how to handle repeat customers who question pricing

[huggytree]

as the remodeling market shrinks further the remodelers keep questioning my pricing...more and more

i have a pricing sheet that they always use and my bids lately have been at or below my pricing sheet...im trying to be frugal for them to help them win more bids

i price my jobs out for the hours a average plumber could complete the job....i actually think my $$ are now below what the average guy could do.. its been a while since i worked with other plumbers, but i remember they are 1/2 my speed or slower....i run up and down the stairs, while they slowly crawl up and down them....and they take smoking breaks and 1/2 hour mid morning breaks,etc

the builders complain that I complete the jobs way under what my hours must be...they know my hourly rate, so its easy to calculate in their heads...i make most of my profit by getting the jobs done early....if i work hard i should receive a better reward...thats why i went into business...im a super man plumber....i kill myself working hard...im not going to do it just to make a small profit...or more profit for the builder...i want to make it for myself....and some day when i hire someone my prices should stay the same...i feel its correct to base hours on what an average employee in any field can complete a task....

...i never lower my prices....i let them know that i feel im competitive for the service/quality i deliver...i try to make any discussion of pricing quick and short...i avoid it when i can...it is what it is ...thats my attitude.

its getting annoying.. i handle it with a smile and a short explanation.....it is what it is...take it or leave it...

how do you handle it for your business?

[billbenson]

If it's slow I discount on the small orders, if I'm swamped, I don't want to deal with the little orders. Big orders can take more time for me to do than small ones, but not always.

The thing I gather from you is that most of your profit comes from labor. A big order means more work and travel time and other fixed expenses remain constants. I think that is consistent with a lot of people here. Web designers don't have travel expenses, but their profit is pretty much 100% labor. I can see discounting for a very large job, but I can't see discounting for small ones unless you are really hurting for business.

[Steve B]

The way I handle it is that an "Hourly" rate is not part of any discussion or pricing sheet. I give a total price for the job that I'm going to do and there is not even any breakdown of labor versus hardware. If someone wanted to know how much the hardware was (happens about 1% of the time) then they will only know that the total labor is X. It would never be given to them in X per hour.

I know your jobs vary quite a bit more than mine, but you could still do your estimates the way you are currently doing them for your own paperwork. But, on any paperwork that they see, just share with them the total labor amount.

[huggytree]

what if they question your bid and ask for a pricing break down? ....tell them no? (i guess i should)

everyone knows what plumbers charge....if you charge $5,000 or a job and complete it in 1-2 days they know your making 200-250 per hour....they all can guess what the parts are and try to figure out what your making...its pretty easy....they all seem to do it....

the other guy im getting questioned from says 'we both know it doesnt take you 30 hours for this project'....he's sitting back and figuring things out

i havent told them that i bid for the average plumber...they think i bid for my own labor times.....i dont know if its smart to say that i know im over bidding the hours on purpose...in a way i am over bidding them and in a way im bidding them correctly...it depends on how you look at it...

sometimes i do small jobs sight unseen or an aspect of the job is 'unknown'...so its T&M.....they know my hourly wage from this...no way to avoid adding T&M into some bids....whats inside a wall or under concrete is a mystery sometimes....i could bid 10 hours and it could be 30....t&m is how i protect myself from these grey area's...this is another way they all know my hourly rate

both of these customers are struggling right now...they are underbidding(i think) in an attempt to get some jobs...one hasnt given me a job in a year and the other has been 6 months....odds are im going to lose them over price


if i DO bid the jobs accurately to MY ACTUAL labor hours then i would lose 1/2 my profit(or more)....and when i hire someone id have to raise my prices....id lose all my customers when my labor costs double....ive always had the idea to act like im a big company...sound big, look big, act big, price myself big

[Steve B]

"what if they question your bid and ask for a pricing break down?". That only happens 1% of the time and I just give them the cost of the hardware and the cost of the labor - but I don't give them the labor cost in a "cost per hour" they just get a total. I don't have a "cost per hour" rate - I just charge by the type of job I'm doing.

Let them figure it out if they want - as you said before, it is what it is. They can call another plumber if they don't like your price - regardless of how you calculate it or in what manner and detail you choose to share it with them.

I happen to agree with your customers that notice that you're charging them for more hours than it actually takes you. If you're quoting them a "per hour" rate, there seems to be a strong implication that your charge is based on the hours you are actually working. This is another good reason to just give them the lump sum amount of the labor.

I understand, in your case, you will need a T&M solution. In those cases, keep doing what you're doing. And, when you hire someone, you can have different hourly rates for different employees that you have on the job. It's a free country - you can charge however and whatever you want (as long as your union doesn't have an issue with it - and you know where I stand on the union).

[huggytree]

i try to flat rate my jobs as much as possible....kinda like a auto dealer garage...you ask for a brake job...they look it up in the book---4 hours labor...if it takes them 2 hours they still charge 4....its 4 because thats what an average mechanic can accomplish the task in....

when i worked for someone else they used the same type of method...except the owner got it all...i saw some invoices and he was making $400 per hour off of my labor....if i get the jobs done under standard hours its extra $$ for me....w/o it id probably be out of business.....when im working 80-100 hour months that extra $$ is how i survive and thrive

i think its a big business way of thinking about it....and a union way too

[Steve B]

I must not have been clear - your example above is still quoting a job on a "$ per hour" rate. It's just that you're looking up how many "hours" it should take based on some average estimate of "hours" that's in a book. To use that same example - you would just say the labor to install the brakes is going to be $200. PERIOD. You wouldn't say the labor for the brakes is going to be 4 hours at our $50 per hour rate.

