Where am I going wrong?

[renosteinke]

I'm seeing some of this as I seek to get air conditioning installed.

You see, I KNOW what the parts cost. I KNOW how long it should take. I KNOW what it costs to keep a business going. Therefore, I have a pretty good idea as to what pricing I ought to be getting from contractors.

As you might guess, I'm getting pricing all over the map. While I can allow for some variation .... if a guy is way off the mark -either too high or too low- I have to ask myself what's going on.

Too low? What was overlooked? Where did he cut corners?

Too high? Maybe he doesn't want the job- or he thinks I'm uninformed.

For the OP ... there's something missing from your tale. I'd suspect that the 'cheap' guy didn't bid on the scope you did.

 

[defears]

How do you know there is another guy?

Whether you're right or wrong with your pricing, lowering it at all, for any reason, will make you look like a chump. Don't do it.

 

[Cow]

Two things come to mind:

1. Guess who your friend will be calling when the low bidder starts cutting corners and he starts regretting his decision?
2. Your friend will be getting change orders for every little thing. And if he's never built a house before.....oooohhh boy!

It's like watching two trains headed right for each other, you just know what's going to happen.....

But I could be wrong, this guy could be a hell of contractor with some leftover materials from another job and some very efficient help, who knows?

 

[jmellc]

In this area, we hear that all the time, that they got such a better price from Joe, can't we match him? More than once, I have said "call Joe & have him do it". Might then hear they want us to do it because they like our work, our reputation, etc., but can't we do it for Joe's price? I replied that we could not do it for Joe's price.



If your friend calls later that the other guy didn't work out, repeat your 1st offer, but he has to remove the other wiring. Too many chances of staple damage, etc. Boxes may or may not be properly mounted. Adjust price if you see fit.

 

[Strife]

Thanks to all who replied.
The title was really tongue in cheek, I know I haven't done anything wrong, just frustrated at what's going on out there.
I know he didn't get a price for 18K, probably 22-25K which is still WAYYY low for that size house.
As I stated in the OP I know I can tweak it a little bit (10% or so), and I told him we can also save some money going to AL feeders (instead of copper) which could probably be another 3K or so. But no tweaking in the world will bring it even to 25K.
Cow you're right, I know what's gonna happen and is exactly what you stated.
And most likely is someone without a license who'll ask him to pull a homeowner permit, then turn around and say that's not included, and that's not included.

 

[Strife]

There could be one more reason for the "too high" situation.
Not saying it applies to you, but I remember my mentor saying every now and then:"This job will be such a headache, if I get it, I want to make a good profit on it"

As far as the scope, my "friend" claims it's same scope. I pointed to him a job I bid on for someone we both know where I was 14.5K and someone else was 12K. I told the customer same thing:"make sure the other bidder has everything included". They ended paying 17K because (of course), the low bidder DID NOT have everything included.
What kills me is the fact that in the end is the bad guy winning. I lose a job, the customer ends up spending more money.

Too high? Maybe he doesn't want the job- or he thinks I'm uninformed.

For the OP ... there's something missing from your tale. I'd suspect that the 'cheap' guy didn't bid on the scope you did.

 

[readydave8]

There could be one more reason for the "too high" situation.
Not saying it applies to you, but I remember my mentor saying every now and then:"This job will be such a headache, if I get it, I want to make a good profit on it"

As far as the scope, my "friend" claims it's same scope. I pointed to him a job I bid on for someone we both know where I was 14.5K and someone else was 12K. I told the customer same thing:"make sure the other bidder has everything included". They ended paying 17K because (of course), the low bidder DID NOT have everything included.
What kills me is the fact that in the end is the bad guy winning. I lose a job, the customer ends up spending more money.

You may be too close to the situation to be able to see it objectively, or may need this job now,

But look at a year instead of a job, how many did you bid? How many did you get? What average % profit?

The only type of job that I've never lost money on are those in the category of "the one's I didn't get." But I have lost money on jobs that I dropped my price to get the job. And probably so will your lo-ball competitor.

 

[jmellc]

This situation happens because a lot of people are willing to spend big $ on objects. No problem spending $2,000 on a fancy TV instead of a $500 one that's too boring. But they somehow think th wiring to it could not possibly cost that much and the expensive job by you can't be that much better than the cheap job by someone else. Means he can use the difference to add to a payment for the TV. "I've already had to spend $5,000 on the TV, can't you give me a break?" Doesn't matter to him that you got no portion of the $5,000.

 

[rt66electric]

other guy can do it for $2/ft

other guy can do it for $2/ft

A fellow contractor lost a job because the other guy quoted $2/ft
long story --- OH that way $2/ft for rough-in only -----Now pay additinal $2/ft for trim-out----- AND-------- NOW pay for HVL, canlight trims and AFCI's----- etc etc

 

[ggunn]

There could be one more reason for the "too high" situation.
Not saying it applies to you, but I remember my mentor saying every now and then:"This job will be such a headache, if I get it, I want to make a good profit on it"

There's also the situation where the job is such a headache that you just don't want it, so you intentionally price yourself out.

 

[growler]

As far as the scope, my "friend" claims it's same scope. I pointed to him a job I bid on for someone we both know where I was 14.5K and someone else was 12K. I told the customer same thing:"make sure the other bidder has everything included". They ended paying 17K because (of course), the low bidder DID NOT have everything included.
What kills me is the fact that in the end is the bad guy winning. I lose a job, the customer ends up spending more money.

