna be funky…it’s ok if you haven’t been broke. there’s nothing wrong with that. I certainly wish I’d never been broke. While my wife and I do pretty well for ourselves now. I remember what we went through and how a $40 oil change was an enormous struggle for us. So I understand that most of the time people are really just trying to figure out if they should be prioritizing this repair or some other bill. Obviously, we have a little bit of a discrepancy in customer base here though. Because I doubt if you’re doing many home repairs that people need vs what they want. Feel free to correct if I’m wrong on that at all. I’d also like to point out that You SHOULD be questioning things. EVERYTHING. Teaching people NOT to question things is exactly what got us in the political and economic crisis we have today. So just on principle alone. I would never hire someone who wants to perpetuate that type of unaccountability. Stepping down off the political soapbox though… You said if you find unexpected things. You eat that. And that’s commendable. I don’t think there’s anything wrong with keeping what you told them the cost would be if you save a little bit. However, you must understand that most people that do that are inevitably going to cut some serious corners so they can increase their profit margins, right? And finally to bring things back to a little more common ground. Bid vs Estimate. I 100% understand that. In my industry there isn’t really such a thing as a bid. You just never know what fresh hell you’re cracking into when you accept a job. Giving a bid is something I try to do, but it is usually only possible for oil changes. Even a transmission fluid flush can turn into a 4+ hour ordeal with a rusty enough truck. But I wish I could do bids instead of estimates! So you’ve got me beat there! Here’s a tip though… Always put the labor LAST on the breakdown. Then they get sticker shock on parts and supplies and usually don’t even notice the labor 😎
@@SuccessfulContractor Looking back at your response. I can agree that you are right about some things. And while I still wouldn’t choose a contractor or any other business that doesn’t break things down. I can be honest and say that might be more politically motivated than morally motivated. So, I wish you the best of luck with your business! Thank you for the intelligent conversation. Again… It’s not common on TH-cam.
Personally I like to see a breakdown. Then I can decide if the value makes sense for me and I can add or subtract different things. Oftentimes they charge a lot for materials that aren't my first choice. I can usually get something I'm happier with if I source it. For example, I recently did a bathroom remodel and I wanted nicer tiles than the contractors were using. We communicated every step of the way and I bought what the contractor told me to buy in terms of square footage. I actually provided a lot of the materials and nothing was missing. Just took good communication.
We are heavy on description of work, and materials being used along with a firm fixed price. We will not bill more or reduce the billing if we completed the work as specified per the detailed scope. If that's not good enough for you then yes we are not a good fit.
I forgot to add that the contractor was WAAAAAAAY off on his tile estimate. I knew it, but tryin' not to tell him how to do his job or give him any excuses, I just bought what he told me to. Sure enough we had tons of material left over when the job was done, but I get to keep it or make the return. I did, however, bump into contractors that were gonna bill me EXTRA to source materials that were not in their warehouse because "it's in the contract". I can just go to floor and decor and buy it, guys. C'mon. That is just not a value I appreciate and those guys (there were a lot) did not win the bid. There is a reasonable middle ground is all I'm saying and a lot of contractors just try to mess with ya. If it's a bad fit to not want a contractor to screw you over, then ya. Stay the heck away haha @@SuccessfulContractor
I'm an excavatiom contractor and I occasionally get the "well I can go rent a machine and do it cheaper myself". Then you drive by a week later on your way to the supermarket, etc. and you see yard completely destroyed. And you know from experience the concrete or pipe that is being installed is sitting on loose dirt. Someone will be back in 10 years after the ground has settled because the drain or sewer pipe under the ground looks like a roller coaster. Or the concrete or asphalt is cracked into pieces. lol
Knowledge, experience and skills are earned commodities that command a price too, not just the labor and materials. If someone tells me my price is high, I ask them nicely why they believe that, at that point I will know whether or not I want to work with them. You get what you pay for.
Still a better deal than a contractor looking to rip someone off. I'd rather pay for my own mess than yours. If you're cagey about what we're paying for, it's your own fault we flagged you as a waste of money.
I absolutely agree with everything you mentioned in your video! I have built and sold storage units (sheds) for years and ran into the same issues that you talk about. I also learned NOT to breakdown my bids as well. I do list everything that will go into the building that I will be providing and give a total cost, but that is it. I have learned the hard way, that if I give a price breakdown, they will give my bid to another business, so that they could beat me on the price. Why don't customers ask a doctor for a price breakdown when they go to the hospital for surgery? They will simply pay a doctor or dentist any amount of money that they request, with no questions asked. They will not ask for a breakdown and find ways on their own to cut costs. I also learned, that if people get a loan or insurance to pay you, then they will not really care how much a project costs, but if they are paying you out of their pocket then they will be concerned about every little thing.
This is great for contractors and business. If the client or customer wants to count items and needs a breakdown, they may not be someone you want to do business with or for. Customers often underestimate experience and knowledge on a job site, they may assume they were overcharged when the work is finished quickly.
I give one all inclusive price on quotes and invoices. What they are getting is fully detailed. Customers that do this are usually high maintenance and more trouble than they're worth. I had a guy a few years ago call me 5 or 6 times questioning what was included when is was spelled out on the quote. I finally told him the quote was no longer any good and that we weren't a good fit. A couple of hours later his wife called and apologized for is behavior. I finally did the job (AC system) on the condition that he would not be present while we were working. She agreed and sent him to his parents house for the 5 hours it took to do the job. Neurotic customers are best avoided.
The irony of society and construction is that everyone thinks they are getting screwed over by contractors they hired to do a job they can’t do but in the same breath they won’t bat an eye at paying that internet or cell phone bill that provides questionable service while the price remains the same. Definitely bad contractors out there, but by and large you get what you pay for. Skilled labor isn’t cheap and cheap labor isn’t skilled. Always someone willing to cut corners and do it for less. If price is all that matters go with the guys piling out of a 15 passenger van. Good video
You could take the highest bid today and you would still have the van with 15 guys in it pull up and unload. Just because the side of the van has a plumbing or electrician or any other logo does not mean thats they are qualified to do the work. There only need be one licensed individual. The rest can be hired from the homeless shelter. Modern new homes are a glaring example of shoddy and shady contractors in action.
It's really sad how many shots shady contractors are out there. I feel so bad for the good ones. It really is upon the industry to raise the bar. Set some better standards for licensing...? When you see a contractors sign on a job site that reads Jon Doe contractors" we take the con out of construction" you KNOW the industry has some work to do!!
@@mattozx6rr Yes and if you paid for the jobs to be done properly then houses would double in price and no one wants to pay that. Capitalism is constantly forcing people to lower quality to try and be more competitive on price because that's also what the overwhelming majority care the most about.
@@berserker4940 It actually cost less to do something right the first time. The inspection and home warranty industries are a sham and that is a huge part of the problem. Shoddy work is either not being caught by inspectors or its being ignored for some nefarious reason. Craftsmanship counts.
How about, charge the proper labor rate and don't try and make any money on the material? Then break the bid to what it should be so the customer can be sure of what materials they are actually buying. unless you're trying to scam. As a customer my problem is always, I pay a lump sum price and get the cheapest possible materials or whatever is laying around or "good enough". I hate that, and it why I DIY as much as possible.
We always specify what material we are using in our quotes but do not put a price for each material. For instance when building a 6ft privacy fence we have a line the says we use (3) 2x4 #2 prime pressure treated pine runners. We do try our best to let the customer know exactly what they are getting with our bid without itemizing each piece of material
Agreed. It's always better to DIY when you can. I got a bid for a small driveway job, and the contractor said that just the concrete itself was gonna run me over $5k. So I built some forms, did rebar etc, got some tools and some guys to help and I called the concrete place in town to order a truck. It took 5 minutes to place an order and I got more concrete than I needed for $1k. Sure, the prep was a fair amount of work and I'm not saying anybody should work for free, but these contractors act like the customers are out there disrespecting them for asking questions while also trying to charge a 500% mark up on materials.
I agree with you, it's capitalism if they can get it good for them, but I'm not overpaying and will diy. I think the market will correct with high inflation and a trending down economy where they will have to drop prices.
If you feel this way you are choosing the wrong contractor and not getting enough detail about the products they are using. This is where you have a duty to understand the materials you desire and make sure they are specified so they don’t try to use sub standard materials. This is done every day in commercial contracting. There is an entire book called “specifications” dedicated to making sure the desired materials are used on the project. We as contractors also love educated consumers because then we can bid apples to apples. The bad contractors using junk hurt us too.
I have always given a turn key, package price. Years ago, when I was really slow for work, I relented and did a job for a long time customer where THEY were supplying materials. MISTAKE ! I stressed to him if ANY materials were not on site, and I had to run for them, there would be an additional charge. Yup, there were things missing that I had to shop for and he was pissed that I charged for my trip(s). It ended badly. One more thing. About 2 weeks after the job was completed, his wife calls me and informs me that HE is not happy with some of my drywall finishing. ( The job was a partial gut ) When I arrived at the job and the wife showed me what HE was unhappy with I explained to her that the area HE was complaining about was a surface that I NEVER TOUCHED ! He bitched me out on the phone while his poor wife was crying about the situation. I didn’t do any more work. The job was completed as per the contract. I NEVER worked for them again. There are just as many stories of people trying to rip off contractors as there are of contractors trying to rip people. Now- package pricing ONLY ! I tell “ shoppers” to compare my package price with that of others that are providing the same level of service.
There's contractors in my area that give a full breakdown of price but Having the small print, any extras needed will be charged accordingly. Where is my quote stands at the price given
need some advice. let me lay out a senario for you. contractor bids a job, job was paid for and half way contractor says he needs to make a draw on the job. Home owner has already paid the full amount of the bid. What should the Home owner do? Other question is how should you bid a job so that you don't have to make a draw, and have everything you need for the job before work starts?
Necessary good points. I also just submit a bid (most of the time). When I was much younger, one or two customers wanted to buy the materials... say in this instance paint. They would go buy some Big Lot paint. Took me additional coats (labor) to use the cheap paint. Learned quickly that I must specify which paint if they went this route. But most jobs are construction and needing multiple types of materials, most customers prefer you get the stuff after they went and bought the wrong stuff on a several occasions. And you are right about the hourly wage mindset... especially if you are in a saturated market. People don't realize your 40-50 dollar an hour wage (25+ year experience and efficiency) does not compare to the guy who hasn't been doing it very long. They don't see the loss (or breakeven) on other jobs nor all the time gathering, cleaning, owning equipment/supplies before and after their job. And something hardly ever discussed on a larger job... is knowing the best materials to use from different suppliers. Only time and experience teaches a quality contractor this aspect. Plus, you pay your own insurances, no business contributes to your retirement, etc... all the perks they get working for someone else. *I don't mark up materials, but a contractor should make sure the time taken to gather what they need is figured in. Lately since I work for good clients, I often tell them the labor cost separately.
Greedy Insurance companies often want bids broken down . I've never gotten a job when customers ask me for a breakdown I'll never do it again . I love your explanation of why they ask for this. I've always thought they were just cheap F 'rs .
Great video as always Mark, I have been doing "lump sum" bids from day one, I go very detailed on my proposed scope of work (Materials specs etc), but with regards to pricing...........One lump sum price, no break down whatsoever - for the very reasons that you have highlighted in this video.
Appreciate your explanation and can see why a fixed bid works best for you. As someone looking to get a house built, we've had a wide spread of responses from several potential builders. Most are pushing for cost plus on materials, labor and services. The spread of base price are so wide we need to see some breakdowns to understand what actual value to us each price brings. You seem like an honest straightforward guy but considering the cost of a house, I have to see it in writing.
@@SJoelKatz My understanding, is that its less about accurate estimates (and you're right, if you can't estimate the cost, you can still get screwed in profits, especially if something unexpected comes up) and more about preventing the client from trying to change the cost through the project so that you know what you're going to get and the client knows what they are going to get before any work is done and the price is fixed, so no surprises for the client.
Learned the hard way over the years- estimate is fine but before any work is done: materials always listed; punch list with ALL changes during project approved In Writing (there’s always changes & substitutes on rehabs); workers comp/liability waiver/coverage; daily work required with finish date - w/prorate & replacement for unexcused delays; and reimbursement for inspection failure/code issues. Why all that? Both parties actually think it through, fewer misunderstandings & aggravations, expectations & remedies are agreed up front.
