Customer Wants a Full Price Breakdown…

Haters gone hate

I took a sales call to do work on a home in a nearby residence.  The guy I went to see owns the home in a beautiful neighborhood 15 miles away.  He wants me to fix some drywall from a busted pipe that burst during the winter, install a new high-efficient toilet in the bathroom and add rubbed-bronze fixtures to the sink and tub.  Photo: urlesque

I agree to work up an estimate on these items and decide to get back with him the following day — to go over details of cost.  I head back to the home office, pour over the internet for supply costs and recommendations for the homeowner, estimate the time it will take to complete the project, multiply my hourly rate, procurement fee, error/omissions percentage, mark-up, ect., ecetera, ect.

I call the homeowner the next day and schedule a meeting at his house.  I go through the details, ask for input, and a start date — should the customer sign and is in agreement with the quote.

He reads and looks over the estimate, then pauses, for like 15 seconds.

“Is there a problem?” I blurt out.

“Well, yeah.  How much is the materials?  I’d like a breakdown of each of these things are gonna cost!” he replies.

How do you handle that?  Should you give him a revised estimate, or should you hold firm with explanation?

Would you ask for a cost breakdown of a meal at a fast food restaurant?

“Umm.  How much for the pickles?  I need to know the cost because it seems kinda off.  What is the price breakdown of a slice of cheese, the meat cost, and the bun cost.  Also can you tell me how much each french fry will set me back?”

“Now go back and work up another estimate for those items so I can see them listed, because I feel like you are overcharging and I don’t trust you.”

Sounds about right, huh?  Wrong!

First off, when a customer asks for line item cost, it could indicate they are extremely cheap and will beat you up on those line items.  Listing line items gives way to nit-picking — on every line.  You have already invested time and expense to prepare a written quote and drive over there to submit it.  Now they want another printed explanation.

Ouch.

I’m not saying that all people that ask for price breakdowns are not trusting you; they may have been conditioned this way with doing business in their everyday lives from listening to others.  Lawyers and accountants.

What I’m saying is that if a customer wants a price breakdown of materials and labor, they must be charged for it.  Calmly explain to them that there is a fair amount of time involved in preparing a quote (although they may not believe you — with the “free estimate thing” permeating our business, lol).  However, it is the truth.

I don’t know one contractor that prepares written estimates and drives them all over God’s Green Earth, who doesn’t incur gas costs and time spent putting these quotes together.

Sale your services as a full package deal.

In order to avoid headaches, which take the form of the client knowing your profit on their job and asking you to lower it, as well as taking away your material mark-up (by way of line item breakdowns), simply sell your company’s worth as a full package.  This is completely fair and legit.  Your profit on a job is proprietary.  You control the information: the secret recipe of Kernel Sanders chicken with it’s delicious herbs and spices didn’t get out from a customer’s squeeze play did it?  Should yours?

“Mmmm.. chicken..”

kernel-sanders

Decide: should I give a breakdown?

You must decide if you are going to agree to separate things for them, so the customer can see the prices of each item.  In standard contracts, I break down work procedures to be performed and materials to be installed.  But these blocks of information are general in nature — standard contract writing procedures.  Photo: kfc.com

However, if the client wants each and every line item broke down and the price indicated next to it, there is a cost associated with doing that for them.  That cost is purely decided by you and what you think your time, effort and energy is worth.

“I charge $75 per hour, and it will take 3 hours, Mr. Homeowner.  I’ll have that prepared for you in a day or so, no problem.”

If they are willing to agree (pretty sure they wouldn’t; as cheap clients usually request these things and will balk at the site of an added cost), then more power to your construction company..

Control the power

Dealing with certain customers, it becomes about control and power.  You are the contractor and have it.  Don’t let the client take it away by breaking your will to succeed and profit.  Having a calm, steady demeanor when dealing with the general public — and not sway because of emotions — will take you farther in your business pursuits of success than not.

“Grow some of these, too… They’re needed in construction!”

Two walnuts

Remember: Don’t loose your cool when confronted with problematic clients.  You can always just walk away.  The next prospective client won’t be so bad.  Photo: friendsoftheprogram.net

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83 comments… add one
  • kathy

    Er – I just went through this with a contractor.
    His rate was several thousand over the estimates of other contractors. We went with him because he seemed more experienced.
    First, I stupidly gave him the 3/4 deposit he requested. After that, he treated us like dirt. I won’t go into the worst parts and will stick to the point.
    In the middle of the job, he asked for a lump sum of thousands more, because he bought several necessary things. I was fine with that because he should be reimbursed.
    But then he refused to give me a receipt. And he refused to provide any receipts so that I could check his math. I am positive that he padded the billing. (On his final bill, he indicated that the money I paid him was for something else – not what he had told me)
    Another time, he went out and bought a ton of fixtures, and told me to pay him. I didn’t like the fixtures he had bought. He said he couldn’t take them back because he’d thrown away the boxes. I asked to see a receipt. He wouldn’t give me one.
    The fixtures had no brand name on them. They looked cheap and plastic.
    It was obvious that he bought cut-rate and was billing us top dollar.
    He should have bought one fixture for our approval. He didn’t want to go to the trouble of returning them, and could care less what we thought.

    We paid him for the fixtures in full. In fact, we paid him in full for the entire job, and told him not to return.
    He cost us thousands of dollars, over this and many other things.
    So you really think a paying customer has no right to know what in the hell we are paying for?

    • Admin

      My question to you is: Why on earth would you give a 3/4 deposit? There was really no incentive to finish your project (in the mind of this unscrupulous contractor); you gave the guy more than half down before he ever started your project. That is one of many red flags that would have me rethinking this contractor. Did you do due diligence in selecting this contractor? That means checking his license, insurance, Worker’s Comp., references, etc., etc. It is really sad when homeowners get burned after the fact. The “guy in a pick-up” types really bring the true professionals down and devalue our services.

      What did your contract say in regards to allowances, time, and budget? A good contract protects both parties involved. Never go without a contract — which I suspect is your case. Any reputable contractor will provide a blank contract for review by your attorney beforehand. I would have submitted a flat fee contract (fixed price), with allowances included for decent materials that you could have selected yourself. That way you would be happy with. You should never pay the guy in full if you weren’t satisfied. There are a lot of unknowns here in your story and I’d like to hear from you. We can talk directly in this comment section; I’m a licensed professional and I’d like to help you figure this one out.

      And the answer to your last question, “So you really think a paying customer has no right to know what in the hell we are paying for?”

      Yes and no.

      Yes, there should be specific allowance amounts agreed to by both parties stated in your contract for things that you wish to pick out because tastes are subjective — such as the kind of tile, the kinds of fixtures, etc., with a threshold price attached to them — for instance $3 to $5 per sq. ft. tile allowance.

      No. When you sign a flat/fixed fee contract with a company (which, by the way is the best and saves you money), they handle the entire project for you and you sit back and relax — let the pro take care of your solution. Your solution is a package deal — the contractor handles all material procurement, arranges pick-up and delivery, dump fees, the whole shot — for a specific contract price.

      The prices he pays at the supply house for materials for your project is proprietary and shouldn’t be itemized; it just causes you as a homeowner to pick apart these line items and you are in for a battle with each other. However, these line items can further be quantified by allowances to your project. You simply go online or to the home store and advise the contractor of the products you’d like installed, provided that the product doesn’t go over the allowance amount.

      Finally, here’s an example that further explains this theory. When you go to the doctor, do you request him to break down each specific price of the products and services he provides so you can see if his prices are in line with what you assume to be correct? I’d like to think not; you simply pay the bill agreed upon. Next time, do not hire a family member or guy-in-a-pickup-type who “does this on the weekend”; that lives in his mom’s basement and will work for beer money. I may be assuming things here, please forgive me if I am wrong — I’d like to hear back from you.

      • Ade

        Note: When you sign a fixed priced contract of over $1.0million like the one I am presently administering you cannot sit back and relax. You need to monitor what the contractor is doing.

      • it looks like America and Agnes says it looks like European towns! I have neither visited Europe nor USA, hence I am afraid I do&n#39;t have a clue on either 🙁

    • Lamont

      Great comment. I have asked for itemized bids to know the scope of work and type of materials provided. It’s usually not a matter of trying to pinch pennies. I have been bid on a few jobs and given a price for materials that were inaccurate. I just wanted a specific on what to get. When the contractor gave me a bid on ceramic tile, I went and said I could buy the tile he listed at the HD 4 miles away for half the price and then use my military discount to avoid the taxes. He was pissed. But I originally wanted an itemized deduction to list specifically all the work to be done. He didn’t have to break down everything by price – per say. But I definitely wanted it to say what rooms to tile, and grout, and seal, and the sq ft. As a realtor, I’ve seen contractors tell clients “that wasn’t part of the bid.”

