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Old 07-22-2009, 06:48 AM
Mike M Mike M is offline
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best practices: rates

Just curious if anyone has changed from one method to another for pricing and presenting estimates.

I usually just give one total price for a system, and list all the things they get without itemizing specific detailed costs. This works great, but I found another model got great results, based on itemizing everything up front, as a way to show the client where the money goes. I've also tried a flat rate for each fixture (includes transformer, cables, and complete installation), but have found people feel they are paying that much per light bulb (ha) regardless of all the "stuff" that goes into a project. ("Two hundred and fifty dollars for a light?"). And then they start visualizing the elimination of various "lights" from the portrait.

I got a really nice job a while back, which I itemized because of all the tricky trench-work and installation detail which was involved. I don't know why I went away from that model, it worked really well.

I think in these tougher times, clients might appreciate the breakdown model now more than ever, rather than just one price tag.

So, after I move and have to start up without referrals, I plan to get out my measuring wheel and calculator, and offer a breakdown of costs for the client. This is based on Joe's model (owner of lowvolt.org). He has his rates on his biz website, which helps people see the costs associated with a professional system, from design to installation. It also helps with qualifying people.

It's really not complicated. He has a sample estimate on his business site that lists retail price examples for transformers, automatic timers, wire/trenching per foot, fixtures, and a flat rate for a design/installation fee. Since wire is available with footage on it, he also informs them that the wire cost will be exact to what he actually uses. What a great way to show accountability, qualify a client, and to track your own expenses.

It worked so well for me at the time I used it, I don't know why I went away from it. I'm planning on bringing this pricing model back.

Last edited by Mike M; 07-22-2009 at 06:52 AM.
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Old 07-22-2009, 07:31 AM
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INTEGRA Bespoke Lighting INTEGRA Bespoke Lighting is offline
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Breaking down your "costs" (actually the prices you are charging the client, which is nothing to do with your costs) in your proposal opens you up to low balling and price competition.

I dont mind competing one on one with anyone or any company based on a fair comparision of the work we do. But competing on cost alone, no thanks. I will leave that for the trunk slammers and fly by nighters.
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Old 07-22-2009, 08:10 AM
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Pro-Scapes Pro-Scapes is offline
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If its a multiple zone job (ie front back sides deck dock etc) I will break the estimate down to a per zone pricing. Much easier to sell 9k...5k and 4k than it is to sell 17k up front.

On all jobs I estimate my COST in materials then I look at the difficulty of the installation. I myself cant justify charging a client with a simple half day installation the same as I would charge a client that I need to bore 5 sidewalks for. I have come real close on estimating my time it takes to do a job. A little time spent on your estimates will make the job more fair for you and your client.
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Old 07-22-2009, 08:57 AM
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Lite4 Lite4 is online now
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Our model is based on what our electrical service side does. Upfront pricing on a standardized form. This way someone in a high end area doesn't feel like he is being taken advantage of because of his zip code. Our form and prices are the same for everyone regardless of their location. We break it down to Fixtures costs which include installation of fixture and up to 25' of lead wire. We also individually charge for 12/2 wire installed in 25' increments, set price for boring and coring, upcharge price structure for lights in trees above 15', transformer price, seperate accessories such as timer, photocell, UPB, covers, grates, lamps, lenses, services such as single circuit diagnosis for repair, etc... you get the idea. This covers all the little incidentals that often get lost and "absorbed" into jobs. It also allows me to show the client up front all the little costs associated with a professional system. Sometimes the sales process can get bogged down in individual pricing, but overall my clients seem to appreciate knowing all the facts and costs up front. Not saying it is perfect, just seems to work for our model.
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Old 07-22-2009, 09:47 AM
Mike M Mike M is offline
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Tim, I like that model. It seems very professional and beneficial for running a growing business.

I'm not saying it's right for everyone, but I like it and I'm going to it.
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Old 07-22-2009, 10:09 AM
klkanders klkanders is offline
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I can't remember the last time I have handed out an estimate I have prepared. The dollar amount was given verbally with an approximate range in price. If they ask for it in writing however It would be handed over. I then discuss what they are getting. I always put an emphasis on the lifetime multi-tap transformer, durable fixtures and connections. Most could care less how I plan to use the right lamp and lenses to achieve the right look. That is our job not the clients. Some of us I believe get so excited we get too technical explaining how everything is put together. Keep it simple.
So in a nutshell I am saying sell the system first and only break it down when asked.

Keith
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Old 07-22-2009, 01:26 PM
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Quote:
Originally Posted by klkanders View Post
I can't remember the last time I have handed out an estimate I have prepared. The dollar amount was given verbally with an approximate range in price. If they ask for it in writing however It would be handed over. I then discuss what they are getting. I always put an emphasis on the lifetime multi-tap transformer, durable fixtures and connections. Most could care less how I plan to use the right lamp and lenses to achieve the right look. That is our job not the clients. Some of us I believe get so excited we get too technical explaining how everything is put together. Keep it simple.So in a nutshell I am saying sell the system first and only break it down when asked.Keith
Hey Keith,

The whole price sheet we do is not really for the client or for their benefit, although it does help them see what they are paying for. The reason we do it this way is for our techs. With just a little bit of education, anyone of our techs can bid a job correctly by using this form. It contains everything on it they will need to complete a system with an idividual unit cost for each item. They simply count how many of an item they will need, mark it down in the "quantity" box, add up the totals and there you have it. We did it this way for simplicity in bidding, and simplicity in parts reordering for our office staff. When the invoice is turned in the office gals know which of our stocked parts they need to re order based on the invoice check off list. The whole purpose is streamlining the sales and reordering process.
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Old 07-22-2009, 02:43 PM
Mike M Mike M is offline
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If anyone wants a link to a nice webpage that illustrates an example of what I am talking about, just send me a PM.

I am not certain if Joe M. uses an itemized breakdown for each estimate to be seen by the consumer, or if he just uses this sample breakdown to educate and pre-qualify people, but I like this a lot.
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Old 07-22-2009, 02:56 PM
klkanders klkanders is offline
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I agree with what you are doing Tim. For the operation and size of business you are now with it makes sense. Knowing what your inventory is at any given time is always helpful!
Is it correct to assume most of your potential customers are getting other bids?
I am fortunate that I have not had to compete with anyone else yet. Most of my work has come from the landscape side of the business.

Keith
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Old 07-22-2009, 08:39 PM
David Gretzmier David Gretzmier is offline
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I give a total first year price and a yearly maintenance price. When doing Christmas lights I quote items installed inclusive of cords, timers and labor, such as a 6 foot wreath is this price to purchase, installed, taken down and stored at our warehouse. Then I quote the year 2 cost for labor to install, take down and store, all inclusive. Whenever I try to seperate out any one thing on lighting, fixture, cost, trans or wire cost, etc, folks always question stuff. why bring up questions? I offer folks the option to spec out premuim or more expensive items, but I always include all the stuff with it as a total price. if something is going to be harder to install, I've already included that in the price.
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