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  #21  
Old 10-03-2014, 01:22 PM
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JimLewis JimLewis is online now
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Originally Posted by PLLandscape View Post
...I've been itemizing my side of the proposal and often just submit the final price. But I can see where people can say "$3500 for what?" whereas if they see it they can maybe understand it better.
Exactly! That's why I started doing it, long time ago. It justifies your overall price and once I started doing this I stopped getting blowback.

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Originally Posted by PLLandscape View Post
For those that itemize, you can obviously see what you are charging for each material part of the job (based on Jims example which I assume is an actual real one). With the labor section have you ever got the "you want what for this!?" "Well how long is that going to take you for that price!?" which then leads into the "you want what per hour!!?" Basically any questioning of the labor amount.

Besides the cheapskates how have you handled questions like that if they even come up? I know JimLewis and PerfectEarth have established themselves as quality vs cheap so they may not get that type calling for an estimate anyways but even if you have experienced that what is your typical response? Or is it just not encountered this much?

Thanks guys
There are several factors here with the labor. First thing is, the customer should NEVER know what you charge per hour. So I never let them figure that out. It's a perception thing. If people knew what we charged per hour they'd get the wrong impression. They wouldn't understand. They'd think we were exorbitant. Trust me, I've tried. It doesn't go down well. So if and when someone does question the labor portion, I don't give them enough information to calculate what we're charging for hour. They usually don't ask directly. They'll say something like, "So how many days are you figuring for this patio?" And already, I know where they're going with this. But I play along, I'll say, "3 days." Then they follow up with, "Ok. So at $5850 you're charging me about $1950 per day? How many guys are on that crew?" So then I reply, "It's a 3-man crew. And they'll be working 10-11 hours each day. But there's more to our labor rate than just the crew. The labor rate is a factor of the crew's time and my time as well. I will be spending a lot of time ordering materials, overseeing the project, scheduling, etc. It also includes our mobilization time as well, sir. There are a lot of factors that go into our daily labor rate." Then that sort of confuses them enough to where they cannot really figure our hourly from there.

But this leads into my next subject on the matter. If someone is questioning your labor rate, then they either don't see the value in your company or they can't afford you. These days, this comes up maybe 2% of the time. Very rarely does a customer even bring it up. If they do bring it up, that's a huge sign they probably can't afford us. You can't win every bid. And this is an indication to me to stop trying and move on.

Most of the time these days, people don't question are prices. We've marketed ourselves and branded ourselves so that most people who call already expect us to be expensive. The cheapskates don't call, usually. They can tell from our website and our photo gallery that we're not cheap. So those who do call have money and are expecting that it will cost them some good money. It's often them hoping they'll be able to afford us, rather than us hoping we'll land the job. We give so many bids each week, none of us who do estimates really care which ones say no. It's like fishing. If you've been to a lake the last 20 weeks in a row and you've limited out on your trout catch by noon every single time, do you really care whether the first one or two bites you get end up falling off the hook? NO! Because you know you're going to limit out again today. Just a matter of time.

But there was a time - 5 to 7 years ago - when we weren't quite as well known, didn't have quite as nice photos of our work, didn't have that great of a website, etc. And it was harder to justify our prices then than it is now. My solution to that problem was just increase our marketing efforts. We didn't land as high of a % of jobs. Some people questioned our rates and prices. Some people didn't see the value. But we were still giving lots of bids - even back then. So it was still just a numbers game. Back then we probably landed 15% of our jobs whereas today it's maybe more like 25%. But the thing that counted was the 15% we landed we were getting paid well for. And the only reason our success rate isn't higher than 25% today is because it WAS more like 40% and so we raised prices significantly.

Anyway, my opinion is that the solution to this is market to the right kind of clientele that can afford you and give so many bids that it doesn't matter that 80% don't hire you. Create so much demand that you can afford to be pricey. Then you don't have to worry about justifying your labor prices.
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  #22  
Old 10-03-2014, 02:17 PM
PLLandscape PLLandscape is offline
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Jim,

As always great response. And I agree you can't please them all with a price and targeting people makes it easier. I'd imagine there's less of an issue with installation type work than maintenance type as most people haven't a clue on how to install much of anything and make it look good.

I did have one of my good clients question me on some pricing (maintenance stuff) and state "Well we are spending $1500+ with you this year blah blah blah". I broke down his $1500+ on how it was used as in cost of materials, fuel, truck, mower, wheelbarrow, etc... I also did it in a nice fashion. They guy hasn't questioned me too much on anything anymore.

My point is with me breaking it down to show I don't pocket $1500+ made him likely feel better about what he was being charged for everything. Similar to breaking down an $8000 job because people tend to forget you buy materials, pay for equipment and employees, and think you're pocketing $8000 vs seeing where there money is being spread out.