      • Lamont

        Was just reading your last paragraph. When you get a doctor’s bill — it’s after the fact. But it is pretty well itemized. I work for the VA and the spouse does medical billing. You don’t get an itemized bill beforehand, but you sure do afterwards.

  • patti

    I disagree with you. It is not the contractor that “has the power”….it is the customer. The contractor was hired by the customer and is therefore an employee hired to perform an agreed upon service. If the performance of that service is lacking, substandard or dishonest the customer has a right to demand remedy. As far as receipts go, there must be some accounting because how is the customer to know that the materials you placed in someone’s house did not fall off the back of a truck somewhere? I’ll give you an example, in my kitchen renovation I asked for a specific type of appliance…and got it….but it was a faulty cast off piece of junk. How is the consumer supposed to protect themselves from this kind of underhanded practice? If I pay for cabinets, appliances, flooring, sinks and so on…please note…I have paid for them, they belong to me and I have a right to know where they came from and what they cost. Period. Now you make analogies to fast food and medicine…those industries are in fact highly accountable to the consumer and there are numerous agencies whose sole purpose is to protect citizens from scams, faulty products and practices. Even a fast food joint has to pass health inspections, food products are in fact labeled with a complete breakdown of the calories and ingredients. You cannot pay somebody to do a job in good faith and then get “cheaped” to death on materials and have no recourse. The courts have a word for that…..”fraud”. I suggest that you seem to have some kind of ax to grind with the people that use your type of services. We are not a stupid public, some of us read and research things, get informed so to speak. So you can’t pay somebody to do job x with materials y and then come up with materials c and expect not to account. This is America and that dog just won’t hunt.

    • Admin

      @ Patti
      It pays to research who you decide to hire. I’ll repeat it again: the contractor must maintain control the flow of his/her business. I’ve ran across more than enough P.I.T.A. customers who expect you to do wonders for a 10k kitchen. They then get substandard materials and worksmanship when they hire the “cheapest tradesman”. Take a look at the contract you signed. If you aren’t fully satisfied with whom you may hire then why hire them?

      I would never work for a customer that wanted me to install materials they bought beforehand. That’s red flag city. It tells the Contractor that these folks are cheap. These customers pick the wrong size item, not enough of the item, can’t return the item, waste my time, etc., etc., because NOW they expect me to dig them out of their mess. Install it yourself. The DIY channels make it look easy and will show you how.

      But you know the biggest problem is with most folks? They pay to have the nicest cars, eat at the best restaurants, buy the most expensive outfits, send their kids to the best schools, but will cheap out concerning one of their most valuable assets: their home. I’ll never get it.

      Thanks for commenting though.

    • Contractors are Sooo! held accountable , more than any fast food chain,especially when they are licensed and also when permits are issued .Also held accountable by the bond they must purchase before they are issued a license .there are many avenues of recourse for the home owner to take action and get refunded without even having to talk to an attorney.
      I believe you do have the right for specific information pertaining to the models and what not of material, that should be in writing. That way if materials used were not agreed upon then guess what that’s a violation of contract.
      You Have a lot of rights as a home owner, However your contractor is not running a non profit organization. He Is not an employee. Do you provide workman’s Comp for him? No. Do you pay his general liability insurance? No!
      All That is being said in these articles is not to discuss price and markup or profit margins with the customer because no matter how little or how much it is people will think you are ripping them off just because you are making a profit.
      Think about it if you knew how much that cheese burger really cost you would be disgusted at the restaurant chain. If we knew how much it cost to make our medicine we would be up in arms with the pharmaceutical companies. If you Knew how much Home Depot paid for that kitchen sink before they sod it to you ,you would cry.
      Do you know how much of a profit your boss makes off of your services?
      If you happen to be self employed them I will throw out the hypocrite card
      However your right THIS IS America the land of opportunity and free enterprise

      • The Official Contractor

        Thanks for commenting Steve. Good points. Although each situation is different.

      • Lindsey

        I find this incredibly interesting. I’m going to offer my take on this issue, and I’d love to hear responses from the other side.

        I am an advocate for transparency in business. People appreciate that it will cost more to hire someone to do something than to do it yourself. If you want someone to pay you for a service, you had better be able to tell them why they should pay you and not someone else. The problem I see with people on the contractor side is that they over-value the physical cost of production. The real value you are providing to your client is not the service itself, it’s the knowledge and experience to perform the service correctly. It’s that you’re saving them time and money in the long run, because you did the work right the first time, because you did the hard work of learning how to do the service, because you took the time to practice and become great at it. The profit you make should be equal to the value to the customer. Show them how much work goes into it. If you are open and up front about what you’re putting in, and that qualifies what you’re charging for what you’re putting out, people will pay it. You need to ask yourself if you are really providing that value. If so, stand behind it. If not, step up and fix it.

    • Lamont

      Great post. I was laughing at his fast food analogy. You walk in, see a picture of exactly what you will get and the price. And as you said, many agencies regulating the performance of the employees and the quality of what you get. And you can ask the ingredients.

      A restaurant says this is what you get, and this is what it will cost you.

      Lots of clients are not sure what they will get from a contractor, or the cost. I had a tree on my roof. Insurance said to replace 12.28 squares of sheathing during the repair. Roofer said he would repair / replace as needed to fix the roof. He did less than the 12.28, but since he only said he would do what was needed, he was within the legal framework to keep all the money. He even went so far as to say insurance was not meant to give me a whole new roof for free when it wasn’t needed. But he did find it OK for him to get enough money to replace my whole roof even if he didn’t do it. Sure, my roof was fine afterwards. But he got paid enough to remove all of it and replace it. However, he only had to repair it and he did that by replacing less than half the sheathing. I didn’t get any cash and he sent none back to my insurance. I didn’t care about the money – it wasn’t free to me, I paid a deductible as well as premiums for over a decade. I just wanted an itemized bid that said he would replace 12.28 sq of sheathing and the quality of both the shingles and felt he would use.

  • Frank

    This posting made me laugh, as it is exactly what NOT to do or how to think as a contractor.

    Of course you have to give a CSI breakdown. I have been in the commercial and residential construction business for 20 years and can count on one hand the number of times some contractor came back to me with a lump sum bid for something like this.

    I didn’t even return their phone call.

    As a customer, they need to know the breakdown for two reasons.

    1. If their are change orders, they need a unit price to reference the cost differential.

    2. I need to know that quality isn’t being sacrificed in one area to make up for your profit in another. If I ask you to build an addition onto my house and I can’t see in the price that you decided to buy $100 dollar windows from some fly by night “off the truck” supplier, rather than the Marvin Integrity windows that were spec’d. Then we have a problem.

    I don’t know where you get this “The Contractor has all the power” BS, because it is completely wrong, especially in this economy where even excellent contractors are barely staying above water.

    • Admin

      @ Frank
      Are you a contractor or not? The fact of the matter is that you DO NOT give a full price breakdown for individual line items. This is contracting 101. Any competent contractor realizes this. You’ll easily set yourself up for problems. There is no CSI breakdown. Are you kidding me? Most homeowners want you to break every single line item down because they are inherently CHEAP. They then attempt to force you to lower your costs based on what they think you should charge them for each individual line item. Check out what Micheal Stone says about this.

      Also, I’ll note, subcontracting with other contractors and working for a homeowner is like comparing oranges to apples. I doubt you have ever been in business for 20 years successfully — to make a blanket statement like that.

      Reply to question #1: There shouldn’t be a need for change orders if you bid the project correctly and have everything spelled out and agreed to — in your contracts. To hit a homeowner with change orders AFTER you realize that you UNDER CHARGED THEM is just plain wrong. Now if they initiate the change order because they want to upgrade something — that’s different. Homeowners are notorious for asking for “little extras” — free of course. You simply pull out your estimate sheet and CHARGE for these things.

      Reply to question #2: You will know what “quality” is, spelled out according to the contract. The contract should give detailed description on items and the quality to be installed, but as far as separating labor charges + other costs and showing each section of how much each costs is the wrong way to conduct a business. Any competent contractor knows this and charges for his services as a package. Period. My company includes a summary of what we will do and when we will do it and at what time we expect a draw according to the contract. These are usually blocks of text describing the phase with blocks of costs due at those times. We then let the clients pick finishes — through allowances described in their paperwork.

