[splatz]

Interesting point Splatz.
People are asking for my time and resources, in the same way, they ask their grocer, utilities, and auto repair businesses for services. Why should I have to be the only business they "negotiate" with?

Think about this a minute. How would you feel if when your city was building a school, they went to one general contractor, asked for a price, and paid whatever he asked?

(Bad example, @Southeast Power would get the generator install and more than pay for any overspend of his tax dollars. But you get my point.)

Construction and trades are nothing like retail businesses.

Retail businesses like grocery stores don't negotiate, but all retailers sell identical products. People look at the price of beans at Kroger versus Publix and buy red beans at Kroger and black beans at Publix. People shop the hell out of them. To survive they advertise loss leaders hoping people will buy some products that are profitable while they are there. Retail is a tough business.

Automotive shops are a little different, but they still base their pricing on either flat rate for oil changes, alignments, etc., or a base shop labor rate and the book value for the time. Their book is very generous with the labor time estimates that they base their pricing on. The finished product is pretty standard with mechanical work. They do trade on customer service and trust and amenities like wifi in the waiting area. People beat them up all the time, they want them to match tirerack.com tire prices and etc., especially with new customers.

I have an idea what tires cost because I've bought hundreds of them. I don't shop when I have to buy tires, I have a guy. Occasionally I will sanity check his prices when I hear what someone else paid or see an advertisement or something, but I know he's OK. (That's actually a fictitious example, my tire guy is a really good old friend, and undercharges me drastically as I do him, but I'm making a point.)

The average residential consumer electrical customer probably buys electrical construction or service once every 10 years. No two people bidding will do even the simplest job the same way. It's not commoditized at all. When I put a new furnace in my house, I am going to shop.

Again, construction and service trades are nothing like retail. People shop. Be glad it's not a commodity, that's also why you can distinguish your work as better and more valuable so people will knowingly pay more for you.

 

[splatz]

I like the point I'm taking away from Splatz's post. Don't get upset, it's just business. Keep talking and see if you can SELL your services. Try to close the deal.

As contractors wearing multiple hats we often don't put on that salesman hat. Remember, lowest price can put you in the poor house.

That's what it boils down to. Once you've established a relationship with a customer, your work can speak for itself. But isn't the onus on you to distinguish yourself from the bottomfeeders in the market? It's not realistic or even fair to just expect blind trust from prospects, they deserve a few minutes for you to tell them why you're a good value.

 

[99cents]

I agree with one thing that was said. Rationalizing a higher price by saying you have to pay for insurance, licensing, etc. is pointless. In the customer’s eyes that’s your problem, not their’s.

Every successful business has their “bread and butter” which is business that may not be highly profitable but is ongoing and reasonably dependable. In contracting, that could be work with general contractors or property managers. If they pay their bills, it’s business worth keeping (bearing in mind that in business, and in life, everything is temporary).

Once you have established that more or less guaranteed income, it gives you the ability to be picky with new business that comes along. I once threw an atrocious price at a job because I didn’t care if I got it or not. The next day, a purchase order arrived in my email. It felt like I won the lottery. It was with an oil company who has since gone bankrupt but their money was good when I worked with them.

 

[LibertyRising]

Lots of sound advice in this thread.

I disagree.

much of the advise is to either decline to work or get confrontational in a way- such as the “flyby” response. That’s not information the customer wants to know.

I have been winning jobs lately despite being the high bid. It’s all in how you handle the situation. Its important that when they have come back to you with that information they are signaling that YOU are still in the running.

This is the point that you can either be “thats my bid, take it or leave it“ or sell YOUR company’s value over the competition. Knowing who your competitors are helps, but there are ways that you can negotiate a deal without compromising price. I was $10,000 higher than the next bid on a marina that we started a month ago. I won without dropping the price a dime.

I also regularly win my generator jobs despite being higher. Turns out many people prefer a small company with a responsive office that is close and local to them. The Lowe’s and big generator shops don’t really do it for many people once they compare the companies providing the same product and are largely willing to spend more.

there was a YouTube video on how to negotiate without compromising price that was super helpful for me. You never want to split the difference. I’ll see if I can find it.

 

[paulengr]

Move on unless you are prepared to come down. On that small of a job, not worth it, and the difference isn’t much. Stand your ground or come down say $100 and call it a day.

What you will find is low bidders either missed it on the estimate (or you did), or you need to find a way to get your costs down if you are consistently high, or you will find they keep going out of business or ticking off customers. GCs are notorious for shooting from the hip. Or the customer wants your business and is making it up to get a discount.

As a customer if you came back from $1500 to $1000 I would have serious issues. If you did that I would know either you tried to overcharge me, or you are desperate for business and you are probably behind on a loan and you will cut every corner possible, or you don’t know what you are doing. With all of these reasons one thing is for sure...I don’t want you.

You play the game the same way for $1500 as you do for $15 million. And I have been on the losing end of 7 digit deals before where we had an underbid problem.

