keep getting undercut

[CopperTone]

the past 2 months have been pretty frustrating. All the supply houses I go to have been dead.
Every estimate or proposal I give - they get 2 other prices or more and the other guy is 10-20% lower. The low prices can't be making any money. This trade is getting worse with the undercutting. I understand everyone has to eat, but come on, there is a minimum in which you should charge.
I am bidding a 100k job at the end of this week, there are 15 EC's on the bid doc holders list. I can't wait to see these prices. I normally wouldn't even bid a job with that many bidders, but I want to see the prices, even with me bidding it as tight as I can go. Then I will truly know who the idiots in my area are.

I should go on vacation for awhile, I will make the same amount as these other guys in that time.

 

[goldstar]

I brought this same subject up at my contractors' association meeting last week. The only difference is I'm not losing jobs by 10-20%. I'm losing them by 50%. Sadly enough, one of them was to a guy in my association. Apparently there are EC's out there that are willing to work just for food. I hope things are not getting that bad. I can understand beating someone's price by a few hundred $$. But I can't understand why, if the going price for say a service upgrade is $2800 in your area, an EC would bid $1600. There are guys out there that are starving, union electricians out of work and doing side jobs, foreigners with work visas doing electrical work and a whole slew of other scenarios

I recently bid on a bagel shop/deli (approx. 3-4000 sq. ft.). Renovate all existing wiring, install all new, new fixtures, devices, breakers, AC units, exhaust fans, etc. My price was in the $40K area. Legitimately the material costs were close to $10 K. The next price below me was around $25K. The job was taken for $16K. This guy left $9K on the table. Go figure.

 

[masterinbama]

Used to be when we got beat badly on a job the low guy had made a big mistake. Now there are guys working for wages and not making anything for the business.

 

[kwired]

Would you rather work one job with profit, or several at break even or below, and work night and day at them?

If the guys that are undercutting you are still profiting - they either are not making much profit, or they have lower overhead.

If they have lower overhead because they are doing something wrong - it will catch up to them sometime.

 

[Fulthrotl]

Would you rather work one job with profit, or several at break even or below, and work night and day at them?

If the guys that are undercutting you are still profiting - they either are not making much profit, or they have lower overhead.

If they have lower overhead because they are doing something wrong - it will catch up to them sometime.

the workplace is changing. one is left with two choices....

1. bemoan the sad state of affairs

2. adapt to it

adaptation seems to be more advantageous. there is work available,
that can be done at a profit, but from my limited perspective, it's not the
traditional pipe, wire, and lights, job walk, four bidders dance. people
are getting slaughtered doing that. i have a friend who's a VP for
a pretty large contractor here... 40-50 man shop, been around a long time.
good guys to work for, know how to bid and do a good job. mostly
targeting jobs in the 200k~500k range.

they are bidding 15k jobs now, just trying to keep doors open, waiting
for better times.

GC's, i approach as if they are a farmer with terminal cancer, trying to
borrow money on next years crop.

property management firms, from what i have seen, have time to talk
endlessly about not much at all, but when time comes to cut a PO, it's
"we shall have to see what the customer wants." and that is the end of
it.

i'm fortunate that i have minimal overhead. vehicle, tools, stock, etc.
is all paid for, and in good condition. i need three billable hours a week
to cover recurring expenses. i don't bid that way, but that fact is the
only reason i'm still in business. work has been unbelievably tight the
last 4 years.

and unfortunately, that is what everyone is bidding against any more.
someone who is willing to do something, for nothing. or less than
nothing.

i've found however, that there are customers who want things done
correctly, and are willing and able to pay to have that done. there
just aren't a lot of them.

i had a quickie bid come up, at LAX. emt, boxes, and pull strings.
a saturdays work, maybe 200' of 3/4". the contractor on the job
wouldn't bother to bid it, and my client said come give me a number.

on a saturday, zero notice, has to be done in one day, $1,400. figured
i'd get it.

me walking around with a notepad woke up the sleeping contractor.
he bid it at $800. two guys, for a day, and material, $800.

i just laughed, and told my client that he owed me a cheeseburger for
scaring the contractor so badly he did it for free.

i'm still bidding and getting work for that client, 'cause he knows i give
an honest bid, and do a good job.

the other shop, that "stole" my job? it's a union shop, paying LA wages
and benefits.

$800? steal all the chain you can swim with, sunshine.... :?

 

[growler]

Would you rather work one job with profit, or several at break even or below, and work night and day at them?

I think a lot of this is just experience. Once a contractor does a few of these and finds out he's working himself to death for nothing he learns but there is always a new idiot (new guy) just waiting to take his place.

This last boom trained a lot of new electricians how to do simple electrical work and then there were not very many jobs when the bubble burst. These guys are out there and they are hungry.

