Another Clueless Customer

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lefty

Member
Location
Oklahoma
Focus on the customers you want

Focus on the customers you want

Focus on the customers you want, you can usually tell after 15 minutes if this is a job that you want or not. Only you know how to run your business and the type of customer you want, this is a very successful way to get to the customers you want buy eliminating the ones you don't want. Stay focused on your type of customers, leave converting people to the professionals, (ministers). You stay focused on the very few people that understand what you do and want you to do it.
 

MNWildcat

Member
Location
MN
As an EE and a home owner, I can see both sides of this issue. But in my work, I have had a lot of experience dealing with bad contractors - nickel/diming, high change order costs, cutting corners. I know there are great contractors out there, but I have burned too many times, so I am very cautious dealing with any contractors at work and at home.

There are countless examples on the forum of bad work, so how is a home owner to know for sure that the contractor they hire is good? Electrical work is definitely one of those trades that is over most home owners heads, so they can easily feel overwhelmed or taken by some contractors. There are several trades like this, any contractor type, a mechanic, insurance salesman; can all take advantage of customers because they do not understand the trade (and may be ?clueless?) and it is their prerogative to make sure whomever they hire is legit and good.

I was just in that boat recently. I have an older house that is only insulated in the attic. I needed to add insulation to the attic and have insulation blown into the walls. I received four estimates as I wanted to get a good comfort level with the costs. I ended up with four very different walk throughs and four very different prices. I gave the same tour, of what they would take. One was there for over a half an hour, crawled through the whole attic space, found an open by-pass no one else found, gave a detailed estimate, but was the highest number. Another was there for four minutes, barely looked at anything, and mailed me an estimate. Their estimates were $1300, $1400, $1900, and $3300. I wanted the thorough guy, but his was the most expensive. I called him and he came down to $3000, but I still could not justify an $1100 difference. A range from 1300 to 3300 is a huge difference. How is a HO to know the quality of the work? Is the 1100 guy cheap, efficient, cuts corners, or in need or work? Is the 3300 guy gouging, a great contractors, or very thorough? (I went with the 1900 guy.)

Plus, if anyone charges for an estimate, I will not bother. It is my due diligence to get 3-4 estimates and I am not paying $60-100 for each one. Yes I imagine estimates do cost you, but that is part of the contractor?s job. At work I have recently spent probably 50-70 hours on a proposal I am working on for a relatively small fee. Am I supposed to bill the client for this time if I do not get the job? I would never be asked to provide a price again. I need to be thorough so my price is accurate. Marketing should be worked into ones business expenses.

Peace. :cool:
 

aline

Senior Member
Location
Utah
There are countless examples on the forum of bad work, so how is a home owner to know for sure that the contractor they hire is good?

A range from 1300 to 3300 is a huge difference. How is a HO to know the quality of the work? Is the 1100 guy cheap, efficient, cuts corners, or in need or work? Is the 3300 guy gouging, a great contractors, or very thorough? (I went with the 1900 guy.
There's really no way to determine what the quality of the work will be based on price, but chances are the lower the price the lower the quality will be.

The less a contractor charges, the less pay and benefits he can provide for his employees.

Who do you think the best and most skilled employees are going to work for?
The contractor that doesn't pay very well and doesn't provide health insurance, a 401k plan, paid vacation, etc.?

Chances are the best and most skilled employees are going to work for the contractors that pay more and offer better benefits. Chances are they are also going to have charge more to provide this for their employees.

Plus, if anyone charges for an estimate, I will not bother. It is my due diligence to get 3-4 estimates and I am not paying $60-100 for each one. Yes I imagine estimates do cost you, but that is part of the contractor’s job.
I would be willing to bet you would pay more than $60-100 for each estimate, Unless you don't go through with the project.
You not only pay for your estimate but for all the other estimates the contractor gave and didn't get the job.

If a contractor gets 1 job for every 5 estimates, he has to pay for the expense of the other 4 estimates some how.
Who do you think pays for the expense of the other 4 estimates?

If a contractor charges $60-100 for each estimate that's just that much less he can reduce his price by.

If he does 5 estimates and gets $100 each that's $500 he has that he otherwise wouldn't have. That's $500 he can take off the price of your job if you accept the work.
Of course he still has the expenses that are not covered by the $500 inlcuded in the price but $400 came from the other estimates that he didn't get so that's $400 less you're going to have to pay.

I only charge a dispatch fee of $29 for an onsite evaluation and estimate.
Keep in mind these are for small jobs and not large projects.
Charging this fee helps weed out the people who aren't serious about their project but are just curious about how much it would cost if they hired someone to do it verses doing it themselves.