      And Yes. The contractor should control the method at which he is willing to work. The contractor should always attempt to maintain power and order in interacting with a customer — Not because you are doing something to get over on them; but because you decide what you are willing to do on the job and who you work for.

      And by the way. Never base the way in which you are willing to work on the economy and pressure to “keep the doors open”. You’ll be out of business pretty quickly with this type of mentality. 90% of small businesses go out of business in the first 5 years. You know what the main reason is? NOT CHARGING ENOUGH FOR YOUR SERVICES. Your bills are the same aren’t they?

      Some contractors make it and others seem to barely stay above water. It’s not magic or luck. Its charging a fair price for your work — no matter what.

      Thanks for stopping by.

      • Armando

        Very well said Admin, I completely agree, I have been a Quantity Surveyor and Contracts Manager for 23 years altogether and never see a competent contractor showing the breakdown of individual unit rates. Doing so will be risky and exposing the company’s internal processes.

        Armando

      • HOMEOWNER

        Admin,

        I think your post can only represent what you have experienced with “cheap or nit picky” customers. I personally asked for a break of a job not because I’m cheap or want to “force” someone to lower their fee, it’s apart of me choosing who I want to do the job. If there are 4 contractors who for the most part charge the same for materials but “over charge or under charge” for the labor I personally don’t want either one of those folks. I choose based on what’s reasonable and fair to me. I respect folks and their crafts and would never ask them to compromise, but I also protect myself and do what works for me.

    • FMP

      Where to begin… first, I totally agree with Frank; “The Contractor has all the power” is a completely inaccurate assertion. How do I know? Because as the customer I can choose who to give my money to.

      Second, preparing estimates with the intention of earning business is part of the job description when one is a contractor. You are owed nothing for this. Sorry.

      I would agree that customers are not entitled to information regarding profit.

  • Jay

    Good for you Admin…..

  • John

    I’d love to see the guy who wrote this insane article go to the grocery store and have the cashier just look at this cart and say, “uh, that looks like around $115”. Is he really implying that he would just accept it? Give me a break.

    • Apples & oranges John. You must be one of those guys who wants to know how much the pickles cost on his hamburger ……

      • The Official Contractor

        😉

        • Steven (contractor)

          I don’t think customers understand that the reason we seem high on our bids is because we have a hourly wage we have to make! A work truck to pay for to haul tools and give estimates! Tools to pay for! Gas to buy per job! Liability insurance premiums to pay! Health insurance to pay! Workmans comp to pay! Taxes on our contracting business!
          Advertising costs to pay to stay busy year round! That’s why a 16×20 deck might cost you $ 4500 and materials for that 16×20 deck might only be $1250 ! See most people go to work for an employer and the employer pays taxes on them! And pays for their tools they use! Pays workmans comp! Pays for everything to keep that business going

    • Brad

      That’s an inaccurate comparison.

      I proper comparison would be paying for each of those items without finding out what the store’s/brand’s cost was.

      You dont ask the cashier “Can I see an itemized breakdown of what the cost of water, sugar, and lemons was to make this lemonade?” After all, a man’s got a right to know where that water came from and how much it costed.

      You don’t want a lemon. You want lemonade created by lemons. You don’t want a 2×4, you want an addition built with 2x4s. Comparing an entire basket of groceries is making yourself the GC. You picked those items yourself. If you pick the subcontractors yourself, then you will know their quotes, but you won’t know a cost breakdown of what’s in the lemonade, nor should you know a cost breakdown of what’s in the concrete bill.

      It’s all about picking a contractor that you trust and have faith in. They agree they can do “X” repair to your house for “X” amount of dollars. It doesn’t matter what their cost is. That’s what they’re willing to do it for. If you don’t like it, find someone else. If you’re happy with that, let them do the job.

      There are infinite accurate ways to compare it. Hell, if you go to a tattoo shop and and artist says “I’ll do that piece for $100”, do you now deserve to know his/her ink cost? No. They’re offering the service for THAT price. That makes it worth their while.

      Besides that, numerous factors contribute to price increase and decrease. If you want me to carpet one closet in your house, it’s probably going to cost you $250. If you want me to do three bedrooms, I might just do the closets free of charge. If I give you an itemized estimate and you say…hmmm…the bedrooms cost a lot. Don’t do the bedrooms, just do the closets….well, now my price isn’t accurate anymore.

  • Kim

    I’m in the process of hiring a contractor to remodel my bathroom,I did my home work and made sure he was liscensed,bonded,insured and qualified for lead abatement. I was submitted an esitmate which was a few thousand dollars difference both ways from the other contractors,in the contract it stated allowances for tiles,fixtures and such,I’m not cheap and am not trying to short change the contractor I would like to go buy my own tiles,toilet,sink due to we hired a contractor in the past to install an egress window and found out he installed a crank out window,dropped the window well to low into the ground causing the metal grate to act as a block across the top of the window so now the window only opens about 4 inches,the whole point of doing the window was so my sons bedroom could be moved downstairs,we ended up keeping him upstairs as the new window was not safe. As a homeowner I’ll pay his fees I just feel I should have the right to go purchase/pick up my items so I get exactly what I asked for.

    • Admin

      @ Kim

      I’m sorry you had a bad experience with a contractor that installed your window. In your contract, the type of window you wanted should have been clearly outlined.

      You certainly have a right to pick the type of products you want installed and the type of contractors you hire. You seem to have gotten a hack (substandard contractor); next -go- around find a company that specializes in egress windows. I would look for a company that has been in business for 5 years +. They do this type of install daily and are proficient in the right installation procedures (hopefully, if you did your homework).

      Don’t let this one bad experience discourage you from contractors; you just have to find the right people. Good luck.

  • Allison

    I’m having this fight with a contractor right now. He is refusing to give me an itemized estimate, instead saying that “everything is included.” He wants me to just pick out my cabinets, countertop, and paint, and let him go to “his suppliers” and get them, and not tell me how much he will spend on them. He doesn’t want to sign a contract, either. And he tells me his company regularly builds million dollar homes, I find it hard to believe he has worked for the 20 years he claims and has never used a contract or itemized estimate. I don’t want to undercut him, I don’t want to stiff him on a reasonable profit, I just want him to tell me what I’m spending my money on. As long as he stays within my budget and does good work, I want him to make money off me. Not all customers want to fleece their contractors.

    • Admin

      Do not hire anyone that won’t enter into a well-written contract. That is red flag city. Don’t walk, run from that guy. Red flag number 2? He’s bragging about million dollar jobs, lol.

      • Gabriela Lays comentou em 14 de novembro de 2011 às 20:52. desta vez por que vc nao faz o make da selena gomes na musica ¨Love You Like a Love Song¨ ela esta muito linda ….. bjj¦sâj€Âj!

      • Thanks for spending time on the computer (writing) so others don’t have to.

      • The only experiance I had was watching my then wife have a cisarian section I watched from open cut to closing stitch he had to pull her insides out several times to get it right(stop the bleeding) I was ok with it all.The reason I mention this is that some months later she as watching the learning channel and they had some operations that I simply could not watch so I understand what you were going through

  • Thank you for the terrific article! We just had a long-term customer who asked for a breakdown of cost for a water heater install bid. I broke it down to material/tax/labor for her, and she came back with a request for “how much each piece of equipment costs and how much each costs for installation.” We can’t comply with that request, since the time is based on the best estimate for the entire job, not a per-item installation, and the markup is proprietary. I explained that to her, and suggested that she get some competing bids for the job, and go with the one that seems most appropriate for her needs. That way she can see where our bid stands in comparison to others, but I don’t expect to hear back from her again, simply because I said “no.” But that’s okay – for every customer like her (and there have only been about three), we have 200 other ones who accept our bids and are happy with our work and our prices.

    • Admin

      Good for you Juliet! I’ve been pretty darn busy this spring, but I hope to gain insight from others and mybe I’ll come up with some new stuff soon. Thanks for commenting.

  • Chris

    This is a great discussion that covers a topic that has frustrated me every time it comes up…which is rare but has a significant impact when it does. My perspective is of a carpenter owning my own business for almost 7 years. 90% of my business is word of mouth, 10% find me online through my website. Out of the hundreds of clients I have worked for about 2% have asked for itemized estimates. Most of those estimates were under 5k. Of the 2% only 2 clients asking where referred.

    I think these rough breakdowns alone detail the clients, in my experience, that need the “additional cost insights” to feel they are getting a fair deal from their contractor.

