Customer Wants a Breakdown

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aline

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Below is an e-mail from a guy who happens to be a contractor. I charged him a dispatch fee to give him an estimate for about two days worth of work. He said he was happy to see I charged a dispatch fee because when he was contracting in California he charged for estimates. He also said he like the fact that I gave a price upfront in writing and didn't charge by the hour so I was kind or surprised to get this e-mail after giving him a price.


Just a couple of questions.

1) What is your hourly rate ?
2) Could you break out Parts and Labor for each of the jobs.

This estimate seems high, just trying to get a clear picture of the actual costs.
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I feel I gave him a price and if he doesn't like it and thinks it's too high he should get other estimates. I don't feel it's any of his business to have me break down parts and labor for each item on the estimate. I was wondering how others would respond to this.

I responded with the following questions of my own and have not heard back from him yet.

1) What have the other estimates you’ve gotten come in at?
2) Can you elaborate on why this seems high?
3) How much were you expecting this job to cost?

Personally I can't imagine getting an estimate from a contractor and then telling him I want a break out of the parts and labor. If I don't feel his price is fair I can get more estimates to compare it with.

Here's a link to an article on the subject written by Frank Blau.
http://journals2.iranscience.net:80...tures/BNP__Features__Item/0,2379,5091,00.html

Scroll down on the page for more great articles.
 
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I have had this happen when I did a service upgrade. We spent an 8 hour day plus some office time to complete the project sent out the bill and the customer wanted to see the prices as if the job was T&M. I simply told them that the service upgrade is a flat rate job. I think flat rate is the way to go most projects. Stick to you guns and let him know that a quoted job has many variables.
 
If you want to break it down into smaller jobs, that's up to you. You might could break it up into modules (I would think at a higher total cost) but I don't see you have an obligation to give him an hourly rate. If you don't estimate that way, so be it.

If you do estimate using T&M (which, to me, is not the same as working for T&M) why not share the details? The one reason I could think of is because it probably will not matter how you break out the cost, he is going to try to pick it apart and get you to reduce your price.

Just in case he is not aware of everything the job requires, perhaps a general discussion of what you have covered in your price will be enough.

I would not reduce my price unless he can identify some work in my bid that should not have been included.
 
mivey said:
If you want to break it down into smaller jobs, that's up to you. You might could break it up into modules (I would think at a higher total cost) but I don't see you have an obligation to give him an hourly rate. If you don't estimate that way, so be it.
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On the proposal I gave him I did break it down into 6 smaller jobs with a seperate price for each job. I just didn't break out the labor and materials for each job. I also gave him a very detailed description of what the jobs entailed and what he was getting.

This estimate seems high, just trying to get a clear picture of the actual costs.
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This is the comment made by him that gets me.
I gave him a clear picture of the actual costs if he hires me to do the work. :)

The problem with electrical work is the end product doesn't look like much. It doesn't look like it should take long at all.

It's kind of like when you go grocery shopping and you push that small cart of groceries up to the check out counter and you can't beleive the total came to that much. You check your receipt and sure enough all those little items sure add up to a lot of money.
 
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I would tell him that the "breakdown" or whatever will be availible once you get a contract or purchase order as it is part of the schedule of values that are typically not due until the contract is awarded.
 
The customer either accepts the flat quote in writing, or if they start game playing, we move on, as fast as we can get away from them.
 
aline, the link didn't work; i would like to read it if you can get it fixed.

anyway,

here's my answer to the contractors questions:

1) indirect costs + direct costs = hourly rate
2) sure, as soon as you sign the contract.

you and I both know exactly what is going to happen if you give him the actual numbers.
 
brantmacga said:
aline, the link didn't work; i would like to read it if you can get it fixed.
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I was able to read the article in question, but not able to link to any of the other articles below it. I would like to read a few of them if I could. :)
 
aline said:
Personally I can't imagine getting an estimate from a contractor and then telling him I want a break out of the parts and labor. If I don't feel his price is fair I can get more estimates to compare it with.http://
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After all he is a contractor. Even if you gave the low bid there is nothing to prevent him from trying to get you to lower your price even more. GC's make their money the same way as used car dealers they buy cheap and sell dear.

You gave him a firm bid with a scope of work and that's all he needs to know. If you give him a breakdown of materials he will be out buying those himself ( oldest trick in the book ). If he gets a breakdown on labor he will use that to negotiate with other electrical contractors.
 
satcom said:
The customer either accepts the flat quote in writing, or if they start game playing, we move on, as fast as we can get away from them.
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Kick him to the curb. The last one that wanted a multiple breakdown from me wasted 6 hours of my time before hiring someone else. Now I'll just say something like "What were you expecting for a price". They'll usually say something that amounts to less than materials at cost.

Dave
 
aline said:
I feel I gave him a price and if he doesn't like it and thinks it's too high he should get other estimates. I don't feel it's any of his business to have me break down parts and labor for each item on the estimate.
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I agree. Is he going to do an in depth study of your business costs as compared to other contractors?

You charge what you have to charge.

That's your price.
 
aline said:
Below is an e-mail from a guy who happens to be a contractor. I charged him a dispatch fee to give him an estimate for about two days worth of work. He said he was happy to see I charged a dispatch fee because when he was contracting in California he charged for estimates. He also said he like the fact that I gave a price upfront in writing and didn't charge by the hour so I was kind or surprised to get this e-mail after giving him a price.




I feel I gave him a price and if he doesn't like it and thinks it's too high he should get other estimates. I don't feel it's any of his business to have me break down parts and labor for each item on the estimate. I was wondering how others would respond to this.