Bottom line is estimates cost the customer. The more running around giving estimates without charging for them the more expenses I have that the customer has to pay for.
Charging for estimates can increase closing ratios. In other words I might start gettin 2 out of 5 jobs I estimate instead of 1 out of 5.

In this case I was following up to find out what the other estimates were, who he was going to go with and why he was going with them. He didn't get any other estimates. He just figured up how much the materials were going to cost and figured how much time he thought it would take. Based on this he felt he was being charged too much.

He wanted it done for a day's wages.
My question is who's day's wages does he want this done for?
The journeyman electrician wages?
The apprentace electrician wages?
The owner's wages?
The dispatcher/call taker wages?
The estimator's wages?
Other office personel's wages?

All these people need to earn a days wage.
Who's going to pay for that if the customer doesn't?
 
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MNWildcat

Member
Location
MN
If a contractor gets 1 job for every 5 estimates, he has to pay for the expense of the other 4 estimates some how.
Who do you think pays for the expense of the other 4 estimates?

If a contractor charges $60-100 for each estimate that's just that much less he can reduce his price by.

If he does 5 estimates and gets $100 each that's $500 he has that he otherwise wouldn't have. That's $500 he can take off the price of your job if you accept the work.
Of course he still has the expenses that are not covered by the $500 inlcuded in the price but $400 came from the other estimates that he didn't get so that's $400 less you're going to have to pay.

In this case I was following up to find out what the other estimates were, who he was going to go with and why he was going with them. He didn't get any other estimates. He just figured up how much the materials were going to cost and figured how much time he thought it would take. Based on this he felt he was being charged too much.

All these people need to earn a days wage.
Who's going to pay for that if the customer doesn't?
I agree that you have to put the time for the estimate somewhere, like in your overall cost to the HO. But as I stated in my first reply, where do I bill my 50-70 hours I worked on that proposal? We may not get this job, but that is part of our normal business expenses. If I do not get the job, I cannot send him a bill for my time. We have a budget for marketing and proposals that are indirectly accounted for by our hourly fees. Same with lights, comptuers, legal, building, TP, etc.
And yes, some HOs push too far and have unrealistic expectations. But again, I think many HOs are uncomfortable handing over a lot of money to some guy that says he will do the work. Will he do it properly? Will there be cost additions? Everyone has heard of contractors (or other trades I mentioned above) that have taken advantage of people.
And yes, if they do not understand all of the costs that go into your price, then they may be clueless, but maybe they just have not thought about all of those other expenses since he can just go to HD and get the parts himself. But a lot of the tone I hear on this site is sometime tough on HOs.
 

macmikeman

Senior Member
I agree that you have to put the time for the estimate somewhere, like in your overall cost to the HO. But as I stated in my first reply, where do I bill my 50-70 hours I worked on that proposal? We may not get this job, but that is part of our normal business expenses. If I do not get the job, I cannot send him a bill for my time. We have a budget for marketing and proposals that are indirectly accounted for by our hourly fees. Same with lights, comptuers, legal, building, TP, etc.
And yes, some HOs push too far and have unrealistic expectations. But again, I think many HOs are uncomfortable handing over a lot of money to some guy that says he will do the work. Will he do it properly? Will there be cost additions? Everyone has heard of contractors (or other trades I mentioned above) that have taken advantage of people.
And yes, if they do not understand all of the costs that go into your price, then they may be clueless, but maybe they just have not thought about all of those other expenses since he can just go to HD and get the parts himself. But a lot of the tone I hear on this site is sometime tough on HOs.
Would I be considered clueless if I didn't understand why EE's get paid what they do? I bet most EE's would say yes to that in a heartbeat. By the way, it is one of my personal pet peeves when customers think they can load me up with excessive design requirements in order to get around having to pay the services of an electrical engineer to do the proper job of design. I think those are clueless customers. Of course there are some EE's that do a lousy job and all.........
 

lefty

Member
Location
Oklahoma
Just try to be professional, explain your costs and try to be believable, the customer does not know you and you have to build trust, references work the best for me. When a customer of mine tells a friend of theirs, I'm halfway there, after that it is just the price and how we can work this out. The customers have the same problem with us as we have with them. My approach is to be honest, and tell them that we could possibly work within their budget, and I tell them it is not just my wages that you are paying for there is my work truck, insurance, bonding, workers comp, accountant, banker and lawyer that has to come out of that. If we can somehow get rid of the lackluster contractors then it would be easier. If all of those insulators charged 3300.00 you would have picked the one you liked and felt the best with, and payed 3300.00, who can say what a 3300.00 job is, how would you know what the others 3300.00 job looked like. It is like when an EC is working with an EE, we have problems from time to time.
 

aline

Senior Member
Location
Utah
But as I stated in my first reply, where do I bill my 50-70 hours I worked on that proposal? We may not get this job, but that is part of our normal business expenses. If I do not get the job, I cannot send him a bill for my time. We have a budget for marketing and proposals that are indirectly accounted for by our hourly fees. Same with lights, comptuers, legal, building, TP, etc.
Unless you work for free someone is billed for the 50-70 hours worked.