    From my experience, my opinion is… if a service provider comes to your home, takes time to review the proposed work with you, understands your requests and that understanding is then clearly outlined in the estimate they submit to you…It doesn’t matter what their margins are. They are providing a cost estimate for what it will cost you to hire them to work on your home…period. If you’re not happy with the estimated costs either have a discussion with them about your financial concerns or politely decline their proposal. Bare minimum, please respond to their efforts. People they have spent their money and time to offer this often free service, at least say, no thank you.

    I’ll repeat what many have said in this forum. Business’s profit margins on both labor and materials and how they develop them are proprietary. We have the right and goal to profit from our knowledge and services. Profit is deemed for some to be a dirty word…but hope that your reputable contractor profits from their services so they can continue to provide you and others with quality work. And yes, that does cost more than a “tail gate” “carpenter” your neighbor’s uncle knows whom will work for pizza and beer.

    It takes most small businesses, from scratch, months to years to develop a competent system to identify and cover their expenses and incorporate them into a estimating system. Don’t ask us to try and explain our fees with over simplified “line item cost”…it’s frankly rude. Again like others have mentioned, no one’s asking Home Depo to reveal their wholesale pricing manufactures are charging them. How could the cashier know that information? Right. For some reason the proximity of the client to the small service provider (decision maker) leaves clients feeling they can get and are entitled to knowing our profits.

    My hope is not to sound like a soap box preacher here folks. I simply want to encourage those hiring service professionals to look at the process differently. It’s not about how much a provider is making off you. Its simply, are you interesting in paying their price to work on your home. If not, respectfully move on.

    • The Official Contractor

      You hit the nail right on the head, Chris. Thanks for that!

    • Lindsey

      After reading more comments, I think a lot of the issues with this topic actually stem from a lack of marketing.

      No one is asking Home Depot how much they paid for the sink because they already trust Home Depot. Whether it’s deserved or not, HD paid to get that trust. They spend millions of dollars a year (and corresponding hours of work) putting out advertisements that demonstrate their expertise and encourage the general public to trust them.
      That’s the difference. Your prospective buyer doesn’t trust you, because they don’t know you.

      When it comes to selecting a reputable company for a service, it is absolutely not “simply” being “interested in paying their price”. It is about trusting that your price is reflective of the quality of service you are providing.
      You can’t ask the customer to look at it differently unless you make them. Mostly because you can’t ask anything of a person you can’t contact. Start presenting your offers differently. They are not in your industry and they don’t know what you know. They also don’t know that YOU know what you know. You know why you’re charging more than Joe Schmoe, so tell them. An educated customer is a happy customer.

  • KoKo

    So my contractor tells me that he can do this project for $50K, and it’s a T & M contract, and now he has billed me for $52K, and the job is about half done. When I start asking for receipts/invoices for the materials (which he said he was marking up 10-20%), I find that he has marked them up 45%, above the RETAIL prices. He failed to provide me the real invoices — the ones with HIS cost on them. He claims that he has to pay retail, yet he owns the tile shop where he (I) bought the tile, so I KNOW he’s not paying retail for my tile. He also sub-contracted a bunch of work, charged me $40 – 45/hour for the subs, but also charged me $45/hour for his time to supervise them!! I was paying $45/hr for HIM to do the work, not $85 – 90/hr that it ended up costing me for him to watch subs do it! He has charged me about $12,000 for about 500 sq ft of tile work. And I end up looking like the jerk for asking for receipts and original invoices??? If contractors want to be trusted, they should prove themselves trustWORTHY. And in a T & M contract, contractors should have no problem providing their cost invoices.

  • Chris

    My experience is that EVERY SINGLE CONTRACTOR I have called in the past if pretty
    much looking for a gravy train. Theory has it that many contractors know they are
    overbidding in hopes that if only ONE out of TEN customers accept their price, then
    they can make a lot more money and not have to work so hard doing more jobs for
    less money. At least this has been my experience. Example: Wanted a simple 8′ x 10′
    pondless waterfall. Had it bidded by FOUR DIFFERENT landscaping companies. All
    of them came in between $4000 and $6000 – insanely overpriced. The pump kit
    has everything and cost me $440. Labor is two days AT THE MOST for two guys
    (probably illegals being paid $10 an hour). The people would have effectively
    be charging me about $125 an hour for their labor based on 32 hours of labor (2 guys, 2 eight hour days each). I’m not a cheapskate but not a sucker either.

    • Lamont

      I wonder why the pros here continue to think that customers are cheap but all contractors are honest.

      I don’t care about price as a first continuum. But I find too many contractors want to write a 1 paragraph 11 word contract that is specific only in final price. Seriously, why not list the type and amount of material, time frame and so forth? I can’t say this enough, I have seen many contractors bid to repair, replace, or remodel and not be specific in writing. But you just had a 2 hour conversation on work that she or he sums up in an 11 word agreement and hands you a pen to sign for $20K worth of work.

      I don’t care what a contractor pays. I care about quality. And I care about his / her honesty as much as him about mine. I can’t repeat enough about what I’ve seen and / or gone through. They don’t have multiple shows about cheating contractors and shoddy work for nothing. Has anyone seen a television show about homeowners cheating contractors??

      There are two sides to this. Many honest contractors have enough idiots not requesting a more thoroughly written bid and can walk away from people demanding one for good or bad reasons. I just recently got a $9300 bid from a contractor that said, “Repairs as per conversation with homeowner 2/13/15.” Really? Really??

    • Dante

      You’re not a cheapskate, you just can’t afford to pay to the going rate for a professionally installed water feature. Maybe you could go out and buy a big book on water feature installations, one with lot’s of pictures, and then go hire a couple of those “illegals”, pay them $10 per hour….and see how everything turns out. Then, when the water starts to flood your yard, and house foundation, you can give one of us professionals a call.

      • Lindsey

        Because I’ll bet not one of those contractors explained the benefits of a “professionally installed” water feature or the risks of not having one, the way you did at the end of this comment, because they already knew the risks. But that guy doesn’t. He’s not the professional. You are. Instead of being offended that this stranger wants you to explain WHY they should fork over $4k instead of $500, help them understand.

        • Mấy bác làm marketing ở VN suốt ngày cứ hô hào về Email marketing, nào là bí quyết, tuyệt chiêu…. thật ra toàn Ä‘i spam….Má»—i sáng mở mắt ra, vào mail 1 phát là thấy cả trăm cái tin quảng cáo, sp&#ma8230;.Riết ko muốn vào mail nữa

  • Anna

    STANDARD PROCEDURE from every reputable contractor I’ve ever worked with, every reputable contractor site out there, residential, commercial, small to large, is to include an itemized materials,product, labor breakdown. If that’s too much for a contractor’s bid, then you are not ready for prime time. Seems this guy is VERY green, even I can come up with an approx. materials and labor breakdown for every job I request bids on.

    And by the way, there’s this thing called email, fax, and the telephone. No need to burn gas. It’s how things are done these days.

  • Jonas

    As a General Contractor specializing in home remodel, I agree with Admin that a fixed price contract does not require any breakdown of costs for materials or labor, provided that materials/products are specified in the contract, which we do in ours. (It is even more unreasonable for a client to expect a Contractor to provide such detail of costs with a free estimate for a fixed price remodeling project.) Homeowners are able to get multiple estimates, see examples of the Contractors work, check their references, etc. in order to make the determination of who to go with in addition to comparing pricing.

    Unlike Admin, we allow clients to furnish certain materials for us to install, such as tile, cabinetry, appliances, vanity, toilet… items that are very specific in taste. This does NOT include basic building materials, as we all know that 2×4’s from some big box stores aren’t straight and are difficult to work with.

    For items the homeowner is providing, they MUST provide us with product specs in advance of a contract, and that information is included in the contract (ex: brand and model for appliances, and size and material type for tile) so there are no surprises. Our contract is very clear that if the product is not delivered to the site in good condition and in sufficient quantity prior to start of work, there will be extra costs assessed for any delay this causes us. We also stipulate that one-time only installation costs are included, so if for some reason the product is defective or not as they intended, we will charge them to remove and re-install (we’ve seen this with cabinets where the owner didn’t check them carefully and they were the wrong size). This is not a perfect system, but works pretty well for us and the client gets the exact product they want without us having to shop around and price each item and its delivery.

    My experience is that most of the people who want line item breakdowns don’t have the money to do the project they want and think if they can take one little thing out here and there, or buy it themselves, they can still come in on budget. Otherwise, they are people who are very mistrustful of Contractors. Either way, they will not be clients you’ll enjoy working with, and they will probably create additional costs that make the project less profitable in the end. These are the people who want to buy their own electrical outlet covers thinking they can save a few pennies. This is not the type of client we want to work with, and we do not itemize costs for fixed price estimates or contracts for this among other reasons.

