Marketing and Sales
Itemized Bids
When a customer asks for itemization, they normally add the phrase, "So we can compare bids."
Right.
If you and I and a third contractor were all preparing an estimate for the same job, any job, we
would come up with different numbers. The only way we would reach the same cost for the job would
be if we discussed it together. Even then, we would probably have different ideas on how we would
do things and what it would cost. And as we have discussed time and again, it's unlikely that the
three of us would have the same markup. So, if the three of us working together would have a
difficult time estimating a job and agreeing on what it would cost, how can a customer with little
or no training in construction going to do a relevant comparison of itemized quotes? They
can't.
But that is not why they are asking for itemization. Let's be clear about it. In too many cases,
customers are looking for itemization so they can lower your price. Or even worse, they'll use it
to try to lower your price during the course of the job. We get calls and emails from contractors
in this situation at least once a week.
"My customer won't pay me because they say they could have bought their windows someplace
else for less money."
"My customer won't pay me because they say we are charging too much for our work."
"My customer won't pay me because they say they got another quote from their brother -in-law
who is an electrician and his price is half of what you guys have on your sheet you gave
me."
"My customer won't pay me . . . " and on and on it goes.
What happens is this. You start their job and they start making changes. At about 60-70% of the
way through the job, they realize there isn't enough in their budget to cover the job because of
the changes they made. The thought process is, "We have to find the money somewhere." So they go
looking in your pocket.
Suddenly the numbers you quoted on your itemized sheet are too high. Your labor is running way
over what it should. How dare you charge that much for a door! They can buy the same door for $____
down at the Big Box store. Tell me you haven't heard this nonsense. And it all started when you
handed them an itemized list of the numbers for the job. Itemization is handing your customer
bullets so they can shoot at you.
When someone asks for itemization so they can compare bids, the first thing out of your mouth
should be,
"John, Mary, let me tell you how we conduct our business. We come out and talk with you
about your project. We find out what you want to do, when you want to do it, we set the budget for
the work and then we do the work of getting the job ready to start under a design agreement. Part
of getting the job to the starting point is developing a firm price quotation or an
estimate."
"Neither you nor anyone else outside our company could read my estimate sheet, so we would
have to spend considerable time in putting it in a format that you could understand. If you want an
itemized estimate, that is a lot of extra work for us. We charge $75 an hour for itemization and
your job will take between six and eight hours to compile such an estimate. Now, if you want me to
proceed with that estimate, we will be glad to do so, but only if we are paid for the work we do.
Is that fair enough?"
Then you button up and listen to what they have to say. They will tell you real quickly where
you are with them. If they ask if the itemization fee will be credited back with the job, the
answer is a polite "no". If they come back with "Everyone else we have called is giving us a free
itemized estimate", that's your lead into "Are you getting other quotes for this job? What's your
criteria for picking your contractor?" And you now have the opportunity to establish yourself as
the contractor of choice.
If they insist on free itemization, walk away. If you don't, you have no one but yourself to
blame when you find yourself in a fight over the details you provided.
(By the way, this is straight from our book, "Profitable Sales, A
Contractor's Guide", page 208. If you want to resolve a lot of those nagging sales issues that
are costing you sales and/or causing you problems when you get the job, buy the book and read it.
It's worth your time.)
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