The question is who.

My guess is, it's the people that use your services and hire you to do a job.

So if you don't get this job, guess who gets billed for the 50-70 hours?

The customer who hires you for another job.

If you get 1 out 4 jobs estimated, that 1 job has to cover the expenses of the 3 jobs estimated that you didn't get.

So yes, when you hire a contractor you pay for your estimate as well as the other estimates the contractor gave and didn't get the job.

Estimates are only free if you never hire anyone to do the work.
However even then they're not really free unless you feel your time isn't worth anything.
It does cost you some of your time to get these estimates.
In my opinion your time is the most valuable thing you own.
Once it's gone, no amount of money in the world can buy it back.
 

MNWildcat

Member
Location
MN
If you get 1 out 4 jobs estimated, that 1 job has to cover the expenses of the 3 jobs estimated that you didn't get.

So yes, when you hire a contractor you pay for your estimate as well as the other estimates the contractor gave and didn't get the job.
Yes, I agree. I just feel that the estimate, or the time to write the proposal, should be included in the cost of business. I do not like all the break out fees, like the airline industry is doing right now - charging for one carryone or checked is ridiculous. How far would you take your break our fees? Charge for mileage to the site, van fee, drill fee, saw fee, etc? I also understand that there are unique circumstances, such as maybe multiple trips or a remote/rural customer.
But normally it should be included in your overall costs, IMO.
 

SEO

Senior Member
Location
Michigan
Yes, I agree. I just feel that the estimate, or the time to write the proposal, should be included in the cost of business. I do not like all the break out fees, like the airline industry is doing right now - charging for one carryone or checked is ridiculous. How far would you take your break our fees? Charge for mileage to the site, van fee, drill fee, saw fee, etc? I also understand that there are unique circumstances, such as maybe multiple trips or a remote/rural customer.
But normally it should be included in your overall costs, IMO.
Who pays for the overall costs the one good faith customer or the four others that are price shopping? Business is tough!
 

aline

Senior Member
Location
Utah
Yes, I agree. I just feel that the estimate, or the time to write the proposal, should be included in the cost of business. I do not like all the break out fees, like the airline industry is doing right now - charging for one carryone or checked is ridiculous. How far would you take your break our fees? Charge for mileage to the site, van fee, drill fee, saw fee, etc? I also understand that there are unique circumstances, such as maybe multiple trips or a remote/rural customer.
But normally it should be included in your overall costs, IMO.
With your vans , drills, saws, etc. the expenses for these items are not specific to one customer.

Traveling to the customer's job, spending an hour going over the job with the customer, providing an estimate and traveling back is an expense specific to that one customer. When you buy vans, drills, saws, etc. you have not provided a service to a customer. When you give estimates you have provided a service to a specific customer. There's nothing wrong with charging a fee for that service.

That being said I do inlcude expenses for estimates in my overall costs.
I charge a small dispatch fee for coming out to provide the estimate.
Keep in mind this is for small projects and not large projects.
It's doesn't come close to covering my costs. It's main purpose is to weed out customers I don't want. These are customer's who's main concern is finding the lowest price possible instead of finding a quality contractor. Often times I will not get these jobs anyway, so it's a waste of time and expense estimating them. This reduces my estimating overhead expenses allowing me to offer a better price to the customers that I want.

Angie's List is a good example of people looking to find a quality contractor. Angie's List members pay a fee to join so they can find a quality contractor for their project. They don't mind paying a small fee to find someone reputable.

Quite often when I hear someone complaining about the contractor they hired, I will ask them why they chose this contractor to do the work.

Their response?

He was the lowest price.
Plus, if anyone charges for an estimate, I will not bother. It is my due diligence to get 3-4 estimates and I am not paying $60-100 for each one. Yes I imagine estimates do cost you, but that is part of the contractor’s job..
You say you won't pay $60-$100 to obtain estimates for a project but the reality is you pay that and more. This is partly what I mean about customer's being clueless. Many believe estimates really are free. The customer has to pay for everything. That's why when you give them a price that includes time spent giving free estimates they feel it's too high. That job is only one day's worth of work! The price is way too high for only one day's worth of work! They not only don't want to pay for estimates they also don't want to pay for any of your other overhead either.
 

satcom

Senior Member
Yes, I agree. I just feel that the estimate, or the time to write the proposal, should be included in the cost of business. I do not like all the break out fees, like the airline industry is doing right now - charging for one carryone or checked is ridiculous. How far would you take your break our fees? Charge for mileage to the site, van fee, drill fee, saw fee, etc? I also understand that there are unique circumstances, such as maybe multiple trips or a remote/rural customer.
But normally it should be included in your overall costs, IMO.
After a few years of operating a for profit contracting business, you will begin to understand, the real cost of doing business, and what it takes to run a contracting business that will support a decent salary and produce better then wage income, the main reason someone goes into business is usually to do better then what employment offers, if as a customer you select contractors on price, they you will usually get just what you are paying for, cheap prices usually produce less then expected, and at times down right sloppy work.