I'm a homeowner and I managed subcontractors for 30 years on state and private projects. I've encountered way more "shady" contractors than honest. In this fencing example, it's too easy to bid for 50 posts, use 40 and keep 10. Pretty soon the contractor has his house fenced for free by his clients. I knew a contractor who paved his 275 ft. driveway with this method on a state job. You can't just leave the extra paving materials at the site. Thanks, tax payers! Nah. Get a few bids and ask for a few key break-out items. I agree with other commenters that you'll come across way less "shady" by providing some line items, thereby building a solid reputation that results in getting more work.
I'm a contractor and I managed homeowners for 30 years. In my experience many homeowners were ungrateful and selfish. Most people in the world are quite self centered when it comes to money. Construction is a hard and stressful occupation and on top of that you often have to deal with people who are trying to get as much as possible while paying as little as possible. I think this puts many contractors in a survival mode.
When it comes to the fence, it is impossible to bid for 50 but use only 40 posts. It is possible to go over on posts not under. I got to put a post every 8 feet. Often you have a root or a rock in the way so you set your post at 6 or 7 feet. So usually you have to buy more posts and concrete and dig additional holes out of your pocket. When it comes to Interlock, I price per square foot and I buy a few extra square feet to account for cuts. The leftover stone belongs to me. I don't want it and usually leave it for the customer. Often they don't want it so I just throw it out.
I am a retired contractor of 30+ years, all of this was true 40 years ago too and probably always will be 40 years in the future! lol! Customers are even more demanding now though, and with such high costs for everything these days I can't blame them. But it is really not fair for them to make you break down all of your costs so they can then figure out ways to manipulate you and your business. Only you can ensure your business is successful, not a customer.....I only gave bids or worked time and materials, I never once gave a price breakdown for a customer for a bided job and always had work. Never let a customer in any business dictate anything to you about running YOUR own business! Some contractors have learned to use this idea of breaking down costs to their advantage by actually breaking things down but being dishonest about the real costs of that breakdown! Skewing such in a way they believe might help them to fool the customer and land them the job! Customers then believe they are getting the "honest" guy because he was willing to break the costs down for them, but they are really getting the most dishonest guy.....lol! How many customers have to break down their own jobs for their customers at their place of employment, not many. Do you ask Apple to break down their costs of an I-Phone before you buy one? Or how about that new car or boat? That would be silly right? It's a silly idea and one that can be used to manipulate each other on both ends of the deal. Just agree to a fair price and let the contractor worry about the details! You are free to ask upfront about what materials or anything else that they might be using in the construction of the job, have such written into the contract, ect.....It is not necessary to know how all of those costs break down for one guy over another because each contractor is going to have a different way of bidding his jobs including possibly charging you for every single possible "unforeseen cost overrun" they can dream up along the way where another guy might simply stick to his bid no matter what he encounters along the way, because he is a man of his word! All that matters is the end cost to you the consumer, not every little cost detail because those details can also be manipulated. So, you the customer, end up over complicating what can be a much easier process to begin with.....Many customers can be their own worst enemies when it comes to contracting.
👆🏻 This 👆🏻 So well put. Just because you get a bid "broken down" is no guarantee of actual transparency. People can cook numbers any way they want to. It makes a lot of people feel better though.
@@SuccessfulContractor yes, and much more simply put! 👍 Pertinent details can be written into the contract without needing a cost break down.....
Just going to add a few things, when you’re just starting out and haven’t build a decent reputation for yourself as a professional contractor then you have to go the extra mile to breakdown costs. Depending on the customer is good and bad but ultimately it might be better to weed out the problem clients. A good client will see the $1500 for demo and think it’s reasonable because of the amount of work and dust the workers have to deal with, while another might see that charge and think its way too much because it has no skill required, depending on their reaction it might be a flag you might think its not a job worth taking on.
If you are having multiple quotes to complete, then trust you already have build a reputation and you can turn down job breakdowns. Also you can say even if i breakdown the job, i cant remove one line without the other lines increasing because they are receiving a group discount. You cant have them remove the supervisor/ construction management line removed because they’ll be at home watching the workers …
If this guy is going to buy his material at the Depot or Lowe's I'm done I wanted that s*** used on my job I would do the job myself
Thanks for your input and I hope for your success on future endeavors.
With that being said, use the return button sometime and learn how to write a f****ckin paragraph. Jesus Christ.
As a HS dropout (been successful now for decades from hard work and real estate) anywho I'm amazed how people cannot put a paragraph together and have such bad grammar.
Cheers.
I started giving customers a breakdown a long time ago. Several customers said they chose me in spite of the fact that I was the higher bid because I was more forthcoming so I've been doing it ever since.
Good for you! Excellent business practice!
I agree....but you have to read the customer. Adversarial customers at the start....are adversarial when it comes to paying.
@@metricdeep8856 Yes. I completely agree with that. I'm getting pretty good at weeding out the irrational folks from the good customers. Every once in a while one slips through though. I do my best to document everything and be vigilant with the change orders.
I find they take details and play off of other bid….in the commercial field you are given an RFQ. Detailed request with specifics. You can’t compare apples to oranges. You guys with the detailed bids are hysterical for homeowners. No specifics supplied. How the fook can you compare bids. Duh.
@@skiprope536 You seem to have missed the point entirely. I dictate the details and specifics that I am costing out in the Proposal. I include the Estimate which is about 15-22 pages in a spreadsheet, for the customer to refer to. I do the same for my commercial customers as well. The result for me is a lot of repeat business with an educated consumer that prefers to collaborate with someone they trust and rely on instead of just chasing down the lowest bidder. If someone wants to compare my bid with that of some hack, then that's their business. I'm not engaging in any haggling. I thought this was pretty clear in my first statement. Don't think I could have dumbed it down for you any further unless you want me to use crayons.
As a General Contractor I break everything down to show the homeowners exactly what they are getting.I show them my mark up and cost for each item that way they see I’m not hiding anything. This has gotten me more jobs in the end by not hiding anything. We do everything on a cost plus basis so it is fair for both sides if you start doing this you will win a higher percentage of the jobs you bid. Don’t hide anything and you will have more trust from the start.
I agree with you, being totally transparent is how you earn trust and keep it honest.
Budedwards has it figured out. I’ve been building for over 40 years and have found transparency and a cost plus basis to be the best practice and garnered me more sales than previous methods.
OK this guy just exposed the flawed thinking in his practice of fixed price bidding that drives customers to seek transparency. Combine 2 primary areas below with a general distrust of contractors ( you know with ALL the excuses they come up with as to why they’re not there working), and it becomes obvious why people want to see the costs….
1. Material markup - It’s understandable IF you also pass through your contractor pricing and base the markup from that vs marking up based off of retail pricing. Most contractors (not all but most) lie about this and are unwilling to show their cost basis.
2. THE CONTRACTOR HIMSELF doesn’t believe his craftsmen and laborers are worth the $50 /hr labor rate BECAUSE HE DOES NOT PAY THEM $50/hr. Now if he replies and says all insurance costs, benefits -if any, etc… are built into that then he must recall him saying in “material markup” “that’s where he picks up his fixed costs of doing business”. So is he double dipping with material and labor markup??
Also remember…. You can get a contractor to do anything (including break out a bid) during contracted economic times caused by ( high interest rates, high building material costs, market saturation, etc…). When they’re hungry, they’ll grovel and beg for your job.
Always ask for what it costs to have them sit up at a bar when they say “the weather is bad” yet farmers in the exact same area are still out working.
If they won’t break a bid down and you like their “bid” negotiate terms like guarantee finish date, with delay penalties.
sole focus to finish - meaning no work on other jobs unless you have additional crews to cover that job while continuing to work on mine.
Tell them they’re bid is a little more expensive but the other contractor is guaranteeing me he’ll be completed in 4 weeks but you won’t say how long it will take you. If you can do it in 4 weeks I’ll award the bid to you.
Also In today’s world if the customer is borrowing money to do the job most banks require a breakdown of money spent. I’ve had banks recommended me to other people for the way I break a job down honesty is the best policy
Thank you for your willingness to educate a customer and showing them what separates you from the competition.
If you're giving a quote vs an estimate, then this practice is TOTALLY OK. I am a customer that asks for break downs when I get ESTIMATES, because I want to know when there is an overrun, what I can expect before the request comes....and to assure that I'm not just being asked for more money without clear reason. I have no problem paying more when there are material overages (not due to flagrant waste) or more complex repairs. But I've also witnessed a contractor (one bad apple) that would give an estimate, then ask for more to complete the job once the demo was done and the job half finished. Unfortunately, these bad apples make customers skeptical.
It’s totally understandable to not rely on owners to supply materials , esp critical or more than a few items. Clients don’t grasp the amount of time involved ordering delivering, logistics, esp for a Lary job-for a while house it’s formidable. But it’s laughable to suggest you ever pass unanticipated savings onto client, or even don’t push for more money if disaster strikes😂😂😂. But I general your approach clear and principled clients need to get multiple detailed bids. Clients need to understand the building industry is flush right now, they can get 50$ hour for hourly unskilled labor. In 2008 it was quite different. Good time to be a GC, as his moniker confirms, bad time to be a client. If you think these guys are making too much money, we’ll go into that business. Times have changed white collar Drone jobs are not as attractive as they once were. As for skilled trades, plumbers electricians etc, they ARE worth $150 an hour if you have them do serious work heavy ups etc and not screw in a light bulb. Learn how to unclog your toilet, change a can fixture etc.
you wouldn’t be more than 50% accurate if you had to put together estimates either. The project is your desire and your problem. Contractors aren’t clairvoyant. You may realize that but many people don’t. The harder you push for a “reasonable” price the more you’re asking for trouble.
@@fleetfootedtexan But again as this guy mentioned, That's the difference between a BID and Estimate. IF the cost is an all in cost you shouldn't be paying more than the Bid, the Estimate however will leave you hanging when the contractor decides changes were needed or he didn't estimate the proper number of materials needed.
I'm pretty sure there is a legal limit to how much over the estimate they can charge on completion. That absolutely is something that should be known when looking at an estimate, for those that aren't aware of it. Also, don't go with someone who doesn't point that out when giving that estimate.
Yea, I’d tell you to call someone else. Funny though, everyone else is going to tell you the same thing 😂
Looking by what many of the replies are expressing, this guy's advice is out the window.
From John Q homeowner:
I THOROUGHLY APRRECIATED YOUR HONESTY AND CANDOR IN THIS VIDEO.
This is a well spoken, clear and easy to understand video which explains a lot of things I personally have never understood about projects, estimating and bids. THANK YOU SO MUCH!
I appreciate that!
As someone that hires contractors, I always get at least 3 bids. The bids need to be broken down in order to compare them and ensure that you are getting the same goods and services. I don't think I have ever gone with the lowest bid, but I have eliminated contractors from the bidding process when they refused to provide a detailed bid. It comes down to not knowing what they are trying to hide.
I got 3 bids for a 1/2 day roof repair... $5K, $10K and $21K.
That's how contractors treat Sr. Citizens. All 4 guys on the crew made more than the President that day.
@@kenjordan5750Roof repair, not a replacement? That’s crazy, sounds way too high. I’ve seen the same thing lately though.
Most contractors want to charge way too much for what they do. I replaced a hot water tank, like for like and two contractors wanted over $1000 in labor for one hour labor (for one guy). I had the new tank already here. So I said forget it and did it myself. It took me less than an hour and that’s the first time I’ve ever replaced one.
That was just one example, another was replacing a cracked sidewalk sq about 3’ by 3’ and they wanted 5k. These guys lately are ìnsane and just want to rip people off.
Youre not following.. A detailed bid and a breakdown are two different things.. The “detailed bid” is the details in the scope of work. Not the “breakdown” of his labor per man hour etc.
@@jhurley12 - Of course it is. For example: I recently had the siding replaced on my house. I got many bids. I specifically stated that I wanted James Hardie Color Plus and wanted everything replaced including fascia, vented soffits, sheathing, etc. Some of the bids came back specifying that they would be installing vinyl siding at the contractor's discretion. Others did not include permits, inspections or replacement of rotted wood. The company that I went with (one of the highest bids, BTW) listed everything down to the last board, nail and roll of seam tape. They would order all the materials up front with an extra maybe 20% for waste , which I would pay for. I am sure they marked up the cost which is perfectly acceptable. They finished the job and then I got a credit for the unused materials. Everything was open, honest and transparent. As a customer, I will pay extra for that. I can be fairly confident that they aren't trying to hide something.