Thanks for the reply...
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  #23  
Old 10-03-2014, 03:19 PM
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JimLewis JimLewis is online now
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You bet. Yah, I've often thought of listing out all the different costs our business has and when someone questions where all the money for labor was going or questioned if they were paying too much, I could show them the list. You know, things like labor, insurance, bond, shop rent, office rent, uniforms, cell phones, trucks, trailers, truck repairs, equipment repairs, mechanic, tools, equipment purchases, equipment rental, disposal costs, utilities, cleaning fees, computers, office supplies, bank fees, county taxes, city taxes, tri-met taxes, federal taxes, unemployment taxes, worker's comp. insurance, materials, fertilizer, herbicides, health insurance, office staff, continuing education, advertising, vehicle lettering, graphic designer, attorney, CPA, you know? The list goes on. I always wanted to list all those items down in a row and create an entire page of expenses we pay. Then when some smart ass asked where all the money was going I could say, "Oh! Hold on, let me get this paper here that will explain all that for you!" Just haven't ever done it.
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  #24  
Old 10-03-2014, 04:26 PM
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gcbailey gcbailey is offline
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Originally Posted by JimLewis View Post
You bet. Yah, I've often thought of listing out all the different costs our business has and when someone questions where all the money for labor was going or questioned if they were paying too much, I could show them the list. You know, things like labor, insurance, bond, shop rent, office rent, uniforms, cell phones, trucks, trailers, truck repairs, equipment repairs, mechanic, tools, equipment purchases, equipment rental, disposal costs, utilities, cleaning fees, computers, office supplies, bank fees, county taxes, city taxes, tri-met taxes, federal taxes, unemployment taxes, worker's comp. insurance, materials, fertilizer, herbicides, health insurance, office staff, continuing education, advertising, vehicle lettering, graphic designer, attorney, CPA, you know? The list goes on. I always wanted to list all those items down in a row and create an entire page of expenses we pay. Then when some smart ass asked where all the money was going I could say, "Oh! Hold on, let me get this paper here that will explain all that for you!" Just haven't ever done it.
That would be awesome.... Watch some guy pull a scroll out of his back pocket and just watch it keep rolling out, like in the cartoons.

I've always loved the people that question why a "legit" guy charges so much more than the fly-by-night guys.
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  #25  
Old 10-06-2014, 05:30 PM
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xtreem3d xtreem3d is offline
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Originally Posted by JimLewis View Post
We've provided detailed line item proposals for our clients for many years. It's fairly normal and IMO a homeowner has a right to know what they are spending money on - how you arrived at the total. It also serves you, as the contractor, well to give a proposal that is detailed. Because it shows that you've actually taken the time to consider all of the materials, exactly what the labor will cost, etc. You're justifying your total price to your customer. Otherwise, they often think you were just "winging it." And if the price is more than what they were thinking, they are left thinking you were gouging them. Which is now what you want your client thinking.

We detail out every bid/proposal we give. Over 40 a week between me and the other 3 estimators here.

I can't tell you how many times I've heard something like this from our customers, "Well, this is a lot more than we expected to spend. But it makes sense, once we look at all the costs. I guess we'll go ahead with it. What do we do next?"

It just makes you look more professional and customers LOVE it. An example of one of our proposals is pictured below....

Also, you shouldn't assume that you lost this customer because he was a cheapskate. You very well may have lost the customer because they found someone who was able break down the costs for them. I don't know about you. But we put a lot of time and money into finding new customers, walking through their properties, writing up their proposals, etc. I don't take any of it for granted. If I'm losing bids because of something I'm doing wrong, I want to know why and see if there is something I can do to correct it, so we don't have that happen again. Yes, there are plenty of cheapskates out there. I fully understand that. But don't assume that's why you haven't heard back.

.
Jim,
on your sod price, I see you charge them about 200 for the pallet and I assume you can get one for about 130.00 ( we can here direct if we pick up) then there's 910 for labor. ( and a little for soil) so it works out to about 2.00 to 2.08 per sq foot laid ? I'm not criticizing but that's pretty good !!!!
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  #26  
Old 10-06-2014, 05:42 PM
PLLandscape PLLandscape is offline
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Originally Posted by xtreem3d View Post
Jim,
on your sod price, I see you charge them about 200 for the pallet and I assume you can get one for about 130.00 ( we can here direct if we pick up) then there's 910 for labor. ( and a little for soil) so it works out to about 2.00 to 2.08 per sq foot laid ? I'm not criticizing but that's pretty good !!!!

I think Jim puts it well here....


Quote:
Originally Posted by JimLewis View Post
Most of the time these days, people don't question are prices. We've marketed ourselves and branded ourselves so that most people who call already expect us to be expensive. The cheapskates don't call, usually. They can tell from our website and our photo gallery that we're not cheap. So those who do call have money and are expecting that it will cost them some good money. It's often them hoping they'll be able to afford us, rather than us hoping we'll land the job. We give so many bids each week, none of us who do estimates really care which ones say no. It's like fishing. If you've been to a lake the last 20 weeks in a row and you've limited out on your trout catch by noon every single time, do you really care whether the first one or two bites you get end up falling off the hook? NO! Because you know you're going to limit out again today. Just a matter of time.
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  #27  
Old 10-06-2014, 05:48 PM
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JimLewis JimLewis is online now
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Quote:
Originally Posted by xtreem3d View Post
Jim,
on your sod price, I see you charge them about 200 for the pallet and I assume you can get one for about 130.00 ( we can here direct if we pick up) then there's 910 for labor. ( and a little for soil) so it works out to about 2.00 to 2.08 per sq foot laid ? I'm not criticizing but that's pretty good !!!!
No, you're assuming wrong. It costs me about $196 - almost $200 to get a pallet of sod delivered. Portland is a big enough city that land is too expensive here to grow sod. All the sod farmers have had to move down south by 30-50 miles. There are no sod growers in the Portland area and haven't been for years. All of the sod farms have a 1000 sq. ft. (2 pallets) minimum delivery. One of my sod farms will delivery less than 1000 but then you get a $50 delivery fee. So with the delivery fee, pallet fee and cost of sod, it's almost $200 is what we pay for a small order like that.

Larger orders are a little less expensive, per sq. ft. We can get it for $.30 - $.34 for larger orders.

We really don't make any money on the sod itself. We make money on other raw materials (soils, bark mulch, gravel, etc.) but not sod. Then, of course, we make most of our money on the labor.
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