[huggytree]

I must not have been clear - your example above is still quoting a job on a "$ per hour" rate. It's just that you're looking up how many "hours" it should take based on some average estimate of "hours" that's in a book. To use that same example - you would just say the labor to install the brakes is going to be $200. PERIOD. You wouldn't say the labor for the brakes is going to be 4 hours at our $50 per hour rate.

and what do you say to the customer who asks...'how do you come up with that price...details please?'

thats the type of questions im getting right now...they want to know my math...

none of your business is what i should say, but thats too rude...

the customer emailed today again comparing one bid 15 months ago to a recent one which isnt apples to apples...he's questioning why my prices are higher and how i come up with the prices....i tell him to look at my pricing sheet and he questions things even further...tonight i decided to give him a political type answer...only 1/4th answer the question and start talking about another aspect of the project....im blowing him off...and ill keep doing it until he gives up asking too many questions....

he wants to know exactly how i arrive at prices, so he can figure them out without me.....my reply was to let me handle the bidding and just keep asking for quick bids via e-mails w/ photo's....he is the engineer type and gets into details heavily...he's very good at what he does and may be a bit autistic over it.

[billbenson]

and what do you say to the customer who asks...'how do you come up with that price...details please?'

thats the type of questions im getting right now...they want to know my math...

none of your business is what i should say, but thats too rude...

the customer emailed today again comparing one bid 15 months ago to a recent one which isnt apples to apples...he's questioning why my prices are higher and how i come up with the prices....i tell him to look at my pricing sheet and he questions things even further...tonight i decided to give him a political type answer...only 1/4th answer the question and start talking about another aspect of the project....im blowing him off...and ill keep doing it until he gives up asking too many questions....

he wants to know exactly how i arrive at prices, so he can figure them out without me.....my reply was to let me handle the bidding and just keep asking for quick bids via e-mails w/ photo's....he is the engineer type and gets into details heavily...he's very good at what he does and may be a bit autistic over it.

Why not just say "we charge flat rates for this". If they have any questions ask them if Midas charges flat rates for oil changes?

[Steve B]

I have never once had a customer ask how I came up with my price. I probably give about 500 quotes or more in a year. I've had them say almost everything but that - "That's higher than I thought", "it's more than xyz company", "That's less than I thought" etc. But, I've never had anyone ask how I come up with the price. I'm guessing you're getting questioned about it because other plumbers in your area give their quotes that way and you are often dealing with other contractors instead of directly with the homeowner. Just because other plumbers quote that way doesn't mean you have to.

I like your idea of answering it like a politician does. Maybe something like, "my price is a reflection of the effort, expertise and attention to detail required to complete this job". Or, if it's another contractor, you could say, "probably similar to the way you price your jobs". Or, "I've incorporated several years experience to price my jobs appropriately for the market". Basically, all of them are polite ways of telling them it's none of their business. If you give them three or four answers like that they'll eventually get the hint.

[79level]

people will always question your pricing, it is in their nature, the best thing you can do counter it in my opinion, is building professional image to your company, for example.. In Building industry I noticed that companys that charge more, have their logotypes and website adress on their uniform, and all uniforms are the same, and so they seem more professional then Building company with workers in shaggy pants and stuff, so building your personal image is important as well as building your comapny image.

Having a website is also quite important those days for any kind of company, and if anyone have any question you can always send him to website to section "How we work" ;) but firstly you have to create this page and write up, how quality your work is + adding testimonials from other clients and so on. Basically you would need to build your own brand, and then none will question your prices.

[huggytree]

the customer gave up questioning me today...finally....my 'no answer' answer worked...either it frustrated him and he gave up or maybe he just decided 10 e-mails on the same subject was enough....i recommend the run around type answer to a stupid question

Steve...your customers are the homeowner.....most of my customers are builders....they have to get the prices down as far as possible to sell jobs, so you can see why the details are important...when these customers are on the verge of going under they have to figure out ways to lower their prices...going after subs is the easiest solution......next time this issue comes up im going to begin the conversation with a run around.....give answers that arent really answers...just like a politician

[billbenson]

I friend sold used cars years ago. He said every customer is going to point out a door ding or any flaw to try to get you to lower your price. His strategy was to completely ignore the comment as if it was never said.

I was at my local auto shop where I always take my car for service. They do a good job and are fair. A friend has known the owner since grade school. A customer was there complaining to the clerk at the front about how expensive the tires were. I gather he had all the tires changed on a recent model car. They aren't cheap. The clerk used the same tactic. She ignored all the complaints as if they were never said. He questioned the bill and she pointed out items on the bill he questioned and nothing more. I imagine auto shops get quite a few of these types of customers, but this guy was pretty aggressive. Same strategy as the auto salesman.

I've used the same strategy over the years. It works quite well.