    • The Official Contractor

      Thanks for the reply, Jonas!

      You make some very valid points. You also might have misunderstood a portion of what I was trying to say. The homeowner gets to pick some of their own materials. For example, a customer get X amount of dollar allowance in the contract for a toilet, X amount for a sink and vanity, etc.

      The only thing I won’t do is install an item the customer bought beforehand — sitting in a basement that is already opened! They seem to think that they measured correctly and next thing you know, you don’t have enough drywall~!

      So, you have to go back to the store, grab some more drywall and mud, and they expect this at no cost to them. We try to avoid problems by having solid agreements. Thanks for stopping by, and Jonas — come back from time to time 😉

  • Carole

    I hired a contactor to do a small tile job in my kitchen. I was given a bid of $575.00 for the labor. When I asked him if he charged by the hour or square foot he seemed to not want to answer me but finally said he charged $45.00 per hour. Not having any idea how long the job would take, I agreed. When it was all said and done, the job took him a total of 6 hours which would work out to roughly $260.00. He still wants the entire amount of his bid which works out to roughly $95.00 per hour. I’m having a hard time with this. He did a great job and I have no problem compensating him but the amount he wants for the amount of work he did seems unreasonable. Please give me your take on this. (Materials were extra)
    Thank you!

    • The Official Contractor

      Hi, Carole!
      I’m glad you asked a question because I’d love to help 🙂

      I believe the contractor simply was caught off-guard by your question.

      In the world of contracting, “silence is golden”, which means, if a customer asks you a proprietary, personal question, like, “how much is your profit, and what are you making off this job?”, in order to control his blood pressure, he should remain silent first, think about a decent answer, and retain the client until the project is finished!

      I have a question: Would you be offended by a customer asking how much profit you make selling a product to them that you invented and hand-crafted for your business?

      You would probably tell them to go take a hike!

      The bid for $575 is the dollar amount he came up with to do your project. A “bid” is a “flat-fee”, meaning if he takes 1 hour or 5 days, the price for labor stays the same. He was covering himself for unforeseen things as well as giving you a fair price that you and him could live with.

      Why did you go further into how much he made an hour?

      Most contractors do not bid by the hour — unless it is a time-and-material contract, which I suspect you thought it was, which it wasn’t because he did not supply (procure) the materials along with labor. You got a flat-fee bid for him to install something. The customer (you) supplied the material (it was on site).

      I would have never told you how much money I make per-hour, when I only work “flat-fee”. You had him between a rock and a hard place and he was not strong enough to resist 🙂 haha

      Joking aside, you are having a hard time with this — rightfully so. You did the math and added up his hourly wages like he was an employee. It hurts.

      If he did a great job, them you should probably pay him his original bid. He told you 45-an-hour on other jobs (but that was proprietary info)… If you felt like you and the contractor got along during the project pretty decent, I see no reason to loose him for future jobs.

      I suspect you are a little on the cost conscious-side but that’s okay. I am too!

      Finding a good contractor is what it is about. I suspect he is a good tradesman; he just doesn’t know how to price his work and stick to what he knows is fair.

      Most handymen, tradesmen, etc., UNDERPRICE their work by at least 45%, unless they have thoroughly researched their numbers. That is why most home improvement businesses fail within the first 5 years of life — a whopping 90% — due to not charging enough for their services.

      Okay, ok, I’ll let you in on a little secret, Carole: Many remodeling companies start at least $75-an-hour. They then figure out how many hours your job will take, how many guys needed, materials + mark-up. Finally, they present you with a bid based on these factors. There are other things to calculate, but that is the basics — based on the individual company. I ain’t one to gossip, so you didn’t hear it from me.. 😉

      Again, — thank you for commenting and if you have any other questions, please feel free to ask in the comment section below ~ 🙂 Good Luck.

      • Jeff

        I could use some advice or answers on a slightly different situation. I’m a homeowner. I’ve got a contractor selected. He’s quoted a fixed cost of labor. I’m to supply the materials. Unlike Carole, I’m perfectly OK with the contractor finishing early and still getting paid the full quoted price. The price is the price.

        However, it is my insurance company that is demanding a breakdown of that labor cost. They refuse to advance the claim process until the contractor tells them his cost per hour. I’m not sure why the insurance company needs to know this. I’m also not sure why the contractor won’t just pick a number and tell them, though I would guess it has to do with the “silence is golden” rule or the fear of finishing early and not getting full payment.

        Any suggestion on how to approach both the insurance company and my contractor on this topic?

  • Duane

    I have recently started up a home improvement company. I’ve only been in business for 6 months, but always learning the business side of construction. I’ve recently took on a client that is a friend of a friend. The client has a farm house built in 1900 that he wanted remodeled. We did a initial walk through and told me his vision of his home. At first it was a simple gut and remod. I summit ted an estimate in which he said looked right on his numbers. So I started the project. It didn’t take long before the initial estimate went out the window. He added major structural improvements,i.e. opening load boarding walls with 16 foot I beam headers. Then I gave him my invoice at the end of the week and I for all add ons that were done. Being in construction for a few I well know takING out a 16 foot section of aload being wall is not cheap. I also did the same on a 12 foot section of a load bearing wall. To keep it short he is now telling me that I NEED to send him a material list of all material purchased and used, weekly time sheets hour by hour, my hourly wage and my markup. I did send him materials and time sheets, but refuse to tell him my mark up and hourly wage. I’ve already adjusted my invoices once and know he wants to do it again. I just got done doing numbers and realized I’m paying him to remodel his home. The client has owned his own company for years and his business is doing verywell so he knows construction. Im starting to feel that he’s brought me on as cheap labor since I’m inexperienced in business since. I want to do estimates and signed addendums stating prices but he said he’ll only do time and material or he’ll get another contractor. What’s should I do? Stay through it and lose out or cut my loses. Also can someone tell me a new business with little overhead should charge for installing a 16 ft header in a load bearing wall and also a 12 ft header in a load bearing wall. It’s a 2 story house also. This is including temp walls and demo of load bea ring wall and prep for install. It took me about 16 hours to do it all. Please help….

    • The Official Contractor

      What’s up Duane! First I want say welcome to the construction business.

      Most of the time, a client’s vision of their home is not in touch with reality. Many have grand plans of what they want, but have unrealistic budgets in mind. You must get a budget established with the client as early into the estimate as possible.

      The way to determine their budget is to ask a bunch of questions about their project and either jot the answers down or record the conversation. The more questions you can come up with, the better informed you become of what costs are involved and what those will cost your client.

      When a customer wants to change something after you shake hands and the original contract is signed, YOU MUST ALWAYS issue to them a change order for the new work and added cost. People will expect you to work the new changes for free if you do not speak up. It goes like this:

      Customer: “I want to open up a wall now. Just go ahead and do it”
      You: “Sure. Let me grab my estimate pad and change order forms. I can take care of that for you.”

      If he agrees, you simply estimate the new work costs and write the additional change work order up. If he doesn’t want to do the additional work, stick to the contract.

      If you had issued a change order to this bully, you would be safe. Also stick to your price. The minute you take off money for something, they’ll think your price was high to begin with and will expect you to take off for other things. You don’t want to known as the cheap guy.

      Also, check into creating a draw schedule into your contracts for future projects. That way you make the client pay you during each stage of the reno. Get “ahead of the money” which means don’t let the client owe you a bunch of money by the end of the project. Realistically, you should collect 75% to 85% of the balance owed before the punch list and final walk through.

      It doesn’t matter if he knows construction: What and how are you willing to work? Do you want to provide for your own family?

      Do not be afraid of this bully. He knows better than to take advantage. If he chooses to find another contractor, SO BE IT. Just make sure he pays you for what is owed. Cut your losses. You might as well stay home on the couch and watch Monday night football than to work for free. You are NOT losing out on anything — except working for an idiot!

      The main problem I see with a lot of guys just starting out is their need to “be working”, whether it is fair or not. Find other customers and clients. Get business cards and flyers printed up and pass one out to a stranger per day. Be honest with the people you get. The work will soon take off. If you need experience, paint, practice, etc. at your own house.

      The worst people to work for is family and friends, because they never value your time and expertise.

      Here’s the best advice I can give you:

      1. Get licensed if you can. This will cement the fact of who you say you are.
      2. Create your own type-written contracts tailored to each particular project and client.
      3. Study Michael Stone’s books on pricing your work. He is the real deal and will give you confidence in your journey.
      4. Join a contractor forum and ask questions.
      5. Take a bunch of pictures from the beginning to the end of all projects with your cellphone for obvious reasons.