You only got that because that contractor pays for a service where all he does is take pictures and sends them to the supplier and they send him back a detailed list of materials, it wasn’t because he took his time listing out everything. When I was starting out I could not afford this luxury and just gave an estimate with a good description of the work. If you hired me, in my contract it said you can request a material list and I have 7 days to provide it. Which was simple for me I would just goto my supplier and ask for the material list for that project. A breakdown estimate without being hired would take time to price and list every little thing so I would have charge. Just a contractors point of view that you might be missing.
Sage advice from someone who clearly knows what's he's talking about. Thank you.
I am a mechanic and used to have my own shop. Had a customer who owned a local restaurant and had me do all his work. One time he dropped off his van for some work and wanted a discount if bought his own tune-up parts. I asked him if I got a discount if I brought in my own steaks for him to cook. He never asked me again
He actually probably could give you a discount bringing in your own steak but the markup on the stake would be significantly smaller than on the car parts. It's really messed up that a company can lie about how much they paid a car part for and lie about how much it's worth. Why not just be honest and say you got it for 25% off the local auto parts store because of your discount and the auto parts store got it on a 250% discount from the dealership using a different brand?
@@JustNo8808In the food service industry a 300% margin for food items is normal. It is probably 1000% for beverages. Half of restaurants still go out of business bc they can't make a profit.
@@JustNo8808 No restaurant owner in their right mind would allow that. They have health department regulations to abide by just like auto mechanics and builders have regulations they must abide by.
So by your logic if you bring in a part to a mechanic and he installs it and it fails, you'd probably angry at him when you're the one that supplied the part. I'm a contractor and if a customer supplies items such as plumbing fixtures etc, I do not provide a warranty but will install it because I don't know if it's a used part or a reject or where it came from. You would do the same if you were in someone else's shoes.
As far as "No restaurant owner in their right mind would allow that." is concerned, it happens daily at catch and cooks around just about any island or coastal area.
About the faulty parts - how about if the customer proves it's new? A receipt from a reputable store should do the trick.
Seems easy to prove, and how many homeowners have 'newish' parts laying around that they don't know how to install by themselves?
The no warranty seems just another way to keep another profit center alive. @@brettb614
hahaha Good one
Thank you for this video. Been doing construction for 50 years and I learned some things from you young stallion!😊
You mentioned the time you have to spend gathering all the materials, more than $100,000 for your tools and equipment; you didn’t even mention the fact that you have to pay insurance, your gasoline, maintenance and repairs on your vehicles and tools, buying new replacement tools when the old ones wear out, all other overhead, whether that’s a small shop at your house, etc. The list of things that it costs you just to stay in business, goes on and on. $50 an hour labor is cheap, especially if you have employees you’re trying to give a little paid vacation or a few paid sick days because you want to bless him for their good work ethics, some bonuses, whatever it may be. $50 per hour is not even half what auto mechanic shops charge. Keep up the great work.
☝🏻This ☝🏻
Yes it’s call overhead and can also be billed out as such. It could also be billed as tooling. Knowing replacement rates to spread costs is something a customer could understand. Having a random FFP doesn’t mean you don’t have a basis of estimate. Heck you could even provide that in the bid. If you bid for the US government. There is no discussion about BOE or breakdowns of bids. It’s that or nothing. Yet you can be reasonable with your BOE’s and they as people understand. That the trick when you put costs together. Provide an explanation for costs in your quote and you will find customers agreeing more. Just don’t detail your insider processes and procedures. That is what makes your skill set the money. The knowledge not the materials and labor costs. Breaking down all kinds of requirements should also be detailed and reflected accurately in costs. How do you show that without justifying the material costs and labor hours for said requirements. If your under on labor or explain how certain materials have wastage like lumber. Then what’s the big deal. The fact that you won’t do itemized bids is because you don’t want to do the work for something you haven’t secured a job for. Fair enough but you certainly didn’t get all the jobs you could get simply for that fact. Each their own I guess, it’s your business and your success. Do what works for you in your market.
I learned in the early 80s that handing a broken-down bid to a prospective customer is akin to handing them a shopping list. I found this out when calling the prospect after not hearing from him for two weeks. He had taken my sound system design and equipment list, and given it to someone else, and let them do exactly what I had proposed doing. That was a hard lesson for me.
EXACTLY ! THANKYOU GARY !
That's a bad way to think of it. I ask for a breakdown so that I know what type of materials and quality of materials to expect. Too many times I've been burned with vague quotes that end up not including things that would seem obvious or misunderstanding of 'replace in kind' or 'repair and FINISH' means between one person and the next. If I get an estimate to replace my deck I would very much like to know what type of wood will be used, what type of screws, and how the handrails will be secured. This is just proper communication so no one gets misunderstood. Every time that I've failed to ask for a breakdown, I have been cheated on quality of materials or on what level of finish was expected. One time I was quoted for replacing a 10' malibu slider and finish interior. They put the drywall very messily, didn't even mud. Idk what industry standard is, but I expected at least mud and texture match and I would take care of the paint. They though nailing in the drywall and leaving was 'finished'. Had a deck replaced and person replaced deck using cheapo screws and replaced handrails that were secured well with thru-bolts with carriage screws that weren't even long enough to fully secure it. This is why I want a breakdown on how the work will be completed, to what level, and with what materials. They can then charge me whatever they want for materials and labor based on what they need to make a profit, but the communication needs to be there. I'll gladly pay extra for it.
@@DrDingusWell yeah until you start doing it for your livelihood and experience people giving all your pricing and breakdowns to some schmuck to copy. Happens all the time.
We still give material breakdowns, but not for every little item just the main things, and a flat rate price at the end.
Sounds like you hired some cheap unprofessional contractors. Sorry you experienced that. Get some referrals next time.
They were bad client, you managed to get away from them without further drama
@@DrDingus see I discuss those types of things with my customer and I ask them exactly what they want, including specifics they need to have in the project. And since I'm readily listening to them, they do tell me, and I write it down. I then take those notes and list PRECISELY what my job scope is and what it isn't. I then give them one price only upfront, along with a list of specific tasks and requests that they asked me for. Keeps it simple, keeps it to the point. They don't nitpick that one box of screws I bought but it's contracted that they receive exactly what they wanted in the first place.
I respect your honesty but I would never accept a contractor refusing to break out their bid.
Majority of those customers are nit picky and cheap, things most people and contractors really don't want to deal with anyway.
The best jobs are sometimes the ones we don’t get
Same. I say this as someone who used to be a contractor.
then you are wrong
That's a red flag of a bad customer. It's a two way street. I'm sizing you up at the same time looking for red flags of a difficult customer. If I sense you're going to be difficult I will pad the cost knowing me or my crew is going to have to deal with you.
The main reason I would ask for a bid breakdown would be to find out what materials are being spec'd for the job so that bids can be accurately compared.
Seems like the main "bid breakdown". He's talking about is costs, not the project overall.
Lots of ways to describe scope of work and specificity of materials without going into line item costs..
Material description would be in the proposal. You don’t need to put it as a line item.
YES!!! I made the mistake of taking a lower bid then AFTER I had mildew all over my basement I realized the guy had not tamped the soil properly, not sealed the cracks properly AND had cut corners by not using green board (learned as I tore the stuff back out myself). I WISH I had not hired a contractor at all for that job. I lost $60k having to tear everything out and replace it. Contractor was long gone, of course.
@davidfisher5140 dude that’s heartbreaking. And infuriating.
@@deline8ed619 Yeah, oddly, he looked & talked a lot like the scumbag in the video.
If there is no contractor to build, hire workers & build yourself. Don't settle for a guy like that "successful contractor" guy.
A few years ago when I legitimised my moving company, I thought average worker's comp rates of $20 per $100 was crazy but then I happened to look at what roofers and other construction trades were paying in my state for the insurance. Then I finally figured out why there are so many under-the-radar outfits operating.
And the people that pay the price are the workers.
"In five years the family moving company will be completely legitimate." -Michael Corleone 😂
“I will make him an offer he can’t refuse”
Vito Corleone
@@jakeforrest "We need more cowbell!"
Bruce Dickerson
thats interesting that people would say you not worth the hourly rate or price ... im pretty sure theres a huge shortage of skilled trades out there in the United States
Do what works for you-I agree with you 100% (I’ve been in business for 23 yrs) not only do I do it the same way , but I’ve also learned that when you deal in quality and not quantity, your clients, don’t nitpick you to death. Nor do they care for all the extra details
I would bet that your haters are the cheap guys on the block
I would bet you're right.
I used to do fences in college and charged materials plus labor per day, it was just me. I would have the customer pay me for the materials when I brought them and the receipt to them before I unloaded. That way I never got bad materials and could return them if they freaked out about the cost even though the estimate was really close. Granted it was a real small operation but it paid for my school so I didn’t have any debt.
I loved it when the customer wanted to compare my single person labor to the ones with more people working on a per worker basis.
That was 35 years ago, it has to be a real pain these days.
Great video.
Me too, but I did that in HS hiring a buddy of mine from the football team to help me out. I paid my friend double his daily construction job earnings and still made plenty for myself while ALSO providing a much better fence than my competitor (Sears fences were GARBAGE!).
That is illegal in most states, since unlicensed contractors are limited to very small jobs.
@@vids595 wrong!!!
Fence building is not illegal so long as it's not installed in the wrong place.
Sadly, lots of municipalities & pvt orgs ban so many things u wonder who owns the property u are paying for.
if you have a business with employees, car insurances, business insurances, excise taxes for business and cars, etc. In other words; just to be in business you would have lots of overheads, you wouldn't be able to do it that way. Just saying.. you had a much simpler operation system to deal with and that surely workds material+labor. But you ahd to do all of the work. If you wanted to scale and be on the administrative end of your business, then the math changes.
This depends on the job and the customer. People with money don't care, they just want the job done right with no headaches. These are my target customers. Nothing worse than working for people who cannot afford you.
Heavy on description of work, and materials being used along with a firm fixed price. We will not bill more or reduce the billing if we completed the work as specified. If that's not good enough for you then yes we are not a good fit. We don't play games.
@@SuccessfulContractor Yes, agreed. The first eight letters of contractor spell CONTRACT!
that is what I have learned as well. Unfortunately it took me 5 years to get this into my head. Price you pay for not learning with the older contractors
As a former small remodeling contractor, the best people that I ever worked for were professional gamblers. After working for the first one I got many more jobs from their friends. They always paid in cash from a big roll of $100 bills from their pocket. Never a problem from any of them and they rarely ask the price. I always treated them fairly and they did the same to me. They always gave really nice tips.
This guy gets it
Thanks Mark, I just learned the difference between bid and estimate and time and material job. Very good informative video
Glad it was helpful!
As a customer (and professionally a commercial project manager), I want a breakdown every time. You don’t need to break it down to commercial level, but if you give me a bulk rate project cost, you’re immediately put in the circular file (trash) and blacklisted from any future projects.
I’ll tell you why. In my experience (again as a residential customer and a commercial project manager [E2E full scope]), if a contractor isn’t providing you with a reasonable work breakdown, they’re hiding something or padding the cost in a “less than desirable“ way. I’ve found this to be true 100% of the time in both scenarios (tho bulk pricing in the commercial/industrial world isn’t a thing for that exact reason).
You need to create a win/win situation for both you and your customer. When you say “most customers don’t understand”, or “I’m just trying to make it a simple as possible”, you’re telling the customer they’re stupid and don’t have the ability to understand simple pricing. That’s insulting. If that’s how you choose to do business, good luck. Contractors (in all trades) are VERY sketchy and shady business people. I don’t know what it is about them, but even the very best fall into that group.
My first experience with a GC was in a water remediation and repair. I finally had to demand a full line item breakdown for everything. One example then I’m done, but ServicePro put over a hundred 1” moisture testing holes in our drywall. The “turnkey” included “everything” (which is NEVER the case) to make us whole again. My Spidey Sense was just bothering me so I halted work until the breakout showed up. He was charging me $10 per hole just to hot mud! If there is a contractor out there than can justify that, I’d love to hear from them. Each hole took less than 15 seconds in labor and maybe 1.2 cents (retail) in consumables. Recall, this cost was just the hot mud filling, finish and paint are totally separate.
Are all contractors like this? I don’t know, but I’ve been burned to some degree by every residential contractor I’ve worked with, without exception. And I do this for a living (not residential)! So when you hear “we’re just trying to make things simple”, RUN. You (as the customer) WILL BE scammed somehow, for sure.
We do a lot of insurance work and when all fees are added, the computer program that the insurance companies use pays $15/ hole in my area. That wall also needed painting and their program is low on that.
