ITO,
your points are incredibly valid for a commercial new construction company that does bid work for GC's.
For residential work, we have to have a set standard so to speak for our pricing and our tasks.
Imagine have 30 of you men out, each pricing 3-5 small service jobs a day. You couldn't rely strictly upon their instinct to price a job correctly. Nor could you have them all call one estimator in the shop to come up with the scientific price.
Now imagine a couple of those guys consistantly pricing too low and losing money. And also consider a couple of those guys pricing unjustifiably high (maybe the homeowner is a senior citizen that really has no clue)and sells a service upgrade for $15,000 (not a justifiable price, a just cause they can price)
Now imagine doing a service upgrade for the jones house, in a specific development. You charge the jones's $X. Their next door neighbor, the smith's want the same upgrade. Same house, same everything. You send a different tech, he quotes 50% higher than the jones' just cause he thinks he can. Think neighbors don't talk?
So, you average items and put them in a book. Sometimes you make more money than average, sometimes you make less money than average. But at the end of the day/week/month/year, you probably made your average targets.
I agree with your general position, however when bidding $300k projects, 10% is a big number. When bidding $300 service calls, adding an addition 20-50% is not that big of a number.
The smaller the price, the more profit you can tack on...
[This message has been edited by mahlere (edited 12-06-2006).]