After a few years in business , come back here, and comment on this again.
 

MNWildcat

Member
Location
MN
I was not open to paying for an estimate, but I was serious about the work. I had a ball park figure of the price but I needed some finite estimates and a chance to evaluate the contractors. My effort was justified since there was a huge range from $1300 to $3300. That is a big difference. But I did not go with the cheepest, I went with the second highest and wanted to go with the highest as I felt he was the best, but I also thought he was charging way too much. The guy I went with, I was aslo impressed with his walk-thru and his price was right where I thought it would be. As much as I liked the highest guy, his quality was not worth 60% more for the same job.

Yes, when HOs go for the cheepest, they are at risk for a poor product. There was no way I was going with my lowest estimate. I deal with that in my work when public owners have to take lowest bid, especially when one is way low - it makes me cringe.

I guess if your amount of unsucessful estimates are increasing, then I can see how it is hard for you to not to charge for them. But right now there are enough contractors that do not charge for them.

But, working for a design firm, what do you think would happen if we were to charge for our proposal time? We would never be asked to submit again - then no new projects and no new income. Proposals have a certain acceptance rate and that is part of of the business. We budget for it. In fact, since projects have been harder to get we have actually increased our marketing budget. So the projects we do get are paying for the time invested in the projects we do not get.
 

aline

Senior Member
Location
Utah
I was not open to paying for an estimate, but I was serious about the work. But right now there are enough contractors that do not charge for them.
So you're not ok with paying for the 3-4 estimates given to you but are ok with paying for the 1 estimate you went with and the 4 other estimates the guy gave to other people that didn't use his services?
To me you end up paying for 5 estimates.
One for you and four for the other people who didn't use his services.
Contractors do charge for them. The only question is who gets charged.

But, working for a design firm, what do you think would happen if we were to charge for our proposal time? We would never be asked to submit again - then no new projects and no new income. Proposals have a certain acceptance rate and that is part of of the business. We budget for it. In fact, since projects have been harder to get we have actually increased our marketing budget. So the projects we do get are paying for the time invested in the projects we do not get.
There's a big difference in the projects you're talking about and small residential projects such as someone wanting three rooms and a bathroom finished in their basement.

I've gone out and looked at some of these jobs only to be told I was the tenth contractor they've had look at it. On this particular job that I was the tenth contractor to look at it there were already some boxes nailed up. He wanted me to start right away until I told him I needed a down payment first. He decided not to have me do the jog after all.

I bid on a service upgrade for residential home and when I followed up on it I found out she had gotten seven bids. She went with the cheapest.

It's true there are plenty of contractors not charging these customers directly for their estimate, but is it fair for you to have to pay for them?
But that's exactly what happens.

I know it will never happen but if all contractors charged some kind of fee for estimates people wouldn't likely get 7-10 estimates and then end up not having the work done anyway.

I had one guy call wanting an estimate but didn't want to pay a $29 dispatch fee for me to come out and provide the estimate. He called back later and told me he had gotten three estimates and if I would beat the lowest estimate I could have the job. Like I want this guy for a customer. Being a contractor can be very entertaining somtimes. :)
 

bradleyelectric

Senior Member
Location
forest hill, md
I've gone out and looked at some of these jobs only to be told I was the tenth contractor they've had look at it. On this particular job that I was the tenth contractor to look at it there were already some boxes nailed up. He wanted me to start right away until I told him I needed a down payment first. He decided not to have me do the jog after all.

I bid on a service upgrade for residential home and when I followed up on it I found out she had gotten seven bids. She went with the cheapest.
Do you ever ask people what they are looking for when they tell you they have gotten multiple quotes? I ask them what they are looking for and try to convince them I'm their guy. If they want the cheapest price they should call the guy that gave that to them, there is usually a reason why they haven't done that and become willing to pay me to do the job.

Then again there was the woman that wanted me to accept $75 dollars to change 2 non working GFI's and fix a splice Saturday afternoon. I was simply unreasonable.
 

Dnkldorf

Senior Member
Folks, if you go on 5 estimates, and only close one, you need some serious help.

Even worse is using this as an argument to prove a mute point.

Learn how to market, and learn how to close a sale.

You'll complain less on the internet and make more money.
 
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