The insurance company is obligated to pay for loss minus your deductible. If the program tells us that the repair will cost $20,000 and you have a $1,000 deductible, the insurance company will give you a check for $19,000. If the contractor does the work for $15,000, then your loss is only $15,000 so they would send you a check for $14,000.
Exactly... this professional fence builder who thinks he has the skills of an auto mechanic is not smart enough to explain the projects to his customers, so instead he insults them by basically saying they are too stupid to understand construction... why does this guy have to ruin America for all of us?
So you wanted the contractor to "break down" this estimate to show the cost to fill tiny holes? Are you serious?
No. You don't buy anything else in your life with a breakdown of every little part. When you book a hotel you pay x per night. When you buy a car you just pay the price, when you bought your home you just paid the price. When you get a haircut you just pay the price.
Respectfully disagree and here is why. The contractor can manipulate the numbers. What I mean is, if my price to demo and build a deck is 10k and the customer wants a detailed price break down, I can say my material is 5k, labor is 3k, P&O is 2k when it can actually be different in reality. You do not know what it costs for someone else's business to be in operation daily, weekly, or monthly. That contractor was charging you $10 a hole. Whether it is high or not is subjective, everything in this world has a cost.
Wow, I am absolutely impressed with your honesty and straightforward distinction between an estimate and a Bid!
Thank you for helping me understand the distinction. Now, I will able to better express this to my "Handyman Clients"!
Well done, Sir!
Glad it was helpful!
Great advice. When a contractor gives a quote, they are taking a risk - every single time. Sometimes things go well and you do better than you had anticipated (you actually make good money), but there are other times when you face challenges that slow down your progress. Every job has its own set of obstacles and oftentimes you can't know exactly what those are until the job is in progress. Therefore you have to bid accordingly. As a contractor, you are free to charge what ever you want to charge, and how you get to that number is completely up to you. The client is also free to accept or reject your bid. When a job takes longer than anticipated, and your costs for doing the job go up, clients don't usually offer to give you more money. They want the job done for the price you quoted, and if you bid too low, that's on you. So it's always best to give yourself room for unexpected costs and time. The average Joe, has no idea how much a contractor invests in time and expense to complete a project.
At the end of the day, the best way to run a successful business is to know your numbers, provide great customer service an excellent finished product.
The risk is what everyone seems to forget.
Yes sir. It is the job of the Client to compare Bids, Quotes, Estimates, Etc and find the right fit. If they want to haggle and be deceptive or low ball, that's where I walk.
Years ago , I did a large window replacement job for a customer. They were tear outs and I think I used Pella. The total for the job was about 15k. When I was finished and collected the final payment from here , I mentioned, casually, that I probably should have been about 10% higher on my estimate. I ALWAYS track time and materials. She replied “ I’m sure”. She gave me my final payment and I left. About a week later, I received a nice Thankyou card from her thanking me for a great job. Also included was a check in roughly the 10% amount that I said I under bid ! I was floored ! She was a business owner as well, and said she had had that experience too and wanted to make good. This was really appreciated as it was right before Christmas! I continue to work for her. 😎
@@johnjmariettijr5671how about knowing what materials are going to be used?
@@SuccessfulContractor Then the risk is on the customer , I don't want to be the butter job that was charged for bolder drilling just so you can break even when you do a bolder at butter pricing. HOWEVER around here every contractor has always given us a complete break down on supplies cost, labor cost, supplies estimated and quality eg. green treat, cedar tone, brand name or ordered form china, possible problems that might pop up. That way you can compare apples to apples on the job. And if unforeseen problems arise you can know what to expect. We have had work done that did exceed the bid and we paid the extra, and jobs that came under and were credited. When our contractor went over and only charged at cost for extra work we tipped 30% on the extra, if he went under cost we tipped based on the original bid.
I owned a construction company for almost 40 years in the beginning i would break down cost but i quickly learned it made more work for me to list everything and customers then questioned everything so i changed to a fixed numbers. I retired at 59 pretty well off iam 64 and still get calls asking me to do there jobs , i was proud of our work quality and was constantly booked 5-7 months out , there is allot of work that goes on behind the scenes that people don’t see.
So true.
Yep, 60 year old contractor here. In my younger years I would sit at my desk ( after working 8 hours doing construction ) and itemize a new house bid. It took roughly 40 hours to complete one. Then later you find out there were 6 others bidding and some of them are shady builders that you would never win a bid against.
I'm curious if the common person would be willing to work a week for free at their job? True profit is way less than people think.
@@phillipharris8159 Its very easy to not realize the overhead of taxes, workmans comp, insurance, equipment maintenance or purchasing.
One of my bosses told me that customers would complain about how much it cost to have their tree removed, he'd tell them that he has 250,000 of equipment showing up to ensure the job got done well in a timely fashion.
You're just being lazy.
@@Sith_dude lol! have you ever worked a construction job a day in your life? If you have you will know even the so called "lazy" ones still work far harder than most other people ever do.....Construction work is hard enough without customers making it even more difficult..
Hey Man! Just stumbled upon your channel. I’m not a GC , but am a specialized contractor. I polish natural stone and concrete and install concrete coatings. Recently I had a potential customer ask for information on the stain and sealer we were going to use on their floor . I reluctantly sent product pdfs knowing he was probably just trying to figure out product costs and haven’t heard anything back , so it’s most likely for the best !
This sounds all too familiar. He won’t get the same result though.
As someone who has to write RFP’s and award contracts, I have to get 3 proposals and I only look at itemized proposals so that I can compare apples-to-apples and to make sure that each proposal is capturing everything required in the RRP scope.
It’s very common to produce an itemized bid while performing commercial work or any project where state / federal funds are used .
Ultimately , it enables a customer to review the scope . And ultimately determine if someone is cheaper because they missed something on a bid .
How does providing a cost breakdown allow you to determine if something was missed on a bid? Something being on the cost breakdown doesn't mean you get it and something not being on the cost breakdown doesn't mean you don't get it. What you get is what's in the scope of work.
We have worked with several GC firms and if they can't provide rough breakdowns we move onto the next. We gut renovated two adjacent buildings in 2019 and our architect and the contractor were very resistant to upfront costs and transparency. Now we are onto a larger commercial renovation and we did not call them to bid on the project because of this lack of transparency. However, if this system works for you that is good but I think most GC firms are comfortable providing cost breakdowns.
I feel we are talking about two different things. We are heavy on description of work, and materials being used along with a firm fixed price. We will not bill more or reduce the billing if we completed the work as specified per the detailed scope. If that's not good enough for you then yes we are not a good fit.
if you always hire contractors, seems like you do that as part of your living, as you've mentioned several buildings, than this is your job and would be smart to know each price so you won't be overpaying. However, we are talking about Homeowners who hire a contractor a few times. In the commercial scenario, they tell the contractor what they are going to pay. Most of the time, they are not building their dream kitchen, their dream garage or master suit. Price is somewhat important in a commercial scenario. I get that, hence I don't do commercial. I want the customer who is excited about the work and not the price so I can do the best quality work I can and not have to worry about making a profit cause it is going to be there.
One thing people never take into account is your equipment cost. People used to come into my shop and explain that what they wanted me to do for them was simple and quick. Sure, I'll just go do that using these four machines that cost me x amount of dollars. It takes me whatever amount of time because I spent money on expensive equipment.
Agreed, people that ascertain information feel empowered, so if you give them a breakdown of information they would not of known otherwise, some feel they now know the extent of the situation and surmise that they have the appropriate insight to determine the value of the scope, but as you mention, there is so much more to it than just "their" job, there is all of the overhead, equipment, subject matter expertise, experience, and wisdom of the trade, and so much more.
Just check the comments for evidence of that. 🙄
@@SuccessfulContractor I appreciate you putting out information like this, it doesn’t get the response it deserves, keep up the effort and know that most of what you do is rewarded and appreciated. Some topics are just too much for folks especially if it triggers grief they have had. Your transparency is admirable, all the video and documentary of what you do is a privilege to see. May you be blessed in you ventures.
@@wcbscout and that value which clients may not always see is what a contractor must appreciate and cost it properly for a bid
@@SuccessfulContractormany roofers bid labor at 300-400 dollars per man hour. Not joking. Of course people don't trust you. Don't pretend your industry is not loaded with crooks. You may be honest, but not telling them a ballpark labor rate is stupid and I would never use you. If you expect $100 an hour for labor, tell them that. If you expect $130, tell them. But a lot of people float out high rip off bids hoping they snag one job with a dumb customer and it pays all their bills.
I appreciate your perspective and that explains why I got ghosted. I wish it was more like a mechanic.
I remember paying a dealer $60 after they tried to charge me a few hundred dollars to toggle a setting on my car’s computer.
As a customer when I see the parts needed for a job is 4-600 dollars and the estimate is $1800 dollars it makes me question things for a 1-2 hour install.
It’s not that I don’t have the knowledge and experience. Just not the time or desire.
You make some good points. I had an hvac tech try and charge me $1000 to replace my capacitor. Not knowing anything about it, i asked him to break down the cost. He hem'd and haw'd for a bit, not really explaining the process. I told him i would think about it and sent him in his way. Come to find out, it's a $30 part that took me 10 minutes to swap out. So if you ask me, yes, there is a problem with not breaking down the price.
This is an unfortunately reality, some folks will try to take advantage of you. This is why we try to get people to get competing offers.
That hvac tech is a dirt bag. Never pay more than $200 for a cap. Remember, hvac techs get paid a lot so the cost is high. Not that high though.
I agree with not breaking it down in that way however I always ask if everything is included in that price and I make sure that's in writing. Every single solitary thing that is involved in whatever project you're asking about. Far too many contractors will give you a bid and then at some point during the project they'll say oh I have this other thing I need to do to get your job done and they need more money.
Then I'd ask for a failure clause. Is there anything about this project in your professional opinion that would stop you from completing the project?
Then I would be sure to get some sort of a timeline on it. If the contractor says it's going to take 2 weeks, what happens if it takes 3 weeks? Do I get money back? (See failure clause)
There are way too many shady contractors out there and if you're working with one for the first time you should be aware of these items.
Sounds reasonable.
Is a retired landscape architect I've always broken down bids. As in the case of his example of the fence. I want to know how many posts there are going to be distance off center depth under the ground is it going to be concrete is it going to be rammed Earth how tall is the fence going to be how many linear feet of fencing is there going to be I want to know about the gates the hinges and the lock I also want to know about how the fence May impede drainage were future access for equipment. In short always break down the bids show the customer is aware of all costs for all things it's just the right thing to do that's honest and it's informative. This guy's successful I'm sure. Customers appreciate being educated and informed and after 30 years of my career I would not do it any other way
We are talking two different things. We are heavy on description of work (post spacing), and materials being used (level of quality) along with a firm fixed price. We will not bill more or reduce the billing if we completed the work as specified per the detailed scope. If that's not good enough for you then yes we are not a good fit.
@@SuccessfulContractor Contractors around her can't afford to have that attitude. Rumor would get around and they go out of business very quickly.
@@65ramblerman yeah it depends on the demand, if contractors have too much work they can afford to be picky or make decisions like saying, "nah I'm not giving you a price breakdown of raw materials and labor here's the price!". For those people I say good for you! In the house painting business there's always stiff competition so I was never able to do something like that. And when I started in construction and roofing I don't remember my boss being able to do that either.
in my 25 years in flooring you are 100 percent right about everything you said. I thought no one would understand these things like you explained. Ive had customers get angry w me for not breaking down price. I look them in their faces and tell them they can get someone else. funny thing 9 times outta 10 they come back i do the job and their happy telling me how they hated me at first but afterwards saw how awesome of company i have. I dont let anyone push me or my employees around. I am extremely honest and upfront. We are not slaves. we are skilled workers and will be treated as such. You dont like it kick rocks. I also tell them when they go get jose from home depot parking lot to not call me to fix it. Places doubt in their minds and considers your companies contractor license and insurance ect is there for a reason.
Starting a small business, not in contracting. The difference between bid and estimate is something I never really considered. Very helpful. Thank You!
You sure are preaching the truth. The very reason I'm here watching your video now is because I had a bad experience yesterday. I ripped an entire 500ft row of trees out for a guy and I made the mistake of saying I would do it for so much per hour. The job would have been about 5,000 bucks if anybody else would have done it but because I was very quick with my excavator and he went and got his truck and driver to haul 8 of the 20 loads I ended up loading out and hauling to the dump so fast, I only got a mere 1700 bucks and then he still bitched about my bill because 'he was helping'
I feel that!
Glad it works for you.
