50% up front, 30% after rough, 20% after trim

Status
Not open for further replies.
B

bumperlt

Member
Thats how I do mu bid jobs, have for a few years. Recently I lost a job because I asked for money up front to start. Unless the owner is supplying the material, 50% is what I ask for and never had an issue until now.

The contractor on the job normally does large $500k+ jobs. He said it was very uncommon to ask for any money up front. That could very well be the case on large projects, but this was just a service change and a detached garage/MIL. The total price was $4900ish.

My question is what I off base? How do you guys normally do it?
 
10 years in business. Never any money up front. New Construction 2/3 rough, 1/3 trim. Service work 100% when job done. Remodel 2/3 rough, 1/3 trim.
 
50% up front will scare away 98% of potential customers.

MAYBE 5%.... but not much more unless I'll need a substantial amount to purchase some special-order material.
 
Nothing wrong with getting money the first day on a job. You show up with materials, permit and put in a days labor. I think it's fair enough to expect to be paid that amount when you show up.
 
I asked for money upfront once. Even though the customer normally paid a percentage for his projects, (mfg plant) or a check upon delivery, he did not like it when I asked. We settled with payment on delivery of materials and as work progressed.

Most, I seem to finance for 30 days or so.
 
I will usually get a percentage on the day I start the job if it is not a regular customer.
Depending on the job, regular customers will either be billed 1/2 way or at the end.

If there are special order materials such as switch gear or transformers that I could be stuck with, I'll ask for a check before I order them, cost of parts plus 5%.

One thing I have learned is any job that I have to "engineer" or draw up will be billed a design fee, to be discounted off the job price. I have spent hours designing cabinets and specing materials only to have the job and my design go to another contractor. The customer said " He was $500 cheaper". Yeah because I designed it, apparently for free.:mad:
 
Front money makes the owner/GC suspicious of your ability to perform.
I would never pay a sub any up front money.
If you have to have that money to buy materials, then perhaps you are over your head at this point in business.
Open an account with a distributor. Get your first draw on rough-in.
Also, I would never, ever do a job where someone else furnishes misc materials
 
I do mainly new construction and TI contracted work. We never get money up front. We bill for draws against the percentage of completion on the 20th of the month, or against a percentage of the Schedule of Values listed submitted for AIA billing.

We are lucky if we see that draw request by next month when we bill again on the 20th. Material bills are not due until the 25th of the month following the draw request submission.

Even for a service change on a home I would not ask for any payment until I receive my Final Inspection. That's just a day or two to fund the materials. Not to mention, unless you are paying cash, you have 30 days to pay the supply house.

I believe you should be able to fund any project for one month's time prior to being paid.

I am not saying you should not get money up front. It just not work that way in my area.
 
bumperlt said:
The contractor on the job normally does large $500k+ jobs. He said it was very uncommon to ask for any money up front. That could very well be the case on large projects, but this was just a service change and a detached garage/MIL. The total price was $4900ish.

My question is what I off base? How do you guys normally do it?
Click to expand...


I worked with a GC years ago that did some large remodeling and new construction projects. He would always try to get as much money as possible up front but he didn't want to give out any money to the subs.

With companies going bankrupt all over the place it's a good idea to get as much as you can as soon as you can. A bird in the hand is worth two in the tree.
 
New const. resid. with an unknown contractor 30% at start 30% at rough and balance plus addons at final.
Trusted contractor 60% at rough balance at final
Commercial with trusted contractor 60% at rough plus cost of lighting package and/or special order equipment balance at final.
Service change nothing up front unless that little voice in my head says other wise.
 
cdslotz said:
Front money makes the owner/GC suspicious of your ability to perform.
I would never pay a sub any up front money.
If you have to have that money to buy materials, then perhaps you are over your head at this point in business.
Open an account with a distributor. Get your first draw on rough-in.
Also, I would never, ever do a job where someone else furnishes misc materials
Click to expand...

Some jobs the rough lasts more than a month. In that situation we bill based on AIA. Some tenant space work fixtures and or gear are supplied by tenant. We will install them. My guarantee only covers material supplied by us and workmanship.
 
Dennis Alwon said:
I have never asked for money up front nor would I pay a contractor up front unless I know them.
Click to expand...

I agree completey. If someone was working on my home and wanted money up front they would not get the job. As a contractor I do not expect anything up front, but at the end of the day after a substantial amount of work had been completed is another thing. South Florida is scam artist central, around here you pay someone up front and they fall off the earth.

On some commercial work you're lucky to get your first payment before you finish the job, not all the time, but it happens.
 
When I ask for money up front, a contract is signed at the same time. With refereces, a contract, and a legit license that can be looked up via L and I's website, I see no reason why asking for a start up draw is unnacceptable.

If it were a con, it sure seems like a lot of effort to go through to have legit references (whom also in many cases are contractors with thier own companies), and legit licensing.

My listed company address is also my personal residence.
 
Dennis Alwon said:
I have never asked for money up front nor would I pay a contractor up front unless I know them.
Click to expand...

the only "up front " money i have been getting lately is from the bank in the form of a short term "floater" loan needed to pay my bills in a timely fashion...we have never had so many bills over 45 days as we have now...more and more this is becoming the norm...
 
ceb58 said:
Service change nothing up front unless that little voice in my head says other wise.
Click to expand...

I agree completely. I had someone recently ask me to do a job very similiar. He works for the bank that wants the work done. He paid me out of pocket to look at it, but when I quoted him for the work, change out service, I told him to tell the bank I need $500 up front. The little voice in my head said so. I haven't heard from them yet, but I haven't lost any money either. I think you should find a balance, ask good questions, and try to be a good judge of character. I really don't think it is wrong to ask for money up front. It just depends on the circumstance.
 
I usually don't get money up front but then again I mostly work for people I know.

If I ever get back to working for new GC's I may start requiring a deposit, I'm more reputable and established than many GC's, why should I trust them if they don't trust me?

1.5=10k is the size of jobs I'm thinking of. Service work and small alterations I want to get paid in full as I'm loading my tools.

Any job that someone else is delaying my work I want to get paid every time I have to stop.
 
Status
Not open for further replies.
Top