I responded with the following questions of my own and have not heard back from him yet.

1) What have the other estimates you?ve gotten come in at?
2) Can you elaborate on why this seems high?
3) How much were you expecting this job to cost?

Personally I can't imagine getting an estimate from a contractor and then telling him I want a break out of the parts and labor. If I don't feel his price is fair I can get more estimates to compare it with.

Here's a link to an article on the subject written by Frank Blau.
http://journals2.iranscience.net:80...tures/BNP__Features__Item/0,2379,5091,00.html

Scroll down on the page for more great articles.
Click to expand...

I am on the other side of the fence on this one, why not give a breakdown of labor and parts? I do that on every service quote I do. Dont you already have a rate sheet?

Refusal to break down an estimate makes it seem to me like you are trying to hide something, IMHO.
 
zog said:
...Refusal to break down an estimate makes it seem to me like you are trying to hide something, IMHO.
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I am not legally required to provide one, so why should I take the time to do so?

I have yet to have a customer who asks for a breakdown want it for any other reason than to use it against me in an attempt to lower my price. It takes time out of my day to break it down, and even more time to 'defend' it to the customer.

If the OP wants to give the customer a breakdown, go ahead.... fine by me. But I've got other fish to catch.
 
growler said:
After all he is a contractor. Even if you gave the low bid there is nothing to prevent him from trying to get you to lower your price even more. GC's make their money the same way as used car dealers they buy cheap and sell dear.
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I guess I should add that he's not a GC but a Landscape Contractor.
The funny thing is he went on and on about how his customer's are often suprised when he gives them a price for his landscaping jobs. They always expect it to be much cheaper. Maybe he's used to breaking his jobs down for his customer's.

zog said:
Refusal to break down an estimate makes it seem to me like you are trying to hide something, IMHO.
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I guess I buy a lot of stuff from people that are trying to hide something.
Seldom do I get or ask for a breakdown of the material and labor charges for things I purchase. The guy gave me a price to complete the job as specified that's all I feel I need. If I think the price is high I'll shop around and compare.

Maybe I should start asking how much I'm being charged for the labor to cook the steak and how much I'm being charged for the steak the next time I go out to eat. This way I can compare the price of the steak to what I can buy it for at the local grocery store and figure out if they are charging me more per hour than what I make.

The guy hasn't e-mailed me back since I sent him my questions.
 
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480sparky said:
I am not legally required to provide one, so why should I take the time to do so?

I have yet to have a customer who asks for a breakdown want it for any other reason than to use it against me in an attempt to lower my price. It takes time out of my day to break it down, and even more time to 'defend' it to the customer.

If the OP wants to give the customer a breakdown, go ahead.... fine by me. But I've got other fish to catch.
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This is similar to my experience. They want the information for negotiation & it's a waste of time unless you want to drop your price & lose your profit.

Dave
 
We seemed to have covered the gammut of opinions so far (Or have we just begun??:) ) but I will add my thoughts. I do not like breakdowns. Most of the time it results in questioning your hourly rate and material prices. So-n-so charged me this much...my cousin in CA can get it for...etc. We had a customer call in one time irate over a job he perceived to be half a day and "nobody is worth that much per hour" until we explained about travel time, fuel costs, material time, and many other things involved that did not occur at his property and he was more understanding. Some people like to know what they are paying for and I do not fault them fo it. If they want a breakdown, I will let them know what is involved, but I am very hesitant to line item the bill. I agree with others who have stated, "This is my price. We would like your business, but if you feel you need to go with another EC, than we will understand."
 
I think you have two choices. Either decline to provide the information requested, or provide it.

We often get similar requests and our practice generally has been to provide this information.

We also frequently get customers that want to supply their own parts. Its not that big of a deal. We add in money for handling the parts they supply (it costs us money whether we buy the parts or not), and when there are missing parts they get supplied on a T+M basis, or we charge them for the time to hunt down the missing parts so they can supply them.

A lot of contractors seem to feel that there is some special reason they should be able to mark up the parts cost and that margin is sacred. Its not. Just remember that you have to make a certain amount of money off each job to turn a profit and it does not matter much whether it comes from parts markup or from labor markup.

The guy is not stupid. He knows what the parts cost every bit as much as you do, probably within a few percent.

He is trying to get the lowest price. Nothing wrong with that. Your goal is to keep the price to the contractor as high as possible. Nothing wrong with that either.

Look at it this way. If you are only supplying labor, and are supplying it at your normal rate, how are you hurt by that unless your normal rate is too low to begin with.
 
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I guess what I'm really trying to get out of this thread is a tactful and polite way of telling the customer I don't think it's any of his business what my hourly rate is or how much I'm marking up the materials. I'll even throw the materials in for free or give him free labor which ever he would prefer but the job is still going to be the same price.

I gave him a price to do the job as specified and he's welcome to get other bids. There are plenty of contractors out there willing to give him an estimate and plenty that will do this job on a T&M basis if that's what he wants.
 
aline said:
I guess what I'm really trying to get out of this thread is a tactful and polite way of telling the customer I don't think it's any of his business what my hourly rate is or how much I'm marking up the materials. I'll even throw the materials in for free or give him free labor which ever he would prefer but the job is still going to be the same price.

I gave him a price to do the job as specified and he's welcome to get other bids. There are plenty of contractors out there willing to give him an estimate and plenty that will do this job on a T&M basis if that's what he wants.
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You must have given him some kind of hourly rate. How will you handle changes and adders? Normally the contract will specifiy something like $XX/hour plus actual parts cost plus 15%, or whatever is agreed to.
 
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