 

[petersonra]

Apparently there are EC's out there that are willing to work just for food.

Working for food is better than starving.

There are a whole bunch of businesses who have figured out how to do things cheaper or found new niches, or both. They are called survivors.

You can either join them or become one of the many failed businesses.

 

[ramsy]

I'm fortunate that i have minimal overhead. vehicle, tools, stock, etc
is all paid for, and in good condition. i need three billable hours a week to cover recurring expenses. i don't bid that way, but that fact is the only reason i'm still in busiess.

When I ask customers why they chose me most say, "you were the only one who answered the phone."

 

[goldstar]

Working for food is better than starving.

There are a whole bunch of businesses who have figured out how to do things cheaper or found new niches, or both. They are called survivors.

You can either join them or become one of the many failed businesses.

Interesting outlook. FWIW, I'm not one to gold plate the jobs that I get. I generally give fair prices to my customers and when I give an estimate, if I end up doing the job in less time and for less material cost I will charge them less. Having said that, if our trade has finally lowered it self to the point where we're all prostituting ourselves to get jobs, then it's time to get out, sell your tools and buy yourself a 7-11. The way I see it you can get paid to do your job with dignity and respect or you can be a bottom feeder. If you're the type that wants to get into the gutter and sling mud that's up to you. I'll walk away with my head held high.

 

[cowboyjwc]

Working for food is better than starving.

There are a whole bunch of businesses who have figured out how to do things cheaper or found new niches, or both. They are called survivors.

You can either join them or become one of the many failed businesses.

I tend to agree with this.

You may not be going on vacation this year or getting a new truck, but you're not standing in the welfare line either and you're keeping your name out there.

 

[petersonra]

Interesting outlook. FWIW, I'm not one to gold plate the jobs that I get. I generally give fair prices to my customers and when I give an estimate, if I end up doing the job in less time and for less material cost I will charge them less. Having said that, if our trade has finally lowered it self to the point where we're all prostituting ourselves to get jobs, then it's time to get out, sell your tools and buy yourself a 7-11. The way I see it you can get paid to do your job with dignity and respect or you can be a bottom feeder. If you're the type that wants to get into the gutter and sling mud that's up to you. I'll walk away with my head held high.

Finding ways to survive until things get better is not being in the gutter or prostituting one's self.

What is wrong with running a 7-11? It is just as honorable a way to make a living as being an EC or an engineer.

Probably better than being a plumber. Certainly well above politics as a profession.

IMO, there is no such thing as a "fair" price. There are just prices. The guy paying the bill gets to decide which price if any he is willing to pay.

Just for your consideration. Do you consider using preowned parts bought off of eBay or some similar place to be an acceptable practice in an attempt to control costs? We have a customer that uses LOTS of such parts for their internal projects. A Fortune 50 company.

 

[nhfire77]

I find myself doing a lot of leg work for others looking to best down the one who already had the bid.

Last waste of my time (but always learning something!) We found a huge cost saving alternate design angle. ($15k on a $60k job) the engineer cut and paste, I worked up the correct items and then still lost it to the guy that originally was awarded the job. No I wasn't surprised that he took my idea and won with it. The fact that they did was should be a $35k- $45k job for $18k was impossible to profit from. (I know the cost on the parts +/- we're both dealers)

Surviving by adapting like that is understandable, but at some point, you are throwing good money(wages) at bad (potential profits down the line). Am I off base saying that?

 

[petersonra]

I find myself doing a lot of leg work for others looking to best down the one who already had the bid.

Last waste of my time (but always learning something!) We found a huge cost saving alternate design angle. ($15k on a $60k job) the engineer cut and paste, I worked up the correct items and then still lost it to the guy that originally was awarded the job. No I wasn't surprised that he took my idea and won with it. The fact that they did was should be a $35k- $45k job for $18k was impossible to profit from. (I know the cost on the parts +/- we're both dealers)

Surviving by adapting like that is understandable, but at some point, you are throwing good money(wages) at bad (potential profits down the line). Am I off base saying that?

there is no such thing as what a price "should" be.

there are only what prices actually are.

back when you were really busy did your customers tell you what prices "should" be? or what was a "fair" price"? if they did would it have mattered one iota to you?

 

[nhfire77]

there is no such thing as what a price "should" be.

there are only what prices actually are.

back when you were really busy did your customers tell you what prices "should" be? or what was a "fair" price"? if they did would it have mattered one iota to you?

No, and I don't care what the customer thinks it should be. My perspective is that of a businessman. Price from that perspective 'should' include profit. I do not ever take the customers perspective on price. I look at their goals and deliver solutions. If their goals are incompatible with me making profit, such is life and we move on.

Sound callous? Ok fine, but I'm still making $ hand over fist. Dont get me wrong, I'm not foolish enough to believe this is the best attitude, but jobs where cutting one another's throats is a means to losing money, I'm callous.

