When a client 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 client 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, clients 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 client won’t pay me because they say they could have bought their windows someplace else for less money.”
“My client won’t pay me because they say we are charging too much for our work.”
“My client 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 client 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 client 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.)
Related Article: An Opinion on Itemized Estimates
Looks like a lot of the comments are from the customer’s point of view and that’s completely understandable however; my husband and I started a small handyman service in our town and are running into the same issue but are probably in a worse scenario. Because we are a handyman,… Read more »
I suppose I am a little torn on this. I am just starting out on my own in residential contracting but have spent the last 12 years with two of the largest GC’s in the country (we are talking highway, bridge, etc so the same but different). Part of the… Read more »
I guess this type of behavior from contractors flies where you are from. No need to walk away. I’ll would tell you get lost.
Sorry I just don’t know why a contractor cannot provide an estimate that itemizes the labor and the material, unless they have something to hide. Don’t you have to figure it out that way to come up with a price? I just want to know what I am paying for,… Read more »
If you make more than $75 an hour then why would you have an issue paying someone else that rate. Honestly salesmen are more overpaid than anyone. It must me nice to get paid to BS your way through life. Im sure you get plenty of bonuses and paid vacation.… Read more »
Clients need to have the money put back to pay for the entire job. Yes, there are shady contractors out there and there are shady clients. The ratio is about even between the 2. Everyone is trying to make a buck and save some doe. If the client cannot produce… Read more »
Been there and couldnt agree more. I always get a signed contract and have to have at least enough down to pay for materials. Ive even started putting in the contract that if the job is cancelled the balance on what has already been done is due immediately and I… Read more »
Not all consumers are out there to cheat you, and as a consumer who works hard for their money, I feel I am within my rights to bid my work and keep within a budget by doing minor itemization or a simple line estimate. I needed this for the bank,… Read more »
Hello, what a great forum. “But that is not why they are asking for itemization. Let’s be clear about it. In too many cases, clients 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… Read more »
That reasoning is so wrong. I work with contractors all the time for my clients. The reason why i tell them to get an itemized contract is not to compare prices,but in case you change something or decide you dont want to do a certain thing you know how much… Read more »
Sara, You shouldn’t run short because of unforeseen problems, if you do, the project wasn’t researched, planned or put together well. You should give your contractor the budget upfront and let them design the job to the job. When you do that, no one will waste time on wood floors… Read more »
once a hard price or estimate has been generated, planning has already started… just because a line item says, oohhh wood flooring -1500 sq ft @ 3 Per Ft for install, bla bla bla. later you decide to go to carpet. with me … (i am a licensed GC in… Read more »
Agree 100%,
I would just like to add a consumer’s opinion to this. I think it is short-sighted to have the mindset that the consumer is out to get, or take advantage of the contractor by asking for a detailed estimate. A contractor that I hired to do a porch for me… Read more »
Wade, From your comments it’s obvious you don’t know what markup actually is. “a 10% markup on materials for loading, pickup and transport is not going to be a noticeable difference”…..those are job costs and not part of a contractor’s markup. Markup is what every contractor needs to stay in… Read more »
Dustin, good points, but; you are missing a very big piece in your approach. You have to see if from the customer’s point of view. Communication goes a long way with customers/clients no matter what industry you are in. After I wrote the above, I hired a contractor that came… Read more »
Wade, for starters, we don’t believe ALL consumers are out to rip off contractors. But it happens and when it does, it can take a contractor out of business. I appreciate that you understand the consumer point of view. You don’t understand the contractor point of view, and they are… Read more »
this is a good discussion item. Michael I agree with your approach, I am a small contractor and once in a while I am asked for detailed pricing. this is a tip to watch out for – problems ahead. Many clients ask for lots of things when providing an estimate… Read more »
Don’t do free quotes unless you’re willing to eat the cost. Tell the consumer up front that putting a bid together takes time and money , then put the markup in the itemization and let the consumer decide if they want to pay it. It’s called transparent pricing!
do you have one of those books that tells you how much jobs cost? if you are really that concerned about 1000 dollars and you didnt hire the guy because of it then be prepared to get what you pay for… you say you trust the guy, to me it… Read more »
Bryan, I think you need to actually read what I wrote. My concern with a line by line has nothing to do with what the contractor makes. Again, if you go to a service department for your car for an estimate, you get a line by line. They tell you… Read more »
i read what you wrote… i think if you actually trust a contractor to do your work… whats 1000 dollars… now your left trying to find someone else, that you dont know, thats going to come in with a lower price. that just sounds like a nightmare waiting to happen.… Read more »
What’s $1000? On a $10K project? PRETTY SIGNIFICANT. The fact is, a contractor that does not have my best interests in mind, is only worried about their pocket book and not mine. If you are afraid to itemize your materials list for a client, then it must be only to… Read more »
the fact is, if a porch roof leaks… its thousands to repair. your worried about the 1000 dollars your saving now… you doing your own work to save that thousand… negates any contractor warranty. just pay the 1000 dollars to someone you trust, thats licensed, bonded and insured, let them… Read more »
I love this question when asked by a customer for a itemised quote, normally respond with our price is the BEST price WE can do the job for more than happy for you to get other quotes we recommend it. We can provide an itemised estimate but not quote so… Read more »
Wow, if a contractor treated me as a homeowner like that, i would walk away in a New York minute. As another commenter pointed out, it’s about apples to apples comparisons. What kind of relationships did you have with clients that you were constantly in conflict with them?
Agreed! I’m having a lot of work done right now because of storm damage and I HAVE to have an itemized estimate in order to get money from our insurance company for the repairs. I think it’s very short-sighted for a company to refuse to do this.
We are a young electrical and communications contractor and I was just asked to itemize our bid. We won the contract because a) they wanted to use us anyway based on previous relations in business environments. b) our bid was fair. I felt a little short changed on the time… Read more »
You couldn’t be more wrong. When I was working for an owners rep. Construction consultancy firm we did bid comparisons all the time. It’s a check to make sure the bidders are trying to screw the owner, as a check to make sure the contractor got all the items in… Read more »
*aren’t trying to screw the owner
I spent more than a decade at a large CM firm acting as owner’s rep or and GC depending on the project. We too tried, sometimes successfully, sometimes unsuccessfully to get into the details of the bid. But how many times did you tell the successful bidder to increase his… Read more »
If the contractor does not want to provide itemized estimate, or charges extra amount of money for the time to do estimate, it raises a red flag either he is not competent to provide a systematic estimate for each stage of the work, or there is something he wants to… Read more »
Susan: When you ask your medical doctor, your dentist, your grocer, your clothing store, your computer or phone store, etc, to provide a detailed itemized list to support their price and they refuse to provide it, do you also assume they are hiding something? They are. They are hiding their… Read more »
Don’t worry, Michael. We’ll itemize for anyone we hire ourselves but coming from a client your article is an interesting view into the “other side” of the business. I don’t pay someone else to do the work for me because I can’t do the work myself, I hire out the… Read more »
Michelle: Thanks for your post. Everything that you have included is covered in our book, Profitable Sales; A Contractor’s Guide.
Michael
Michael, We are in the unfortunate position of not being able to walk away because we really need the work to survive. Thus we have provided a breakdown of our price, which, yes, they shopped out and then reduced our scope. What option is there other than to walk away… Read more »
What do i say if a client asks for an itemization after they have signed a contract and we have started the job?
no!
no!