PDA

View Full Version : to bid or not to bid?



huggytree
11-22-2009, 08:56 AM
I got a plan from a new builder last week. His cover letter talks about KEEPING HIS OVERHEAD LOW and that he is looking for bids on his new spec. house.

So all he's looking for is a cheaper price & thats not me!

His plans didnt have any details, so i e-mailed..
How many bidding?
is this a house your building this winter or a test for price?
who is your current plumber?

his response didnt say how many bidding (which to me means 5+)
His current plumber is the large cheap shop which typically is 10% lower than me...and he's been using them for 25 years!!!!!!!!!

after 25 years id hope as long as my prices were good that id be safe.

should I bid?

I threw the plan in the garbage...it will take 2.5 hours of my time to do it or more...im not that busy, but do have other positive sales things to complete with that free time.

He does not fit my customer profile...they typically all come to me having problems w/ their current plumbers and price isnt the most important thing. Plus they are willing to pay extra for quality parts.

The wife yelled at me this morning for even considering bidding.

thx4yrtym
11-22-2009, 09:40 AM
I'd listen to your wife. You've been down this road before and didn't like the outcome. On top of everything else it might take forever to get paid.

Best of luck with the coming week.

Spider
11-22-2009, 09:45 AM
Two and a half hours to bid the plumbing on a single residence? What is it, Dave? a 20-room mansion?

For an ordinary 2½ bath, 1 kitchen house, you need to get your bidding process down to 30 minutes max. Then, I would say, Yes, bid it, regardless. But at 2½ hours to bid, I'd decline politely.

huggytree
11-22-2009, 10:16 AM
I map out on the plan exactly how i will be plumbing the house...then add up every fitting and foot of piping...I also have to figure out every fixture and look each one up..then i have to figure out the hours with a bid sheet which gives an hour value to each fixture....thhhheennnn i have to type it all in to a blank bid form + fixture list.

my bids look 100% better than most and are more detailed...i usually end up reading it over 2-3 x and making changes after changes until i have everything correct and detailed.

some bids require me to contact the building inspector to ask how he wants things done (example this week: outside drain on 2nd floor open porch..storm sewer or sanitaty sewer)...each inspector will ask for something different...ill spend 30 minutes and usually 2-3 calls researching and getting it figured out.

When i was bidding houses more often I used to try to have a set/flat rate price for each different house layout....2.5 bath -2story = $x

when bids are down to who's $100 lower you cant do that....

this house is also bid w/ copper water pipe (which i havent done in 2 years)...so id have to get up to date copper pricing on all my fittings....that alone would probably take 1 hour+....right now im on old stock and my price list is close enough for the small type projects i use copper piping on.

if i were larger & price wasnt as important i could knock bids down to 1 hour.

I shouldnt even bother bidding on new homes anymore...i lowered my profit margin to 5% and im still too expensive...the only new homes i get are from my existing new home builders. I can charge 10% profit on them.

I also agree with THX4YRTYM...the low price guys are always slow payers too...they abuse the system in every way to squeak out 1% more profit...im dealing w/ another slow payer right now.....id rather sit at home than deal with the stress of someone oweing me $5k-$10k and giving excuses....those situations always end with a Final Lien threat and a payment showing up magically in 1 hour or less.

I wrote the customer back and asked once again 'how many are bidding'....since he didnt answer the first time im curious on the response....yea he'll lie anyways if its 5+

huggytree
11-22-2009, 10:25 AM
Spider you are correct though...i can bid remodels in 20-30 minutes....i should be able to get new homes down to 1 hour...30 min...not possible...

i use basic fixtures that i have on a reference list, but there's always a few specialty items which take 15 min to look up.

typing it in takes 20+ minutes...sometimes its 3 pages long

flat rate pricing on parts is the only way to knock it down to 1 hour....

i dont see 30 minutes as being possible unless its a very basic house..

Steve B
11-22-2009, 11:48 AM
Sounds like you knew the answer before you asked the question.

huggytree
11-22-2009, 12:59 PM
yea i knew the answer..

its just hard to pass on potential work....but in reality it never was work...just being used

it may be the first time ive passed on bidding and its painful.

but its more painful when i bid and the builder blows me off after i submit the number...or says 'all plumbers charge too much and thats why i use a sidejobber'

the pattern the bad guys always follow is they are your friend until they get your number...after that they act snotty to you and rude....their true personality shows when the friendly act isnt needed anymore.

last time i wrote about a bid i didnt want to do i dug it out of the garbage and bid anyways....that one was more obvious than this one...that builder was the one who told me he had bids for 1/2 price from sidejobbers...then he told me off for being too expensive.He told me he couldnt believe anyone would pay my prices...it was a whole house gut..i was $10k and his side jobbers were $5k.....$5k to replumb a whole house...it was just crazy numbers..parts would have been $3,500..it took 1 month to stop thinking about that one.