I'm not sure the winner is a bad guy. He is just taking advantage of the fact that many homeowner/GCs are to dumb or lazy to read the scope of work and make sure they are getting what they wanted.

Years ago I learned that most people won't read an insurance policy to see what's covered all they want to know is the price. When something goes wrong they learn what's covered and what's not.

When someone gets a low bid on something they had better read the contract and find out why it's low.

 

[satcom]

I'm not sure the winner is a bad guy. He is just taking advantage of the fact that many homeowner/GCs are to dumb or lazy to read the scope of work and make sure they are getting what they wanted.

Years ago I learned that most people won't read an insurance policy to see what's covered all they want to know is the price. When something goes wrong they learn what's covered and what's not.

When someone gets a low bid on something they had better read the contract and find out why it's low.

It happens everyday, the low bid is usually low for a reason, we were just talking to a gent, that had a cold storage building and office built, his GC never read the scope, and spec notes, he ended up paying close to a million in extras, for gas supply lines, and some power feeders.

 

[jmellc]

These low bidders have learned to play the game well, being lowdown without being dishonest. They misinform without lying, shortchange without stealing, etc. because they learned how to say what one wants to hear, while writing the real details into the contract, probably with strung out & confusing language. "I said I would do this & that but I never said you won't have to pay for it".

 

[kwired]

This situation happens because a lot of people are willing to spend big $ on objects. No problem spending $2,000 on a fancy TV instead of a $500 one that's too boring. But they somehow think th wiring to it could not possibly cost that much and the expensive job by you can't be that much better than the cheap job by someone else. Means he can use the difference to add to a payment for the TV. "I've already had to spend $5,000 on the TV, can't you give me a break?" Doesn't matter to him that you got no portion of the $5,000.

Same guy will also hand you some 'oxygen free' speaker wire that he paid way too much for and will want you to install for his sound system.

The reality is most homeowners do not respect the electrical trades profession in general, and have no idea what is all involved that they do not understand. Therefore they have a hard time validating the cost of things.

 

[stevenje]

The reality is most homeowners do not respect the electrical trades profession in general, and have no idea what is all involved that they do not understand. Therefore they have a hard time validating the cost of things.

You hit the nail right on the head! :thumbsup:

 

[jmellc]

Same guy will also hand you some 'oxygen free' speaker wire that he paid way too much for and will want you to install for his sound system.

The reality is most homeowners do not respect the electrical trades profession in general, and have no idea what is all involved that they do not understand. Therefore they have a hard time validating the cost of things.

Of course. All we do is hook up a few wires. Anyone can do that.

 

[jmellc]

There's also the situation where the job is such a headache that you just don't want it, so you intentionally price yourself out.

A former boss used to do that. If he didn't like looks of a job, he bid out of the ball park, hoping not to get it. IF he did get it, he at least made a good profit. Other bidders were probably bidding even higher, for him to get the job. Or some may have said up front "not interested".

 

[petersonra]

A former boss used to do that. If he didn't like looks of a job, he bid out of the ball park, hoping not to get it. IF he did get it, he at least made a good profit. Other bidders were probably bidding even higher, for him to get the job. Or some may have said up front "not interested".

Where I used to work many times we felt it was important to produce a bid even though we knew we were unlikely to get an order for various reasons. It cost us a lot of time and money to get a bid so the projects we felt were unlikely to go our way got wild guesses that were deliberately high. The biggest fear anyone had was that we would make a mistake and be the low bidder.

It happened to a competitor of ours once. They bid on a system that we actually wanted and were about $1 million lower than us (I think we had bid like $5 million) so got the job. Turned out the sales guy that bid the job for our competitor had made some kind of major league mistake on his MTO.

One time we actually got an order for one of the jobs we had deliberately bid very high. When the P.O. came in, we were rather surprised, and had a series of meetings to discuss where we had made our pricing mistakes. We discussed turning down the P.O., even though we could not find any substantial mistakes in our pricing. We made very good money on the project. We were never able to find out just how we came to get the order. We suspected that our competitors were busy and did not have the shop capacity to build the thing so bid even higher than we did, but never found out for sure what happened.

 

[jaylectricity]

I was just driving by a second story addition the other day that I was supposed to do. I had been working with these guys for a short while before one of them was doing this addition on his own house.

I gave him a price of $8500 or so. He called me up later and said that he got a price from a guy on Craigslist for $7500. Of course he said he wanted me to do it, but was hoping I could match the $7500.

I told him that I had thought of everything and that I would have to stand by my price. He went ahead and used the other guy. They never used me again. To this day I wonder if I lost money and a valuable contact by not giving him a little discount on his own house.

 

[readydave8]

I was just driving by a second story addition the other day that I was supposed to do. I had been working with these guys for a short while before one of them was doing this addition on his own house.

I gave him a price of $8500 or so. He called me up later and said that he got a price from a guy on Craigslist for $7500. Of course he said he wanted me to do it, but was hoping I could match the $7500.

I told him that I had thought of everything and that I would have to stand by my price. He went ahead and used the other guy. They never used me again. To this day I wonder if I lost money and a valuable contact by not giving him a little discount on his own house.

but you didn't lose any money on the jobs you didn't get