I’ve had many contractors ask how to respond when a client announces they want to renegotiate the price after a project has begun. The client suddenly decides that the price is too high, or they went shopping at a big box store and now think the contractor is overcharging. One specialty contractor told me he had three jobs in a row where the owners told him after the work was done that they weren’t going to pay because they thought he was overcharging. Three in a row.
They’re probably doing this because they’ve been told it will work. Their buddy got away with it on a project so they’re going to try the same thing. It’s dishonest but they don’t see it that way; they believe it’s how you do business.
If you have a written and signed contract that follows the implied understanding of good faith and fair dealing, you should be able to get paid for the work you’ve done. That’s because if you have a written contract and they want to change it, their disagreement isn’t with you. It’s with the contract. That’s why you should never let this turn into an argument. It’s between them and the contract, so your response should be, “Let’s see what the contract says.”
If the contract is clear without any loose ends, and it shows a firm price and the payment schedule, what is there to argue about? Explain to your client, politely but firmly, that they signed the agreement, you did your part, and you expect them to do their part. If they don’t, you’ll consider them in default and take appropriate action to collect the monies due. Don’t say any more than that.
They may huff and puff and make a few idle threats, even threaten to see an attorney. When you have a written contract, you can smile and walk away while they think it over. Almost always they’ll realize this game won’t save them any money and will cause more problems than it’s worth, and they’ll pay you.
If they don’t pay and on time, shut the job down. Your contract should have language that details what you’ll do if payments aren’t made or are late. Explain that if they don’t get payments current within a given number of days, you’ll take such action as necessary to collect monies due.
If they still don’t pay, file a lien and hand it to your attorney with instructions to collect. Don’t waste time trying to justify your contract price or dealing with dishonest people. All you get when you wrestle with pigs is mud all over.
I’ve heard that some attorneys balk at helping with liens because they don’t make money on them. If your attorney won’t help with the lien, find a new attorney. Your attorney needs to be willing to take the good with the bad; if they want your good business, they also need to help you with the bad business. Let them deal with the lien and you stay focused on running your business and building profitable jobs.
Don’t worry about losing referrals from this client, because the referrals you get from them might be the very people who put them up to this nonsense in the first place.
I’ll never understand how some people can think it’s acceptable to cheat another person out of what they’ve earned, but it happens. That’s why you should always work with a well-written contract. It’s better to be prepared and never have to use it than to lose thousands to a dishonest client.
The knowledge and experience Michael Stone gained in his 60+ years in construction has helped thousands of contractors improve their businesses and their lives. He is the author of the books Markup & Profit Revisited, Profitable Sales, and Estimating Construction Profitably, and is available for one-on-one consultations as needed.
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