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huggytree
09-17-2009, 06:31 PM
I beat a competitor on a job and took a builder away from him....the builder called me and said 'we want you to do this job for us..give us your price'...they assumed id be lower again....i wasnt....i told them 'i want this job, please call me if my bid is higher and i will help compare bids to see if its apples to apples'.......i want to lock in this builder....

Well, i was higher....i may have $500 in extra stuff the other guy doesnt have in his....so if we compare apples to apples i MAY be lower already....but if im not im considering offering to match the other bid....its a rule i said i would never break....i dont ever lower my prices....if im within $500 ill just lower it....if it keeps happening i probably wont next time...

Builders are going out of business at a rate of 3-5 per month....the economy is not getting better...i see it getting worse lately....i have lowered my new homes to 1/2 my profit...and now im starting to lower my remodel prices.

any suggestions on my offering to match my competitor? im 50/50 on the idea

orion_joel
09-17-2009, 08:29 PM
Huggy, i think that in the current market there may be some need to lower prices. I think this is inevitable at some times.

The thing you need to be careful and where i think the people that go out of business make the mistake, is by lowering their prices to far. There is a point when getting work for sake of getting work, and making no profit no longer becomes feasible.

This to some extent i believe will improve the market for you. People will have less choice, and will be more reliant on the quality tradesman that have outlasted the downturn.

Harold Mansfield
09-17-2009, 08:58 PM
I beat a competitor on a job and took a builder away from him....the builder called me and said 'we want you to do this job for us..give us your price'...they assumed id be lower again....i wasnt....i told them 'i want this job, please call me if my bid is higher and i will help compare bids to see if its apples to apples'.......i want to lock in this builder....

Well, i was higher....i may have $500 in extra stuff the other guy doesnt have in his....so if we compare apples to apples i MAY be lower already....but if im not im considering offering to match the other bid....its a rule i said i would never break....i dont ever lower my prices....if im within $500 ill just lower it....if it keeps happening i probably wont next time...

Builders are going out of business at a rate of 3-5 per month....the economy is not getting better...i see it getting worse lately....i have lowered my new homes to 1/2 my profit...and now im starting to lower my remodel prices.

any suggestions on my offering to match my competitor? im 50/50 on the idea

Personally, as far as construction is concerned, I am in a very hard hit market..there's even 2 Casinos half finished that are sitting idle on the strip and many home builders have folded here as well, so I would be apt to say match the bid within reason..if it means a 10% difference or something like that.

I certainly wouldn't go down in the 30% range, that's just not right.
I would say make the call on a case by case basis.

Construction certainly is not getting any better. No one is building anything.

dbelmont
09-20-2009, 02:04 PM
Tough times call for sharp pencils. But blindly beating a price is generally a losing strategy IMO.

I suppose the core question is whether you can match your competitor and still be able to cover the costs of the job. Otherwise you are in fact buying work (which only works if this is a hobby for you). If you cover ALL your costs you at least live to fight another day.

That's not to say that you can't reduce your costs in some way to make it work. Take a lower salary for yourself. Negotiate a lower labor cost with your crew since some work for less will likely look better to them then no work. . Look at all your expenses with a magnifying glass and cut out anything that is not essential. Try to sculpt the contract so your risks in case of the unforeseen aren't all on your back. Take the time to really define the contract since those gray areas are often the place where we end up getting nailed for extra costs.

If you get the work be diligent on being sure that any extras "You know the while we're at it's" are also fully covered in terms of real costs. Extras can make you money but sloppy pricing on them can kill you. And they are an opportunity to improve your bottom line overall. Don't get greedy but don't give them away either.

Remember this is a business. You may love it but if it isn't making you money right now it may be time to back off until it will.

Good Luck. ANd don't forget we've been down this road before. Good times will come again.

Don Belmont

Spider
09-21-2009, 11:52 AM
To my way of thinking, a bid is a statement of what I am prepared to do the job for. To come back later and reduce the price is to say I was lying before. Not a good spot to be in.

Therefore, I treated such situations as an opportunity to negotiate.

"I can remove the $250 I have for clean up if your men will clean up after I have finished."

"I have allowed for $300 for weather-related delays. I can remove that, if you are prepared to pay $70 an hour if and when it rains while I am doing outside work."

"I can knock $500 off if you will provide the labor to unload my materials."

cocoy
09-21-2009, 03:41 PM
I think it pretty much a given that prices need to be lowered if the competition is doing it. but you also have to look at your customer base. If it's developers and builders who are trying to make a profit on the home then chances are they will pick the cheaper contractor.

Now if they are individual homeowners and the main concern is quality and service then they may be willing to pay extra for that peace of mind.

dbelmont
09-21-2009, 10:38 PM
To my way of thinking, a bid is a statement of what I am prepared to do the job for. To come back later and reduce the price is to say I was lying before. Not a good spot to be in.

Therefore, I treated such situations as an opportunity to negotiate.

"I can remove the $250 I have for clean up if your men will clean up after I have finished."

"I have allowed for $300 for weather-related delays. I can remove that, if you are prepared to pay $70 an hour if and when it rains while I am doing outside work."

"I can knock $500 off if you will provide the labor to unload my materials."

I think you've got the right idea. Just lowering your price makes a liar of you.

I especially like the idea of offering to remove contingencies you've built in as long as your customer is willing to take on the risk. I do a similar thing when clients want a cheaper inspection. I start talking real risk that they can assume by not doing certain optional parts. Funny thing is when I start calmly making the case for them assuming the risk for a lower price they often decide it's better to pay for the higher level of service.

Steve B
09-22-2009, 06:56 AM
Great advice Spider. I never change my quote for that exact reason - I tell people I give my best price the first time. I tell them the little old lady that doesn't negotiate gets the same low price as a professional purchasing agent.

But, you offer some very practical ways to get the best of both worlds. A couple times I offered a discount if the owner assisted me during the installation. It really did save me some time and the customer qot a break on the price. I also have knocked off a bit on the price if they waive the standard follow-up training session (I only do this with competent pet owners).

Spider
09-22-2009, 09:09 AM
Remember, too, you don't have to follow through.

"I can remove the $250 I have for clean up if your men will clean up after I have finished." And then do your own clean up.

That way, you gave a discount, for a reason, but did the clean up because "that's the kind of business I am." You didn't make yourself a liar in the first place and further confirmed your superior quality in the second place.

Ah, the games people play!