[fakie99]

OK...this has come up a time or two, but I'd like some feedback. I have revamped our estimating process for this coming season based on feedback from customers last season.

Last year, I would submit an estimate for a project - hardsaping, plant materials, drainage, etc. - with speciifc parts of each detailed out, i.e. brick, gravel, 8' white pine, topsoil, etc. Then at the end of the estimate, I'd put the price - $25,000.00. That was it - I never broke up the prices, or itemized in any way. Then I had cusotmers start saying: " we'd like to see how this breaks down so we know where we're speding our money." I heard it more than once. Any most contractors around here (and builders for that matter) do use broken-out pricing to list prices for eveything.

So, I created a new estimate format in Quickbooks and used it for the first time a few days ago. Know what i got? "hey, this oak tree seems a bit high", and "if drainage is that much of the overall price of the job maybe we'll do it ourselves."

I KNEW IT! those are the kind of nickel and dime statements I tried to avoid with the one lump-sum price.

But anyway, attached is the new format - how do you guys present estimates?

Thanks for the help - this is going to be a great season i think....

[Nebraska]

Maybe you're breaking it down too much?....

Why not just give totals by each section (Patios, plant material, etc...)?? For example for the plant material list quanty but no item price and have a subtotal for Plant and labor that just shows $2463.50.

Sort of an in between lump sum and itemized.

[HardDaysKnight]

No don't itemize fakie. You see what happens?
Everything on your estimate is predicated on all the work.
The price of materials is what you pay NOT what they would
pay. I may get flamed By others here but, it's a package deal
and itemizing breeds questions and indecision and eventually
NO SALE. You have to explain that in this business that every
move compliments another. You can itemize a grocery bill but
not a construction project of any trade. Give a price and negotiate
if you want to but, don't break each task down by price.
You are not running a "Flea Market".

[VoodooChile]

What HardDaysKnight said.

We simply provide a material list, description of the work and a price. Multiple phase projects are broken down logically, i.e. patio, garden, pond. That's it.

The other solution to this problem is screening. The Nickel and Dime crowd gets sent to the low-ballers with questions like, "What's your budget," and statements like "$1000 won't get the work done". Both can be said from the comfort of your office chair, over the phone. If you're saying such things face to face, it's already too late.

Your estimate looks like our Time and Materials accounts' invoices, and occasionally we hear "That seems a little high" from them, but T&M is almost always profitable, itemized bills are the only way to instill confidence that you're on the up and up, and after they see us sweat, the squauwkers tend to simmer down.

Good Luck!

[cutntrim]

I break it down like you do - for ME, but not for the customer. For them, it's similar to what HDK and Neb. are saying.

Can you imagine going to buy your next truck and negotiating with the salesman on every component part of the vehicle? "Now why do I have to pay $xx.xx for that muffler made by so and so? I can get a cheaper muffler over at AutoZone, and how about that steering wheel price?..." Ya know what I mean?

[jwholden]

I used to break things down to tons of detail on estimates and I got tired of the questions. I went to listing the most important materials and a lump sum at the bottom of the page, and never had a single customer question my costs.

I am going to use Quick Estimator for estimates this year and transfer the totals for M, L, E, S to QB. I will most likely spell out all the materials I'm bringing to a clients house, but give a lump sum for labor and equipment. I think it will help my customers see the VALUE of my service and understand why I have to charge what I do.

If this method becomes problematic I will choose a different format for my estimates.

[HardDaysKnight]

Originally posted by Nebraska
Maybe you're breaking it down too much?....

Why not just give totals by each section (Patios, plant material, etc...)?? For example for the plant material list quanty but no item price and have a subtotal for Plant and labor that just shows $2463.50.

Sort of an in between lump sum and itemized.

Exactly!
Use phrases like: All beds dressed with mulch(no quantity).
#1 screened topsoil for backfill or whatever( no quantity).
Price includes materials, labor and delivery etc..

[Bill Schwab]

I break out every detail. EVERY detail. Each detail has a price. WHY? one might ask?
Becaue our state will not legally allow you to bill for any work not done, nor supplies on the ground. So, at any one second, by looking at each detail on the invoice, and by seeing how many hours have been worked, we know to the penny where the crew is on the job at the end or middle of each day. Since we invoice every 3 days no one can give me any crap about something not being done, or, in the event of a bad client, we terminate the job and bill for what was done.

On the sales aspect, when the local surfer dude climbs off his board dripping wet with an estimate saying one thing with a large price, we show every single item a person gets for what they pay.

When the average contractor turns in a one page bid and for the same work we give a 10 page bid, perspective is everything. If someone has it organized so well that every item needed is listed, people see exactly why our costs are so much higher than the average company.

It may be a regional thing, but this is what works here.

[VoodooChile]

I'm thinking Bill,
you got more lawyers than wackos in California...but you make me question our touchy-feely proposal template.