      And never, ever let someone tell you how to run your business. Do the studying for yourself. Your overhead is your own personal info. You set the price for installing those beams. Once you get some experience, you’ll be able to estimate the time it will take you to do a particular job just by looking at it. Before lifting a hammer, tell the dude what it will cost him. Otherwise stick to the contract.

      Stop work immediately on everything if you do not have a written agreement.

  • I don’t think I will ever understand the ongoing feud it seems between contractors and howowners. I have spend over 25 years working in the renovation business and spent another 20+ years in the Technology business. In my humble opinion its all about personalities. As a contractor you have to be able to ask the right questions and listen for the huge red flags in the first minute of the conversation with a propective customer. Admin is right as a contractor you are better to stay home than work with a bad or cheap (and I mean there is nothing wrong with being frugal but to save money at the detriment of others is a not right or fair). Be honest with your customers right from the start, get it in writting and don’t do anything extra without it in writting. As a customer you need to educate yourself on the project you are looking to complete and expect your contractor to make a profit. If the customers employer dosen’t make a profit off there products or services they wouldn’t have a job for long.

    As far as customers buying there own materials I don’t really care but that brings me back to the personalities part and trust. Some customers bring out that little voice in my head that says these people aren’t to be trusted so I get larger deposits and ask them who did there last job for them and see the reaction. I also look around there home and ask about what improvements have they made and who did those jobs. If the customer starts bad mouthing the other contractors I want to know why.

    Working for friends and relatives, I think 90% of the time it ends bad. The old saying is you don’t really know someone until you do business with them and money is involved

    These are just my thoughts and experiences

    Cheers the Handyman in Canada

  • Lamont

    I have asked contractors for an itemized deduction, not for price, but for scope of work. Price is important and can be eye opening. I had a tree fall on my house. 12.28 sq was the size of my roof and the insurance said to replace that many feet of sheathing and shingles and flashing. The contractor said he would repair/replace the roof and gutters for the exact amount allowed in the insurance bid. After getting on the roof, he replace about 4 sq of sheathing, reused old flashing, and was paid $300 to fix the gutters. He straightened and nailed back up the original gutters. When I complained, the result was that he was required to repair / replace the roof as needed for that price. According to his professional opinion, not all the sheathing needed replacing. So he didn’t have to. And since his bid didn’t say he would replace 12.28, he wasn’t cheating me or the insurance. He repaired the gutter by nailing it up, even though he could have bought brand new for the amount he got. He could have and could have replaced all the sheathing, felt, flashing, and shingles as well for the price he got– and still made a profit. Instead he made a bigger profit with his un-itemized bid and doing only what he said was necessary. And on the roof, there could have been larger amounts of on-the-border sheathing that could / should have been replaced–but who knows. As a homeowner, there are a lot of reasons other than price for wanting a defined scope of work. I couldn’t care about the cost since the insurance is paying, but I want to know how much work is being done.

  • Dana

    I have no problem whatsoever giving a potential customer a breakdown of labor and materials. I am a painting contractor, use basically only SW paints. I know how much in materials a job will cost me, and how much time it will take. I’m sure this is a rarity, but I write a contract to protect me from additional costs, and I rarely go over my projected cost. So I don’t have a problem sharing the labor vs material cost with my customers, nor do I have a problem if they purchase their own material. However, I let them know up front that if they *and often they do* purchase substandard paint… well then, we will put on our standard one coat primer and two coats paint, but if it goes over that, it’ll be a changeorder slip they’ll be seeing to have the job done right. Haven’t (knock on wood) had a problem yet with this way of presenting a business contract. It seems to INCREASE the homeowner’s trust in my company, in fact. I’ve learned a lot from reading this, but overall maybe I’ve learned why homeowner’s often feel so betrayed by contractors. To understand where the cost comes from…..it goes a long way to know that you will have top quality products used, and if you want substandard, it’s written in so I’m not paying for six coats in lieu of two quality. Unless the person is really cheap or really not smart they tend to understand that we need to make a living as well. And for THOSE PEOPLE………………I say DO IT YOURSELF!!!!!!!!!!!!!!!!!!!!!!!!
    When my philosophy fails me, I’ll be back.

  • jill

    I am the wife of renovations contractor. I am hearing a lot about the unscrupulous contractor! What about the cheating, maniupulating, unscrupulous clients who like to play the “innocent card”? The most difficult aspect of my husband’s very reputable company that keeps my husband up at nights is having to deal with these customers who think he works for free!! Oh, they will say,”While you’re here, will you paint this extra room?” They actually think they don’t have to pay him because he’s already there with the paint!! My husband’s problem is he is too nice!
    There are unscrupulous people everywhere on both sides of this issue. For example. My husband designed and drew up kichen plans for a couple who agreed to hire him for the reno of their kitchen. He learned later that they took his kitchen plans and did it themeselves!
    And what is it with acquaintances who think they will get a real deal because “they re friends”. Would you give a a portion of your pay cheque to friends?

    The door swings both ways and whether you are the client or the renovator everyone can get burned. Not only is it Client beware , it is Contractor beware!

  • James

    If I hire a contractor to do something you better be sure he or she will provide a list of where the money I am paying is going or I’ll find a more trustworthy contractor.

    Any good contractor or business person will understand that the more time you put into the getting the sale the more likely they are to get the sale. If you can’t provide it to me or worse wanting to charge for that information that screams of red flags to me.

    You’re either confident in your business practices, or you’re over charging and trying to blame the customer. As a customer I can understand you earning $2,000 for profit on a project that takes a couple of days and as I look down the itemized list I’m confident you put in good work and wanted to take care of me.

    I as a customer would be extremely foolish to trust a contract 100% without due diligence on a project that could ultimately increase the price of my home or decrease it because they wanted to take short cuts, but less than satisfactory products but charge top line prices.

    Any trustworthy contractor worth his salt would openly and freely provide this information to any customer.

    • Steve

      Your due diligence should be in front of accepting a bid by getting multiple bids for your job. If you decide to go with me my responsibility is to do the job to your satisfaction for the agreed contract price, not to give both you and my book keeper the detailed receipts of what it cost me to do the work. If I make a profit good for me, if I take a loss shame on me for underbidding, but that really isn’t any of your business nor should it matter to you so long as you are happy with the results.

  • AJH Landscapes

    I itemize quotes by activity but I don’t split up labor and materials. When Ive done it in the past Often customers have asked why the material cost is higher than what they could buy it for at the store, even when I explain that I need to spend my time organizing/purchasing/transporting etc they dont agree.

    Ive had people say my price is double or way more – that’s fine as the price i came up with reflects what I think I can do the job for without losing my shirt.

    I intend to stay in business for a while and do quality work. The customer is paying for a package: my expertise (try to itemize that!), my time, employee labour, subs, equipment, small tools, materials, overhead and contingency. I’m sure i missed something in there too.

    As others have said, the contract not the estimate dictates the scope/schedule/finosh level.

  • Architect

    I remember a story from an old business instructor at UCLA. A company’s machine stops working. In a panic, the company calls a repairman. The repairman comes, looks at the machine, replaces a bolt and gives the company a bill for $2000. The owner of the company says “Two thousand dollars to replace a bolt? That’s outrageous! I want a price breakdown”. The repairman gives the client a breakdown. 1.Bolt – $5.00 2. Knowing which bolt to replace – $ 1995.00.

    • Lindsey

      And if it breaks the following day because it turns out they DIDN’T know which bolt to replace, who pays the bill to fix it again? Do I trust them to come back and actually fix it? They should, and they should do it for free, since I already paid them for “knowing which bolt to fix” and they didn’t deliver. But since they didn’t deliver the first time, how do I know it will be right the second time? Am I going to end up paying a second company $2000to fix the work the first company screwed up? Will it be right that time? When does it end?

  • Deb

    Why do you think you the contractor is the one with the power. I would never want a break down of materials cost, but I would want a breakdown of what the job to tile a floor is, to install electric etc. So that if you add more jobs, or take away jobs, your “credit” or charge is not arbitrary. That makes sense.

