[Malrex]

As most of you know, this is my first year, so I am still learning alot and trying to avoid mistakes. I just worked a job for time and materials for the first time. While I was on my way to get my check for the job, alot of questions flooded my brain and I started to get paranoid. Everything worked out fine but I started to think of questions and what I would do in these sort of situations.

Mainly:

Do homeowners ask to see the receipts?
If they ask to see the receipts, and your fat wholesale price is on there...what then? Explain the process?

These are probably stupid questions and you are snickering to yourself but seriously, how do you handle that? Please help a newbie.

[agla]

I do design work, so I don't sell product often. However, I do sell product every once in a while when I do rock gardens. When I do those the plant list is going to change, so I have to have a system where my pricing can not be questioned because there are two things I don't want - to have my integrity questioned and to lose money.

What I do is to put into the contract that plant pricing is based upon the retail price of the plant at a certain nursery "whether I buy it there or somewhere else". Sometimes that price will have a mark up % and I'll write that in. All that does is standardize your pricing and has no bearing on where you buy them. The nursery does not even have to be close to you, but it helps if it has online posted prices making it easy for you and the client to find.

That will stand up in court, but more importantly, it makes the pricing solid and keeps the client AND YOU from second guessing it. That allows you to realize that the price "is what it is" and keeps you from lowering it because you think it sounds too high.

[Raj Venugopal]

Your receipt is your business, not theirs. Don't get into showing clients receipts other than the one you issue them. If there's a warranty issue they're concerned about, that's what they should be paying you to deal with.

Be honest, let them know that any break you get as a contractor accounts for design, selection, delivery, placement, warranty work and installation.

If you go to a restaurant, is it acceptable to ask for a receipt on how much the overpriced T-bone cost at the butchers? No. The reason is that the cook adds value to a regular T-bone by cooking it and serving it in an environment we find pleasing. Same thing here. You take materials and add value to them by buying them and providing them to your client. Your skill and expertise need to be accounted for in the final bill, not the piecemeal parts.

We ran into this twice, and both times we explained how we work and the homeowner was happy they were looked after.

[EpicInterlock]

Excellent response Raj.

[TrickyDick]

I used to work for a company in a different industry and all our T&M billing was done with a straight 18% markup on materials, subs and services. That was the deal and a photocopy of every reciept was included with the invoice package. If you have an agreed upon mark-up the client has every right to see reciepts.

What I mostly do in this business is quote prices for T&M work (which I don't do very often). Quote a price (per hour, ton, cubic yard, pallet, etc.) for everything that will be included in the job. If the client agrees up front to pay $25/ yard for screened loam than it's none of their business what you pay for it.

[agla]

It is true that you don't want to open your receipt book to your clients, but when you go "time & material" you live by the sword and you can just as easily die by the sword.

An abstract policy can create problems if someone does not like the bill. If you have a clear policy and it is in the contract there is pricing can't be disputed. By referencing someone's price list it makes the price undisputable. You don't have to show that price list up front, just reference it. You don't have to buy from that supplier, just state that the "prices are Billy Bob's Nursery's retail price (no discounted, off season, or sale price) + 10%" and you can buy them from a good wholesaler or Home Depot for whatever price you can get it for.

If you pull these prices out of you a ... (hat) and someone disputes them and you go to court and they show the cheapest prices they can find to the judge, there is no reason that the judge will accept anything besides those that the homeowner has brought in or receipts of what you paid. In the absence of a firm policy, that is what the judge will rule on.

You can be cryptic and maybe use some descretion to make up for other losses on the job or maybe charge what just feels right and fair. But when disagreements occur it is a hard position to defend.

[Malrex]

Thanks guys. I'm going to set up a system for myself in case I run into this situation again. Luckily the homeowner was happy with my work and it wasn't even a problem, but I like being prepared.

[Terre]

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[Dale Wiley]

agla response is right on...a T&M job is just that...your time plus your materials. They have very right to see the recipits and unless you have a agreed upon markup, you just pissed away 11% to 15% cost in administrating the materials.

Define how the time is spent or qualifies...How about any support times you have to support the time yuou spend on the job..

These support times occur on every job and can range from 75%, (bad) to nothing... (very efficent and HIGHLY unlikely.)

Where do you cover those times in a T & M job ?? That has to be in a contract too...