Both my brothers are contractors and there's no justification for markup on materials beyond the time spent getting them. If you need to add costs to material to cover your overhead, then you simply need to increase your labor rates.
I would never accept a bid that doesn't include a material breakdown. I have a lot of connections to get discounts on lots of materials. Example, I can get 60% off on a wide variety of decking materials, windows and doors. There's lots of people that have random connections like this who still rely on contractors for work.
Now maybe you would work with a reasonable customer that explains that they have access to massive discounts like that. Maybe not.
I'm just glad I have two brothers to do this kind of work with/for me at a simple and fair labor rate. (we don't do family discounts for work that we do professionally)
Or instead of increasing the labor rate, simply have a seperate line for overhead; stated as a percentage applied to the bottom line.
I only do cost plus… prices are all over the place these days. With the exception of lumber starting to go down, what. cost 10.00 last week is 20.00 this week.
If I were to do a fixed bid today I would include a 100%. Markup on all materials, plus labor, plus overhead, plus profit
Today I quote cost plus 20%, that 20% is on top of all permits, connection fees etc.etc
If people say that’s too high, I thank them and move on.
It just takes too much time to watch every last item and to supervise every last installation.
In other words to do it right
Liability insurance is based on gross receipts. If you buy $200,000 worth of material and did not charge any increase your insurance liability just charged you 8% that you lost. That a $16,000 loss. Not even remotely smart. Duh. Low balling wins nothing.
You are out of touch with contracting or business for that matter. Labor and overhead are two different things. Labor has its own markups for workers compensation insurance, payroll taxes and contributions, vacation or holiday pay, etc. To take your overhead and add it into your labor is business suicide. Mortal overhead is liability insurance, truck and equipment insurance, along with maintenance expenses, office expense either rent or mortgage, office staff and supplies, computer hardware and software, etc. Labor costs can cleanly be applied to a bid, but overhead needs to be spread out across all jobs to be completed during the year. A simple way is to add a markup to materials. If a customer saw a line item on their bid for computers or some other overhead expense, they would laugh you out the door!
I was thinking the same thing, also I guarantee this guy’s labor costs aren’t exactly discounted to begin with. So he’s just double dipping and trying to hide profit as material costs. It’s shady but a lot of guys do it.
I have an hvac business. I always give an itemized list of everything we will be providing and doing. I tell them when we will start and when we will finish. I give them a price 5000$ for example. If they have a question “how much is the disconnect “ or whatever…I tell them. I have never had an issue or problem because I work primarily on referrals and I do good work. I have found that customers don’t care if you do what you promise but they start counting and keeping track if they don’t think you are doing what you promised.
yes, you work in a very small, referal based field. you have no overhead outside of your truck and tools, and marketing costs are not a concern. but if you were dealing with having salesmen that respond to the calls you get from your advertisement and youre pumping out a dozen estimates a day (or evena week) you have to streamline the process and weedout the people that are going to be a hassle. I utilize down payments in this fashion (primarily on jobs that arent from referal or that are lengthy) you are securing time on the schedule, just like you do with a hotel. Its just 20%, so you arent taking an unreasonable risk (it should be higher to be honest, especially with longer projects) as a customer. but from experience, the people who have an issue or struggle with this -you dont want to work for. Wait until they get the invoice and have to pay 100% of the bill... its better to leave these people to it fromt he start. I think, to an extent, and again, depends on how the customer came to you and size/type of job. But with HVAC, your average customer cant do the work. With building contractors, they think they can and have no clue what they need. this is why you avoid foreigners too (yeah, this is mainly aimed at the orient and those from areas that have an abundance of sand, they treat business like "if you allow yourself to be taken advantage of, that is on you" and feel no moral obligation to act honorably or value their word to someone not of their own ilk. that is an unsavory statement of fact and not a statement against any individual, ive learned this the hard way and remained friends with some, friend-wise, great people, business-wise, eh, not for me haha)
Make sure you read what's in the bid documents, lots of larger scale projects 1mill + require full breakout pricing; if you don't provide breakout pricing you could lose the job. If it's for $1000-$5000 job a lump sum isn't generally an issue unless there are multiple scope(s) in your bid.
Yes, for sure. The commercial world is a different game.
Greater transparency & itemization almost always translates to a higher bid/win rate, regardless of pricing. When you're super transparent up front with how you operate people don't have an issue. And if they're the type of customer who does have an issue, it's probably best to just pass on the job. There's plenty of work, no reason to take the jobs that scrunch your margins and make you miserable in the process.
There is a difference between a bid breakdown and a crystal-clear scope of work.
And yes, pass on problem customers. Totally agree with that. 👍🏻
@@SuccessfulContractor That makes complete sense. We analyzed around 2 million estimates to understand the correlation between level of detail/itemization and the bid approval rate. We found that jobs with less than 3 line items have a ~20% bid approval rate. We charted this also, as we increased the number of line items, the big approval rate continued to increase as well. Estimates with over 20 line items have a 80%ish approval rate. To your point though, you really don't have to add a price on every line item and you're doing yourself a disservice if you do. You can just treat them as informational to explain the scope of work and just put a single price at the bottom.
Really enjoying your content Mark!
Great explanation, and you have confirmed why I will not work with someone who will not break down a bid. As a good businessman, you will always build in some padding for contingencies. And in a normal job with no or few problems, which should be more common, you will make a larger profit than anticipated. I bet you rarely if ever eat extra costs on a job. If you do, you did a poor job on calculating your bid and you would likely be out of business soon. But you make a good point. Some customers want a fixed price and are unwilling share in the risk that the contractor has. You are the man for them.
I will go one step further. I will not work with a bid, period.
All the work I do it time and material and the customer gets the best deal possible.
I don’t give an exact detailed description of every aspect of the proposal, but I do breakout certain elements of the worked being performed. I have a labor price and materials price line for each area I’m performing work in as well as an item repair line. This allows the prospective customer see how their money is being broken down and applied to their job. I personally feel that a large number scare potential customers into the arms of the cheapest bidder. So allowing them to see the smaller numbers makes a large proposal more palatable.
This is by no means a slight to your company, but if fence and gate erecting is the bulk of your business, then it’s much easier for you to give a lump sum proposal. Being a home improvement contractor, there are a lot more moving parts to finalizing a job. On that note I do agree with some of your thoughts.
As a painter, I separate my materials cost because the difference in cost from a premium paint vs. the cheap paint can be huge - $90 vs. $35 a gallon. Imagine needing 10 gallons for a job and that difference can be $500 or more. I prefer to use the premium but will use mid-grade if I - and the client - decide on that.
What do you charge per hour for labor
Painted my house, I used premium paint as the time it took to prep I did not want to waste it on cheap paint. That was 13 years ago, holding up well!
As a painter,too, I NEVER use cheap paint. It usually ends up doing multiple coats to look right. Not worth it. Also, on a painting project,the paint cost is typically than 20% of the total.
You can do a painting project and specify product without giving the price of a can of paint! Example: paint 3 bedrooms - ceilings, walls, wood trim and doors (2 coats), Sherwin Williams [Emerald]. Total cost labor & materials: $2,800
@@PilotOlms If you are asking me, I bill between 65 and 80 depending on the client. I charge 650 a day and that's what I try and base my estimate on. I'm near DC, where a lot of people have money.
I'm in a situation now where we used a bypass door that the customer provided. It's a mirrored door that rides on tracks on wheels that are just rubber o-rings. One of the O-rings was missing. Well, it's got two tracks, one on the head jam, one on the floor. The floor is tile so I wasn't going to drill holes through the tile and install the bottom track before we knew we were going to actually use the door. Nobody local had these O-rings, of course, so that meant two weeks waiting on the customer to find the part, and get it here. Since it's a by pass door that meant we have to case that opening out, and if the customer provided door wasn't going to work out he mentioned going with a standard 60" double door, which means we can't case it out, or put any base down on any of those walls. Not using customer provided materials is definitely a good tip.
when a customers says they want to help, tell them the price doubles for that, you don't have time to babysit and train them how to use your methods and skills, they will slow things down either from their pace or story telling and screw things up where work needs to be removed and redone and materials need to be removed and replaced, (two separate things even tho they are worded similar labor -n- materials) ...there is a reason why they aren't doing it themselves even if they used to be a professional in your business.it's not your job to cipher why, that's added costs in brain power.
@@aprilgeneric8027
story telling... I'm a story teller.
I will shut up and go upstairs from now on, except to see what kind of pizza the crew wants for lunch.
You have never ordered a kit and had a part missing? You cannot blame that on the customer.
@@davidfisher5140 this was some door he bought off Facebook that was opened when he bought it. I'm not mad at him, but it wouldn't have happened if he'd just gone with a standard door.
@@rickyborden3287 I hear ya man, BUT, I've bought new sh!t w electronic shorts that required repair before installation (tankless water heater), and w missing hardware tgat had to be replaced or gerry-rigged. Defects coverage is often why the term "southern engineering" gets used.
My point us tgat, as frustrating as it is, it DOES happen.
Oh yeah tghe shower! Imagine opening a luxury shower NIB, but then u find one of the panels for a specific $8k special order shower was cracked in shipping ... 4-6wks to get a replacement they said!
You are absolutely right sir. I know nothing about the contractor business but I did work as a successful business to business sales rep and trainer many years ago. If you give them a bid, you have one objection to overcome. If you break out the job charges, you’ve now got a dozen or more objections to overcome. You’ve just made closing the sale an order of magnitude harder when you didn’t have to. I could sell a job and close a sale with a flat guaranteed rate 100x easier and more successfully than having every little thing broken out. “We guarantee our quality and guarantee our price. If we run into any unforeseen issues and have to do more work than we anticipated, which sometimes happens on jobs, we guarantee not to charge you one single penny more than we promised. Is that peace of mind something you’d like to have on all work that’s done for you? It is?, great, would you like us to start on Monday the 13th or Tuesday the 21st?” Then get the agreement signed along with the deposit and let them know you’re eager to see them bright and early Monday morning. (They’ll pick the earlier day of the two days you give them).
Love this. Well put.
I completely agree with this approach, and it has worked for me in bench projects, contract projects to supply finished goods on demand and projects within people's homes. You're correct to say there are many reasons you might be asked for a breakdown, but I have generally found a customer that reacts badly to a "No, here's why...." answer was never going to be your ideal customer. I make only one exception, which is that I will break out the cost of carrying waste in quotes where it is only possible to 'estimate' the volume of material to be taken away. This will be very clear to the customer when we're discussing their requirements and obvious to them on-site. In my experience it is the quality of the statement of work you provide in response to the customer's requirements which is often the deciding point for the customer.
My bids are slightly broke down. I show the total dollar amount of labor. Not hours. And then different elements of the job by cost not quantity. This has served me well, as I have been burnt on both extremes of this argument.
Do you charge for your time preparing a proposal. In the HVAC industry it can take 4-5 hours to put together a proposal, Job site visit, getting pricing from suppliers, heat loss/heat gain calculations, airflow calculation, actually meeting with the customer to present the proposal. Lots of time goes into our proposals. I’ve heard many contractors ask for a bid deposit and will include it in the cost of the job. Where I do business it’s not uncommon for potential customers to get 5-6 proposals before agreeing on a contractor. I generally ask if they have had any other quotes before I head out to review the job. I was called out to give a proposal a while back and asked the customer if they had any other quotes and he said I was the 6th contractor out to look at the job and he had one more lined up after me….I smiled and kindly said we are too busy and wouldn’t be able to accommodate his time schedule and left. I don’t want to get caught up in the race to the cheapest price, bid peddling is not ethical. Get 3 prices and pick one you can afford.
Well said
Yeah, good luck getting work that way, I’m a GC for commercial contractor, right now I’m working on an $11 million dollar project, most of our work is open book with repeat customers. The company has been growing for 50 years and cannot hire fast enough. Being open and honest with the customer and developing a relationship of trust is very important. And if you make a blunder and miss something, good luck proving it to the customer if you never broke down the bid. Breaking down the bid shows how complex and important your role is and demonstrates whether or not you know what it actually takes to do the job. Be sure to include all the overhead, mileage, tools, dumpsters, insurance, labor, permits, taxes, profits, etc…. When the job is 2 months long and you compare your profits to their income, they most likely will realize they are getting a good deal. Odds are they are getting multiple bids, and if the other bidders refuse to break theirs down and you will, it demonstrates an ability to communicate clearly and concisely, something very important to people who probably don’t understand construction very much.
Hi, Mike. I hope that you can assist me. I want to purchase software that compares bids side by side and identifies pricing and scope discrepancies, etc.. All suggestions would be appreciated. I only work with contractors who break down their bids,.