When I said should, that was what it should be for me. If another guy wants to bid a job below cost because there is a bigger plan, I get it. The job in question is more complicated than worth going into here.

 

[goldstar]

Just for your consideration. Do you consider using preowned parts bought off of eBay or some similar place to be an acceptable practice in an attempt to control costs? We have a customer that uses LOTS of such parts for their internal projects. A Fortune 50 company.

Not sure I'd be willing to do that. What types of "parts" are you referring to ?

 

[readydave8]

if I end up doing the job in less time and for less material cost I will charge them less.

I've always done that too but I'm trying to make myself stop, I need that extra to cover jobs that cost me more than I thought. And to pay the mechanic that fixes my truck and after I pay him truck is still broke. So I'm trying to learn to give customer good value, if I make more than I thought I would on a job it does not affect the value they received.

 

[petersonra]

Not sure I'd be willing to do that. What types of "parts" are you referring to ?

all kinds of parts. what difference does it make? mostly what we are directly dealing with is PLC parts. but I understand they are using used parts of other types as well.

they often move machines from one factory to another. That is an entire used machine. how is that any different than putting in a used MCC.

people are finding ways to cut their costs where they can.

 

[petersonra]

No, and I don't care what the customer thinks it should be. My perspective is that of a businessman. Price from that perspective 'should' include profit. I do not ever take the customers perspective on price. I look at their goals and deliver solutions. If their goals are incompatible with me making profit, such is life and we move on.

Sound callous? Ok fine, but I'm still making $ hand over fist. Dont get me wrong, I'm not foolish enough to believe this is the best attitude, but jobs where cutting one another's throats is a means to losing money, I'm callous.

When I said should, that was what it should be for me. If another guy wants to bid a job below cost because there is a bigger plan, I get it. The job in question is more complicated than worth going into here.

I don't think it is callous at all. But if you do not care what the customer thinks the price "should" be, why should you feel that he ought to think the price you want is what it "should" be?

The way it works is if the price you are offering exceeds what a customer is willing to pay, he will pass on it. he may come back and ask you to rethink it some, or take something out to make it affordable, or the whole project may just go away. or the project might well go to someone who bid more in line with what he wants to pay, or can afford to pay.

I would not be so quick to assume that just because another business bid less than you did that it was below their cost. There are some people who have whittled out every nickle from their cost structure and are very lean. They would not have managed to survive this long into a sucky business climate if they were losing money on these jobs every time. Somehow they are making enough money to stay in business.

 

[Fulthrotl]

I find myself doing a lot of leg work for others looking to best down the one who already had the bid.

Last waste of my time (but always learning something!) We found a huge cost saving alternate design angle. ($15k on a $60k job) the engineer cut and paste, I worked up the correct items and then still lost it to the guy that originally was awarded the job. No I wasn't surprised that he took my idea and won with it. The fact that they did was should be a $35k- $45k job for $18k was impossible to profit from. (I know the cost on the parts +/- we're both dealers)

Surviving by adapting like that is understandable, but at some point, you are throwing good money(wages) at bad (potential profits down the line). Am I off base saying that?

i came up with a solution to a problem.

the contractor who CREATED the problem, had given a price of $45,000 to fix it.
the fix, IMHO, would not have solved the problem.

my fix did solve the problem. how do i know? simple.

i quoted $6k to fix it, using my idea. the customer took
my idea, gave it to the dipsnit contractor, and paid them
$14k to implement it, which they did, rather poorly. in the
process, they reversed the rotation of the main electrical
service, as they didn't bother to check rotation before
doing the work.

then they ran the chillers and elevator pumps, etc. backwards.
until one burned up.

then they got paid to fix THAT, 'cause their quote excluded any
damage done by their repair.

that's todays big tip. if you are incompetent, exclude the consequences
of your incompetency from the bid, and you can make more money
fixing problems you create.

 

[nhfire77]

i came up with a solution to a problem.

the contractor who CREATED the problem, had given a price of $45,000 to fix it.
the fix, IMHO, would not have solved the problem.

my fix did solve the problem. how do i know? simple.

i quoted $6k to fix it, using my idea. the customer took
my idea, gave it to the dipsnit contractor, and paid them
$14k to implement it, which they did, rather poorly. in the
process, they reversed the rotation of the main electrical
service, as they didn't bother to check rotation before
doing the work.

then they ran the chillers and elevator pumps, etc. backwards.
until one burned up.

then they got paid to fix THAT, 'cause their quote excluded any
damage done by their repair.

that's todays big tip. if you are incompetent, exclude the consequences
of your incompetency from the bid, and you can make more money
fixing problems you create.

I would love to see the contract details, dumb customers are great.