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
Receive our white paper, “Estimating Profitably: Ten Tips to Improve Your Estimating Skills”
Our weekly newsletter is sent most Wednesdays with a link to new articles and a reminder of upcoming events. Unsubscribe at any time.
Hello Mr. Stone Im knee deep in a project with a fixed cost, that was remodeled and sold to my client. I was originally doing roof deck modifications to bring up to code, insulate the rear dog leg, hvac issues and interior under slab drain issues. Which most of this is complete. Since then there have other issues arise, example the flipper remove the interior portion of the footers flush with the interior basement walls, dug the basement down flush to bottom of footer, then poured a 4″ slab. I have priced all the new work ($200k+) to fix all… Read more »
Mark, your note isn’t clear. Are they asking for an itemization on work you’ve already completed? Or are they asking for itemization on work that still needs to be done?
You should always be paid for your time putting together an itemization. Your time has value, you’ve put a lot of work into estimating a $200k job, and you deserve to be paid for it.
Sorry about that, They are wanting an itemized report on all work completed and still to be done. I believe your advice would still be the same.
Thank you for taking the time to answer my post.
Be safe
I’ve been swindled. I’m getting ripped off. Period! I asked for an itemization after they started. What they said and what is being done is completely different. We agreed on a price. The crew showed up and did what they wanted to do. They stated,” Did anyone see the contract?” Wow? My 6 foot antique windows we’re supposed to be removed by them. I woke up to braking glass. I ran outside to tell them to stop, they where supposed to remove them carefully. The crew said their boss stated to only save a few. Thank god. My boyfriend ran… Read more »
These are the details that should be in the contract. You need an attorney. Your problem isn’t an itemization, it’s that details either weren’t communicated or they weren’t heard. That’s why contracts need to be detailed, written, agreed to and signed.
Here’s another downfall.The contractor lives across the street from us. And he only wanted to talk to my boyfriend. Since they became chummy with each other. He only moved into the neighborhood approximately a year ago. And only dealt with me when he had to. I’ve brought this up with both of them separately and while they were together. I have approached this situation with grace and respect. I truly believe it’s because I’m a woman. I got seriously intimidated into this situation. The contractor verbally agreed with what I wanted but the contract is extremely vague. I knew he… Read more »
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, we offer a significantly lower labor cost. Honestly it’s probably too low given our expenses. We aren’t making any profit. 4 kids, car payments, and no profit hurts at the end of the day. We have a customer that has in the past, asked for an itemized list of material.… 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 reason I wanted to go off on my own is because I do see that there are many residential contractors who lack a professionalism seen in other industries (This is VERY generalized and frankly most of those guys probably are not the type to be reading up on how to… 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, instead of going with someone else that is why it is called competition. I was told that if they have to provide an itemized estimate that the price of the material would be more, when I asked why they said that I did not know construction. I have been in… 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. You shouldn’t give your opinion without fact. It makes it difficult for honest contractors like myself to make a living. Everyone thinks they are getting ripped off based on a few bad eggs. And yes I was in sales and had salesmen working under me so I know what being… Read more »
its all you the cheap broke bums like you that make doing repairs and estimating not worth getting involved.
You have a price…it was worked up…most if not all free of charge…if you can’t afford it DO IT YOURSELF OR LIVE WITH IT…THIS ISNT WELFARE CONSTRUCTION YOU IDIOTS!!!
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 the money to fully finish the job and pay up front, that is not my issue as a contractor. If unexpected expenses come up, that is not my issue either. Don’t start a $20,000.00 job when you only have $20,000.00. Clients need to have double the money for these issues… 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 have them sign for a 2.5% carrying charge. Hard to collect but helps keep the honest guy honest
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, and now I need it for my backers in my rescue. I know you think this is to jack prices down, but not everyone is like that out there. In my case, without plans, nothing would get finished, and also there is just as many dirty construction outfits as there… 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 of the job. We get calls and emails from contractors in this situation at least once a week.” I believe this might be true in some cases, but as an architect working as right hand for the owner (client) I believe usually the reason I ask for itemization is to… 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 of a credit you should get. like if you start to run short because Of unforseen problems. Maybe you want to save some money and forego wood floors and just put cheap carpet instead. How much of a credit does the contractor owe you? Who knows, he can say whatever… 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 if they can only afford cheap carpet. When clients start asking “how much is this, how much is that” after the job has been priced, it’s usually because the client and/or designer hasn’t done their own homework to know what they want, and they aren’t communicating well with the contractor.… Read more »
You seem to just frame everyone who criticizes your opinion on itemized lists as cheapskates and kind of skirt around the actual criticism. In just about any business it is completely normal to expect some level of itemization on a job that is being done. Of course unforeseen problems should be accounted for and that’s why you need to have more than what’s quoted available. No one has said otherwise and no one has actually made the argument that the price was too high or that contractors should be paid less – you seem to use this as a red… Read more »
Bob-I agree with you completely. The negative tone of Michael Stone through the entire article and every comment he makes would have me running full speed away from him if I ever discussed a project with him as a GC.