 

[LawnGuyLandSparky]

This depends on what you bid on - what kind of job, and what kind of customer. If this is a GC, bringing the price down will only get him to tell the 2nd bidder he's the highest bidder. Pretty sure you're onto that game. If this is a homeowner-" We use high quality proven materials, devices, LEDs to reduce callbacks and customer frustration." or "Our employees are vetted, experienced, and background checked." or "We use proven, reliable electrical panels and professional grade breakers from real trades suppliers, not lower consumer-grade off-the-shelf home center products."

 

[LARMGUY]

I dislike all the posts saying thank you and walk away.
Explain to them the value of your services. As was stated before, if you have previous knowledge of the building, that is value added. If you use better materials, that is value added. If you go over on your estimate because the other two were bidding the specifications and maybe they didn't take into account the additional things they added to your proposal request and not the others, apples to apples. You might have caught something that wasn't code that you provided for the others didn't. That is value added.

Don't sell yourself short.

 

[Switched]

I dislike all the posts saying thank you and walk away.
Explain to them the value of your services. As was stated before, if you have previous knowledge of the building, that is value added. If you use better materials, that is value added. If you go over on your estimate because the other two were bidding the specifications and maybe they didn't take into account the additional things they added to your proposal request and not the others, apples to apples. You might have caught something that wasn't code that you provided for the others didn't. That is value added.

Don't sell yourself short.
View attachment 153015

Yes and no...

Let’s say he spent an hour on the quote, the job is 4 hours. that’s 5 hours into the project.

How much time should he spend tripping over dollars to pick up pennies?

If it was a much larger project then maybe fight for it more. But that’s a half day to days worth of work.

What this ultimately says is he as a salesperson did not create enough value when he was face to face. He created enough that they called back, but not enough to get the job.

At this point, he can’t sell how much better he is, how great his employees are, and how high end his materials are. It’s too late.

He also failed to find out what their real concern and motivation was, what is their pain point?

Taking sales classes and reading/listening to sales books would be in his interest. You have the electrical skills, now build the business skills.

 

[Harry76]

This is why I do very little residential anymore, There are too many part time uninsured guys out there doing it for beer money.
The county I live in doesn't require any licensing for anything which opens the door for anyone to claim they are electricians.
Its hard to compete when you have benefits for your guys and overhead.

 

[varmit]

Not residential, but some really large companies will automatically throw out the lowest bid is it is considerably lower than the other bids submitted. This is to try to prevent some hack company from creating problems from short cuts, omissions or going broke and abandoning the job.

 

[Greg Sparkovich]

I only do estimates, don't "promise" anything, and have a system that I've worked out based on looking through 10 years or so of invoices. Most of it is in a series of google docs I send to a customer if they ask or if I think it's helpful. Whenever I want a raise, I change the prices. If I find out someone is charging much less than me I might re-evaluate. I have pricing guides for trouble-shooting (DEFINITELY NO PROMISES THERE), Service work, adding circuits, replacing lights/receptacles/switches, ceiling fans, laundries, etc. ALL of my stuff has thoughtful information, not just prices.
I also have a bunch of "informative" google docs that explain things like grounding and bonding, how to make a circuit map, GFCI and AFCI protection, knob & tube, blah, blah. They also have pricing, but they are geared toward "helping" by giving away free information.

I "data mined" my online reviews for the most common words of praise:
Honest, knowledgeable, professional, helpful, transparent. ...Out of 60+ reviews only 3 mentioned price.
I do not do free estimates in person ($125), but I do by email or phone.

Here's what I do: give out my cell phone number. Answer questions thoroughly (50% of customers tell me they aren't going to call anyone else because I answered the phone and I sound like I know what to do). If you're a big company, you might not be able to do this.
Somewhere in the conversation I will mention that I love my job and I like helping people (true).
Almost every contact gets some kind of information from me by text or email or when answering a Yelp request -often AFCI/GFCI info, Grounding/bonding info, a 'basic trouble shooting' guide ...SOMETHING. Because now they know that I am the guy who will pay attention ...and that (for most people), is what your customer wants: Security, comfort, a knowledgeable contractor. If you're a big company, have your receptionist do this. Giving away free information is the best way to put yourself FIRST in their minds.

Worst case scenario when someone balks on price:
"To be honest, I don't want to be the cheapest contractor out there. I've done this for a long time and I understand that new companies or people who aren't getting much work have to compete on price, but I just don't do that. No hard feelings on my end and I wish you the best for your project. Feel free to contact me if you need help understanding something or something seems fishy ...you don't have to hire me for me to be a good neighbor."

 

[Switched]

Nah, it isn't OK. It is a racially offensive term used by people who can't seem to leave behind the stereotypes of the past.

Just carry on though, as it seems perfectly OK with you. And, you have Jewish friends, so you can say anything you want.

 

[Switched]

No real need for me to say anything. You quite eloquently show who you are with the words you keep posting.

 

[emtnut]

Keep on trying to slam me if you wish, I am a total asshole.

J W

Fixed it for you ... what a piece of work you are.

 

[readydave8]

Not meant to be aimed at ancient, and quote is not what he said,, general observation:

what circumstances cause a person to have to say "I'm not a racist, but . . ."

 

[MikeFL]

I just closed this thread. It's off topic, off character and becoming argumentative.
OP's question was asked and answered.
Have a nice day everyone.