It is overwhelming to analyze bids from 4-5 contractors with 200+ line items in each bid. I am not a construction professional; although, I have hired several contractors in the past few years for both small projects and major residential renovations. So, I am not a newbie and I am very capable using software with a steep learning curve. Thank you.
@@victoriapearson5321 we use excel and generate a new spreadsheet for each scope (sitework, concrete, steel, framer, etc.) of work. Hope that helps
@@victoriapearson5321 If a large language model _can't_ yet do the sort of comparative analysis you're talking about, they soon will be able to. From the point-of-view of what's intellectually demanding work, to an AI, that job should be about as tough as providing more than one cake recipe.
We're all being replaced.
What customers are paying you $11 million for two months of work? If they are I would certainly break down my costs for such costumers! Can I have their numbers please? lol! This above is probably extremely unrealistic for most contractors reading these posts.....I was a General Contractor for over 30 years and never once broke down my costs for a customer and always had far more work than I could possibly do because I was very good at what I did and all that mattered in the end for me to land jobs was my reputation.....
You seem to be comparing very large scale projects (General Engineering Contractor) to typical general contracting (General Building Contractor). These are entirely different worlds.
Thank you for your presentation. I’d like to add to the discussion.
Your opinion is very difference from the opinion offered by Mike Holmes, of TV fame. I’ll try to echo his views.
Mike likes detailed bids. The more detailed the better. He cites two reasons.
You mentioned one - further discussion with the customer over the scope of the work - but that’s secondary to his main reason.
Think of your quote as a sales tool, as well as a detailed contract.The quote is your chance to detail exactly what you include, what materials will be used, and how things will be done. This sets your bid apart from the rest. The other guy quoted a different price? Was he quoting the same job? Or, was he using lesser materials, providing less service, etc.? This also allows the customer to press the other guy. In a way, you’re using the quote to educate the customer. Let the quote highlight your advantages.
Money an issue? Well, educate the customer on how he can get you to lower your price. Perhaps the customer can make changes that will reduce the contractor’s burden. Can the customer adjust scheduling, improve access, provide the dumpster, etc.?
There is a role for estimates, as opposed to bids. The customer needs to plan according to their budget.
I hear what you're saying. We do employ a crystal-clear scope of work in our bidding. Clarity and written accountability are important.
HAHAHA! You are doing it to keep it simple. How nice of you. Before I get an estimate, I break everything down myself to estimate what it would cost. The lump sum estimates are usually based on quoting based on location. I live in a nice neighborhood and thus people like to quote high. For people like me, not breaking things out and coming in with a super high estimate just makes me think you are trying to scam me.
This is the perfect solution. You break it down for yourself and decide if the value is worth it. You don't need me to do it. Everyone is overlooking the fact that many contractors will lie when they "break down" a bid to make themselves look good.
What you're doing here is the only real solution. That and getting competing offers.
I've done lots of small handyman kinds of jobs, and I only bid a lump sum for the reasons you give. It saves so much headache! And often I find I bid too low (I'm usually working by myself) and kick myself. But that's my problem, and I just try to bid better next time. And then once in awhile you get that sweet job that goes smoother and faster than expected. Yippee!
like when the rusted sink trap breaks off in your hand or you find the wires on an electrical install have the insulation rotted off. Suddenly you're looking at 3 times the original estimate.
Very bad way to work. Better to work time and material. That way each job gets exactly the right price. How can you disagree with this?
In Commercial Contracting itemized breakdowns are expected specially to protect the sub and to protect the GC. It also gives you a good idea if all things are covered or if things need to be added for coverage. Residential can tricky hats off to you. I learned early in my career there was 2 types of construction, 1 for making memories and 1 for making money. I like that the money guys aren't looking for deductive change orders on that half box of screws 😁
Yep. When we do a project with a GMP, all change orders include itemized pricing for labor, which includes their costs for everything including insurance and retirement. Additionally the actual invoice or proposal from third party material providers are included as well. Everything is completely transparent.
I worked for a Fortune 500 company that had this policy. It is FANTASTIC!! One caveat: you need a reputation to back it up. I would drop my number on a manager's desk, promise the manager it is the highest price, and still win enough jobs to vacation in the Bahamas. This practice is easy to sell, IF AND ONLY IF you do the hard part of being the best option your customer has.
👆🏻 This! 👆🏻
Same method.
I agree with all of this.
It was very painful and stressful to learn the hard way.
Wasn't it though?
@@SuccessfulContractor the point is, i learned. Changed. And now things are so straight forward. I used to pick jobs. Now I pick customers. I only work for cool as a fan people. Fun fact. and its a good marker I swear. If they have cats they are tough customers, if they have dogs almost always true they will be cool. Im an ass, and wouldn’t want to work for me. I have cats. F.
But its true and I use it to vet them or charge more If they dont have pets I ask what they would rather have cats or dogs. Seems like something someone with cats would do doesn’t it?
Im embarrassed, but Im telling you its true.
Think of all the rough jobs. They smelled like a dang cat box .
Sure appreciate the time you make for your channel. Keep it coming.
If every contractor was honest and did quality work, I would agree with this take. Price gouging is real though and this is how people get away with it.
A breakdown shows organization, transparency, and ensures the contractor is efficient. That’s added value to a customer. If you’re good enough at what you do, people will pay.
Good morning Fence members!!!! This is very helpful information that I will definitely be applying to my next sales! Thank you once again❤
Thanks for tuning in!
This approach is correct for a fence builder or anyone that is pricing one specific job with exact specs and customer expectations. Not for a builder, remodeler, or general contractor. Love your videos!
In your scenario, the customer couldn't possibly have any legitimate questons and good intentions --- and contractor couldn't possibly be anything but a salt of the earth shining example of an honest tradesman?
I have no problem admitting that there are lots of lousy, nit picky, indecisive, borderline abusive customers out there. But... Why can't contractors also acknowledge that a lot of their problems --- and the customer demands for more transparency --- are self created because there are so many terrible, lazy, borderline criminal contractors out there?
Contractors always play victim and do this pearl clutching routine like their customers just don't value them and at the same time play dumb like they have no idea where in the world these concerns are coming from. Spoiler alert --- it's because your industry has an often well deserved reputation for being shady as hell.
I’m pretty sure you’re the customer asking for that breakdown lolololol 😂
Every industry has bad actors. Luckily google has a way to rank contractors (reviews). Do you research and avoid said bad actors. We have no problem working T&M but don’t ask for a “bid” because while you may save you also open yourself up to the risk of overruns. Providing a bid for a specific scope that is well defined is not shady.
Are you hiring licensed contractors or "handyman"?
I completely agree with you, well said! Unironically, you’re getting pushback from contractors for your comment. There are far more than just a “few bad apples” as one of your rebuttals stated. Certain industries have more of this issue than others.
@@SuccessfulContractor um, Google rankings are garbage! And often loaded with paid reviewers... but, unfortunately, Contractors have run the gamut of skill and honesty and there is VERY VERY little protection to the consumer... my experience is that Contractors are like Lawyers.... not a lot of honest ones out there. The good ones are hard to find and even harder to secure as they are BUSY. If you find one they are worth their weight in gold! I am in awe of the work that it takes to do a GOOD job. It is a profession that requires true craftsman/artist and GOOD business skill. The problem with fixed bids is when the cost runs over due to things not anticipated by the contractor they cut corners and use questionable methods to keep the cost down- thus screwing the customer. Been there! Discovered such things as the wrong mil vapor barrier under foundation, one coat instead of 3 of paint and the list goes on-Contractor looks me in the eye and lies and says so sue me! I would have much rather have paid more and gotten a job that would last!
What estimating software do you use for the estimate? We send our broken out prices on projects all of the time. It dosen't bother me at all to send out backups. That way they can see where their money is being spent. If you are worriied about your price being shopped out then don't wrok for those type of people.
First time watcher. Thank you for your honesty. I learned a lot.
A lot of this absolutely has to do with deception. 2 years ago I had a roof replaced, in the bid I payed for 11 sheets of plywood, the contractor showed up with 11 sheets of plywood that I payed for….the contractor didn’t use any plywood. Him being a completely honest contractor gave me the option of knocking the price of the plywood off or leaving it for me.
Control your business and how it operates. Never allow a client to change your processes or policies. They've come to you as the professional. If they try to control how you do it they are thinking of you as an employee.
The first person I have seen that was able to explain this in an intelligent and well thought out manner.
Hey thanks!
I’m a Hardwood floor contractor and what I’ve found with people when I do break down estimates which I don’t anymore, but I used to on request is that they will cherry Pick the hard work have you do that and then try to save money either do it themselves on some of the stuff or get another Contractr it will be cheaper for that And it usually happens after you’re already in the job and you’ve cost average everything out to where you’re gonna make what you need to make when you do the whole entire job, but then they’ll come back and say hey I don’t want you to do one of the most expensive things in the bed now where all your profit pretty much was tied in And then you lose sometimes it’s just out of their control. They just wanna change their mind or it just doesn’t work out where you can do that work now it’s in your best interest because you have the negotiating power and you can set the price to give them a credit on instead of them setting the price. Another thing I can say is when you write down for time material and labor if there’s any material left over that you had delivered which most smart contractors always order extra material because it cost time and gas to go pick up a couple extra pieces of wood or whatever you might need. The customer will try to keep the extra material. you have to state that in your contract that all material delivered. The job is for doing the job and at the end of the job once it’s complete. Any leftover material is the contractors not the homeownersfor some reason the homeowners always want to try to keep the material. I don’t understand why.
I have a remodeling company in Winnsboro TX and I am pleased to know that we manage our bidding process identically. But why share this with the competition? LOL
I also stopped breaking down my bids. This has also saved me time when creating our bids. The customer has the option to except or decline. This has also prevented them from asking me to take something off of the bid.
Detailed breakdowns of all the costs is a recipe for problems. Detail the work, not the costs.
@@SuccessfulContractor With drywall, paint, and trim jobs I can give them a bid within a few minutes, or spend several hours breaking it down... You want to PAY me extra to break it down for you, if so that's $500 today, and it doesn't come off the final price.
I found we were getting MORE jobs once I stopped breaking them down.. here's the price, take it or leave it.
@@C0braChicken2are you talking about residential or commercial?
Great video, keep up the good work!
I've been a contractor for over 30 years. The first bid I ever gave (being young and dumb) was to a customer who wanted me to build him a new garage. I foolishly paid an architect to do the plans, gave a complete material list as well as listed my markup. Never heard back from the customer and a few months later saw the same building being built from my plans. Last time I provided details for an estimate and did plans before a contract was signed.
I also found that when I submitted an itemized bid, I never got any work because the customer would immediately cherry pick various parts of the job and hire it out to friends and family which left me the most difficult work where I couldn't make any money. Almost had to close my doors but figured out no more itemizations. Now if they require itemizations I tell them they'll have to call someone else. I have a family to feed just like they do.
@@jonathanhobbs5878 residential, full gut jobs.
I too stopped giving breakdowns! Glad to see this video support my intuition. My reason was just because I didn't think the customer had a right to know my income any more than I should know theirs. I also stopped using customer materials because of the overhead I was losing and the problems that the customers created by not getting the materials right.
I sure would love to hear your thoughts on charging for estimates/bids.
Especially for a guy starting a new business and does not have the same income flow to override lost wages due to free bids.
Ill add that to my video ideas list.
I'm struggling with a property manager that wants materials and labor separated. I'm in a bit of a rural area so having a large firm as a client is nice, but I'm afraid breaking that down will handcuff me...
The more important breakout would be reducing the scope or having a pick list of interrelated scope items. In this case maybe we replace one run of fence at a time. While this would increase the mobilization & administrative costs once all the work is completed, it would allow the customer to do some work, pay it off, and come back later to the next piece. This is typically the way I ask for bids. (Whole fence, just the back, just the west side, etc.) Then I pick what I can spend on that property at that time. In this time of contractor scarcity, I think we should expect to pay high prices because they have more than enough work to do. I try to pick a small set of contractors that I work with all the time and that appreciated the income in the busy and lean times. After a while you know what their costs are from all the bids you've seen. This everyone wins a little philosophy is less risk that the transactional relationship he is describing.
Some of the comments here are bizarre. Do you get a breakdown on your haircut? Your cheeseburger? Your gasoline? A description of the work and the scope seems appropriate. But a breakdown seems impractical.
Well put.