  • betsy

    I had a house fire and received a scope of work with no prices and was told to go shopping. How am I supposed to shop for cupboards without knowing what my budget is? Do I go out and choose them, then I get told by the reno guy or the insurance company that they are too expensive? Then I head out for a second try? Please help me understand.
    My claim is large obviously, house is mostly gutted. How do I choose my cupboards, floor etc. without having the line by line. What happens if I run of out money…

  • Kathy

    We are a renovating company and have been successfully in business for 15 years. Lots of mistakes and LOTS learned the hard way (cost of losses, lawyers and working for free) Our salvation? CONTRACT, CONTRACT, CONTRACT. We had an attorney draw ours up and no one gets in without one. We have customers who demand receipts on T and M jobs- sorry – what does the contract say? We have every scenario that has cost us money in the contract. We are protected again and again by our contract. If as a contractor are working without one, you are working with your pants down! Pay the money and have an attorney who knows construction write one and don’t start a job until you have the ink. As a customer- For the love of Gordy! – READ IT and UNDERSTAND IT before signing! If you don’t know what something means- find out. You will learn the hard way afterwards if you skim and sign. Then do us a favor and please, do not blame the contractor for your choices. You make a decision and take responsibility for that decision. You are an adult and it is your obligation to yourself to FULLY understand what you are LEGALLY getting into. Experience is the best teacher- be it for good or bad.

  • Harry Hogg

    So I guess I have been one of those “annoying” customers that asked for an itemized breakdown of labor versus materials. This was on a $20,000 waterproof deck job I had done. But I couldn’t care less how much of the job was labor or materials. The sales tax on materials is an income tax write off, and my accountant would not accept a ballpark figure. He needed an exact number in writing/estimate/invoice form from the contractor. So I’m sorry that it creates a bit more work for the contractor, but a customer has a completely legitimate need for a labor/materials breakdown like this. It saved me hundreds on my taxes and will keep me safe from Uncle Sam should he decide to audit me. Cheers.

    • Bradley

      That request is different. Labor and material on a total job is different than asking for a line item price.

  • Adrian

    I was reading all of this comments and it seems that not a lot of people agree with your article. I am a general contractor. So I am with you. You are totally right. We do not go to the people’s homes and asked them how they make their money right? I mean, that money is going to be used to pay me, then I have the right to know when it came from? Of course not! So I don’t know why people seem to think they are entitled to know how much money a contractor is making. It is this simple, you want an itemized quote? It is all right. But that takes time man, then pay me for that time. Because as contractor we invest our gas, our depreciation of our vehicles, our time, etc just to go and see the project, and then go back and put together a price and go back to the homeowner, and more time, gas, vehicle, etc. Ah, and guess what? Most of us do that for FREE hoping to get the job. But it is not over, after all of this time and effort, the owner decides to hire another guy! Because the rule is to get three bids, right? Or five? Or ten? I mean the owner can get as many estimates for free as he/she wants. And of course, I cannot say I charge for estimates because I wont have the chance to even take a look to the job. So you want itemized estimates? Fine, you pay for all the time I am going to be in front of the computer. I have a son, I would like to spend as much time as I can with him. Being a contractor is already time consuming. Now, in the other side, I am also with the consumer. Thanks to the homeowners we can do a living. And by the way, the contractor it is not the homeowners employee. That it is a totally wrong description. Even legally you cant say that! But we are partners, owners and contractors. I know there a lot of contractors that just want to take advantage, but for that reason you have to educate yourself, and ask the right questions. Paying 3/4 for deposit! That’s is not even legal. Asking for itemized quotes, or trying to figure out how much markup or profit the contractor makes, those are the wrong questions. Like I said we should act like partners. Partners will no always agree. But at the end they will work together to find solutions to the problems. If someone wants to get their own tile, is fine. Then they should communicate that before signing a contract. If they want the contractor to take care of everything, then, again, they should communicate about how much are willing to spend and what kind of tile they want. The main goal for everybody is to make the best quality work, within the budget and time frame. Being too concern about the price of things is time consuming for everybody. And last time I checked, time is money, for everybody.

  • Ade

    From previous write-ups, I think most respondent have only handled small renovation contracts. My daily responsibility for the past 15years is the formation and administration of construction contracts between $500k to $220m. Having itemized cost for different sections of the Works helps to determine progress payment and % completion of the Works. Equipment and labor rates (which is a form of breakdown) in contracts reduces negotiation of rates for scope change etc. My question is, how I compare pricing when contractors have not given a breakdown – at least for different sections of the Works. Recently, I negotiated a contract of about $170m where we had contractors from France, South Africa and India. The breakdown given by each contractor was the basis of the bid analysis.

  • John L

    Very interesting thread here. I stumbled upon it while researching whether I should request a minimal itemized quote from three roofing contractors (. cost of roofing, cost of gutters and labor for each). I read many different opinions.
    Background: I need my roof torn off and replaced. I went through a re-roof twenty years ago and now it’s time to replace it completely. Also, I am having new gutters, soffit, fascia and downspouts installed. I went through this process ten years ago and have had nothing but problems with leaks and water pooling in ill-sloped gutters.
    The gutter work had to be redone three times. None of the material was replaced. Thus, I have aluminum gutters, fascia and gutter aprons filled with holes, re-bent and not fitted correctly. Unfortunately, I didn’t find this until a year later when cleaning gutters. I left it alone.
    So starts my journey getting this and the roof replaced.
    Like I should, I called three roofing contractors to provide estimates. I have received the quotes. One is 20% higher than the other two. None of the quotes break out material and labor.
    My first question is: how can I ensure the quotes have included everything promised or needed without getting some sort of breakdown? even if the cost isn’t noted.
    Second, I find it interesting that each contractor quoted the exact same shingle (one is a authorized installer for the brand).
    Third, one of the first recommendations to homeowners is to ensure that a contractor is licensed, bonded, insured and has workmens comp ins. Why don’t contractors bring copies of these with them when going out to provide a quote?
    Fourth, the contractors I called were registered in my city but let the registration lapse. Why should I be charged for them to renew the license in my city?
    Lastly, in response to some responses here, I think it is fair and reasonable for a contractor to make a margin on supplies (shingles for instance). But I disagree with the concept that the cost per a single item has an administrative cost. That is, the administrative cost to purchase one bundle of shingles is exactly the same cost as ordering 100 bundles. I think it is unfair to charge a 100% profit on each bundle of shingles under the guise of taking the time to procure and administratively handle the product.
    Thoughts?

  • As a contractor I provide quotes that include “Discription of tasks to be performed” itemized for each individual part of the job with reference to the materials and “Description of the materials to be used” itemized for each piece of the material.
    If a customer wants to provide their material I inform them that in that case I cannot provide guarantee for the matrials nor will provide any material (they forgot or did not know has to be a part to purchase) at no cost.
    The quote will also include estimate time frame for the job, special requirements (access to electricity, water etc), payment options and any issues may arise during work (dust, noise etc)
    It is time consuming but in most of the cases guarantees quote approval and time wasting explanations what is included and what is not.
    I also charge mark up on materials 10-30% depending of where and how material is sourced.
    Overheads of the business are part of labour cost as I am a sole trader.

    Many customers are not aware that an acceptance/approval of a quote is legally equal to agreeing on a contract. If a customer wants to change the quote, add some work or take something out, a new quote will be produced.
    When the invoice/receipt is issued it will contain the same details as the quote.
    I do not negotiate my quotes as my business works for profit providing quality workmanship and the best materials.
    I usually take 10-30% deposit prior commencement of the job to cover initial material costs.

  • Melly

    I have a question about an issue we have with a flooring company that does remodels. We hired them to tile us 1 walk in shower, new tile floors, new vanity tops with 4 sinks (2 bathrooms) new vanity lights and we do the demo. They drew up an estimate or what we thought was a contract. There were no signatures, but emails and we sent a check for 50% down and rest upon completion. Job was to be 6400k plus billed later for electric and plumbing work. Our estimate had backsplash material and a price on it. He had his suggestions but we thought we found something else off the Daltile website, but there were no prices and since they don’t sell to the public we were letting him order it with all the other tile. Now, 3 1/2 months later and 1/2 a shower installed , we get a “new” estimate that is almost 7k over the original and see that even though our original estimate for backsplash was $66.00 he spent $525.00! We were NEVER informed of this and never even asked if we wanted to spend that kind of money! He says we asked for it so he provided it. The “new” estimate includes items like shower drain set supplies, labor costs, sink fabrications, sinks. Things we feel he should have included in the first one but maybe was trying to come in low? And now he says his original quote was for all stock materials. First we’ve heard of this. Also we were not told that a change in material for vanity was more expensive because our choice was a Quartz product and requires a different process to install the sinks, create the edges, etc. He never told us this. He emailed to verify the “color” change but didn’t bother to mention the price was going up $1900.00. Our original estimate had vanities with sinks and now we are being billed $1000.00 for sinks and labor too. There are lots of other miscellaneous charges in there for things I guess he “forgot”. He wants another 3500k and has stopped all work. Mind you, we don’t even have all the shower tile installed yet. He billed us over 2k in electric and plumbing, which we think is too high but ok, we might let that one go. Main question: is this how it works? We don’t know what to do. We didn’t agree to these price hikes and feel that he has an obligation to inform us and get our ok before spending more money. We have the backsplash tile and will return what is not already used and we hope he has not fabricated the vanity/ sinks. He has most of the floor tile and other tile in his warehouse. We wrote him a long email stating everything I’ve said here but he seems unwilling to budge. We don’t know what options we have? Any advice would be appreciated!