Spider
11-22-2009, 01:54 PM
It's just a matter of developing a system, Dave. If you spend 2½ hours on a bid and the work involved is 25 hours, that's 10% of your time spend bidding. If labor is half the cost of the job, that's 5% of the bid. If you are losing bids by 10% (as you said), half your excess cost is your cost of bidding, which has nothing to do with the quality of materials used.

Looking at it another way, 2½ hours at your regular rate means the bid is costing you $240, which of course you must include in the bid. If you are losing bids by $100 (as you also stated) you could win more jobs if you were able to reduce your bid by $140 because your bid only took 1 hour at a cost of about $97.

If you can devise a system where you can bid a house in 30 minutes, your cost of doing business is greatly reduced and you will win more bids. Which is the name of the game. Using the system I had developed for my company I could have bid the plumbing on a single house and have it printed out in full detail in about 15 minutes.

billbenson
11-22-2009, 02:30 PM
Have you ever considered using a database program such as access to speed up your bidding process? It's a lot more upfront time, but in the end you should dramatically reduce your bid turn around time.

I've spent weeks designing a quote database (not all at one time) so I can get quotes out fast. Granted, my quotes are generally only product quotes so they are easier, but I can do a quote in 30 seconds which gives me a much higher closure rate. It really has a dramatic effect.

Your quotes are going to be more complicated, but I bet you could dramatically improve the time it takes to quote. Its the sort of thing you set up when you have free time.

For something like this, you can easily add all of the fixtures and parts. You pad your time and quote high, not taking to long to quote. You are really not expecting to get the bid, but if you don't quote, you aren't in the ball game. Maybe he's having a problem with the current plumber.

If, for some reason, he gets back to you, but says its high, you can go over it in detail to see what the real price should be?

huggytree
11-22-2009, 04:55 PM
a database program or bidding software would definately help me....as i grow i will have to go to something like that..bids on new homes are pretty rare these days.

I lost one house recently by $100...that was a 1 time example.

his letter and limited discussions has said nothing about not being satisfied...its 100% about getting a cheaper price..25 years with the same plumber is amazing..ive never heard of 10 years even....25 is practically a marriage....if i win the bid by $200 will he leave his plumber of 25 years for $200? he'd have to be crazy to do that.

his 25 year plumber has MANY quality issues.....its costing him future referrals....i start getting service calls from them after 3 years typically......if he hasnt seen a problem in 25 years does anything think i could change his mind and make him pay $1,000 more when he's asking for less ? no chance.

many of my builders have used this plumber...most only did 1 or 2 houses with them...they saw the quality and wanted better.

billbenson
11-22-2009, 08:00 PM
Sounds like as you already decided, its not business you want. It would be interesting to know why he goes out to bid after having a 25 year relationship with a plumber. Maybe he thinks his current plumber is screwing him; testing the market; some quality issue?

Spider
11-22-2009, 08:10 PM
It would appear that you don't know what is going on with that 25 year relationship, so why second-guess it and likely guess wrong.

1. Perhaps, after 25 years, the plumber is retiring and the builder is looking for someone to start another 25 year relationship with.

2. Perhaps, after 25 years, and all those bad referals, the plumber is seeing the error of his ways and beginning to bid for doing quality work. The builder wants to see if he can get a quality plumber at less than the old plumber wants to charge for quality work.

3. Perhaps the contractor has come to realize that the home building economy has changed and that high volume/low quality won't cut it in the future. Maybe the contractor has decided to adapt to a high quality/low volume narketplace.

4. Perhaps the plumber is ill and someone else is taking over, who is even less quality conscious.

5. Perhaps these 25 years has seen a steady decline in the plumber's standard and the contractor is not prepared to go any lower and is considering producing a better quality product.

My Goodness, there are a zillion possible scenarios. All of the above would suit you handsomely, Dave, if you are ready to negotiate. You never know - and you never will know if you drop out before the game begins!

handprop
11-24-2009, 07:58 AM
You need to sit down and define your business. "Who is Waukesha Plumbing?"

Do this and the answer is obvious

huggytree
11-24-2009, 06:11 PM
were talking 25 years....not 2 or 5....after 25 years they know what they are getting...a low end plumber

this plumber is one of the largest shops in town..so no one is retiring.


Its still on my mind...i was considering yesterday to get it out of the garbage can and thow a 30 minute bid on it...id just take the last house i did and add a bit for the differences....but then i thought of how i feel when i submit the bid and then get insulted because im $1,500 more...its happened over and over when competing with this plumber

i dont compete to be the low priced....if someone uses a plumber for 25 years its obvious what his expectations are..

yes its possible he's realized after 25 years that he's used the worst/cheapest plumber in town....but from what ive gathered he's just looking for someone worse/cheaper yet.

i threw the plan into the dumpster today...no turning back..

I had a good new prospect call me today 2x w/ questions on a 1 month old bid...its gotten my mind off this guy....the new prospect IS my type of customer. the low end builder IS NOT.