I'm just wondering. If someone demands to know how you came up with the estimate for their job do you show them everything? Your mark up on materials, your overhead figures, your profit?
I don't really have a problem with it. I've shown people before who really questioned my prices. I'm an honest person so I have nothing to hide. But on the other hand, I suppose it just seems that I should be allowed some freedom to estimate my jobs and run my business without constant scrutiny. Of course, I'm am running a business, I guess I should expect it.
Just curious on what other people's take on this is.
Never reveal to a customer the method you used to arrive at the price. Never break down a bid into parts and labor AND NEVER TELL THE CUSTOMER YOUR HOURLY RATE.
No business in the world would provide their customers with this proprietary, confidential information.
There's absolutely no upside to revealing this information, it will only be used against you.
When asked about my pricing, I say that my prices are arrived at by a computer program that updates materials on a weekly basis and generates my prices.
It has nothing to with "being honest" and having "nothing to hide". Would you send the customer your QuickBooks files or personal pictures of your wife? No, some things are nobody's G-damn business but your own.
Sorry for the rant, but I think it's real tacky when people demand to know how much money I plan to make or what my overhead costs are.
#159411 - 01/17/0705:58 PMRe: What info should builders/gc's be privy to?
Well that's exactly how I feel. I guess I just wanted to make sure I wasn't being ridiculous by feeling that way. I feel like I am scrutinized enough as it is so why give them more information/ammunition by showing them my very honest way of developing my prices.
Thanks for the input. I'd love to hear how others feel about this.
#159412 - 01/17/0706:39 PMRe: What info should builders/gc's be privy to?
"Never reveal to a customer the method you used to arrive at the price. Never break down a bid into parts and labor AND NEVER TELL THE CUSTOMER YOUR HOURLY RATE. No business in the world would provide their customers with this proprietary, confidential information."
He hit the nail on the head!
What GC, or Builder opens his books or gives a detailed cost breakdown of the construction costs, to a home buyer?
One of the industry problems is, offering GC's or builders sq ft. or unit pricing, rather then a contract price.
[This message has been edited by LK (edited 01-17-2007).]
#159414 - 01/17/0708:29 PMRe: What info should builders/gc's be privy to?
For me, the way I handle such a question depends an awful lot on the circumstances.
For example, most of my customers provide me with steady work. I have a long standing relationship with these folks, and our communication is excellent. We also have a great deal of trust in each other. I will keep them informed of things that can affect pricing ... we often work together so that everyone is happy in the end.
Some folks are just honestly curious, never having run a business before. I explain to them the basics ... I make my best guess based upon experience, as to the time, materials, and skill required. I will also explain that the nature of the customer is a factor; some folks get charged more than others. More risk = higher price.
If economy is an issue, I provide ways that they might reduce their expense. For example, I will knock $100 off a service change if the customer drives the ground rod. (It's simply amazing how a half hour driving a rod "explains" why I charge $900 to hang $300 worth of parts!)
On the other hand, I have no patience for the game player. I tell them that my price is my price, and they are free to shop elsewhere. If "Joe" will do it for less, well, hire him. I'm not "Joe," and if you want me, you pay my price.
It's not a matter of having "something to hide." We all have our methods. It's not so important 'how' we get there ... just that we do!
For example, LK and I have compared jobs a few times (we're in different markets, so there's no risk of 'collusion.') We differ greatly in how we arrive at our prices, and we treat material mark-up completely differently. Yet, at the bottom line, he and I come in very close together.
Generally, the less said, the better. "I will do this job for this price" is your offer. Accept or decline as you will. No, we're NOT going to perform an autopsy on the quote.
#159415 - 01/17/0709:11 PMRe: What info should builders/gc's be privy to?
The problem with revealing your estimate is it’s just an “estimate”, it's your best guess for that job, that the GC will then use against you. If you guess high it’s your gain, but of you guess low it’s your loss, and that info is private. If the GC wants T&M rates, then give him that, but your takeoff is proprietary, especially if you don’t have a contact.
However on bigger jobs you may be required to provide a detailed breakdown for change orders, but this would be a job you already have a contract on, and even then being vague is a good thing.
[This message has been edited by ITO (edited 01-18-2007).]