starting a customer off w/ a low price and raising the prices on each job

[Spider]

That makes a lot of sense, Gregg. I would suggest that an item (such as a new faucet) that would normally cost the client $500 would be of more obvious value to the client than a $500 discount. The fact that a $500 item might *cost* the business only $300 is an added advantage.

Great suggestion!

[huggytree]

My markup on 'parts' is usually 35-50%

markup on fixtures is 30-35%

i wish fixture markup was 200% or more.....

Home Depot charges less than i can even buy some of the fixtures for...i cant mark them up much.

i do charge 100% markup on parts for small 1-2 hour jobs.

[orion_joel]

This parts issue seems to be a issue for many markets, Technology is an excellent case, to get away from the price shopper market you need to get away from any product that is sold via retail channels. To do this you move to the market that is dominated by manufacture's selling direct.

I doubt the same is true of the plumbing or most other building industries as the technology, however getting the parts at a price you can make money on is always a bit of an issue.

[Spider]

It seems to me that "marking up" parts or fixtures is a topic for retail businesses. One buys items as $x each, mark them up y% and sell them for $z. The % mark-up is an addition for profit.

This is not appropriate for contracting or service businesses that provide parts or fixtures along with a labor component - unless the "mark up" is strictly for additional materials - as in, adding 10% for wastage, or 15% for consumables (like glue, putty, nails, nuts and bolts, solder, labels, etc.)

If one takes a "retail" approach for contracting/service work, one loses control of the amount of profit that will be included in one's price. The result is a loss of control of the bid price, so that one is sometimes high and sometimes low without really knowing why.

The most accurate method of calculating a price for contracting and service work is to use only the cost of the item plus consumables, plus the actual cost of labor, and add the desired profit at the end.

[orion_joel]

Frederick, i do understand where you are coming from and i only wish that this were the case. In some instances it does work. For business or people that just want a total price, you do not need to break things down.

However i have found that many people want to see things broken down. Maybe this is different for plumbing to technology, or other industries as well. But by far the majority of quotes that i have done are from people that want to see a breakdown of $X for this item $X for this part and $X for Labour. These are not retail customers either these are businesses and such.

The problem is you need to quote how the customer wants it quoted. You lose the deal if you dont quote how they want it. But then you quote how they want it and you can lose it based on how you price. it can be very much lose, lose from a quoting perspective all around. So it comes back to you do what you can do.

[huggytree]

i always put Fixture Allowance: as a seperate catagory...I throw in #'s to get them a good starting allowance..then they go to a supply house to pick them out and that price changes.

the more i can break down a project the more customers like it...giving 1 bulk price at the bottom is a neg. from what my customer tell me...when if the customer changes the project and eliminates a task. With my bid the contractor just crosses out one line...with a bulk bid it has to go back for rebid...which costs time...

The majority of what i sell is not available at Home Depot, but some is....its all available on the internet...Home Depot may sell the same product, but its always a different version..some customers believe me, some dont....i explain how the same looking faucet has a different # on the side of the box...because it IS different...HD sells junk as far as plumbing goes....i still buy tools and 2x4's there

[Spider]

Joel, I wonder how many of these insistant people (who "want to see a breakdown") really understand what the bid details tell. And, I wonder what they mean (and what you understand) by a "breakdown." Further, I wonder what they want the breakdown for and how you could better help them with that.

1. I have found that many people ask for a breakdown because they think that is how they can check the quote. If they don't know how to do the work, they won't necessarily understand a breakdown. I have also found that by telling such people that this is proprietory information and that I would be happy to answer any specific questions they have, usually solves their problem.

2. A breakdown can be done in many, many ways - per item breakdown, per section breakdown, per floor, per visit, per component, etc. etc. It all depends on what the breakdown will be used for. Even a per item breakdown does not have to reveal labor rate, item cost, contingency allowances, profit added, etc.

3. A client may need a breakdown to determine the individual cost of areas of a building, which will be rented to different tenants, for example. If one is quoting to supply components for further assembly, a breakdown by component may be needed so the client can price their manufactured items. A breakdown by time will help a client determine his cashflow needs. The clue here is to find out how the client will use the breakdown so you can provide it in a useful format.

I have no problem with providing breakdowns - in fact, most of my bidding was done providing extremely fine details, such as per CY of concrete in foundations, per CY of concrete in columns, per CY of concrete in floors, per CY of concrete in beams, per CY of concrete in staircase stringers, per CY of concrete in staircase steps, per CY of concrete in walls and so on ad nauseum. A bid for a simple 3-storey office building might include a breakdown of several thousand items. All supplied to an engineer or architect who understands such things (most clients would not want that much detail.) And all without revealing labor rates for various trades, costs of many different types of materials, allowances, contingencies, profit and so on.

Added: CY = cubic yard

[huggytree]

got an e-mail today that i got the job.....ill make $ on it.

the good news is that its a quality remodeler with tons of potential.....could end up being one of my top 3 customers.

[Spider]

Way to go, HT!

[orion_joel]

Congratulations HT.

Frederick, I do see your point. For me in the Tech industry they want the breakdown to compare the product pricing. That is basically what the industry is. When a price is request for a single item it is hard to quote anything but the price that single item. When a customer comes and asks for a price on a dozen printers, 20 computers, a digital projector and a number of other things, again you really need to break it down, not always so they can compare pricing, but many companies i have dealt with, while they may have a budget for the year they only get $X at a time so they have to take the quote and work it in as the funds are available.