I love the comment I heard from a seasoned General Contractor when I was worried about project bidding, his words, and maybe he stole them from someone else: "you never lose money on the jobs you don't get". Don't sell yourself short, if you do good work, you'll have plenty of business.
This video is rather significant. I'm just getting started and doing a little side hustle for myself here and there with concrete work, I have terrible self esteem. This is not going to come naturally but everything you say makes a lot of sense.
Ive been in business over 40 years. I give a “ package price “ in specific detail. I tell people to compare my “ package price” with other like bids. I NEVER break down bids ! ALWAYS leads to trouble.
I had a contractor call a concrete pump truck to my residence and he charged 200 dollars for making the phone call. I had a mechanic call the auto parts store to have a part delivered and he didn’t charge anything for the call.
We all have our rate. Seems silly to charge 200 for a phone call but hey an attorney might disagree 😂
You could have called the parts store yourself, you’re just lazy. The concrete company probably would have laughed you off the phone had you called on your own, nobody is going to risk ruining a half million dollar concrete truck because some idiot homeowner thought they could pour 15 yards by themselves in a day because “how hard could it be”.
@@apersonontheinternet8006 troll
That $200 was the nonrefundable deposit for reserving the pump charged to the contractors account. You could have made the call and they would have required you to pay the total for the pump for the entire day upfront. Also nonrefundable.
@@apersonontheinternet8006They won’t laugh. I just did that!😂
Back in the day I started a gutter cleaning business. On one of my first jobs I broke down the bid for cleaning the gutters by the foot, I listed each gutter uppers and lowers. When I came to do the work, the homeowner said that his son cleaned all of the lower gutters and left the upper gutters that were all ladder work and very time-consuming to the point that I really lost money on the job. After that I never itemized again and just bid the job. I also had instances where the homeowner had the son clean the lower gutters when I arrived to do the job I would tell them that the price quoted was a minimum charge and that I appreciated his son helping out.
I also ran into people who were working on a house, would call me and ask for an itemized estimate with the goal of finding my pricing structure so that they could do the work themselves. Then there are the ones that call for a free estimate with the goal of picking your brain on how an installation or repair would be done.
This is why I just don't bother with hiring anyone any more if I can avoid it. I don't want to offend them with not replying to a bid. I paid to have an arborist give me a rundown consultation on the trees for about an hour, that was his visitation fee we agreed on. All good, and he offered a quote for pruning them afterwards, I really didn't expect that, but thought.. why not, I'll take a quote. The quote was $2K if I wanted to do the pruning. I thought nah, bought a pole saw for $100 and spent about a half day's work on it. The problem is home ownership isn't for penny pinchers. It's for people who are willing to spend lots of money on various things they have no idea about.. OR it's for DIY people who are great at all kinds of various handy things and tools, and enjoy working on their home and doing the work properly. I've come to the conclusion I'm too much of a penny pincher. I'd be broke if I had to hire everyone to do the work I wanted to be done, so I just learn how to do the work properly and get it done.. Home Depot style, where doers get things done.
I used to install custom cabinets. A customer called and complained one day after my partner and I finished an install. It was about a 20 minute drive back to the shop and he called right as we were leaving his house. His complaint was that we did it too fast, because the shop broke down the bid.
Never break down your bids!
I've run into everything you mentioned. I give a detailed list of materials and scope of work all the way down to ground clean up. Then a price.
One thing that needs clarity, the contractor does not need to break down costs associated with the job, but at the same time can be very detailed in the work to be completed and materials used for bid comparison purposes.
THIS!!!!
correct and that is what I do. I have a very detailed estimate showing what I am going to use for materials, links to it, units for HVAC, water heater, tiles, etc. I just don't put the prices in there. They can go online and see the cost price for it, but not my price with mark up. Why? Because they are even surprise that I mark it up at all, let along to know I did by 10,20 sometimes 30%. They don't seem to understand the work involve in getting these materials and units and being responsible for it.
I just submitted a roofing bid/ estimate, I broke out all the materials and dumpster costs separate from the labor costs, I try to list all the materials I can and also state what’s not included, I figure if someone is expected to pay a lot of money, I better lay it it all out so they get a better understanding of all that’s involved. Maybe I’m not the lowest but your going to get a descriptive estimate and a quality job with a warranty to back it. If they want the lowest price they should expect quality to be compromised because maybe the other contractor is using low quality materials or rushing the job to get to the next one to make money elsewhere. It happens more than people know, I have been there myself as well where you underbid a job and just want to finish so you make money on the next job. Not all jobs are money makers. That’s why it’s important to price the work accordingly. Good luck.
You can write a bid with a detailed materials list so they know what they're getting. But that's entirely different than listing out the prices for materials and man hours. You tell them what materials will be used and provide a total cost. They either accept the bid or they don't. Good contractors are booked out for a year and don't need to deal with nit picky customers.
@@thomasquall8476 Knowing what you're paying for isn't "nit picky". You don't want to list it out because you don't want us to know your mark up. That's the real reason. You don't want us to know you're charging hundreds of dollars more than we could buy for ourselves.
@@Steven-wm9vu then you can always find another contractor.
@@Steven-wm9vuIts business the simple if not u do if your self 😊
@@Steven-wm9vu But you're not buying it or doing it yourself. That's why you're getting asking for a bid/estimate. Did you ask your barber to list the price of all the products they use? No you didn't.
As a 20 year diesel mechanic… The ONLY reason one does this is to hide things.
Let me ask you this… How would you feel if you brought your truck to me with a bad transmission and I said. That’ll be $15,000. You simply ask “why”? And I say. You take your shitty truck and get the fuck out of my shop…?
Scenario 1:
Alright, sir. Your truck's transmission is shot. Replacing it will cost you $15,000.
-Fifteen grand? That's a bit steep, don't you think? Can you break that down for me?
Sure. Labor is $3,000. The new transmission is $10,000. Miscellaneous parts and fluids are $2,000. There you go.
-Wait, wait, wait. $3,000 for labor? How many hours is that?
About 30 hours at $100 an hour.
-Can we speed it up? Maybe you can skip a coffee break or two?
Trust me, you don't want me skipping coffee. It'll just take longer.
-Fine. What about the transmission itself? $10,000 seems awfully high.
It's a top-of-the-line transmission. You want cheap, you get cheap, and then you'll be back here in a month.
-Okay, what if we go for a used transmission? That'll save some money, right?
You want to gamble with a used one? You might save now, but when it breaks down, you'll be paying double in the long run.
-Ugh. Alright. But $2,000 for parts and fluids? That seems excessive.
You want your truck running smoothly, right? Can't skimp on quality fluids and parts.
-Do we really need all those fluids? Can't we recycle some of the old stuff?
Sure, if you want your truck running like a salad dressing. Oil and water don't mix, and neither do old and new fluids.
-What about the parts? Are there any we can skip?
Sure, we can skip the bolts and just duct tape it all together. How does that sound?
-Alright, alright, I get it. But seriously, any way to cut the costs?
Well, you could do it yourself and just pay for the parts. Of course, you'll need to rent my garage and tools for $1,000 a day.
-And how many days would that take?
For you? I'd say about 30. Maybe 40.
-Your a thief man. Nobody should be taking advantage of people like this. Here's another boat payment for you.
Scenario 2:
-Fifteen grand for a new transmission? Can you break down the cost for me?
I'm sorry, but we don't typically break down the bid. It's a flat rate based on the parts, labor, and our shop's overhead. I understand it might seem high, so I encourage you to shop around and compare prices.
-Really? You don't break down the costs at all?
That's correct. We find it simpler for both our customers and our shop to provide a comprehensive price. But please, check out other shops. Get a feel for their prices and services.
-But what if I can save some money by understanding the breakdown?
I understand your concern, but our price reflects the quality of our parts, the expertise of our mechanics, and the reliability of our service. You're welcome to get quotes from other places and see how we compare.
-Alright, I guess I'll do that. (later) Well, prices are all over the place, but nobody has as good a reputation as you guys.
We do pride ourselves on our work and customer satisfaction. I'm glad you did your research.
-Ok, I'll go with you.
I'm not saying this would work for you, but this is closer to my reality.
@@SuccessfulContractor Well… I gotta give you credit for the well thought out response. Yes. I did read the entire response and I have to genuinely thank you for such a well thought out response. You don’t normally see that on TH-cam much anymore. Especially to a comment that’s arguably fairly negative towards your point. So thank you for taking the time! With all that said… Buckle up because it’s gonna be a bumpy ride, but as you did. I will be as respectful as possible.
I can tell you’ve had a lot of practice with trying to justify your stance on this subject…And when you explain it that way. I can kind of see where you’re coming from. It still wouldn’t sell me, my wife or anyone we know a damn thing. I kind of get it though. But can we be honest with each other for a second and acknowledge that in reality… Some customers are just a pain in the ass. Regardless of how much bending over backwards you try to do? That’s part of life as a business owner and It is what it is. The fact is that at least in the mechanic industry. Once the job is done. You’re required (in most states) to give an itemized breakdown of parts, labor and shop supplies. So you can either have that conversation before you put all the labor and resources into it. Or you can have it after and risk them not paying and either abandoning the vehicle, trying to steal it back or possibly even suing you.
Now… Obviously the nature of your work is quite a bit different as I would assume you’re not usually working on something so mobile in nature. But that makes things worse in my opinion. Because for you. You don’t have anything you can hold on to if they don’t pay after the job is done. However, bid vs estimate does play a roll in that risk as well. More on that later…
Having said all that… I do understand your point that it’s frustrating when people don’t understand why the price is what it is. But in most cases everybody has a budget and in most cases people in America are living check to check. So they just want to know what and where their money is going to…While I get the frustration. I do not get the entitlement attitude of “pay me what I tell you and don’t you dare question me”. And I mean that in the most respectful way possible. Have you ever been truly broke? As in am I getting deodorant or soap broke? Because if you haven’t… Let me tell you. Whether you pick soap or deodorant… You’re gonna be funky…it’s ok if you haven’t been broke. there’s nothing wrong with that. I certainly wish I’d never been broke. While my wife and I do pretty well for ourselves now. I remember what we went through and how a $40 oil change was an enormous struggle for us. So I understand that most of the time people are really just trying to figure out if they should be prioritizing this repair or some other bill. Obviously, we have a little bit of a discrepancy in customer base here though. Because I doubt if you’re doing many home repairs that people need vs what they want. Feel free to correct if I’m wrong on that at all.
I’d also like to point out that You SHOULD be questioning things. EVERYTHING. Teaching people NOT to question things is exactly what got us in the political and economic crisis we have today. So just on principle alone. I would never hire someone who wants to perpetuate that type of unaccountability. Stepping down off the political soapbox though…
You said if you find unexpected things. You eat that. And that’s commendable. I don’t think there’s anything wrong with keeping what you told them the cost would be if you save a little bit. However, you must understand that most people that do that are inevitably going to cut some serious corners so they can increase their profit margins, right?
And finally to bring things back to a little more common ground. Bid vs Estimate. I 100% understand that. In my industry there isn’t really such a thing as a bid. You just never know what fresh hell you’re cracking into when you accept a job. Giving a bid is something I try to do, but it is usually only possible for oil changes. Even a transmission fluid flush can turn into a 4+ hour ordeal with a rusty enough truck. But I wish I could do bids instead of estimates! So you’ve got me beat there! Here’s a tip though… Always put the labor LAST on the breakdown. Then they get sticker shock on parts and supplies and usually don’t even notice the labor 😎
You've got some excellent points here and I appreciate your perspective. I still like my method, but I can really see where you're coming from! 👍🏻👍🏻
@@SuccessfulContractor Looking back at your response. I can agree that you are right about some things. And while I still wouldn’t choose a contractor or any other business that doesn’t break things down. I can be honest and say that might be more politically motivated than morally motivated. So, I wish you the best of luck with your business! Thank you for the intelligent conversation. Again… It’s not common on TH-cam.
great video!.. i appreciate the honesty.. i’m a painter and i generally itemize but this gives me something to think about.. thank you
Really appreciate this for my own (totally unrelated) businesses😃. Cheers!
Glad it was helpful!
Personally I like to see a breakdown. Then I can decide if the value makes sense for me and I can add or subtract different things. Oftentimes they charge a lot for materials that aren't my first choice. I can usually get something I'm happier with if I source it. For example, I recently did a bathroom remodel and I wanted nicer tiles than the contractors were using. We communicated every step of the way and I bought what the contractor told me to buy in terms of square footage. I actually provided a lot of the materials and nothing was missing. Just took good communication.