  • Jane

    You use a poor analogy about ordering a meal. In fact, when I order a meal, everything I order is listed on the check. There’s a difference between giving the customer the recipe and telling them what they’re buying. I strongly object to heating contractors refusing to break down materials and labor. I’m not asking for every part of the heater or every elbow and ligature in the installation. The least a company do is tell the customer how much the hot water heater costs and how much the installation charge is, as separate amounts.

    • when it’s one item that’s fine. But when you have 20 items that’s different

  • Laura

    My husband is contractor, working his own business. He is currently working a job and the homeowners are completely awful. There is a signed contract that nowhere states he provides them with receipts from Home Depot or wherever he gets material from. He is about halfway through the job and now they are insisting on receipts every single day. My husband has had to about beg for payment from them even though the work is being done, and quite well, in fact. They are playing a “power” game with him and last Friday they gave him a check and promptly stopped pay on it, “just because they could.” They said they will not pay him anything else until he breaks down every single receipt from the job. Again, it is NOT in the contract. Can they do this? They even ‘demanded’ that he work at their house every day, even Saturday AND Sunday, from 5 am to 10 pm. Is this insane? They think they own him, and are using their money as a weapon.

  • Marlene

    “Contractors have the control????” Wow! Pretty bold, don’t you think? As a contractor, you are a HIRED EMPLOYEE, and nothing more. The CUSTOMER has the control, and the CUSTOMER gives you your paycheck. If you worked in the real world and had a real job with a real company, you would never survive with any company with the attitude and belief that YOU have the control over your employer! When I go to the grocery store, I get a receipt of the breakdown of my purchase. When you, as a contractor, go to Lowe’s to purchase materials for your customers, do YOU get a receipt of the breakdown of your purchase? I’m gong to go out on a limb here and yes, you are given a receipt for your purchase. What if the sales clerk did NOT give you your receipt after you complete your purchase? I’m going out on another limb here and say that YOU WOULD ASK FOR YOR RECEIPT. If you are not giving your customers a copy of the original receipt of the breakdown of materials, then it is crystal clear that you are hiding something and most likely padding the bill without their knowledge. I, as a customer, have dealt with many contractors, and I have had only ONE refuse me a copy of the receipt of materials purchase. Needless to say, I will never deal with this contractor again. All of the other contractors were more than happy to provide me – FOR MY REQUIREMENT TO KEEP SPOTLESS RECORDS – copies of any and all purchases.
    And that, friend, is the reality of this subject.

  • Katt

    I love that sandwiches are the comparison. It’s a $5.00 sandwich.. Who cares about the ingredients. Now if someone is paying over $10,000.00 and may be charged more.. I want to know the details.

  • Pretty interesting article. You have a knlegwdoable opinion on the matter and I will be subscribing to your feed and will hope you will write again soon on similar subjects. But I was would like to know what your sources for the post are? Thanks a lot

  • Lesley

    I made the mistake of agreeing to pay $108 an hour (two workers at $45/hr and 20% mark up for owner of the company). The materials also had a 20% mark up. The first week I was not monitoring the hours worked as I trusted that I would be billed for the actual amount of time spent on the project. However, I found that the workers put in only approximately 7 hours a day but I was billed for 8 hours a day. The next week I clocked their hours and requested that I be billed only for the hours they worked. The company did bill me only for the hours I recorded. However, the material costs were outrageous. I felt they charged an excessive amount for the little bit of materials needed. Therefore I requested that the company provide me with an itemized account of the cost of the materials, rather than simply putting on the invoice “caulk, materials, etc’
    before I make the final payment. My question is “Is this an unreasonable request?”
    I decided not to have this company continue to work on my house as I found another reputable company which was less costly who agreed to complete the remaining work for a flat fee. ( A lesson I learned is to never agree to pay by the hour

  • LC

    It’s not the contractors fault, In order to deduct repairs, upgrades, and general expenses, the CPA needs a breakdown of how to do so.

  • Rick

    Homeowners that want very little to do with the process should expect to pay more than the owner who is willing to work every detail out with the builder.
    I am finishing two very long term jobs that required many change orders and many details.
    One owner was there every step of the way. They objected to very few items and rarely complained. Although the job was exhausting, I over-delivered every time. The owner new what to expect because she helped pick it out and I when with her to do so. She paid me for all the changes and I was able to do impeccable work because the owners gave me the confidence that they would participate and that they would fund the work properly.
    They are not rich and neither am I, but I can sleep at night and they know I will always do a beautiful and functional job.

    The other owner are three condo owners.Two is never around – absentee, the third is a pill and seldom participates and usually complains. The first is a great couple who try hard to work it all out, but has had to bear the burner of the other two. This job was exhausting mainly because it was too much work to chase them all around to figure every detail and any change orders needed on a building that was massive, needed tons of work, had been woefully neglected and had limited budgets on everything.
    To the owner who got substandard products: please do your job. Help select the items you want. Educate yourself about the work and the materials. Make sure they are specified and discuss it with the contractor before, during and after the work is done. Show your face and be supportive. If the contractor runs into a jamb, help figure it out. Its your house!
    If you don’t want to participate, then don’t be surprised if there are difficulties.
    To the owner who thinks that contractors are employees: Sorry, you are wrong. You can’t imagine how hard it is to run a project and a business in the construction field these days.

  • Rick

    Sorry about the typos everyone – there is some typing glitch that isn’t allowing corrections.

  • Rick

    One more comment. These jobs took a long time because of the massive changes, adding many items not on the original plan, limited budgets, owner number three, but above all: huge issues with staffing. Qualified workers, who don’t have drug and/or alcohol problems are almost non-existent. So I do the work myself about 50% of the time!!!

  • JP

    Charge me to break down your own estimate? How about I just not do business with you? Why do you people think you can pull this shady crap with us consumers? I understand you need to make a profit, but trying to hide things is just wrong, plus then you get mad when we ask for a little clarification. God forbid we buy the parts ourselves and you install them without a 500% markup.

  • Laurie

    Glad I found this page. Really puts things in perspective.

    With that said, I have a situation myself and would love to hear people’s take on it as I am really struggling on how to handle this. In a nutshell:

    A friend recommended a long time friend (contractor) of his to install a storm door that I already bought and do some carpentry work. The guy comes and gives me an estimate of $200-$300 for some carpentry work on the mantle (just adding leg skirts to the existing mantel) and $100 for the storm door. He never mentions this is a time and material work. He wants to make sure the door fits so he measures it one more time and even come to HD to check out the door to make sure it fits. He confirms it will fit. One month later, he comes to start the job, and states that the door will not fit and I tell him that I cannot return it anymore as it is past the return period and the reason we picked it up instead of canceling it was because he confirmed it would fit. He then studies the opening and figures out a way to fit it in. Never once does he mentions anything about additional cost or estimate changes. I hate to use this word but I assumed he was taking responsibility for his mistake and continuing on. About 1 month later, he finishes and gives me an invoice of ~$1700 for the mantel ($600), door ($900), and materials($200)!!!! He concludes that it was a time and material order and that he mad 5 trips and logged all the hours – mind you I was only there 3 times as he came 2 other times without me being there. He also charged me for helping me “fix” another door that was not leveled. He did a few things to it the day I wasn’t there and added another $150.

    Now he NEVER once told me there was going to be additional charges, NEVER confirmed it was a time and material, and NEVER told me he was charging for helping me on the back door. Don’t get me wrong, I do accept some fault for not asking, not getting a contract (never again), and assuming he wasn’t charging me for the help but a 425% increase?!?!?!?! I never agreed to the invoice amount, however, I did pay him a portion because I don’t expect him to work for free and/or pay my materials for free. I do plan to give him more but nowhere near the invoiced amount.

    What do you guys think about this? Should I pay the full amount? Am I wrong for thinking this guy is trying to “tool” me as someone mentioned before?

  • Jc

    I would also like a breakdown of materials and labor cost. Every one expects a markup on parts it’s the norm. There is a big difference in a 25.00 meal and a 25,000 project. I had a plumber wanting to charge me 800.00 for 20 minutes of work. ?

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