What happened to customer service? Michael does not put his customers first but instead characterizes them as the “bad guy” consistently. Remember Michael, these customers are who pay your bills!
Bob, Chris, my articles are written to contractors and that’s generally who I’m criticizing. It’s the contractor (designer, salesperson) who needs to know the budget on the job. It’s their responsibility to communicate with the client, and yes, it’s their job to provide a detailed contract that explains what will and won’t be completed. Our goal is to improve the image of the construction industry by encouraging contractors to conduct business as professionals. Part of that means communicating and taking responsibility for their work. As professionals, they don’t have to provide details on their pricing; they need to do the… 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 CA) if i haven’t bought the wood yet and we can have it returned thats fine but the cost of the labor still has to be paid. the reason being is that i have already put in the hours setting up this job, doing the schedule, organizing crews working around… 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 recently did a great job and within budget. I have recently bought another house and wanted a lean-to roof over the deck. It is a project that I am capable of, but do not have the time before the summer. So, I asked the same team to give me an… 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 business. It is completely separate from job costs (materials, labor, labor burden and any other cost associated with your job specifically) This amount, which is different for every single contractor (10% overhead/10% profit is a total joke, BTW) must be recovered from every job by the contractor or there’s no… 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 to the house, bid the deck covering with an itemized list. This is only a $12k-$14k job and he just finished a $100k+ job down the street. But, he still took the time with me and sent me an estimate that gave me a good idea where my costs were… 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 the one at risk. For starters, you say they are “just ordering and setting up delivery” – if something goes wrong with the ordering or delivery, will it be your problem or theirs? If the railing that you purchased was defective, will you pay the contractor’s time to fix or… 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 or quote. there are many part time so called contractors, especially in the small end of the business. it is a really problem to work in this business area and customers try to not pay all kinds of things, like sales taxes, delivery charges and time planning for the project.… 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 sounds like you dont trust him at all. Me personally, if a client wanted me to drop my pricing to meet another contractors price that is even just a few thousand cheaper, i walk away from it. Chances are, the aggravation that client is going to cause me trying to… 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 how much the labor is and the parts, regardless of markup. I am not being cheap – I am being a smart consumer. As I explained above, what ended up happening is a builder (not a contractor) ended up giving me an estimate and agreed to give me a line… 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. A lot of times these guys use cloud based software, or sq ft pricing that includes labormaterialsgeneral conditions, etc etc… so splitting it up is a bit of a task and not something many people are willing to do since it takes so much time. i know i wouldnt, not… 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 hide something. If there is nothing to hide then there should be no problem.
Remember, I am talking about a porch roof, not a finished garage type project.
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 do 100 percent of the work, and buy the materials. you are completely covered. I MYSELF as a contractor and developer, would NEVER let you do any work on site. EVER and if 1000 dollars matters that much to a quality product like a roof deckporch, then ill let you… Read more »
That Doc sounds like par for the course…lots of deadbeat cheap unscrupulous lovers out there that look to cheat contractors out of final payments as the norm…
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 if the job runs over what we haven’t budgeted for it will be on charged at this hourly rate plus cost plus 10% on materials. Will also be an upfront charge for preparing itemised estimate. If you want a true and real cost of the job and don’t believe the… 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.
Have you applied for welfare….they can help you
This is a good discussion. I have much work to be done because of water damage and MUST have an itemized estimate to get money from my insurance company to do the repairs. I just want the insurance company to pay the real cost to do the work. They have an itemized estimate and I need the same to be sure they included all the work and the $$$ to get the job done right.
Sue, it takes time to put together an itemized estimate and your contractor should be paid for that estimate. Once you’re paid by the insurance company, the contractor has no guarantee that you’ll give him the job.
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 involved to explicate the details of our materials but I am also glad they requested this because we later found a lighting controller they purchased cannot be installed due to their limited access to available power- so we still get paid for the portions of the contract we can do… 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 his bid, and during a comparison you can see if the contractor is unreasonably high or low in certain areas of the bid.
You don’t need to compare apples to apples but you can compare a bowl of then next to another bowl.
*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 price because your review indicated he might have missed something?
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 hide. I would simply walk away and look for someone else. Unless there is a shortage of construction contractors in the nation, I would take time to find someone more transparent.
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 personal information that is none of your business. When a contractor asks you for 3 years of tax returns so he can be confident you’ll pay the bill, and you refuse, should he assume you’re hiding something? A professional contractor will offer a detailed, fixed price contract. He won’t do… 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 job because I just don’t have the time or patience to do it myself because I’m often too busy. For all you consumers, get several estimates and don’t be afraid to ask for references or question a price that you’re not completley in agreement with. Your “nonsense” as it’s so… 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 from the work? We are pissed at having to spend so much time doing all this work for them but we really need to to win the work. Any suggestions would help!
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!