We are heavy on description of work, and materials being used along with a firm fixed price. We will not bill more or reduce the billing if we completed the work as specified per the detailed scope. If that's not good enough for you then yes we are not a good fit.
I forgot to add that the contractor was WAAAAAAAY off on his tile estimate. I knew it, but tryin' not to tell him how to do his job or give him any excuses, I just bought what he told me to. Sure enough we had tons of material left over when the job was done, but I get to keep it or make the return. I did, however, bump into contractors that were gonna bill me EXTRA to source materials that were not in their warehouse because "it's in the contract". I can just go to floor and decor and buy it, guys. C'mon. That is just not a value I appreciate and those guys (there were a lot) did not win the bid. There is a reasonable middle ground is all I'm saying and a lot of contractors just try to mess with ya. If it's a bad fit to not want a contractor to screw you over, then ya. Stay the heck away haha @@SuccessfulContractor
I find it useful to provide % breakouts when requested for breakouts never hard cost numbers
I'm an excavatiom contractor and I occasionally get the "well I can go rent a machine and do it cheaper myself". Then you drive by a week later on your way to the supermarket, etc. and you see yard completely destroyed. And you know from experience the concrete or pipe that is being installed is sitting on loose dirt. Someone will be back in 10 years after the ground has settled because the drain or sewer pipe under the ground looks like a roller coaster. Or the concrete or asphalt is cracked into pieces. lol
Knowledge, experience and skills are earned commodities that command a price too, not just the labor and materials. If someone tells me my price is high, I ask them nicely why they believe that, at that point I will know whether or not I want to work with them. You get what you pay for.
Still a better deal than a contractor looking to rip someone off. I'd rather pay for my own mess than yours. If you're cagey about what we're paying for, it's your own fault we flagged you as a waste of money.
I absolutely agree with everything you mentioned in your video! I have built and sold storage units (sheds) for years and ran into the same issues that you talk about. I also learned NOT to breakdown my bids as well. I do list everything that will go into the building that I will be providing and give a total cost, but that is it. I have learned the hard way, that if I give a price breakdown, they will give my bid to another business, so that they could beat me on the price. Why don't customers ask a doctor for a price breakdown when they go to the hospital for surgery? They will simply pay a doctor or dentist any amount of money that they request, with no questions asked. They will not ask for a breakdown and find ways on their own to cut costs. I also learned, that if people get a loan or insurance to pay you, then they will not really care how much a project costs, but if they are paying you out of their pocket then they will be concerned about every little thing.
This is great for contractors and business. If the client or customer wants to count items and needs a breakdown, they may not be someone you want to do business with or for. Customers often underestimate experience and knowledge on a job site, they may assume they were overcharged when the work is finished quickly.
I give one all inclusive price on quotes and invoices. What they are getting is fully detailed. Customers that do this are usually high maintenance and more trouble than they're worth. I had a guy a few years ago call me 5 or 6 times questioning what was included when is was spelled out on the quote. I finally told him the quote was no longer any good and that we weren't a good fit. A couple of hours later his wife called and apologized for is behavior. I finally did the job (AC system) on the condition that he would not be present while we were working. She agreed and sent him to his parents house for the 5 hours it took to do the job. Neurotic customers are best avoided.
The irony of society and construction is that everyone thinks they are getting screwed over by contractors they hired to do a job they can’t do but in the same breath they won’t bat an eye at paying that internet or cell phone bill that provides questionable service while the price remains the same. Definitely bad contractors out there, but by and large you get what you pay for. Skilled labor isn’t cheap and cheap labor isn’t skilled. Always someone willing to cut corners and do it for less. If price is all that matters go with the guys piling out of a 15 passenger van. Good video
You could take the highest bid today and you would still have the van with 15 guys in it pull up and unload. Just because the side of the van has a plumbing or electrician or any other logo does not mean thats they are qualified to do the work. There only need be one licensed individual. The rest can be hired from the homeless shelter. Modern new homes are a glaring example of shoddy and shady contractors in action.
@@mattozx6rr you’re 100% correct
It's really sad how many shots shady contractors are out there. I feel so bad for the good ones. It really is upon the industry to raise the bar. Set some better standards for licensing...? When you see a contractors sign on a job site that reads Jon Doe contractors" we take the con out of construction" you KNOW the industry has some work to do!!
@@mattozx6rr Yes and if you paid for the jobs to be done properly then houses would double in price and no one wants to pay that. Capitalism is constantly forcing people to lower quality to try and be more competitive on price because that's also what the overwhelming majority care the most about.
@@berserker4940 It actually cost less to do something right the first time. The inspection and home warranty industries are a sham and that is a huge part of the problem. Shoddy work is either not being caught by inspectors or its being ignored for some nefarious reason. Craftsmanship counts.
How about, charge the proper labor rate and don't try and make any money on the material? Then break the bid to what it should be so the customer can be sure of what materials they are actually buying. unless you're trying to scam. As a customer my problem is always, I pay a lump sum price and get the cheapest possible materials or whatever is laying around or "good enough". I hate that, and it why I DIY as much as possible.
We always specify what material we are using in our quotes but do not put a price for each material. For instance when building a 6ft privacy fence we have a line the says we use (3) 2x4 #2 prime pressure treated pine runners.
We do try our best to let the customer know exactly what they are getting with our bid without itemizing each piece of material
Agreed. It's always better to DIY when you can. I got a bid for a small driveway job, and the contractor said that just the concrete itself was gonna run me over $5k. So I built some forms, did rebar etc, got some tools and some guys to help and I called the concrete place in town to order a truck. It took 5 minutes to place an order and I got more concrete than I needed for $1k. Sure, the prep was a fair amount of work and I'm not saying anybody should work for free, but these contractors act like the customers are out there disrespecting them for asking questions while also trying to charge a 500% mark up on materials.
I agree with you, it's capitalism if they can get it good for them, but I'm not overpaying and will diy. I think the market will correct with high inflation and a trending down economy where they will have to drop prices.
If you feel this way you are choosing the wrong contractor and not getting enough detail about the products they are using. This is where you have a duty to understand the materials you desire and make sure they are specified so they don’t try to use sub standard materials. This is done every day in commercial contracting. There is an entire book called “specifications” dedicated to making sure the desired materials are used on the project. We as contractors also love educated consumers because then we can bid apples to apples. The bad contractors using junk hurt us too.
I have always given a turn key, package price. Years ago, when I was really slow for work, I relented and did a job for a long time customer where THEY were supplying materials. MISTAKE ! I stressed to him if ANY materials were not on site, and I had to run for them, there would be an additional charge. Yup, there were things missing that I had to shop for and he was pissed that I charged for my trip(s). It ended badly. One more thing. About 2 weeks after the job was completed, his wife calls me and informs me that HE is not happy with some of my drywall finishing. ( The job was a partial gut ) When I arrived at the job and the wife showed me what HE was unhappy with I explained to her that the area HE was complaining about was a surface that I NEVER TOUCHED ! He bitched me out on the phone while his poor wife was crying about the situation. I didn’t do any more work. The job was completed as per the contract. I NEVER worked for them again. There are just as many stories of people trying to rip off contractors as there are of contractors trying to rip people. Now- package pricing ONLY ! I tell “ shoppers” to compare my package price with that of others that are providing the same level of service.
Such a spot on video, with great advice! Thanks for all you do Mark!
Thanks!
There's contractors in my area that give a full breakdown of price but Having the small print, any extras needed will be charged accordingly. Where is my quote stands at the price given
need some advice. let me lay out a senario for you. contractor bids a job, job was paid for and half way contractor says he needs to make a draw on the job. Home owner has already paid the full amount of the bid. What should the Home owner do? Other question is how should you bid a job so that you don't have to make a draw, and have everything you need for the job before work starts?
Necessary good points. I also just submit a bid (most of the time). When I was much younger, one or two customers wanted to buy the materials... say in this instance paint. They would go buy some Big Lot paint. Took me additional coats (labor) to use the cheap paint. Learned quickly that I must specify which paint if they went this route. But most jobs are construction and needing multiple types of materials, most customers prefer you get the stuff after they went and bought the wrong stuff on a several occasions.
And you are right about the hourly wage mindset... especially if you are in a saturated market. People don't realize your 40-50 dollar an hour wage (25+ year experience and efficiency) does not compare to the guy who hasn't been doing it very long. They don't see the loss (or breakeven) on other jobs nor all the time gathering, cleaning, owning equipment/supplies before and after their job. And something hardly ever discussed on a larger job... is knowing the best materials to use from different suppliers. Only time and experience teaches a quality contractor this aspect. Plus, you pay your own insurances, no business contributes to your retirement, etc... all the perks they get working for someone else.
*I don't mark up materials, but a contractor should make sure the time taken to gather what they need is figured in. Lately since I work for good clients, I often tell them the labor cost separately.
Right on all counts
Greedy Insurance companies often want bids broken down . I've never gotten a job when customers ask me for a breakdown I'll never do it again . I love your explanation of why they ask for this. I've always thought they were just cheap F 'rs .
Maybe your customers thought you might be a F---ing cheat.
@@Thomas-s2s6h maybe got three crews running 6 days a week must be doing something right . Who do you work for ? That’s what I thought ….
@@Thomas-s2s6h you jealous or something? I’m hiring if you need a job
I hate insurance work.
@@Thomas-s2s6h You don't even know that gentleman and yet you resort to insults. How about we keep our comments nice.
Great video as always Mark, I have been doing "lump sum" bids from day one, I go very detailed on my proposed scope of work (Materials specs etc), but with regards to pricing...........One lump sum price, no break down whatsoever - for the very reasons that you have highlighted in this video.
It never works out and as you can see in the comments consumers don’t understand what it takes to operate a business and the costs that go into it.
Ha! A few years ago you were teaching me how to pull fence posts and install gates. Nice to see your new channel!
Appreciate your explanation and can see why a fixed bid works best for you. As someone looking to get a house built, we've had a wide spread of responses from several potential builders. Most are pushing for cost plus on materials, labor and services. The spread of base price are so wide we need to see some breakdowns to understand what actual value to us each price brings. You seem like an honest straightforward guy but considering the cost of a house, I have to see it in writing.
I understand! 👍🏻 It doesn't work for everyone and in every situation.
biggest takeaway I got from this, structure your business around Bids and not estimates and have the language in the bid/contract clearly articulated.
If you're not good at making accurate cost estimates, don't even try structuring your business around bids!
@@SJoelKatz My understanding, is that its less about accurate estimates (and you're right, if you can't estimate the cost, you can still get screwed in profits, especially if something unexpected comes up) and more about preventing the client from trying to change the cost through the project so that you know what you're going to get and the client knows what they are going to get before any work is done and the price is fixed, so no surprises for the client.
Customer is a price checker and will end up going with the cheapest, crapiest contractor. Walk away.
Your business is to stay in business.
Learned the hard way over the years- estimate is fine but before any work is done: materials always listed; punch list with ALL changes during project approved In Writing (there’s always changes & substitutes on rehabs); workers comp/liability waiver/coverage; daily work required with finish date - w/prorate & replacement for unexcused delays; and reimbursement for inspection failure/code issues.
Why all that? Both parties actually think it through, fewer misunderstandings & aggravations, expectations & remedies are agreed up front.
I'm a homeowner and I managed subcontractors for 30 years on state and private projects. I've encountered way more "shady" contractors than honest. In this fencing example, it's too easy to bid for 50 posts, use 40 and keep 10. Pretty soon the contractor has his house fenced for free by his clients. I knew a contractor who paved his 275 ft. driveway with this method on a state job. You can't just leave the extra paving materials at the site. Thanks, tax payers! Nah. Get a few bids and ask for a few key break-out items. I agree with other commenters that you'll come across way less "shady" by providing some line items, thereby building a solid reputation that results in getting more work.
I'm a contractor and I managed homeowners for 30 years. In my experience many homeowners were ungrateful and selfish. Most people in the world are quite self centered when it comes to money. Construction is a hard and stressful occupation and on top of that you often have to deal with people who are trying to get as much as possible while paying as little as possible. I think this puts many contractors in a survival mode.
When it comes to the fence, it is impossible to bid for 50 but use only 40 posts. It is possible to go over on posts not under. I got to put a post every 8 feet. Often you have a root or a rock in the way so you set your post at 6 or 7 feet. So usually you have to buy more posts and concrete and dig additional holes out of your pocket.
When it comes to Interlock, I price per square foot and I buy a few extra square feet to account for cuts. The leftover stone belongs to me. I don't want it and usually leave it for the customer. Often they don't want it so I just throw it out.