With your 10-page itemized approach there is no doubt what you'll do and they'll owe.

[bcx400]

I always itemize my estimates, including unit costs and quantities. Most of my clients only look at the bottom line. Two or three times per season I do get the client who nit-picks out the more 'expensive' items, not this is not the norm.

I also do a lot of work for existing clients on a T&M basis- which is the fairist for both parties. In these cases the estimate is really just an 'estimate.' This thread has got me thinking though- maybe I will start giving only the bottom line costs to new clients, and keep the itemizing for the T&M work.

Which brings up another point: You submit an estimate, the client accepts the estimate, and you complete the work. If you are over on hours used (not because of additional work added) do you still invoice for the original esimated amount, or the actual hours used on the job? I think it is easier to justify billing the client for additonal hours used when the estimate is itemized from the start.

[fakie99]

thanks everyone for the replies - i wish i could get quickbooks to show only lumped costs for each project aspect (as in the attached file which i've doctored up in photoshop). i think the more detial we provide on the estimate the better, but i am seriously considering nixing the PRICING for each detail.

i am also considering taking the MANHOURS off the estimate. the customer really does not need to know how many hours i am estimating for each phase.

[cutntrim]

I would agree with not showing a labor hours estimate. Frankly, I'm usually over budget on labor anyway, and even if I were under I wouldn't want a customer out there with a stop-watch, or questioning the two hours I was away from the site on one day, since they didn't know I was at the supply yard...

On a side note...California seems like a red-tape nightmare for contractors to me, and thanks to California I can't get my 2-cycle Lawnboy trim mowers any more!

[Bill Schwab]

See we use labor hours as a sales tool. Since many competitors like playing hopscotch with clients, when we start, we finish. They can see how many hours what we do involves by seeing the time spent on the project. Also, if you have to bail, and product is on site, you have a lined item for what the client gets to pay for and can walk away with hours spent on site..

[johnkeegan]

Even if you don't break out the estimate in as detailed a manner as Bill, at least let the customer know what the cost is for each facet of the project. 20' x 15' patio costs... 30' x 4' walkway flairing to 6' at both ends costs... 9-10' white pine...10 yards much...
That way the customer may see that the 10 pines are what's pushing the projects costs from $20K to $25K, and they won't scrap the whole project because their budget was only $20K. Or if they see that the sitting wall adds $7K as opposed to just bringing the grade up to the patio and not having a sitting wall....etc.
I tell people that most projects are done in phases and that it's better to be patient and do each phase correctly (i.e. by me) rather than try to do everything on the cheap (i.e. by a low baller). Of course, there is a line on the estimate which informs the customer that there is a separate fee if the overall project is broke out into to phases to cover the costs of set-up, loading/unloading, lawn renovations etc. It's nice to do it all at once but i'm determined to make the same profit per day whether I'm there for 3 weeks or one day.
I also don't usually separate out the labor and materials on the estimate. For instance, the cost for a 10' pine or a 15' x 20' patio is listed as "labor and materials included " for each item. This seems to discourage customers who want to buy materials themselves and all the ensuing headaches and time delays that would cause. In my estimates the materials mark up and labor unique to buying, handling, transporting and quaranteeing each item is folded into the costs. This allows me to estimate in an efficent manner and I don't have to argue with a customer that says, "Well I see the spirea costs 'x'. I can get it at Home Depot for 25% less. What if I buy I buy it and you plant it?" If they really insist on buying the materials I merely subtract my wholesale cost and keep all the markup and related costs originally added in. But that's rare.

[start2finish]

We try not to break things down any more than we have to. We usually get picked apart on them. Or get asked to do a couple of things that we don't profit as much from. Now on a time and materials bill I show everything that happens. I want to make sure and justify the price at the bottom of the invoice.

We did a job monday cleared a back section of the property. 30 x 100 a dozen cedars 12inch caliper and honeysuckles and briars. We estimated the job for 1188.00 including haul off and dump fees. The customer gave us approval immediatly and was estatic about the price. even said are you sure you can do it for that? We stated we have figured the job accurately and assured the customer that there would be no surprises. a concrete price. Well we show up with F700 dump and tractor trailer dump (40 yards) S250 bobcat and 2 laborers. 2 hours and fifteen minutes later we are loading up and leaving with the debris loaded on our trucks. The customer asked up how much was the bill going to be. We stated $1188.00, he said it only took you 2 hours. We confirmed and reminded him that we were the cheapest out of three and he questioned the cheaper price. He stopped complaining and we mailed him out an invoice on Tuesday. I wonder am I wrong on sticking to my guns. If the job had took twice as long as I intended he would have insisted on the first price and rightfully so we rarely ever add to an estimate. Doesn't this work both ways. I admit to you guys I over estimated the yardage of debris to haul off. I expected some downtime to go dump and load another load on the big rig. any thoughts?